Pe et. al vs.

Pe
Pe et. al. vs. Pe
G.R. No. L-17396. 30 May 1962.
Bautista Angelo J.:
Appeal from a decision of the CFI Mla.
Facts: Plaintiffs are parents, brothers and sisters of Lolita Pe, an unmarried woman 24 years of
age. Defendant, a married man, frequently visited Lolitas house on the pretext that he wanted
her to teach him to pray the rosary. They fell in love and conducted clandestine trysts. When the
parents learned about this they prohibited defendant from going to their house. The affair
continued just the same. On April 14, 1957 Lolita disappeared from her brothers house where
she was living. A note in the handwriting of the defendant was found inside Lolitas aparador
The present action was instituted under Article 21 of the Civil Code. The lower court dismissed
the action and plaintiffs appealed.
Issue: W/N the defendant committed injury to Lolita's family in a manner contrary to morals,
good customs and public policy as contemplated in Article 21 of the New Civil Code.
Held: The circumstances under which defendant tried to win Lolitas affection cannot lead to
any other conclusion than that it was he who, thru an ingenious scheme or trickery, seduced the
latter to the extent of making her fall in love with him. Indeed, no other conclusion can be drawn
from this chain of events than that defendant not only deliberately, but through a clever strategy,
succeeded in winning the affection and love of Lolita to the extent of having illicit relations with
her. The wrong he has caused her and her family is indeed immeasurable considering the fact
that he is a married man. Verily, he has committed and injury to Lolitas family in a manner
contrary to morals, good customs and public policy as contemplated in Article 21 of the New
Civil Code.

University of the East vs. Jader G.R. No. 132344

UNIVERSITY OF THE EAST, petitioner vs. ROMEO A. JADER, respondent.
FACTS: Romeo Jader took his law proper at UE from 1984-88. During the first semester of his
last year in law school, he failed to take the examination for Practice Court I in which he
obtained an incomplete grade. He filed an application for removal of the incomplete grade given
by Prof. Carlos Ortega on February 1, 1988 which was approved by Dean Celedonio Tiongson
after the payment of required fees. He took the exam on March 28 and on May 30, the professor
gave him a grade of 5.
His name was still on the tentative list of candidates for graduation. Likewise, his
named appeared in the invitation for the commencement exercises which was held on April 16,
1988. When he learnt of his deficiency, he dropped from his Bar Review classes thereby made
him ineligible to take the bar exam.
He filed a civil suit against UE for damages because he suffered moral shock, mental
anguish, serious anxiety, besmirched reputation, wounded feelings, and sleepless nights due to
UEs negligence. The petitioner denied liability arguing that it never led respondent to believe

that he completed the requirements for an LlB degree when his name was included in the
tentative list of graduating students. The court ruled in favor of the respondent.
ISSUE: Whether or not UE be held liable for damages to the respondent.
HELD: The petition lacks merit.
The court ruled that the petitioners liability arose from its failure to promptly inform the
result of the examination and in misleading respondent into believing that the latter had satisfied
all the requirements for graduation. However, while petitioner was guilty of negligence and thus
liable to respondent for the latters actual damages, we hold that respondent should not have been
awarded moral damages. As a senior law student respondent should have been responsible
enough to ensure that all his affairs, specifically those pertaining to his academic achievement,
are in order.
WHEREFORE, the assailed decision of CA is AFFIRMED with MODIFICATION.
Petitioner is ordered to pay the sum of Php 35, 470 with legal interest of 6% per annum
computed from the date of filing of the complaint until fully paid; the amount of Php 5000 as
attorneys fees and the cost of the suit. The award of moral damages is deleted.

Tanjanco v CA 18 SCRA 994

Facts:
Apolonio Tanjanco courted Araceli Santos. Since he promised her marriage, she
consented to his pleas for carnal knowledge. As a result, she conceived a child, and
due to her condition, she had to resign from her work. Because she was unable to
support herself and the baby, and the Apolonio refused to marry her, she instituted an
action for damages, compelling the defendant to recognize the unborn child, pay her
monthly support, plus P100,000 in moral and exemplary damages.
Issue: WON the acts of petitioner constitute seduction as contemplated in Art. 21.
Held: No, it is not. Seduction is more than mere sexual intercourse or a breach of
promise to marry. It connotes essentially the idea of deceit, enticement superior power
or abuse of confidence on the part of the seducer to which the woman has yielded. In
this case, for 1 whole year, the woman maintained intimate sexual relations with the
defendant, and such conduct is incompatible with the idea of seduction. Plainly here
there is voluntariness and mutual passion, for had the plaintiff been deceived, she
would not have again yielded to his embraces for a year.

AMERICAN EXPRESS INTERNATIONAL, INC.,

Petitioner,

G.R. No. 138550

Present:

PANGANIBAN, J., Chairman,

- versus -

SANDOVAL-GUTIERREZ,
CORONA,
CARPIO MORALES, and
GARCIA, JJ.

NOEL CORDERO,
Defendant.

Promulgated:

October 14, 2005

x-------------------------------------------------------------------------------------------------x

D E C I S I O N

SANDOVAL-GUTIERREZ, J.:

This is a petition for review on certiorari of the Decision[1] of the Court of Appeals dated April 30, 1999 in CA-G.R. CV No. 51671,
entitled, Noel Cordero, Plaintiff-Appellee versus American Express International, Inc., Defendant-Appellant.

Petitioner is a foreign corporation that issues charge cards to its customers, which the latter then use to purchase goods and services at
accredited merchants worldwide. Sometime in 1988, Nilda Cordero, wife of respondent Noel Cordero, applied for and was issued an American
Express charge card with No. 3769-895901-010020. The issuance of the charge card was covered by an Amex Cardmember Agreement. As
cardholder, Nilda, upon signing the back portion of the card, manifested her acceptance of the terms of the Agreement.

An extension charge card, with No. 3769-895901-01010, was likewise issued to respondent Noel Cordero which he also signed.[2]

On November 29, 1991, respondent, together with his wife, Nilda, daughter, sisters-in-law and uncle-in-law, went on a three-day holiday
trip to Hong Kong. In the early evening of November 30, 1991, at about 7:00 oclock, the group went to the Watsons Chemist Shop located at
277C Ocean Gallery, Kowloon, Hong Kong.

Noel picked up some chocolate candies and handed to the sales clerk his American Express

extension charge card to pay for his purchases. The sales clerk verified the card by making a telephone call to the American Express Office in
Hong Kong. Moments later, Susan Chong, the store manager, emerged from behind the counter and informed respondent that she had to
confiscate the card. Thereupon, she cut respondents American Express card in half with a pair of scissors. This, according to respondent,
caused him embarrassment and humiliation considering that it was done in front of his family and the other customers lined up at the check-out
counter. Hence, Nilda had to pay for the purchases using her own American Express charge card.[3]

When they returned to the Excelsior Hotel, Nilda called up petitioners Office in Hong Kong. She was able to talk to Senior Authorizer
Johnny Chen, who informed her that on November 1, 1991, a person in Hong Kong attempted to use a charge card with the same number as
respondents card. The Hong Kong American Express Office called up respondent and after determining that he was in Manila and not in Hong
Kong, placed his card in the Inspect Airwarn Support System. This is the system utilized by petitioner as a protection both for the company
and the cardholders against the fraudulent use of their charge cards. Once a card suspected of unauthorized use is placed in the system, the
person to whom the card is tendered must verify the identity of the holder. If the true identity of the card owner is established, the card is honored
and the charges are approved. Otherwise, the card is revoked or confiscated.[4]

When the Watsons sales clerk called up petitioners Hong Kong Office, its representative said he wants to talk to respondent in order
to verify the latters identity, pursuant to the procedure observed under the Inspect Airwarn Support System. However, respondent refused.
Consequently, petitioners representative was unable to establish the identity of the cardholder.[5] This led to the confiscation of respondents
card.

On March 31, 1992, respondent filed with the Regional Trial Court, Branch V, Manila, a complaint for damages against petitioner,
docketed as Civil Case No. 92-60807. He prayed for the award of moral damages and exemplary damages, as well as attorneys fees as a result
of the humiliation he suffered.

The trial court found that the inexcusable failure of defendant (petitioner herein) to inform plaintiff (respondent herein) of the
November 1, 1991 incident despite sufficient time was the proximate cause of the confiscation and cutting of plaintiffs extension card which

exposed the latter to public humiliation for which defendant should be held liable.[6] On February 20, 1995, the trial court promulgated its
Decision, the dispositive portion of which reads:

WHEREFORE, judgment is hereby rendered in favor of the plaintiff and against the defendant,
ordering the latter to pay the former the following amounts, namely:
a)

The sum of P300,000.00 as and by way of moral damages;

b)

The sum of P200,000.00 as exemplary damages;

c)

The sum of P100,000.00 as and for reasonable attorneys fees; and

d)

The costs of the suit.

SO ORDERED.[7]

Upon appeal, the Court of Appeals rendered the assailed Decision affirming the trial courts Decision with modification in the sense
that the amounts of damages awarded were reduced, thus:

WHEREFORE, in view of the foregoing, the appealed decision dated February 20, 1995 of the
Regional Trial Court of Manila, Branch V, in Civil Case No. 92-60807 is hereby AFFIRMED, subject to
modifications with respect to the amount of damages awarded, which are reduced as follows:
(a) Moral damages from P300,000.00 to P150,000.00; and
(b) Exemplary damages from P200,000.00 to P100,000.00.
No pronouncement as to costs.
SO ORDERED.

Hence, the instant petition raising the following issues:

A. Whether the lower courts gravely erred in attributing the public humiliation allegedly suffered by
Cordero to Amex.
B.
Whether the lower courts gravely erred in holding Amex liable to Cordero for moral damages, exemplary
damages and attorneys fees.[8]

Respondent filed his comment contending in the main that the petition raises questions of fact beyond this Courts domain.

While it is true that under Rule 45 of the 1997 Rules of Civil Procedure, as amended, this Court may review only errors of la w,
however, this rule admits of well-known recognized exceptions, thus:

. . . (1) the conclusion is a finding grounded entirely on speculation, surmise and conjecture; (2) the
inference made is manifestly mistaken; (3) there is grave abuse of discretion; (4) the judgment is based on a
misapprehension of facts; (5) the findings of fact are conflicting; (6) the Court of Appeals went beyond the
issues of the case and its findings are contrary to the admissions of both parties; (7) the findings of fact of the
Court of Appeals are contrary to those of the trial court; (8) said findings of fact are conclusions without citation
of specific evidence on which they are based; (9) the facts set forth in the petition are not disputed by the
respondents; and (10) the findings of fact of the Court of Appeals are premised on the supposed absence of
evidence and contradicted by the evidence on record.[9]

In this case, the inference made by the courts below is manifestly mistaken.

Therefore, we are justified in reviewing the records of

this case and rendering judgment based on our own findings.

In his complaint, respondent claimed that he suffered embarrassment and humiliation because his card was unceremoniously
confiscated and cut in half by Susan Chong of Watsons Chemist Shop.

Respondent anchors his cause of action on the following provision of the Civil Code:

Art. 2176.
Whoever by act or omission causes damage to another, there being fault or
negligence, is obliged to pay for the damage done. Such fault or negligence, if there is no pre-existing
contractual relation between the parties, is called a quasi-delict and is governed by the provisions of this
Chapter.[10]

In order that an obligation based on quasi-delict may arise, there must be no pre-existing contractual relation between the parties. But
there are exceptions. There may be an action for quasi-delict notwithstanding that there is a subsisting contract between the parties. A liability
for tort may arise even under a contract, where tort is that which breaches the contract. Stated differently, when an act which constitutes a breach
of contract would have itself constituted the source of a quasi-delictual liability, the contract can be said to have been breached by tort, thereby
allowing the rules on tort to apply.[11]

Furthermore, to constitute quasi-delict, the fault or negligence must be the proximate cause of the damage or injury suffered by the
plaintiff. Proximate cause is that cause which, in natural and continuous sequence, unbroken by any efficient intervening cause, produces the
injury and without which the result would not have occurred. Proximate cause is determined by the facts of each case upon mixed considerations
of logic, common sense, policy and precedent.[12]

According to the trial court, petitioner should have informed respondent that on November 1, 1991, a person in Hong Kong attempted
to use a charge card bearing similar number to that of respondents card; and that petitioners inexcusable failure to do so is the proximate cause
of the confiscation and cutting of [respondents] extension card which exposed the latter to public humiliation for which [petitioner] should be
held liable.[13]

We cannot sustain the trial courts conclusion.

As explained by respondent himself, he could have used his card upon verification by the sales clerk of Watson that indeed he is the
authorized cardholder. This could have been accomplished had respondent talked to petitioners representative, enabling the latter to determine
that respondent is indeed the true holder of the card. Clearly, no negligence which breaches the contract can be attributed to petitioner. If at all,
the cause of respondents humiliation and embarrassment was his refusal to talk to petitioners representative.

That respondent refused to talk to petitioners representative can be gleaned from the testimony of Mr. Chen Heng Kun a.k.a. Johnny
Chen during the deposition in Hong Kong,[14] thus:

Question No 9
: Was AEII required under its existing policies and/or membership
agreement with its cardholders to advise said cardholders of their card have been put
under the support INSPECT Strictly Question (for identification) cardmembers
before approving any charge?
Mr. Johnny Chen
: Under the existing policies of AEII, we dont have to inform the
cardholders if they have to pass the INSPECT Strictly Questions (for identification).
Question No 10
: If the answer to Q9 is in the negative, please explain why not?
Mr. Johnny Chen
: The reason why we dont have to are because, first, we are not
terminating the service to the cardholder. Second, it doesnt mean that we are going
to limit the service to the cardholder. Third, as long as the cardholder can present an
identification card of his membership, we allow him to use the card. He can show this
by telephoning the company or by presenting us his passport or travel document.
When Watson Company called AEII for authorization, AEII representative
requested that he talk to Mr. Cordero but he refused to talk to any representative
of AEII. AEII could not prove then that he is really the real card holder.

Mr. Chen Heng Kun was briefly cross-examined by respondents counsel, thus:

Question No 10
: Question 9 is objected to since the best evidence would be the
membership agreement between plaintiffs and AEII.

Significantly, paragraph 16 of the Cardmember Agreement signed by respondent provides:

16.

THE CARD REMAINS OUR PROPERTY

The Card remains our property and we can revoke your right and the right of ay Additional
Cardmember to use it at any time, we can do this with or without giving you notice. If we have revoked the Card
without cause, we will refund a proportion of your annual Card Account fee. We may list revoked Cards in our
Cancellation Bulletin, or otherwise inform Establishments that the Card issued to you and, if you are the basic
Cardmember, any Additional Cards have been revoked or cancelled.
If we revoke the card or it expires, you must return it to us if we request. Also, if any Establishment
asks you to surrender an expired or revoked Card, you must do so. You may not use the Card after it has
expired or after it has been revoked.
The revocation, repossession or request for the return of the Card is not, and shall not constitute any
reflection of your character or credit-worthiness and we shall not be liable in any way for any statement made by
any person requesting the return or surrender of the Card.[15]

To be sure, pursuant to the above stipulation, petitioner can revoke respondents card without notice, as was done here. It bears
reiterating that the subject card would not have been confiscated and cut had respondent talked to petitioners representative and identified
himself as the genuine cardholder. It is thus safe to conclude that there was no negligence on the part of petitioner and that, therefore, it cannot
be held liable to respondent for damages.

WHEREFORE, the petition is GRANTED.

The assailed Decision of the Court of Appeals in CA-G.R. CV No. 51671 is

REVERSED.

SO ORDERED.

Socorro Ramirez vs. CA and Garcia [G.R. No. 93833. September 28, 1995]
15 Aug

Ponente: KAPUNAN, J.
FACTS:

Petitioner made a secret recording of the conversation that was part of a civil case filed in the
Regional Trial Court of Quezon City alleging that the private respondent, Ester S. Garcia, vexed,
insulted and humiliated her in a hostile and furious mood and in a manner offensive to
petitioners dignity and personality, contrary to morals, good customs and public policy..
Private respondent filed a criminal case before the Regional Trial Court of Pasay City for
violation of Republic Act 4200, entitled An Act to prohibit and penalize wire tapping and other
related violations of private communication, and other purposes. Petitioner filed a Motion to
Quash the Information. The trial court granted the said motion. The private respondent filed a
Petition for Review on Certiorari with the Supreme Court, which referred the case to the Court
of Appeals in a Resolution. Respondent Court of Appeals promulgated its decision declaring the
trial courts order as null and void, after subsequently denied the motion for reconsideration by
the petitioner.
ISSUE:
Whether or not the applicable provision of Republic Act 4200 does not apply to the taping of a
private conversation by one of the parties to the conversation.
HELD:
NO. Petition denied. Costs against petitioner.
RATIO:
Legislative intent is determined principally from the language of the statute.
The unambiguity of the express words of the provision, taken together with the above-quoted
deliberations from the Congressional Record, therefore plainly supports the view held by the
respondent court that the provision seeks to penalize even those privy to the private
communications. Where the law makes no distinctions, one does not distinguish.
[P]etitioners contention that the phrase private communication in Section 1 of R.A. 4200 does
not include private conversations narrows the ordinary meaning of the word communication
to a point of absurdity.
ITLE: Tenchavez vs. Escano
CITATION: 15 SCRA 355
FACTS:
27 years old Vicenta Escano who belong to a prominent Filipino Family of Spanish ancestry got
married on Feburary 24, 1948 with Pastor Tenchavez, 32 years old engineer, and ex-army officer
before Catholic chaplain Lt. Moises Lavares. The marriage was a culmination of the love affair
of the couple and was duly registered in the local civil registry. A certain Pacita Noel came to be
their match-maker and go-between who had an amorous relationship with Tenchavez as written
by a San Carlos college student where she and Vicenta are studying. Vicenta and Pastor are
supposed to renew their vows/ marriage in a church as suggested by Vicentas parents. However

after translating the said letter to Vicentas dad , he disagreed for a new marriage. Vicenta
continued leaving with her parents in Cebu while Pastor went back to work in Manila.
Vicenta applied for a passport indicating that she was single and when it was approved she left
for the United States and filed a complaint for divorce against Pastor which was later on
approved and issued by the Second Judicial Court of the State of Nevada. She then sought for
the annulment of her marriage to the Archbishop of Cebu. Vicenta married Russell Leo Moran,
an American, in Nevada and has begotten children. She acquired citizenship on August 8, 1958.
Petitioner filed a complaint against Vicenta and her parents whom he alleged to have dissuaded
Vicenta from joining her husband.

ISSUE: Whether the divorce sought by Vicenta Escano is valid and binding upon courts of the
Philippines.

HELD:
Civil Code of the Philippines does not admit divorce. Philippine courts cannot give recognition
on foreign decrees of absolute divorce between Filipino citizens because it would be a violation
of the Civil Code. Such grant would arise to discrimination in favor of rich citizens who can
afford divorce in foreign countries. The adulterous relationship of Escano with her American
husband is enough grounds for the legal separation prayed by Tenchavez. In the eyes of
Philippine laws, Tenchavez and Escano are still married. A foreign divorce between Filipinos
sought and decreed is not entitled to recognition neither is the marriage of the divorcee entitled to
validity in the Philippines. Thus, the desertion and securing of an invalid divorce decree by one
spouse entitled the other for damages.
WHEREFORE, the decision under appeal is hereby modified as follows;
(1) Adjudging plaintiff-appellant Pastor Tenchavez entitled to a decree of legal separation from
defendant Vicenta F. Escao;
(2) Sentencing defendant-appellee Vicenta Escao to pay plaintiff-appellant Tenchavez the
amount of P25,000 for damages and attorneys' fees;
(3) Sentencing appellant Pastor Tenchavez to pay the appellee, Mamerto Escao and the estate of
his wife, the deceased Mena Escao, P5,000 by way of damages and attorneys' fees.

Lagon vs. Court of AppealsCorona, J.March 18, 2005

Keywords: Sultan Kudarat property; Oblicon case on tortuous interference
Nature: Petition for review on certiorari

FACTS:

Jose Lagon purchased from the estate of Bai Tonina Sepi two parcels of land located at Tacurong,
Sultan Kudarat, which covers commercial buildings.
Said commercial buildings were constructed by the unnamed respondent pursuant to a contract of
lease between the respondent and the late Bai Tonina Sepi Mengelen Guibar wherein it was
stipulated that the private respondent would put up a commercial building which would be leased to
new tenants. The rentals to be paid by those tenants would answer for the rent private respondent
was obligated to pay Bai Tonina Sepi for the lease of the land. It was alleged by the unnamed
respondent that the lease contract ended in 1974, but it was renewed since the construction of the
commercial buildings had yet to be completed.
When Bai Tonina Sepi died, respondent started remitting his rent to the administrator of the
deceaseds estate until he was advised to stop collecting rentals from the tenants because the property
had been sold to Jose Lagon, and Jose Lagon had been collecting the same.
Respondent thus filed a complaint against Lagon, accusing Lagon of inducing the heirs of Bai Tonina
Sepi to sell the property to him, thereby violating his leasehold rights over it. Lagon denied that he
induced the heirs to sell him the property, contending that the heirs were in dire need of money to
pay off the obligations of the deceased and this was what led the heirs to sell him the property.
Lagon also maintained that he didnt interfere with private respondents leasehold rights as there was
no lease contract covering the property when he purchased it; that his personal investigation and
inquiry revealed no claims or encumbrances on the subject lots.
Lagon further alleged that before he bought the property, he went to Atty. Fajardo who allegedly
notarized the renewed lease contract but the contract shown to him was unsigned. To refute the
existence of a lease contract, petitioner presented in court a certification from the Office of the Clerk
of Court confirming that no record of any lease contract had been entered into their files. Petitioner
added that he only learned of the alleged lease contract when he was informed that private
respondent was collecting rent from the tenants of the buildings.
Finding the complaint for tortuous interference to be unwarranted, Lagon filed his counterclaim for
actual and moral damages.
Lower Court: ruled in favor of unnamed private respondent, holding the lease contract authentic
and genuine.
Court of Apeals: affirmed Lower Courts decision with modifications.

ISSUE:

WON the purchase by Lagon of the subject property, during the supposed existence of the private
respondents lease contract with the late Bai Tonina Sepi, constituted tortuous interference for which Lagon
should be held liable for damages.

HELD:

No, the interference of Lagon was with a legal justification (in furtherance of a personal financial interest) and
without bad faith.

RATIO:

Elements of Tortuous Interference with contractual relations (So Ping Bun v. CA):
1. Existence of a valid contract
2. Knowledge on the part of the third person of the existence of the contract
3. Interference of the third person without legal justification or excuse
1. Existence of a valid contract: The Court declared that absent a clear, strong and convincing
evidence, a notarized document continues to be a prima facie evidence of the facts that gave rise to
its execution and delivery. This brought the Court to rule that the notarized copy of lease contract
presented in court appeared to be an incontestable proof that Bai Tonin Sepi and private respondent
renewed their contract.
2. Knowledge on the part of the interfere that the contract exists: The Court ruled that Lagon had
no knowledge of the lease contract as he even conducted his own personal investigation and inquiry,
and unearthed no suspicious circumstance that would have made a cautious man probe deeper and
watch out for any conflicting claim over the property; that an examination of the entire property title
bore no indication of the leasehold interest of private respondent and that even the registry of
property had no record of the same.
3. Interference without legal justification or excuse: According to So Ping Bun v. CA, petitioner may
be held liable only when there was no legal justification or excuse for his action or when his conduct
was stirred by a wrongful motive. To sustain a case for tortuous interference, the defendant must
have acted with malice or must have been driven by purely impious reasons to injure the plaintiff.
Even assuming that private respondent was able to prove the renewal of his lease contract
with Bai Tonina Sepi, the fact was that he was unable to prove malice or bad faith on the part of
petitioner in purchasing the property. Therefore, the claim of tortuous interference was never
established.
The disquisition in So Ping Bun applies squarely in this case. Lagons purchase of the subject
property was merely an advancement of his financial or economic interests, absent any proof that he
was enthused by improper motives. In the very early case of Gilchrist v. Cuddy, the Court declared that
a person is not a malicious interferer if his conduct is impelled by a proper business interest. In other
words, a financial or profit motivation will not necessarily make a person an officious interferer liable
for damages as long as there is no malice or bad faith involved.

This case is one of damnum absque injuria or damage without injury.

Injury- legal invasion of a legal right
Damage- the hurt, loss or harm which results from the injury
BPI Card Corp vs CA: There can be damage without injury where the loss or harm is not the result
of a violation of a legal duty.

Attorneys Fees, Actual and Moral Damages cannot be awarded.

Dispositive: Petition is GRANTED. CAs decision is REVERSED and SET ASIDE.

G.R. No. 106341 September 2, 1994
DELFIN G. VILLARAMA, petitioner,
vs.
NATIONAL LABOR RELATIONS COMMISSION AND GOLDEN DONUTS, INC., respondents.
Rogelio R. Udarbe for petitioner.
Armando V. Ampil for private respondent.

PUNO, J.:
Sexual harassment abounds in all sick societies. It is reprehensible enough but more so when inflicted by those with moral ascendancy over
their victims. We rule that it is a valid cause for separation from service.
First, the facts. On November 16, 1987, petitioner DELFIN VILLARAMA was employed by private respondent GOLDEN DONUTS, INC., as
its Materials Manager. His starting salary was P6,500.00 per month, later increased to P8,500.00.
On July 15, 1989, petitioner Villarama was charged with sexual harassment by Divina Gonzaga, a clerk-typist assigned in his department.
The humiliating experience compelled her to resign from work. Her letter-resignation, dated July 15, 1989, reads:
MR. LEOPOLDO H. PRIETO
President
Golden Donuts, Inc.
Dear Sir:
I would like to tender my resignation from my post as Clerk Typist of Materials Department effective immediately.
It is really my regret to leave this company which has given me all the opportunity I long desired. My five (5) months
stay in the company have been very gratifying professionally and financially and I would not entertain the idea of
resigning except for the most shocking experience I have had in my whole life.
Last Friday, July 7, 1989, Mr. Delfin Villarama and Mr. Jess de Jesus invited all the girls of Materials Department for a
dinner when in (sic) the last minute the other three (3) girls decided not to join the groupp anymore. I do (sic) not have
second thought(s) in accepting their invitation for they are my colle(a)gues and I had nothing in mind that would in any
manner prompt me to refuse to what appeared to me as a simple and cordial invitation. We went to a restaurant along
Makati Avenue where we ate our dinner. Mr. Villarama, Mr. Olaybar and Mr. Jess de Jesus were drinking while we
were eating and (they) even offered me a few drinks and when we were finished, they decided to bring me home. While
on my way, I found out that Mr. Villarama was not driving the way to my house. I was wondering why we were taking
the wrong way until I found out that we were entering a motel. I was really shock(ed). I did not expect that a somewhat
reputable person like Mr. Villarama could do such a thing to any of his subordinates. I should have left the company
without any word but I feel that I would be unfair to those who might be similarly situated. I hope that you would find
time to investigate the veracity of my allegations and make each (sic) responsible for is own deed. (emphasis ours)

Thank you very much and more power.

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The letter prompted Mr. Leopoldo Prieto, President of Golden Donuts, Inc., to call petitioner to a meeting on August 4, 1989. Petitioner was
then required to explain the letter against him. It appears that petitioner agreed to tender his resignation. Private respondent moved swiftly to
separate petitioner. Thus, private respondent approved petitioner's application for leave of absence with pay from August 5-28, 1989. It also
issued an inter-office memorandum, dated August 4, 1989, advising "all concerned" that petitioner was no longer connected with the
1
company effective August 5, 1989. Two (2) days later, or on August 7, 1989, Mr. Prieto sent a letter to petitioner

confirming their agreement that petitioner would be officially separated from the private respondent. The
letter reads:
Dear Mr. Villarama:
This is to officially confirm our discussion last Friday, August 4, 1989, regarding your
employment with us. As per our agreement, you will be officially separated from the
company effective August 23, 1989.
May I, therefore, request you to please submit or send us your resignation letter on or
before the close of business hours of August 22, 1989.
Please see the Personnel & Industrial Relations Office for your clearance.
Very truly yours,

(SGD). LEOPOLDO H.
PRIETO, JR.
President
In the interim, petitioner had a change of mind. In a letter dated August 16, 1989, petitioner sought
reconsideration of the management's decision to terminate him, viz.:
DEAR SIR:
MAY I REQUEST FOR A RECONSIDERATION ON THE DECISION HANDED DURING
OUR MEETING OF AUGUST 4, 1989, TERMINATING MY SERVICES WITH THE
COMPANY EFFECTIVE AUGUST 5, 1989.
THE SIGNIFICANT CONTRIBUTION OF THE MATERIALS DEPARTMENT, WHICH I
HAD BEEN HEADING FOR THE PAST 21 MONTHS, TO THE PERFORMANCE OF
THE COMPANY FAR OUTWEIGHS THE ERROR THAT I HAD COMMITTED. AN
ERROR THAT MUST NOT BE A BASIS FOR SUCH A DRASTIC DECISION.
AS I AM STILL OFFICIALLY ON LEAVE UNTIL THE 29th, OF THIS MONTH, MAY I
EXPECT THAT I WILL RESUME MY REGULAR DUTY ON THE 29th?
ANTICIPATING YOUR FAVORABLE REPLY.
VERY TRULY YOURS,
(SGD.) DELFIN G.
VILLARAMA
For his failure to tender his resignation, petitioner was dismissed by private respondent on August 23,
2
1989. Feeling aggrieved, petitioner filed an illegal dismissal case against private respondent.
In a decision dated January 23, 1991, Labor Arbiter Salimar V. Nambi held that due process was not
observed in the dismissal of petitioner and there was no valid cause for dismissal. Private respondent
GOLDEN DONUTS, INC. was ordered to: (1) reinstate petitiner DELFIN G. VILLARAMA to his former
position, without loss of seniority rights, and pay his backwages at the rate of P8,500.00 per month from
August 1989, until actual reinstatement; (2) pay petitioner the amount of P24,866.66, representing his
unused vacation leave and proportionate 13th month pay; (3) pay petitioner P100,000.00, as moral
damages, and P20,000.00, as exemplary damages; and (3) pay the attorney's fees equivalent to ten
percent of the entire monetary award.
Private respondent appealed to the National Labor Relations Commission. On July 16, 1992, public
respondent reversed the decision of the labor arbiter. The dispositive portion of its Resolution reads:
WHEREFORE, premises considered, the decision appealed from is hereby set aside and
a new one entered declaring the cause of dismissal of complainant as valid; however, for
the procedural lapses, respondent (Golden Donuts, Inc.) is hereby ordered to indemnify
complainant (petitioner) in the form of separation pay equivalent to two month's (sic) pay
(for his two years of service, as appears (sic) in the records), or the amount of
P17,000.00.
SO ORDERED.
Hence, this petition where the following arguments are raised:

THE ALLEGED IMMORALITY CHARGED AGAINST PETITIONER IS NOT

SUPPORTED BY SUBSTANTIAL EVIDENCE ON RECORD.
THE MERE ADMISSION OF THE VIOLATION OF DUE PROCESS ENTITLES
PETITIONER TO REINSTATEMENT.
IN ANY EVENT, PETITIONER IS ENTITLED TO HIS SALARIES FROM RECEIPT BY
PRIVATE RESPONDENT OF THE DECISION OF THE LABOR ARBITER ON 4
FEBRUARY 1991 TO (sic) AT LEAST THE PROMULGATION OF THE ASSAILED
RESOLUTION ON (sic) 16 JULY 1992.
IN ANY EVENT, PETITIONER IS ALSO ENTITLED TO HIS UNUSED VACATION
LEAVE AND PROPORTIONATE 13TH MONTH PAY IN THE TOTAL AMOUNT OF
P24,866.66, ADJUDGED BY THE LABOR ARBITER.
THE AWARD OF MORAL AND EXEMPLARY DAMAGES AND ATTORNEY'S FEES BY
THE LABOR ARBITER IS JUSTIFIED.
We affirm with modification the impugned Resolution.
At the outset, we note that the Petition was not accompanied by a certified true copy of the assailed July
3
16, 1992 NLRC Resolution, in violation of Revised Circular No. 1-88. Neither was there any certification
under oath that "petitioner has not commenced any other action or proceeding involving the same issues
in the Supreme Court, the Court of Appeals or different Divisions thereof, or any other tribunal or agency,
and that to the best of his knowledge, no such action or proceeding is pending in the Supreme Court, the
Court of Appeals, or different Divisions thereof or any other tribunal or agency," as required under Circular
No. 28-91. It is settled that non-compliance with the provisions of Revised Circular No. 1-88 and Circular
4
No. 28-91, would result in the outright dismissal of the petition.
In addition, under Rule 65 of the Revised Rules of Court, the special civil action for certiorari is available
in cases where the concerned "tribunal, board or officer exercising judicial functions had acted without or
in excess of its jurisdiction, or with grave abuse of discretion and there is no appeal, nor any plain,
speedy, and adequate remedy in the ordinary course of law." In Antonio v. National Labor Relations
5
Commission, we held that the plain and adequate remedy expressly provided by law is a motion for
reconsideration of the assailed decision, and the resolution thereof, which is not only expected to be but
would actually have provided adequate and more speedy remedy than a petition for certiorari. The
rationale for this requirement is to enable the court or agency concerned to pass upon and correct its
6
mistakes without the intervention of a higher court. In this case, the assailed July 16, 1992 Resolution of
7
the National Labor Relations Commission was received by petitioner's counsel on July 23, 1992.
Petitioner did not file a motion for reconsideration, instead, he commenced this special civil action for
certiorari. Be that as it may, we allowed the petition to enable us to rule on the significant issues raised
before us, viz.: (1) whether or not petitioner's right to procedural due process was violated, and (2)
whether or not he was dismissed for a valid or just cause.
The procedure for terminating an employee is found in Article 277 (b) of the Labor Code, viz.:
xxx xxx xxx
(b) Subject to the constitutional right of workers to security of tenure and their right to be
protected against dismissal except for a just and authorized cause and without prejudice
to the requirement of notice under Article 283 of this Code the employer shall furnish the
worker whose employment is sought to be terminated a written notice containing a
statement of the causes for termination and shall afford the latter ample opportunity to be
heard and to defend himself with the assistance of his counsel if he so desires in

accordance with company rules and regulations promulgated pursuant to guidelines set
by the Department of Labor and Employment. Any decision taken by the employer shall
be without prejudice to the right of the worker to contest the validity or legality of his
dismissal by filing a complaint with the regional branch of the National Labor Relations
Commission. The burden of proving that the termination was for a valid or authorized
cause shall rest on the employer. . . . (emphasis supplied)
This procedure protects not only rank-and-file employees but also managerial employees. Both have the
right to security of tenure as provided for in Section 3, Article XIII of the 1987 Constitution. In the case at
bench, petitioner decided to seek reconsideration of the termination of his service thru his August 16,
1989 letter. While admitting his error, he felt that its gravity did not justify his dismissal. Considering this
stance, and in conformity with the aforequoted Article 277 (b) of the Labor Code, petitioner should have
been formally charged and given an opportunity to refute the charges. Under the facts in field, we hold
that petitioner was denied procedural due process.
We now come to the more important issue of whether there was valid cause to terminate petitioner.
Petitioner claims that his alleged immoral act was unsubstantiated, hence, he could not be dismissed. We
hold otherwise. The records show that petitioner was confronted with the charge against him. Initially, he
voluntarily agreed to be separated from the company. He took a leave of absence preparatory to this
separation. This agreement was confirmed by the letter to him by Mr. Prieto dated August 7, 1989. A few
days after, petitioner reneged on the agreement. He refused to be terminated on the ground that the
seriousness of his offense would not warrant his separation from service. So he alleged in his letter to Mr.
Prieto dated August 16, 1989. But even in this letter, petitioner admitted his "error" vis-a-vis Miss
Gonzaga. As a manager, petitioner should know the evidentiary value of his admissions. Needless to
stress, he cannot complain there was no valid cause for his separation.
Moreover, loss of trust and confidence is a good ground for dismissing a managerial employee. It can be
proved by substantial evidence which is present in the case at bench. As further observed by the Solicitor
General:
. . . assuming arguendo that De Jesus and Gonzaga were sweethearts and that petitioner
merely acceded to the request of the former to drop them in the motel, petitioner acted in
collusion with the immoral designs of De Jesus and did not give due regard to Gonzaga's
feeling on the matter and acted in chauvinistic disdain of her honor, thereby justifying
public respondent's finding of sexual harassment. Thus, petitioner not only failed to act
accordingly as a good father of the family because he was not able to maintain his moral
ascendancy and authority over the group in the matter of morality and discipline of his
subordinates, but he actively facilitated the commission of immoral conduct of his
subordinates by driving his car into the motel.
(Comment, April 29, 1993, p. 9)
As a managerial employee, petitioner is bound by a more exacting work ethics. He failed to live
up to this higher standard of responsibility when he succumbed to his moral perversity. And when
such moral perversity is perpetrated against his subordinate, he provides justifiable ground for his
dismissal for lack of trust and confidence. It is the right, nay, the duty of every employer to protect
its employees from over sexed superiors.
To be sure, employers are given wider latitude of discretion in terminating the employment of managerial
8
employees on the ground of lack of trust and confidence.
We next rule on the monetary awards due to petitioner. The public respondent erred in awarding
separation pay of P17,000.00 as indemnity for his dismissal without due process of law. The award of

separation pay is proper in the cases enumerated under Articles 283 and 284 of the Labor Code, and in
cases where there is illegal dismissal (for lack of valid cause) and reinstatement is no longer feasible. But
this is not to state that an employer cannot be penalized for failure to give formal notice and conduct the
10
11
necessary investigation before dismissing an employee. Thus, in Wenphil vs. NLRC and Pacific Mills,
12
Inc. vs. Alonzo, this Court awarded P1,000.00 as penalty for non-observance of due process.
Petitioner is not also entitled to moral and exemplary damages. There was no bad faith or malice on the
13
part of private respondent in terminating the services of petitioner.
Petitioner is entitled, however, to his unused vacation/sick leave and proportionate 13th month pay, as
held by the labor arbiter. These are monies already earned by petitioner and should be unaffected by his
separation from the service.
WHEREFORE, premises considered, the assailed resolution of public respondent is hereby AFFIRMED
WITH MODIFICATION that the award of separation pay is DELETED. Private respondent is ordered to
pay petitioner the amount of P1,000.00 for non-observance of due process, and the equivalent amount of
his unused vacation/sick leave and proportionate 13th month pay. No pronouncement as to costs.
SO ORDERED.

Liwayway Vinzons-Chato vs. Fortune Tobacco, Corp.

G.R. No. 141309, June 19, 2007

FACTS:
This is a case for damages under Article 32 of the Civil Code filed by Fortune against Liwayway as CIR.
On June 10, 1993, the legislature enacted RA 7654, which provided that locally manufactured cigarettes
which are currently classified and taxed at 55% shall be charged an ad valorem tax of 55% provided
that the maximum tax shall not be less than Five Pesos per pack. Prior to effectivity of RA 7654,
Liwayway issued a rule, reclassifying Champion, Hope, and More (all manufactured by Fortune) as
locally manufactured cigarettes bearing foreign brand subject to the 55% ad valorem tax. Thus, when RA
7654 was passed, these cigarette brands were already covered.
In a case filed against Liwayway with the RTC, Fortune contended that the issuance of the rule violated
its constitutional right against deprivation of property without due process of law and the right to equal
protection of the laws.
For her part, Liwayway contended in her motion to dismiss that respondent has no cause of action
against her because she issued RMC 37-93 in the performance of her official function and within the
scope of her authority. She claimed that she acted merely as an agent of the Republic and therefore the
latter is the one responsible for her acts. She also contended that the complaint states no cause of
action for lack of allegation of malice or bad faith.

The order denying the motion to dismiss was elevated to the CA, who dismissed the case on the ground
that under Article 32, liability may arise even if the defendant did not act with malice or bad faith.
Hence this appeal.
ISSUES:

Whether or not a public officer may be validly sued in his/her private capacity for acts done in
connection with the discharge of the functions of his/her office
Whether or not Article 32, NCC, should be applied instead of Sec. 38, Book I, Administrative
Code

HELD:
On the first issue, the general rule is that a public officer is not liable for damages which a person may
suffer arising from the just performance of his official duties and within the scope of his assigned tasks.
An officer who acts within his authority to administer the affairs of the office which he/she heads is not
liable for damages that may have been caused to another, as it would virtually be a charge against the
Republic, which is not amenable to judgment for monetary claims without its consent. However, a
public officer is by law not immune from damages in his/her personal capacity for acts done in bad faith
which, being outside the scope of his authority, are no longer protected by the mantle of immunity for
official actions.
Specifically, under Sec. 38, Book I, Administrative Code, civil liability may arise where there is bad faith,
malice, or gross negligence on the part of a superior public officer. And, under Sec. 39 of the same Book,
civil liability may arise where the subordinate public officers act is characterized by willfulness or
negligence. In Cojuangco, Jr. V. CA, a public officer who directly or indirectly violates the constitutional
rights of another, may be validly sued for damages under Article 32 of the Civil Code even if his acts
were not so tainted with malice or bad faith.
Thus, the rule in this jurisdiction is that a public officer may be validly sued in his/her private capacity for
acts done in the course of the performance of the functions of the office, where said public officer: (1)
acted with malice, bad faith, or negligence; or (2) where the public officer violated a constitutional right
of the plaintiff.
On the second issue, SC ruled that the decisive provision is Article 32, it being a special law, which
prevails over a general law (the Administrative Code).
Article 32 was patterned after the tort in American law. A tort is a wrong, a tortious act which has
been defined as the commission or omission of an act by one, without right, whereby another receives

some injury, directly or indirectly, in person, property or reputation. There are cases in which it has been
stated that civil liability in tort is determined by the conduct and not by the mental state of the
tortfeasor, and there are circumstances under which the motive of the defendant has been rendered
immaterial. The reason sometimes given for the rule is that otherwise, the mental attitude of the
alleged wrongdoer, and not the act itself, would determine whether the act was wrongful. Presence of
good motive, or rather, the absence of an evil motive, does not render lawful an act which is otherwise
an invasion of anothers legal right; that is, liability in tort in not precluded by the fact that defendant
acted without evil intent.

Silahis International Hotel, Inc vs Soluta

G.R. No. 163087 February 20, 2006
SILAHIS INTERNATIONAL HOTEL, INC. and JOSE MARCEL PANLILIO,
Petitioners,
vs.
ROGELIO S. SOLUTA, JOSELITO SANTOS, EDNA BERNATE, VICENTA DELOLA,
FLORENTINO MATILLA, and GLOWHRAIN-SILAHIS UNION CHAPTER,
Respondents.
FACTS: Loida Somacera (Loida), a laundrywoman of the hotel, stayed overnight at the female
locker room at the basement of the hotel. At dawn, she heard pounding sounds outside, she saw
five men in barong tagalog whom she failed to recognize but she was sure were not employees of
the hotel, forcibly opening the door of the union office. In the morning, as union officer Soluta
was trying in vain to open the door of the union office, Loida narrated to him what she had
witnessed at dawn.
Soluta immediately lodged a complaint before the Security Officer. And he fetched a locksmith.
At that instant, men in barong tagalog armed with clubs arrived and started hitting Soluta and his
companions. Panlilio thereupon instructed Villanueva to force open the door, and the latter did.
Once inside, Panlilio and his companions began searching the office, over the objection of Babay
who even asked them if they had a search warrant. A plastic bag was found containing marijuana
flowering tops.
As a result of the discovery of the presence of marijuana in the union office and after the police
conducted an investigation of the incident, a complaint against the 13 union officers was filed
before the Fiscals Office of Manila. RTC acquitted the accused. On appeal, the CA affirmed
with modification the decision of the trial court.
ISSUE: Whether respondent individual can recover damages for violation of constitutional
rights.
RULING: Article 32, in relation to Article 2219(6) and (10) of the Civil Code, allows so.
ART. 32. Any public officer or employee, or any private individual, who directly or indirectly
obstructs, defeats, violates or in any manner impedes or impairs any of the following rights and
liberties of another person shall be liable to the latter for damages: x x x x

In the present case, petitioners had, by their own claim, already received reports in late 1987 of
illegal activities and Maniego conducted surveillance. Yet, in the morning of January 11, 1988,
petitioners and their companions barged into and searched the union office without a search
warrant, despite ample time for them to obtain one.
The course taken by petitioners and company stinks in illegality. Petitioners violation of
individual respondents constitutional right against unreasonable search thus furnishes the basis
for the award of damages under Article 32 of the Civil Code. For respondents, being the lawful
occupants of the office had the right to raise the question of validity of the search and seizure.
Article 32 speaks of an officer or employee or person "directly or indirectly" responsible for the
violation of the constitutional rights and liberties of another. Hence, it is not the actor alone who
must answer for damages under Article 32; the person indirectly responsible has also to answer
for the damages or injury caused to the aggrieved party. Such being the case, petitioners, together
with Maniego and Villanueva, the ones who orchestrated the illegal search, are jointly and
severally liable for actual, moral and exemplary damages to herein individual respondents in
accordance with the earlier-quoted pertinent provision of Article 32, in relation to Article
2219(6) and (10) of the Civil Code which provides:
Art. 2219. Moral damages may be recovered in the following and analogous cases, among
others, (6) Illegal search and (10) Acts and action referred to in Articles 21, 26, 27, 28, 29, 30,
32, 34 and 35.
DECISION: Denied.
MVRS Publications vs. Islamic Dawah Council of the Philippines, G.R. No. 135306, Jan. 28,
2003
FACTS: Islamic DaWah Council of the Philippines, Inc., a local federation of more than 70
Muslim religious organizations, filed a complaint for damages against MVRS Publications, Inc.,
arising from an article, which reads:
"ALAM BA NINYO?
Na ang mga baboy at kahit anong uri ng hayop sa Mindanao ay hindi kinakain ng mga Muslim?
Para sa kanila ang mga ito ay isang sagradong bagay. Hindi nila ito kailangang kainin kahit na
sila pa ay magutom at mawalan ng ulam sa tuwing sila ay kakain. Ginagawa nila itong Diyos at
sinasamba pa nila ito sa tuwing araw ng kanilang pangingilin lalung-lalo na sa araw na tinatawag
nilang 'Ramadan'."
ISSUE:

W/N this is an action for defamation (libel) or an emotional distress tort action

HELD:

The Supreme Court held that there is no cause of action for defamation.
DEFAMATION DEFINED:
Defamation, which includes libel and slander, means the offense of injuring a person's character,
fame or reputation through false and malicious statements. It is that which tends to injure
reputation or to diminish the esteem, respect, good will or confidence in the plaintiff or to excite
derogatory feelings or opinions about the plaintiff. It is the publication of anything which is
injurious to the good name or reputation of another or tends to bring him into disrepute.
Defamation is an invasion of a relational interest since it involves the opinion which others in the
community may have, or tend to have, of the plaintiff.
GROUP LIBEL/DEFAMATION:
where the defamation is alleged to have been directed at a group or class, it is essential that the
statement must be so sweeping or all-embracing as to apply to every individual in that group or class, or
sufficiently specific so that each individual in the class or group can prove that the defamatory
statement specifically pointed to him, so that he can bring the action separately, if need be.
The statements published by petitioners in the instant case did not specifically identify nor refer to any
particular individuals who were purportedly the subject of the alleged libelous publication. Respondents
can scarcely claim to having been singled out for social censure pointedly resulting in damages.
The action likewise is not for emotional distress.
EMOTIONAL DISTRESS v. DEFAMATION:
Primarily, an "emotional distress" tort action is personal in nature, i.e., it is a civil action filed by an
individual to assuage the injuries to his emotional tranquility due to personal attacks on his character. It
has no application in the instant case since no particular individual was identified in the disputed article
of Bulgar. Also, the purported damage caused by the article, assuming there was any, falls under the
principle of relational harm which includes harm to social relationships in the community in the form of
defamation; as distinguished from the principle of reactive harm which includes injuries to individual
emotional tranquility in the form of an infliction of emotional distress. In their complaint, respondents
clearly asserted an alleged harm to the standing of Muslims in the community, especially to their
activities in propagating their faith in Metro Manila and in other non-Muslim communities in the
country. It is thus beyond cavil that the present case falls within the application of the relational harm
principle of tort actions for defamation, rather than the reactive harm principle on which the concept of
emotional distress properly belongs.

WHEN PLAINTIFF MAY RECOVER:

To recover for the intentional infliction of emotional distress the plaintiff must show that: (a) The
conduct of the defendant was intentional or in reckless disregard of the plaintiff; (b) The conduct was
extreme and outrageous; (c) There was a causal connection between the defendant's conduct and the
plaintiff's mental distress; and, (d) The plaintiff's mental distress was extreme and severe.
"Extreme and outrageous conduct" means conduct that is so outrageous in character, and so extreme in
degree, as to go beyond all possible bounds of decency, and to be regarded as atrocious, and utterly
intolerable in civilized society. The defendant's actions must have been so terrifying as naturally to
humiliate, embarrass or frighten the plaintiff.
"Emotional distress" means any highly unpleasant mental reaction such as extreme grief, shame,
humiliation, embarrassment, anger, disappointment, worry, nausea, mental suffering and anguish,
shock, fright, horror, and chagrin. "Severe emotional distress," in some jurisdictions, refers to any type
of severe and disabling emotional or mental condition which may be generally recognized and
diagnosed by professionals trained to do so, including posttraumatic stress disorder, neurosis, psychosis,
chronic depression, or phobia. The plaintiff is required to show, among other things, that he or she has
suffered emotional distress so severe that no reasonable person could be expected to endure it; severity
of the distress is an element of the cause of action, not simply a matter of damages.
Any party seeking recovery for mental anguish must prove more than mere worry, anxiety, vexation,
embarrassment, or anger. Liability does not arise from mere insults, indignities, threats, annoyances,
petty expressions, or other trivialities. In determining whether the tort of outrage had been committed,
a plaintiff is necessarily expected and required to be hardened to a certain amount of criticism, rough
language, and to occasional acts and words that are definitely inconsiderate and unkind; the mere fact
that the actor knows that the other will regard the conduct as insulting, or will have his feelings hurt, is
not enough.

CHIANG YIA MIN, petitioner, vs. COURT OF APPEALS, RIZAL COMMERCIAL

BANKING CORPORATION, PAPERCON (PHILIPPINES), INC. and TOM PEK, respondents.
DECISION
GONZAGA-REYES, J.:

The instant petition concerns the recovery of a sum of money and damages, initiated by herein
petitioner, a Chinese national based in Taiwan, against Rizal Commercial Banking Corporation
(hereafter, RCBC or respondent bank) before Branch 151i[1] of the Regional Trial Court of
Pasig City. The case, docketed as Civil Case No. 54694, sought the collection of
US$100,000.00, or its equivalent per Central Bank rates, legal interest, moral and exemplary
damages, and attorneys fees.

Petitioners version of the case, which was upheld by the trial court, alleges that the said
US$100,000.00 was sent by Hang Lung Bank Ltd. of Hong Kong on February 7, 1979 through
the Pacific Banking Corporation to respondent banks head office.ii[2] The remittance was for
petitioners own account and was intended to qualify him as a foreign investor under Philippine
laws. As found by the trial court, it was sent by petitioner himself prior to his arrival in the
Philippines.iii[3]
When petitioner checked on his money sometime in mid-1985, he found out that that the dollar
deposit was transferred to the Shaw Boulevard branch of respondent bank and converted to a
peso account, which had a balance of only P1,362.10 as of October 29, 1979. A letter of
respondent bank dated August 9, 1985 stated that petitioners Current Account No. 12-2009 was
opened on February 8, 1979, with an initial deposit of P729,752.20; a total of P728,390.00 was
withdrawn by way of five checks respectively dated February 13, 19 and 23, 1979 and October 5
and 29, 1979, apparently issued by petitioner in favor of Papercon (Phils.), Inc., (hereafter,
Papercon) one of the herein private respondents and a business venture of Tom Pek.iv[4] Thus,
the balance of the account was reduced to P1,362.10 as of October 29, 1979 and no transactions
were made on the account since.v[5] In the same letter, the bank stated that it was no longer able
to locate the microfilm copies of the issued checks, specimen signature cards, and other records
related to the questioned account, since the account had been inactive for more than five years.
Petitioner insisted that he did not cause the transfer of his money to the Shaw Boulevard branch
of RCBC, as his instructions in the telegraphic transfer were for the money to be remitted to the
RCBC head office in Makati, nor its conversion to pesos and the subsequent withdrawals. Nor
did he authorize anyone to perform these acts.
In its Answer, respondent bank alleged that there is no indication from its records of the transfer
of US$100,000.00 for petitioners account from Hang Lung Bank Ltd. through the Pacific
Banking Corporation. However, after plaintiff-petitioner had adduced his evidence, it filed a
third-party complaint against Papercon and Tom Pek, admitting that plaintiff conclusively
appeared to have deposited the sum of US$100,000.00 with the bank and said foreign currency
deposit was converted, adopting the prevailing rate of interest at the time, to P730,000.00 and
deposited to plaintiffs Current Account No. 12-2009 which he opened with Shaw Boulevard
branch, after which plaintiff issued Check No. 492327 to third-party defendant Papercon (Phils.),
Inc. for the amount of P700,000.00 and Check No. 492328 to third-party defendant Tom Pek for
the amount of P12,700.00.vi[6] Respondent bank thus contended that should it be made liable to
petitioner, said third-party defendants as payees and beneficiaries of the issued checks should be
held solidarily liable with it.
Tom Pek and Papercon did not deny receiving the checks worth P712,700.00 but argued that
unless proven otherwise, the said checks should be presumed to have been issued in their favor
for a sufficient and valuable consideration.
Based on the evidence and arguments before it, the trial court determined that the withdrawals
were not made by petitioner nor authorized by him, and held respondent bank liable for the
US$100,000.00 (and the interest thereon from date of filing of the complaint), damages,
attorneys fees, and costs.

It is not disputed that petitioner did not personally go to respondent bank to open the account; it
was Catalino Reyes, an employee of Tom Pek, who obtained the blank application forms from
the Shaw Boulevard branch and returned them bearing petitioners signature; and, the application
forms were not completely filled out. The trial court found the actuations of the banks officers
of allowing Reyes to take out the forms, approving the scarcely-completed application form,
validating petitioners signature thereon even when they have not met petitioner, and permitting
the hefty withdrawals made from the account to be in contravention with sound and wellrecognized banking procedures, and contrary to its (the banks) primordial duty of safeguarding
the interest of its depositors, because for having allowed the same, it enabled an unscrupulous
person to open an account for the plaintiff without the latters consent.vii[7]
The trial court also took against respondent bank its inability to present in evidence the
depositors card showing petitioners specimen signatures and the requisition slip for the
issuance of a checkbook, and disregarded the banks contention that they could not anymore be
located. From this, the trial court concluded that petitioner did not submit any card showing his
specimen signature since he did not open the said current account, and that the withdrawals made
on the said account were unauthorized and in fraud of petitioner.viii[8]
The trial court further concluded that the withdrawals from petitioners account could not have
been made possible without the collusion of the officers and employees of respondent bank. In
its decision dated May 24, 1991, it held respondent bank solely culpable and fully exonerated the
other private respondents. It also upheld petitioners claims for moral damages, for the mental
anguish that he suffered, and exemplary damages, to remind respondent bank "that it should
always act with care and caution in handling the money of its depositors in order to uphold the
faith and confidence of its depositors to banking institutions xxx".ix[9] Thus, the dispositive part
of the said decision read:
WHEREFORE, judgment is hereby rendered in favor of plaintiff and against defendant and
third-party plaintiff, Rizal Commercial Banking Corporation, ordering the latter to pay plaintiff
the following sums:
1) US$100,000.00, or its equivalent according to Central Bank rate at the time payment is
actually made with interest thereon at 12% per annum from June 26, 1987, when the complaint
was filed, until fully paid;
2) P30,000.00 as moral damages;
3) P20,000.00 as exemplary damages; and
4) 20% of the total amount due to the plaintiff as attorneys fees and litigation expenses, all three
foregoing items with interest at 12% per annum from date hereof.
The defendant banks counterclaims and third-party complaint are dismissed.
The third-party defendants counterclaims are likewise dismissed.

Costs against defendant.

SO ORDERED.x[10]
Respondent bank and third-party defendants sought reconsideration of the above decision and on
September 2, 1991, Judge Migrio amended his decision to hold Papercon and Tom Pek
solidarily liable with respondent bank. He also changed the interest rate for the US$100,000
from 12% to 6% per annum, charged interest for the awards of moral damages and exemplary
damages until they are paid, and reduced the award of attorneys fees from 20% to 10% of the
total monetary awards. Following is the dispositive portion of the RTC decision, as modified:
WHEREFORE, judgment is hereby rendered:
On the Main Action
1. Ordering the defendant Rizal Commercial Banking Corporation to pay the plaintiff Chiang
Yia Min the following sums:
a) US$100,000.00, or its equivalent in Philippine currency at the time of actual
payment, with interest thereon at the legal rate of 6% per annum from June 26, 1987,
the date of filing of the complaint, until fully paid;
b) P30,000.00 as moral damages;
c) P20,000.00 as exemplary damages;
d) 10% of the total amount due for and as attorneys fees, all three foregoing items with
interest at 6% per annum from date hereof; and
e) the costs of the suit.
On the Third-Party Complaint
Judgment is hereby rendered in favor of the defendant-third-party plaintiff and against thirdparty defendants, ordering the latter, jointly and severally, to pay and reimburse the third-party
plaintiff the aforeadjudged amounts which it is ordered to pay to the plaintiff in accordance with
this decision.
The defendant banks counterclaims are hereby dismissed.
The counterclaims of the third-party defendants are likewise dismissed.
SO ORDERED.xi[11]

The Court of Appeals, on the other hand, found that the opening of the current account and the
withdrawals therefrom were authorized by petitioner; accordingly, it reversed the decision of the
RTC and absolved private respondents of liability.
Respondent court gave credence to the statements of Catalino Reyes, an accountant of Pioneer
Business Forms, Inc., another business venture of Tom Pek, who testified that petitioner and
Tom Pek were close friends and business partners. Sometime in January or February 1979
Reyes was instructed by petitioner to withdraw the US$100,000.00 from Pacific Banking
Corporation and to deposit the peso equivalent of the same in the Shaw Boulevard branch of
RCBC. These were undertaken to facilitate petitioners change of visa from tourist to foreign
investor. Respondent court also accepted Reyess testimony that he was instructed by petitioner
to prepare two of the checks drawn against the questioned account, and that he witnessed
petitioner sign these checks and hand them over to Tom Pek. It declared that Reyess testimony
that petitioner caused the opening of the said account was more believable than petitioners mere
denial of the same.xii[12] Moreover, Reyess testimony was supported by a memorandum of the
Board of Special Inquiry, Bureau of Immigration which stated that the peso equivalent of the
US$100,000.00 had been tendered and delivered to applicant Chiang Yia Min as evidenced by a
cashiers check dated February 8, 1979 and issued to the latter.xiii[13] According to the Court of
Appeals, this coincides with Catalino Reyess testimony that petitioners money was deposited
by him in respondent bank, and was contrary to petitioners contention that the money was
transferred by Pacific Banking Corporation to respondent bank through a bank-to-bank
transaction.
Respondent court was also not convinced by petitioners allegation that the conversion of the
US$100,000.00 and its being deposited in the Shaw Boulevard branch of respondent bank was
made without his knowledge and consent. It pointed out that it was petitioner himself who wrote
the Shaw Boulevard branch inquiring about the status of his current account; thus, he could not
later be heard to maintain that he thought his money was deposited with the head office of
respondent bank in Makati.
Further contrary to the findings of the trial court, the Court of Appeals determined that the
inward remittance of US$100,000.00 was made while petitioner was already in the Philippines.
Based on the records of the Bureau of Immigration, petitioner arrived in the country as a tourist
on or about January 25, 1979,xiv[14] but subsequently applied for a change of status of admission
to special non-immigrant as a foreign investor.xv[15] Because of this, petitioners initial argument
--- that he could not have authorized the deposit in the Shaw Boulevard branch and the
withdrawals therefrom because he was not yet in the country at the time --- could not be
believed.
Moreover, respondent court found it incredible that petitioner checked on his dollar remittance
only in 1985, long after it was sent into the country. As for respondent banks inability to
produce the depositors card bearing petitioners specimen signatures, the checkbook requisition
slip, and other documents requested by petitioner, respondent court found plausible the
explanation of respondent bank that it only holds records for a period of five years after the last
transaction on an account was made. It also noted several other inconsistencies in the testimony
of petitioner, such as his inability to recall his date of arrival in the country,xvi[16] the date or

even the year when he made inquiries with respondent bank,xvii[17] or his presence before the
Commission on Immigration and Deportation when he applied for a change of status.xviii[18]
Thus, petitioner lost credibility with respondent court which found his testimony to be false on
material points and applied the principle of falsus in uno, falsus in omnibus.
Hence, the dispositive portion of the Court of Appeals decision provides:
WHEREFORE, premises considered, the decision of the court a quo is hereby REVERSED and
SET ASIDE. Herein defendant/third-party plaintiff and third-party defendants are hereby
absolved of any liability arising out of this case. Likewise, the third-party complaint is hereby
DISMISSED.
Costs against plaintiff-appellant.
SO ORDERED.xix[19]
Petitioner is now before us seeking the reversal of the above decision, maintaining that the
evidence on record preponderated in his favor and was enough to sustain the finding that the
opening of Current Account No. 12-2009 and the withdrawals thereon were unauthorized by him
and that respondent bank connived with third persons to defraud petitioner. Private respondents,
for their part, ask that the petition be dismissed and the factual findings of the Court of Appeals
be sustained.
The grounds set out in the petition are:
1. The findings of facts of the trial court and the Court of Appeals are conflicting hence, an
examination by this Honorable Court of the evidence on record is in order. There is an
imperative need for this Honorable Court to exercise its power of supervision and review of the
questioned decision of the Court of Appeals as an exception to the rule (Solidbank vs. Court of
Appeals, G.R. No. 91494, July 14, 1995) because the Court of Appeals for no plausible reason at
all had completely substituted its findings of fact in place of the well-founded findings of fact
made by the trial court. It is a serious departure from the well-accepted rules of procedure.
2. There is preponderance of evidence to show that respondent bank connived with third persons
to defraud petitioner, hence, it should be held liable for reimbursement with interest and
damages.
3. The application of the maxim falsus in uno, falsus in omnibus by the Honorable Court of
Appeals is not in accord with law and the applicable decisions of the Supreme Court. The
Honorable Court of Appeals has so far departed from the accepted principles in the exercise of
judicial discretion as to call for an exercise of the power of review and supervision of this
Honorable Court.xx[20]
Settled is the rule that where the factual findings of the Court of Appeals and the trial court are at
variance this Court will review the evidence on record in order to arrive at the correct
findings.xxi[21] Our evaluation of the numerous testimonies and documentary evidence persuades

us that the findings of the Court of Appeals are well-founded and merit the dismissal of the
instant petition.
The determinative issue in this case, as phrased out in the instant petition, is whether petitioner
has proved, by a preponderance of the evidence, that respondent bank connived with private
respondents and third party defendants Papercon and Tom Pek in allowing the withdrawals from
Current Account No. 12-2009, knowing these to be unauthorized by petitioner, and with the
purpose of defrauding him.
A review of the complaint filed before the RTC, however, indicates that petitioner originally
sued upon an allegation of negligence on the part of respondent banks officers and employees in
allowing the said withdrawals.xxii[22]
Under either theory of fraud or negligence, it is incumbent upon petitioner to show that the
withdrawals were not authorized by him. If he is unable to do so, his allegations of fraud or
negligence are unsubstantiated and the presumption that he authorized the said withdrawals will
apply.
Petitioners allegation that he did not authorize the opening of the current account and the
issuance of the checks was countered by private respondents by presenting Catalino Reyes as a
witness. Reyes, the accountant of Pioneer Business Forms, Inc., another business venture of
Tom Pek, testified that the opening of Current Account No. 12-2009 and the issuance of the
questioned checks were all upon the instructions of petitioner. Reyes stated that he first met
petitioner in January or February 1979 when the latter was introduced to him by Tom
Pek.xxiii[23] He and his fellow employees were advised by Tom Pek to personally help (Chiang
Yia Min) in all his personal accounts.xxiv[24] Reyes, in particular, was charged with working on
the incorporation of Philippine Color Scanning, a new business venture where petitioner will be
the general manager.xxv[25] He also assisted petitioner when the latter applied for a change of
visa from tourist to special non-immigrant. Reyes testified that on the first week of February
1979, petitioner asked him to pick up the US$100,000.00 which he caused to be remitted in
compliance with the capital requirements for foreign investors at Pacific Banking
Corporation.xxvi[26] Bringing with him the letter of advise from the bank, Reyes did as he was
told and the bank released to him a cashiers check representing the peso equivalent of the
US$100,000.00. Reyes then showed the check to petitioner and upon the latters instructions, he
went to the Shaw Boulevard branch of respondent bank to open a checking account in
petitioners name, using the proceeds of the check as initial deposit.xxvii[27]
Reyes describes the opening of the current account as having been done in haste, since petitioner
was in a hurry to have the proceeds of the remittance credited to his checking account. xxviii[28]
Because Reyes was well-known to the officers and employees of RCBC-Shaw Boulevard, he
was allowed to bring out of the bank the application form, depositors card, and other forms
which required petitioners signature as depositor.xxix[29] He then filled out the forms,xxx[30] and
brought them to petitioner for signing. He witnessed petitioner sign the forms.xxxi[31] Then he
brought the signed forms, and petitioners passport, back to the bank, which approved the
opening of the current account upon a comparison of the signatures on the forms and the
passport.xxxii[32]

The documentary evidence accurately supports Reyess statements. Pacific Banking Corporation
confirmed receipt of the US$100,000.00 from Hang Lung Bank, Ltd. by telegraphic transfer on
February 7, 1979.xxxiii[33] It had instructions to transmit the money to Rizal Commercial
Banking Corporation, Head Office, for (the) account of Chiang Yia Min;xxxiv[34] however, the
records also show that on February 8, 1979 Pacific Banking Corporation released the money to
petitioner by way of Cashiers Check No. DD 244955, representing the peso equivalent of the
US$100,000.00, which check was in turn presented before the Board of Special Inquiry of the
Bureau of Immigration as proof of petitioners compliance with the requirements for change of
status from tourist to special non-immigrant, i.e., foreign investor.xxxv[35] On the same day,
February 8, 1979, Current Account No. 12-2009, in the name of Chiang Yia Min, was opened in
RCBC-Shaw Boulevard with an initial deposit of P729,752.20, representing proceeds of inward
remittance received from Pacific Banking Corporation.xxxvi[36]
As established by the records, there were five issued checks: two made payable to Papercon, and
three made payable to cash (these three checks were all negotiated to Tom Pek).xxxvii[37]
Catalino Reyes testified that on two separate instances, petitioner asked him to prepare two of the
five checks questioned in this case, specifically, the check for P700,000.00, dated February 19,
1979 and payable to Papercon, and the check for P12,700.00, dated February 23, 1979 and
payable to cash.xxxviii[38] He witnessed petitioner study the information typed on the checks,
sign the checks, and hand them over to Tom Pek.xxxix[39]
The microfilm copies of these checks were submitted in evidence.xl[40] They all bear the
signature of petitioner.
Confronted with such direct and positive evidence that he authorized the opening of the account
and signed the questioned checks, it is curious that petitioner did not take the witness stand to
refute Reyess testimony. He did present as his rebuttal witness a teller of Metrobank (in which
he also maintained a checking account) who testified that she had assisted petitioner in some
withdrawals with Metrobank and in these instances it was petitioner himself, unassisted, who
filled out his checks.xli[41] Thus, petitioner attempted to show that he prepared his own checks as
a matter of practice. However, we note that the Metrobank teller testified to checks issued on
December 1989, or long after the herein questioned checks were issued. It would neither be fair
nor accurate to compare the practice of petitioner in issuing checks in 1979, when admittedly he
was still unfamiliar with the English language, with the manner by which he prepared his checks
ten years later.
To our mind, the best witness to counter the testimony of Catalino Reyes would be petitioner
himself, simply because, based on the statements of Reyes, the only persons present when
petitioner allegedly instructed Reyes to open the account and signed the checks were Reyes,
petitioner himself, and Tom Pek. (Tom Pek died during the course of the proceedings.) Besides,
if indeed Catalino Reyes lied in saying that petitioner instructed the opening of the account and
issued the checks, we cannot imagine a more natural reaction of petitioner than wanting to set the
record right.
Moreover, petitioners signatures on the questioned checks amounts to prima facie evidence that
he issued those checks. By denying that he issued the said checks it is he who puts into question

the genuineness and authenticity of the signatures appearing thereon, and it is he who has the
burden of proving that those signatures were forgeries.
No shred of evidence was presented by petitioner to show that the signatures were not his. All
that this petition relies on insofar as concerning the authenticity of the signatures is the finding of
the trial court judge that there was a discrepancy between the signatures on the bank form and
petitioners passport. As stated in the RTC decision:
xxx An examination of the signatures of the plaintiff on the said documents will, however,
show to an ordinary person the discrepancy in the said signatures. The letter H in Chiang
as appearing in the application form is in script whereas the said letter appearing in his
passport is in print.xlii[42]
The Court, however, believes that since what is at issue here is whether petitioner issued the
questioned checks the essential comparison should be between the signatures appearing on the
checks and the specimen signatures on the depositors card. Such is the normal process followed
in verifying signatures for purposes of bank withdrawals. Considering that the depositors card
was not produced in evidence in the instant case, resort may thus be made to such other
documents as would bear the authentic signature of petitioner.xliii[43] The record is replete with
documents bearing petitioners signature, among them, his residence certificatexliv[44], alien
certificate of registrationxlv[45], investors passportxlvi[46], tourists passportxlvii[47], and the
application forms for an RCBC current accountxlviii[48]. From our examination of these records
we find no significant disparity between the signatures on the checks and those on the abovesaid
documents, and will not risk a finding of forgery where the same had not been clearly alleged nor
proved. Forgery, as any other mechanism of fraud, must be proven clearly and convincingly,
and the burden of proof lies on the party alleging forgery.xlix[49]
On the other hand, private respondents have presented evidence that petitioner did sign and issue
these checks. The testimony of Catalino Reyes that petitioner told him to prepare the checks,
and that he saw petitioner sign these checks and give them to Tom Pek, stands unrebutted.
There is thus no evidence to demonstrate that respondent bank and respondents Papercon and
Tom Pek colluded to defraud petitioner of his money. What the evidence in fact establishes is
that the opening of the account and the withdrawals were authorized by petitioner, and that the
signatures appearing on the questioned checks were petitioners.
Petitioner, however, insists that respondent bank acted with negligence in opening Current
Account No. 12-2009 without properly verifying the identity of the depositor and in
contravention of sound and well-recognized banking procedures. The petition capitalizes on the
following purported irregularities surrounding the opening of the account: (1) the alleged
depositor never appeared at the bank; (2) the person who transacted for the alleged depositor was
not shown to have been authorized for that purpose; (3) the application form and other
documents required to open the account were brought out of the bank premises; and (4) the
application form, when submitted, was not properly accomplished, but was left blank on most of
the required details.l[50]

The arguments are unmeritorious for failure to show that such irregularities attending the
opening of the account resulted in the unauthorized withdrawal of petitioners money. The
evidence stands unrebutted that petitioner instructed the opening of the said account and signed
the pertinent application forms. Quite contrary to petitioners insinuations of fraud or
negligence, the evidence indicates that the reason why respondent bank relaxed its rules in
handling petitioners application was because, in addition to having been referred by a wellknown client,li[51] petitioner was in a hurry to have the remittance credited to his account.lii[52]
The person who alleges fraud or negligence must prove it, because the general presumption is
that men act with care and prudence. Good faith is always presumed and it is the burden of the
party claiming otherwise to adduce clear and convincing evidence to the contrary.liii[53] No
judgment for damages could arise where the source of injury, be it fraud, fault, or negligence,
was not affirmatively established by competent evidence.liv[54]
Additionally, circumstances may be obtained from the record that cast serious doubts on the
legitimacy of petitioners claims. The Court of Appeals had correctly taken into consideration
petitioners lack of candor in declaring his status of entry into the Philippines. Petitioners
testimony that he came into the country after February 7, 1979 (the date of remittance of the
US$100,000.00) was exposed in open court as an outright lie,lv[55] it being shown that he was
admitted into the country as a tourist as early as January 25, 1979.lvi[56] Thus, there is no truth to
petitioners contention that he could not have authorized the opening of Current Account No. 122009 because he was not yet in the country at the time. The fact is, by February 7, 1979, his 7day visa had already expired (counting from January 25, 1979); he was plainly an overstaying
tourist, working against time to secure an investors visa to legitimize his stay in the Philippines,
which explains the haste by which he ordered the withdrawal of the money from Pacific Banking
Corporation and the opening of the account in RCBC.
It also strains credulity that an investor like petitioner would allow a substantial amount of
money to lie insipid and unproductive in a bank account for six years before he bothered to
check on it. The earliest known record of his having gotten in touch with respondent bank to
check about his money was on August 5, 1985, by a letter of his lawyer. The bank replied on
August 9, 1985, stating that the account was inactive since October, 1979 with a present balance
of P1,362.10.lvii[57] Instead of alarm and indignation at the news that he had lost all his
investment money, petitioner and his lawyer waited until January 27, 1987 when they again
wrote the bank to once more inquire about the status of the current account. The bank simply
reiterated its report, and stated that they can no longer produce the records of that account since
their retention period for records of inactive accounts is only five years.lviii[58] The complaint
was filed with the RTC only on June 29, 1987, or almost two years after his supposed discovery
of the loss of his money.
Moreover, petitioners claim that he felt no need to check on the US$100,000.00 because he still
had cash at hand was contradicted by his own testimony that in 1983 and 1984 he could not put
up the money to fund a letter of credit, lost a major client in the process, and was put out of
business.lix[59] If it was true that the proceeds of the US$100,000.00 remittance were not used up
at that time, why did he not check on the money then?

Besides, the fact that petitioner, through his lawyer, wrote the Shaw Boulevard branch of
respondent bank to inquire about the status of his current account is fundamentally inconsistent
with his position that he had no knowledge of the opening of the account in that branch. It
simply does not jive with his representation that he thought the money was remitted directly to
the RCBC head office in Makati.
These matters certainly reveal a malicious intention on petitioners part to conceal material
circumstances and pervert the truth, and cast serious doubt on the legitimacy of his claims.
As for respondents and third party defendants Papercon and Tom Pek, upon the finding that the
checks issued to them were in order, and there being no indication that respondent bank colluded
in paying the checks to them for any unlawful cause, or was otherwise deceived or misled into
doing the same, the presumption lies that they were holders for value and in good faith.
WHEREFORE, the decision of the Court of Appeals in CA-G.R. CV No. 35442 is
AFFIRMED. Costs against petitioner.
SO ORDERED.

Wednesday, March 11, 2009

MERALCO V. TEAM ELECTRONIC CORP (PD 401/RA 7832, CORP'S

CLAIM OF MORAL DAMAGES)
The law in force at the time material to this controversy was PD 401. It penalized
unauthorized installation of water, electrical, telephone connections and such acts
as the use of tampered electrical meters. PD 401 granted the electrical companies
the right to conduct inspections of electric meters and the criminal prosecution or
erring customers who were found to have tampered with their electrical meters. It
did not provide for more expedient remedies as the charging of differential billing
and immediate disconnection against erring customers. Thus, electric companies
found a creative way of availing themselves of such remedies by inserting into the
service contracts a provision for differential billing with the option of disconnection
upon non-payment by the erring customers. The Court has recognized the validity
of such stipulations. However, recourse to differential billing with disconnection was
subject to the prior requirement of a 48-hour written notice of disconnection.

MERALCO, in the instant case, resorted to the remedy of disconnection without

prior notice. While it is true that MERALCO sent a demand letter to TEC for the
payment of differential billing, it did not include any notice that the electric supply
would be disconnected. In fine, it abused the remedies granted to it under PD 401
by outright depriving TEC of electric services without first notifying it of the
impending disconnection.
SC deems it proper to delete the award of moral damages. TEC's claim was
premised allegedly on the damage to its goodwill and reputation. As a rule, A
CORPORATION IS NOT ENTITLED TO MORAL DAMAGES BECAUSE, NOT BEING A
NATURAL PERSON, IT CANNOT EXPERIENCE PHYSICAL SUFFERING OR
SENTIMENTS like wounded feelings, serious anxiety, mental anguish, and moral
shock. The only EXCEPTION to this rule is when the corporation has a reputation
that is debased, resulting in its humiliation in the business realm. but in such a
case, it is imperative for the claimant to present proof to justify the award. It is
essential to prove the existence of the factual basis of the damage and its causal
relation to petitioner's acts. In the present case, the records are bereft of any
evidence that the name or reputation of TEC/TPC has been debased as a result of
petitioner's act. Besides, the trial court simply awarded moral damages in the
dispositive portion of its decision without stating the basis thereof.
GYUF

LAMBERT v HEIRS OF CASTILLON (Pau)

G.R. No. 160709. February 23, 2005

Facts:
In the evening of January 13, 1991, Ray Castillon visited the house of his brother Joel Castillon at Tambo,
Iligan City and borrowed his motorcycle. He then invited his friend, Sergio Labang, to roam around
Iligan City. Ray drove the motorcycle with Sergio as the backrider.
At around past 10:00 p.m., after eating supper at Honas Restaurant and imbibing a bottle of beer, they
traversed the highway towards Tambo at a high speed. Upon reaching Brgy. Sto. Rosario, they figured
in an accident with a Tamaraw jeepney, owned by petitioner Nelen Lambert and driven by Reynaldo
Gamot, which was traveling on the same direction but made a sudden left turn. The incident resulted in
the instantaneous death of Ray and injuries to Sergio.
Respondents, the heirs of Ray Castillon, thus filed an action for damages with prayer for preliminary
attachment against the petitioner Nelen Lambert. The complaint was subsequently amended to include
the claim by Joel Castillon for the damages caused to the motorcycle.
On June 29, 1993, after a full-blown trial, the court a quo rendered a decision in favor of the Castillon
heirs but reduced Lamberts liability by 20% in view of the contributory negligence of Ray. On the claim
of Joel Castillon, the evidence shows that he is not the real owner of the motorcycle. He is not the real
party in interest. Accordingly, his complaint is dismissed.
The Court of Appeals affirmed the decision of the trial court.
Issue/s:
1.

Did the CA err in not applying the doctrine of Edna A. Raynera vs. Freddie Hiceta and

Jimmy Orpilla that drivers of vehicles who bump the rear of another vehicle are presumed to be the
cause of the accident? In other words, was Lambert negligent?
2.

Does the act of tailgating merely constitute contributory negligence?

Lambert insists that the negligence of Ray Castillon was the proximate cause of his unfortunate death
and therefore she is not liable for damages.

Held
1. No. Clearly, the abrupt and sudden left turn by Reynaldo, without first establishing his right of way,
was the proximate cause of the mishap which claimed the life of Ray and injured Sergio. Proximate
cause is defined as that which, in the natural and continuous sequence, unbroken by any efficient,
intervening cause, produces the injury, and without which the result would not have occurred. The
cause of the collision is traceable to the negligent act of Reynaldo for without that left turn executed
with no precaution, the mishap in all probability would not have happened.
Petitioner misunderstood our ruling in Raynera v. Hiceta. That case also involved a motorcycle crashing
into the left rear portion of another vehicle, and we declared therein that drivers of vehicles who bump
the rear of another vehicle are presumed to be the cause of the accident, unless contradicted by other
evidence. Raynera, being the driver of the rear vehicle, had full control of the situation as he was in a
position to observe the vehicle in front of him. Thus, the theory that drivers of vehicles who bump the
rear of another vehicle are presumed to be the cause of the accident is, as in this case, sufficiently
contradicted by evidence, which is the sudden left turn made by Reynaldo which proximately caused the
collision.
2. Yes. The SC found it equitable to increase the ratio of apportionment of damages on account of the
victims negligence. Article 2179 reads as follows:
When the plaintiffs negligence was the immediate and proximate cause of his injury, he cannot recover
damages. But if his negligence was only contributory, the immediate and proximate cause of the injury
being the defendants lack of due care, the plaintiff may recover damages, but the courts shall mitigate
the damages to be awarded.
The underlying precept on contributory negligence is that a plaintiff who is partly responsible for his
own injury should not be entitled to recover damages in full but must bear the consequences of his own
negligence. The defendant must thus be held liable only for the damages actually caused by his
negligence.[15] The determination of the mitigation of the defendants liability varies depending on the
circumstances of each case. In the case at bar, it was established that Ray, at the time of the mishap: (1)
was driving the motorcycle at a high speed; (2) was tailgating the Tamaraw jeepney; (3) has imbibed one
or two bottles of beer; and (4) was not wearing a protective helmet.[21] These circumstances, although
not constituting the proximate cause of his demise and injury to Sergio, contributed to the same
result. The contribution of these circumstances are all considered and determined in terms of
percentages of the total cause. Hence, pursuant to Rakes v. AG & P, the heirs of Ray Castillon shall
recover damages only up to 50% of the award. In other words, 50% of the damage shall be borne by the
private respondents; the remaining 50% shall be paid by the petitioner.

Equitable Bank v Ng Sheung Ngor

Facts: Ng Sheung Ngor and Ken Appliance Division file an action to annul/reform contracts entered into
with Equitable Bank, claiming that EPCI induced them to avail of their low interest dollar loans which also
contained escalation clauses which they were not made aware of (cr. May increase interest rate). RTC
upholds the validity of the documents, but also awards damages to Respondent by reason of the
purported damage which their business reputation incurred as a result of EPCI's freezing of their bank
account. In the same judgment, the RTC orders respondents to pay the principal plus interest, and to
pay the dollar loan at the old exchange rate of 26.5, the rate which existed at the time of the constitution
of the obligation since the RTC deemed it proper to apply article 1250... Was it in fact proper?
Held: No. In order to apply article 1250, the following requisites are required:
1. that there was an official declaration of extraordinary inflation or deflation from the Bangko Sentral ng
Pilipinas (BSP);
2. that the obligation was contractual in nature;[75]and
3. that the parties expressly agreed to consider the effects of the extraordinary
inflation or deflation.
Despite the devaluation of the peso, the BSP never declared a situation of extraordinary
inflation.Moreover, although the obligation in this instance arose out of a contract, the parties did not
agree to recognize the effects of extraordinary inflation (or deflation).[77] The RTC never mentioned that
there was a such stipulation either in the promissory note or loan agreement. Therefore, respondents
should pay their dollar-denominated loans at the exchange rate fixed by the BSP on the date of maturity.
Furthermore, whatever damages were awarded were baseless, as EPCI was not in bad faith when it froze
the accounts but rather merely exercising its right to offset. Whatever damages the debtor might have
suffered was but a result of its own failure to comply with the obligation

JOSE V. LAGON, petitioner, vs. HOOVEN COMALCO INDUSTRIES, INC., respondent.

DECISION
BELLOSILLO, J.:
This petition for review on certiorari seeks to set aside the Decision of the Court of Appeals of
28 April 1997 which in turn set aside the decision of the Regional Trial Court of Davao City and
ordered petitioner Jose V. Lagon to pay respondent Hooven Comalco Industries, Inc.
(HOOVEN) the amount of P69,329.00 with interest at twelve percent (12%) per annum
computed from the filing of the complaint until fully paid, plus attorneys fees and costs,lix[1] as
well as the Resolution of the appellate court denying reconsideration thereof.lix[2]
Petitioner Jose V. Lagon is a businessman and owner of a commercial building in Tacurong,
Sultan Kudarat. Respondent HOOVEN on the other hand is a domestic corporation known to be
the biggest manufacturer and installer of aluminum materials in the country with branch office at
E. Quirino Avenue, Davao City.
Sometime in April 1981 Lagon and HOOVEN entered into two (2) contracts, both denominated
Proposal, whereby for a total consideration of P104,870.00 HOOVEN agreed to sell and install

various aluminum materials in Lagons commercial building in Tacurong, Sultan Kudarat.lix[3]

Upon execution of the contracts, Lagon paid HOOVEN P48,00.00 in advance.lix[4]
On 24 February 1987 respondent HOOVEN commenced an action for sum of money with
damages and attorneys fees against petitioner Lagon before the Regional Trial Court of Davao
City. HOOVEN alleged in its complaint that on different occasions, it delivered and installed
several construction materials in the commercial building of Lagon pursuant to their contracts;
that the total cost of the labor and materials amounted to P117,329.00 out of which P69,329.00
remained unpaid even after the completion of the project; and, despite repeated demands, Lagon
failed and refused to liquidate his indebtedness. HOOVEN also prayed for attorneys fees and
litigation expenses, and in support thereof, presented its OIC, Alberto Villanueva, and its
employee, Ernesto Argente, and other witnesses, as well as several documentary evidence
consisting mainly of the two (2) proposals, invoices and delivery receipts.
Lagon, in his answer, denied liability and averred that HOOVEN was the party guilty of breach
of contract by failing to deliver and install some of the materials specified in the proposals; that
as a consequence he was compelled to procure the undelivered materials from other sources; that
as regards the materials duly delivered and installed by HOOVEN, they were fully paid. He
counterclaimed for actual, moral, exemplary, temperate and nominal damages, as well as for
attorneys fees and expenses of litigation.
On 9 October 1987, upon request of both parties, the trial court conducted an ocular inspection of
Lagons commercial building to determine whether the items alleged in the complaint and
appearing in the invoices and delivery receipts had been delivered and installed on the premises.
The result of the ocular inspection was 1) with respect to the items covered by Exhibit A and submarkings that there are only
seventeen (17) light diffusers, 13 in the ceiling of the ground and 4 on the mezzanine (Ocular
Inspection, TSN, pp. 5 to 6); 2) on Exhibit B and submarkings, there are only twenty-three
(23) light aluminum boxes, 14 aluminum boxes in the ceiling of the mezzanine and 9 on the
ceiling of the ground floor (Ocular Inspection, TSN, p. 7); 3) on Exhibit C-1, the items are
missing in the area where they were supposed to be installed; 4) on Exhibit C-2, admitted by
defendant Lagon when he stated that I will admit that these were installed by the plaintiff but I
do not know exactly the materials, but I really accept that these were installed sometime in 1981,
before the occupation of the DBP. But I have paid that already in 1981. I could not identify the
materials delivered in 1981 because I do not know the exact names of those materials. (Ocular
Inspection, TSN, p. 12); 5) on Exhibit C-2, the glasses are not tinted but plain white; on
Exhibit C-3, the materials cannot be formed (sic) in the place where they are supposed to be
(Ocular Inspection, TSN, p.7); 6) Exhibit D and D-1, that the materials were supplied by
plaintiff but they did not install them. It was the defendant who caused the installation thereof
(Ocular Inspection, TSN, p. 13.); and 7) Exhibit E-1, as NU- Main and Cross-Runners and
supplied by plaintiff but plaintiff did not install. They had it installed (Ocular Inspection, TSN,
p. 14).

In due course the trial court rendered a decision partly on the basis of the result of the ocular
inspection finding that the total actual deliveries and installations made by HOOVEN cost
P87,140.00. Deducting therefrom P48,000.00 which Lagon paid in advance upon execution of
their contracts with no further payments appearing to have been made thereafter, only
P39,140.00 remained unpaid and where Lagon incurred in delay. The trial court also awarded
HOOVEN P3,255.00 as attorneys fees, but sustained Lagons counterclaims and awarded him
P26,120.00 as actual damages representing the value of the undelivered and uninstalled
materials, and P30,000.00 as attorneys fees in addition to litigation expenses of P45,534.50.
According to the court a quolix[5]
As a result of the partial breach of contract on plaintiff's (Hooven Comalco) part, the defendant is
entitled to actual damages only to the extent of the undelivered materials and undone labor or to
the amount of P26,120.00. This P26,120.00 will be partially offsetted (sic) to the P39,140.00
unpaid balance of the defendant (Lagon), so that the difference that remain (sic) payable to
plaintiff is P13,020.00. Evidence is insufficient to show that bad faith existed in the filing of the
instant complaint for collection against the defendant. Plaintiff's obstinate conduct in
prosecuting its claim spending for litigation expenses and for its lawyers negate the existence of
bad faith. The fact alone that the findings of fact show an unpaid account of the defendant is
proof that the complaint is not completely unfounded though evidence shows also that plaintiff is
guilty of partial breach of contract by reason of failure to completely deliver and install the
materials defendant ordered pursuant to the contract so that plaintiff is liable for damages. As
plaintiff acted in good faith in the filing of the instant complaint in the belief that it has a valid
cause of action against the defendant to enforce its claim, engaging a lawyer to prosecute it,
plaintiff is entitled to a reasonable attorneys fees equivalent to 25% of the collectible amount of
P13,020.00 or the amount of P3,225.00. Defendant's claim of attorneys fees in the amount of
P152,629.15 is in the opinion of the court clearly unreasonable and unconscionable considering
the nature of the action and the amount involved. The court has the power to reduce it to render
it reasonable and conscionable whether the contract for attorney's fees is written or oral. The
attorneys fees is fixed at P30,000.00. The defendant presented evidence of litigation expenses
incurred in the course of the trial for plane fare of its lawyer in coming to Davao City from
Manila from 1987 up to July 1990 in the total amount of P34,730.50 as evidenced by Exhibit
11 to 11-E. The records show that the defendants counsel came to Davao City from Manila
to attend eleven (11) hearings of the case and the plane fare from 1987 up to August, 1989 is
P2,524.50 and from August 1989 to June 1990 is P3,007.50. Hotel expenses of defendants
counsel at the Maguindanao Hotel where he was billeted everytime he came to Davao City to
attend the trial amounted to P11,824.00 as evidenced by Exhibit 17, the certification issued by
the said hotel management. So that the total amount of the actual damage suffered by defendant
is P45,534.50. Said amount of P45,534.50 is partially offsetted (sic) by the amount of
P13,020.00 representing the unpaid obligation of the defendant to the plaintiff so that the
plaintiff is still liable to pay the defendant the difference in the amount of P32,514.50.
Both parties appealed to the Court of Appeals. In its Decision of 28 April 1997, the appellate
court set aside the judgment of the trial court and resolved the case in favor of HOOVEN. It held
that the trial court erred in relying solely on the results of the ocular inspection since the delivery
and installation of the materials in question started as early as 1981, while the ocular inspection

was conducted only in 1987 or six (6) years later, after the entire mezzanine was altered and the
whole building renovated. The appellate court also stressed that the testimonies of HOOVEN's
witnesses were straightforward, categorical and supported by documentary evidence of the
disputed transactions, and that all Lagon could offer was a mere denial, uncorroborated and selfserving statements regarding his transactions with HOOVEN. The decretal portion of the
assailed decision of the Court of Appeals reads ACCORDINGLY, finding the decision of August 26, 1991 appealed from afflicted by reversible
errors, the same is hereby SET ASIDE, and a new one entered ordering the defendant-appellant
(Lagon) to pay plaintiff-appellant (Hooven Comalco):
The amount of P69,329.00 plus interest of 12% per annum computed from the date of the filing
of the complaint, until fully paid.
Fifteen percent (15%) of the amount due, as and by way of attorneys fees.
Defendant-appellant to pay costs.
Petitioner's motion for reconsideration having been denied he now hopes to secure relief from
this Court by contending that: (a) The Court of Appeals erred in holding that the trial court could
not rely on the results of the ocular inspection conducted on his commercial building in
Tacurong, Sultan Kudarat; and, (b) The assailed decision of the appellate court is based on
speculations and contrary to the evidence adduced during the trial.
The arguments in the petition ultimately boil down to the sole issue of whether all the materials
specified in the contracts had been delivered and installed by respondent in petitioners
commercial building in Tacurong, Sultan Kudarat. The question is basically factual involving as
it does an evaluation of the conflicting evidence presented by the contending parties, including
the existence and relevance of specific surrounding circumstances, to determine the truth or
falsity of alleged facts.
While factual issues are not within the province of this Court, as it is not a trier of facts and is not
required to examine or contrast the oral and documentary evidence de novo,lix[6] nevertheless,
the Court has the authority to review and, in proper cases, reverse the factual findings of lower
courts in these instances: (a) when the findings of fact of the trial court are in conflict with those
of the appellate court; (b) when the judgment of the appellate court is based on misapprehension
of facts; and, (c) when the appellate court manifestly overlooked certain relevant facts which, if
properly considered, would justify a different conclusion.lix[7] This case falls squarely within
the foregoing exceptions.
Before delving into the merits of this case, we find it necessary to describe and detail the nature
and contents of the vital documentary exhibits upon which respondent HOOVEN based its
claims, thus Exhibit F - Undated Proposal:

I. For the supply of materials and installation of suspended aluminum ceiling runners:
Area: 2,290 sq. ft.
Materials: NU- Main & Cross runners
NU-5 Perimeter mouldings
G.I. wire hangers
Aluminum straps stiffeners
Blind Rivets and Screws

P14,110.00

Labor charge

4,230.00
18,440.00

II. One (1) set: 65 x 68 YP aluminum cladding

1,150.00
P19,590.00

Delivery and Installation charge

1,860.00
P21,450.00

Exhibit F-1 Proposal dated 3 April 1981

Hooven Aluminum Casement Windows Anolok Finish Manually Operated, with 6.0 mm
Bronzepane Tinted Glass
Five (5) sets: 65

x 126-1/2 (w/ transom)

One (1) set:

x 126-1/2 (w/ AC provision)

65

Two (2) sets: 39-1/2 x 125-1/2

-do-

One (1) set:

39-1/2 x

87

-do-

One (1) set:

39-1/2 x

223

-do-

One (1) set:

65

57-1/2 (w/ transom)

One (1) set:

65

-do-

Hooven Aluminum Entrances and Fixed Windows Anolok Finish, with 6.0 mm
Bronzepane Tinted Glass
One (1) set: 100-1/2 x 76-1/2, double sash, double acting swing door, with transom.
Two (2) sets: 80 x 278, fixed panels

21,740.00

Hooven Aluminum Sliding Windows Fabricated From SD-Sections, Anolok Finish, with
6.0 mm Bronzepane Tinted Glass
One (1) set:

54 x 191

One (1) set:

45 x 302

11,650.00

75,920.00
Add: Delivery and Installation charge

7,500.00
P83,420.00

Exhibit A Invoice No. 11094 dated 29 December 1982

Eighty Six (86) Pieces, 2.0 mm Hishilite

P3,440.00

Diffusers
Exhibit B Invoice No. 11095 dated 29 December 1982
Forty-Three Pieces: For the Supply and
Installation of Light Boxes Fabricated from
GA. 032 Aluminum Plain Sheet
Delivery and Installers subsistence

P5,718.50

Exhibit C Invoice No. 14349 dated 29 December 1984

Five (5) sets 1.651m 3.213m Hooven Aluminum Casement windows, Anolok finish,
manually operated with 6.0 Bronzepane tinted glass.
One (1) set 1.651 m 3.367m

- do - with a/c provision

Two (2) sets 1.00 m 3.188m

- do -

- do -

One (1) set

1.00 m 2.210 m

- do -

- do -

One (1) set

1.00 m 5.664 m

- do -

- do -

One (1) set

1.651m 1.461 m - do -

- do - with transom

One (1) set

1.651m 1.880 m - do -

with transom

One (1) set

1.651m 1.524 m - do -

One (1) set

2.553m 1.943 m

Two (2) sets 2.032m 7.061 m

One (1) set

Hooven aluminum double sash, double acting swing door,

with transom, with 6.0 mm Bronze-pane tinted glass.

Fixed windows, Anolok finish.

.737 m 7.061 m

One (1) set 1.143m 4.851m

One (1) set 1.143m 7.671m

- do -

Aluminum tubulars with aluminum YP-100 cladding,

Anolok finish.
Hooven aluminum sliding windows fabricated from SD
sections, Anolok finish, with 6.0 mm Bronzepane tinted
glass, with 1.88 m tubular posts.

- do -

P75,291.83

4% tax

3,011.67
78,303.50

Delivery & Subs.

7,500.00
P85,803.50

Exhibit D Invoice No. 14265 dated 29 September 1984

For the supply of materials and installation of aluminum stucco embossed sheet on spiral
staircase
P5,310.00
Exhibit E Invoice No. 14264 dated 29 November 1984
For the supply of materials and installation of suspended aluminum ceiling system.
Materials: NU-4 main and cross runners
NU-5 perimeter mouldings

GI wire hangers
Alum strap stiffeners
Blind rivets and screws

P17,057.00

Exhibit A-1 Delivery Receipt dated 9 June 1981

Twenty (20) pieces Light boxes fabricated from aluminum sheets
Forty (40) pieces 2.0 mm x 24 x 24 Hishilite Diffusers
Lump sum cost including discount and Delivery and
Installer Subsistence
P4,340.00
Exhibit A-2 Delivery Receipt dated 8 August 1981
Twenty (20) pieces Light boxes fabricated from .032 aluminum plain sheet
Twenty Seven (27) 2.0 mm x 24 x 24 Hishilite Diffusers
Add: Delivery & Installers Subsistence

P180.00

Exhibit A-3 Delivery Receipt, dated 8 December 1981

19 pcs. 2.0 mm x 2 x2 Hishilite Diffusers

P40.00

Exhibit B-1 Delivery Receipt dated 25 June 1981

Additional three (3) pcs. Light boxes fabricated from .032 Aluminum sheets
P140.00
Exhibit C-1 Delivery Receipt dated 25 August 1983
To change alum tubular frames for sliding windows (item 10 & 11) from 45 L x to 94 x
74.
To change width of one (1) set: item 1 from 126-1/2 to 132-1/2.
To add: one (1) set 65H x 60 aluminum casement windows with 6.0 mm tinted glass.

To extend alum tubulars of fixed windows on 2nd floor by 29L and installation of YP-aluminum
cladding
P8,640.00
Exhibit C-2 Delivery Receipt dated 25 August 1983
Hooven Alum Casement Windows Anolok Finish Manually Operated with 6.0 mm
Bronzepane Tinted Glass:
Five (5) sets: 65

x 126-1/2 with transom

One (1) set:

x 126-1/2

65

with AC provision

Two (2) sets: 39-1/2 x 125-1/2

- do -

One (1) set:

39-1/2 x 87

- do -

One (1) set:

39-1/2 x 223

- do -

One (1) set:

65

x 57-1/2

with transom

One (1) set:

65

x 74

- do P42,530.00

Hooven Alum Entrances & Fixed Windows Anolok Finish with 6.0 mm Bronzepane Tinted
Glass:
One (1) set: 100-1/2 x 76-1/2, double sash, double acting swing door, with transom
Two (2) sets: 80 x 278 fixed panels

P21,740.00

Exhibit C-3 Delivery Receipt dated 25 August 1983

Hoven Alum Sliding Windows Fabricated from SD Sections Anolok Finish with 6.0 mm
Bronzepane Tinted Glass:
One (1) set: 45 x 191
One (1) set: 45 x 302

P11,650.00

Add: Delivery and Installation

7,500.00

Less: 7% Discount

6,256.50
P77,163.50

Exhibit D-1 Delivery Receipt dated 25 August 1983

For the supply of materials and installation of aluminum stucco embossed sheet on spiral
staircase: One (1) set 32 H x 304 WL P5,310.00
Exhibit E-1 Delivery Receipt dated 25 August 1983
NU- main and cross runners
NU-5 Perimeter mouldings
G.I. Wire Hangers
Aluminum straps stiffeners
Blind rivets and screws

P17,057.00

We have carefully and diligently considered the foregoing exhibits and we are fully convinced
that the mass of documentary evidence adduced by respondent suffers from patent irregularities
and material inconsistencies on their faces, raising serious questions requiring cogent
explanations. These flaws inevitably deplete the weight of its evidence, with the result that for
lack of the requisite quantum of evidence, respondent dismally failed in the lower court to
discharge its burden necessary to prevail in this case.
Firstly, the quantity of materials and the amounts stated in the delivery receipts do not tally with
those in the invoices covering them, notwithstanding that, according to HOOVEN OIC Alberto
Villanueva, the invoices were based merely on the delivery receipts.lix[8] For instance, only
eleven (11) items were listed in Exhs. "C-2" and "C-3" with a total worth of P77,163.50. But in
Exh. "C," which was the invoice for Exhs. "C-2" and "C-3," there were thirteen (13) items
enumerated for a total worth of P85,803.50. If Exh. "C" is supposed to be based on Exhs. "C-2"
and "C-3," we cannot understand the apparent discrepancy in the items listed in those documents
when they all referred to the same materials.
Secondly, the total value of the materials as reflected in all the invoices is P117,329.00 while
under the delivery receipts it is only P112,870.50, or a difference of P4,458.00. Moreover, the
materials listed in the two (2) Proposals, upon which HOOVEN based its claims, is only for the
total sum of P104,870.00. Curiously then, why would the materials supposedly delivered by
HOOVEN be more than what was contracted and purchased by Lagon? This circumstance
underscores the need to reexamine the strength, if not weakness, of respondents cause.
Thirdly, under the Proposals HOOVEN bound itself to invoice the materials "when complete
and ready for shipment." Oddly, the records show that the invoices were prepared several years
after the materials were allegedly delivered and installed completely on petitioners building.
Alberto Villanueva testified that their project with petitioner was completed sometime in August
1981 and that thereafter no further installation was done in the building.lix[9] But the disputed

invoices marked Exhs. "A" and "B" were prepared only on 29 December 1982; Exhs. "C" and
"D" were prepared only on 29 December 1984; and, Exh. "E" was prepared only on 29
November 1984. As for the delivery receipts, Exhs. "C-1," "C-2," "C-3" and "E-1" were
prepared only on 25 August 1983 or two (2) years after the completion of the project, while Exh.
"A-3" was prepared only on 8 December 1981 or some four (4) months after the date of
completion.
Even more strange is the fact that HOOVEN instituted the present action for collection of sum of
money against Lagon only on 24 February 1987, or more than five (5) years after the supposed
completion of the project. Indeed, it is contrary to common experience that a creditor would take
its own sweet time in collecting its credit, more so in this case when the amount involved is not
miniscule but substantial.
Fourthly, the demand letter of 25 August 1983lix[10] sent to petitioner by respondent further
betrays the falsity of its claims Dear Mr. Lagon:
The bearer, Mr. Fermin Piero, is an authorized representative of this company. He will arrange
for your acceptance of the complete aluminum and glass installation we have undertaken for
your building. He has with him the delivery receipts for your signature so with a statement of
account showing your balance. Kindly favor us with a partial payment to cover our operation
costs. Also kindly relay to him all other installations you wish us to undertake.
Hoping for your favorable action, we shall remain.
Very Truly Yours,
Hooven Comalco Industries, Inc.
Davao Branch
(Sgd.) Alberto P. Villanueva
If, as claimed by HOOVEN, all the materials were completely delivered and installed in
petitioners building as early as August 1981, why then would it demand partial payment only
two (2) years later? This circumstance is very significant especially considering that under the
Proposals the terms of payment should be 50% down "and the balance to be paid in full" upon
completion. Moreover, it is surprising that the partial payment demanded was only "to cover
operation costs." As correctly observed by petitioner, demand for payment of operation costs is
typical of a still on-going project where the contractor needs funds to defray his expenses. If
there was complete installation, why would respondent demand payment for operation costs
only? Why not enforce the whole amount of indebtedness? All these clearly suggest that there
was no full and complete delivery and installation of materials ordered by petitioner.

Fifthly, all the delivery receipts did not appear to have been signed by petitioner or his duly
authorized representative acknowledging receipt of the materials listed therein. A closer
examination of the receipts clearly showed that the deliveries were made to a certain Jose Rubin,
claimed to be petitioners driver, Armando Lagon, and a certain bookkeeper. Unfortunately for
HOOVEN, the identities of these persons were never been established, and there is no way of
determining now whether they were indeed authorized representatives of petitioner. Paragraph 3
of each Proposal is explicit on this point 3. x x x the sellers responsibility ends with delivery of the merchandise to carrier in good
condition, to buyer, or to buyers authorized "Receiver/Depository" named on the face of this
proposal (underscoring supplied).
As above specifically stated, deliveries must be made to the buyer or his duly authorized
representative named in the contracts. In other words, unless the buyer specifically designated
someone to receive the delivery of materials and his name is written on the Proposals opposite
the words "Authorized Receiver/Depository," the seller is under obligation to deliver to the buyer
only and to no other person; otherwise, the delivery would be invalid and the seller would not be
discharged from liability. In the present case, petitioner did not name any person in the
Proposals who would receive the deliveries in his behalf, which meant that HOOVEN was
bound to deliver exclusively to petitioner.
Sixthly, it is also obvious from the contested delivery receipts that some important details were
not supplied or were left in blank, i.e., truck numbers, persons who delivered the materials,
invoice and s. o. numbers. The persons who delivered the materials were potential witnesses
who could shed light on the circumstances surrounding the alleged deliveries of the materials to
petitioner. Moreover, it could have been easier for HOOVEN to pinpoint responsibility to any of
its employees for the non-delivery of the materials.
We are not unaware of the slipshod manner of preparing receipts, order slips and invoices, which
unfortunately has become a common business practice of traders and businessmen. In most
cases, these commercial forms are not always fully accomplished to contain all the necessary
information describing the whole business transaction. The sales clerks merely indicate a
description and the price of each item sold without bothering to fill up all the available spaces in
the particular receipt or invoice, and without proper regard for any legal repercussion for such
neglect. Certainly, it would not hurt if businessmen and traders would strive to make the receipts
and invoices they issue complete, as far as practicable, in material particulars. These documents
are not mere scraps of paper bereft of probative value but vital pieces of evidence of commercial
transactions. They are written memorials of the details of the consummation of contracts.
Given this pathetic state of respondent's evidence, how could it be said that respondent had
satisfactorily proved its case? Essentially, respondent has the burden of establishing its
affirmative allegations of complete delivery and installation of the materials, and petitioners
failure to pay therefor. In this regard, its evidence on its discharge of that duty is grossly anemic.
We emphasize that litigations cannot be properly resolved by suppositions, deductions, or even

presumptions, with no basis in evidence, for the truth must have to be determined by the hard
rules of admissibility and proof.
The Court of Appeals however faulted the trial court for supposedly relying solely on the results
of the ocular inspection on the premises, which were not conclusive since the inspection was
conducted several years after the disputed materials were allegedly installed therein.
We disagree. The ocular inspection was made by the judge himself, at the request of both
petitioner and respondent, for the exclusive purpose of determining whether the materials subject
of this case were actually delivered and installed. There is therefore no basis to give little
evidentiary value on the results of the ocular inspection, as the Court of Appeals would, and
charge the trial court with error for relying thereon. It is now rather late for any of the parties to
disclaim them, especially when they are not in his or its favor. Furthermore, a cursory reading of
the decision of the court a quo will at once show that it was not premised solely on the results of
the ocular inspection but was likewise predicated on other evidence presented by the parties and
well-considered facts and circumstances discussed by the trial court in its ratio decidendi. We
cannot ignore the factual findings of the trial court, which must carry great weight in the
evaluation of evidentiary facts, and in the absence of any indication showing grave error
committed by trial court, the appellate court is bound to respect such findings of fact.
We hasten to add however that petitioner is not entirely free from any liability to respondent.
Petitioner admitted the delivery of materials under Exhs. "A" and its submarkings, "B" and its
submarkings, "D," "D-1" and "E." With respect to Exh. "C-2," petitioner acknowledged his
obligation under the first heading, Items Nos. 3, 4 and 5, and the second heading, and denied the
rest. Consequently, he should be made liable therefor in the total amount of P58,786.65. From
this amount, petitioners down payment of P48,000.00 should be deducted.
It is insisted by petitioner in his appeal brief filed before the Court of Appeals that the second
item under the second heading of Exh. "C-2" should be excluded in the computation since he
never admitted liability therefor.
We are not persuaded. The transcript of stenographic notes shows that during the ocular
inspection counsel for respondent manifested in effect that petitioner admitted the delivery and
installation of the second item in his building, and petitioner did not interpose any objection to
respondent's manifestation ATTY. QUIONES: We would like to make of record that
defendant (Lagon) admits
that plaintiff (Hooven Comalco) delivered and installed Item No. 1 under the second column of
Exhibit C-2 which is the front door of the ground floor.
ATTY. RICO: Defendant however adds that these were installed in 1981 and had already paid
for the said item.
ATTY. QUIONES: I would like to make of record also that defendant admits the delivery and
installation of Item No. 2 under the second column of Exhibit C-2 as having been delivered

and installed by the plaintiff in 1981 with the qualification, however, that he had already paid the
same.
COURT: Are you stating that all these installed items on the ground floor were all paid by you?
MR. LAGON: Yes, Your Honor.lix[11]
Petitioner cannot now be heard to complain against its inclusion in the computation of his
liability since his silence virtually amounted to acquiescence. The silence of one of the
contracting parties and his failure to protest against the claims of the other party, when he is
chargeable with the duty to do so, strongly suggest an admission of the veracity and validity of
the other partys claims.
In sum, petitioners total liability to respondent may be computed as follows:
(1) Items under Exh. A, consisting of 17
light diffusers at P40.00 each

P 680.00

(2) Items under Exh. B, consisting of 23

light boxes at P40.00 each

3,220.00

(3) Third, fourth and fifth items under the first

heading of Exh. "C-2" which on the basis of
their measurements constitute only 1/3 of
the total costs of materials listed therein

14,176.65

(4) Items under the second heading of

Exh. C-2

21,740.00

(5) Items under Exhs. D and D-1

4,860.00

(6) Items under Exh. E-1

14,110.00
P58,786.65

Less: Stipulated 7% discount

4,408.99
P54,377.66

Less: Advance payment made by petitioner

to Hooven Comalco

48,000.00

Unpaid Balance of petitioner

P6,377.66

Notwithstanding the breach of contract by respondent in failing to deliver and install in the
premises of petitioner all the stipulated materials, we nevertheless accede to the right of
respondent to recover the unpaid balance from petitioner for the materials actually delivered.
The next point of inquiry is the propriety of awarding damages, attorneys fees and litigation
expenses.
We are not in accord with the trial courts ruling that petitioner is entitled to actual damages to
the extent of the undelivered materials and undone labor in the amount of P26,120.00. There is
no proof that petitioner already paid for the value of the undelivered and uninstalled materials to
respondent. Therefore, petitioner may not be deemed to have suffered any such damage. We
have declared in no uncertain terms that actual or compensatory damages cannot be presumed
but must be proved with reasonable degree of certainty.lix[12] A court cannot rely on
speculations, conjectures or guesswork as to the fact of damage but must depend upon competent
proof that they have indeed been suffered by the injured party and on the basis of the best
evidence obtainable as to the actual amount thereof.lix[13] It must point out specific facts that
could provide the gauge for measuring whatever compensatory or actual damages were borne.
But we agree with petitioner that he is entitled to moral damages. HOOVEN's bad faith lies not
so much on its breach of contract - as there was no showing that its failure to comply with its part
of the bargain was motivated by ill will or done with fraudulent intent - but rather on its
appalling temerity to sue petitioner for payment of an alleged unpaid balance of the purchase
price notwithstanding knowledge of its failure to make complete delivery and installation of all
the materials under their contracts. It is immaterial that, after the trial, petitioner was found to be
liable to respondent to the extent of P6,377.66. Petitioner's right to withhold full payment of the
purchase price prior to the delivery and installation of all the merchandise cannot be denied since
under the contracts the balance of the purchase price became due and demandable only upon the
completion of the project. Consequently, the resulting social humiliation and damage to
petitioner's reputation as a respected businessman in the community, occasioned by the filing of
this suit provide sufficient grounds for the award of P50,000.00 as moral damages.
Moreover, considering the fact that petitioner was drawn into this litigation by respondent and
was compelled to hire an attorney to protect and defend his interest, and taking into account the
work done by said attorney throughout the proceedings, as reflected in the record, we deem it
just and equitable to award attorney's fees for petitioner in the amount of P30,000.00.lix[14] In
addition, we agree with the trial court that petitioner is entitled to recover P46,554.50 as actual
damages including litigation expenses as this amount is sufficiently supported by the
evidence.lix[15]

WHEREFORE, the assailed Decision of the Court of Appeals dated 28 April 1997 is
MODIFIED. Petitioner Jose V. Lagon is ordered to pay respondent Hooven Comalco Industries,
Inc., P6,377.66 representing the value of the unpaid materials admittedly delivered to him. On
the other hand, respondent is ordered to pay petitioner P50,000.00 as moral damages, P30,000.00
as attorney's fees and P46,554.50 as actual damages and litigation expenses.
SO ORDERED.
Mendoza, Quisumbing, Buena and DeLeon Jr., JJ., concur.
FILIPINAS BROADCASTING NETWORK, INC., petitioner, vs. AGO MEDICAL AND
EDUCATIONAL CENTER-BICOL CHRISTIAN COLLEGE OF MEDICINE, (AMEC-BCCM)
and ANGELITA F. AGO, respondents.
DECISION
CARPIO, J.:
The Case
This petition for review[1] assails the 4 January 1999 Decision[2] and 26 January 2000
Resolution of the Court of Appeals in CA-G.R. CV No. 40151. The Court of Appeals affirmed
with modification the 14 December 1992 Decision[3] of the Regional Trial Court of Legazpi
City, Branch 10, in Civil Case No. 8236. The Court of Appeals held Filipinas Broadcasting
Network, Inc. and its broadcasters Hermogenes Alegre and Carmelo Rima liable for libel and
ordered them to solidarily pay Ago Medical and Educational Center-Bicol Christian College of
Medicine moral damages, attorneys fees and costs of suit.
The Antecedents
Expos is a radio documentary[4] program hosted by Carmelo Mel Rima (Rima) and
Hermogenes Jun Alegre (Alegre).[5] Expos is aired every morning over DZRC-AM which
is owned by Filipinas Broadcasting Network, Inc. (FBNI). Expos is heard over Legazpi
City, the Albay municipalities and other Bicol areas.[6]
In the morning of 14 and 15 December 1989, Rima and Alegre exposed various alleged
complaints from students, teachers and parents against Ago Medical and Educational CenterBicol Christian College of Medicine (AMEC) and its administrators. Claiming that the
broadcasts were defamatory, AMEC and Angelita Ago (Ago), as Dean of AMECs College of
Medicine, filed a complaint for damages[7] against FBNI, Rima and Alegre on 27 February
1990. Quoted are portions of the allegedly libelous broadcasts:
JUN ALEGRE:

Let us begin with the less burdensome: if you have children taking medical course at AMECBCCM, advise them to pass all subjects because if they fail in any subject they will repeat
their year level, taking up all subjects including those they have passed already. Several
students had approached me stating that they had consulted with the DECS which told them that
there is no such regulation. If [there] is no such regulation why is AMEC doing the same?
xxx
Second: Earlier AMEC students in Physical Therapy had complained that the course is not
recognized by DECS. xxx
Third: Students are required to take and pay for the subject even if the subject does not
have an instructor - such greed for money on the part of AMECs administration. Take the
subject Anatomy: students would pay for the subject upon enrolment because it is offered by the
school. However there would be no instructor for such subject. Students would be informed that
course would be moved to a later date because the school is still searching for the appropriate
instructor.
xxx
It is a public knowledge that the Ago Medical and Educational Center has survived and has been
surviving for the past few years since its inception because of funds support from foreign
foundations. If you will take a look at the AMEC premises youll find out that the names of the
buildings there are foreign soundings. There is a McDonald Hall. Why not Jose Rizal or
Bonifacio Hall? That is a very concrete and undeniable evidence that the support of foreign
foundations for AMEC is substantial, isnt it? With the report which is the basis of the expose in
DZRC today, it would be very easy for detractors and enemies of the Ago family to stop the flow
of support of foreign foundations who assist the medical school on the basis of the latters
purpose. But if the purpose of the institution (AMEC) is to deceive students at cross purpose
with its reason for being it is possible for these foreign foundations to lift or suspend their
donations temporarily.[8]
xxx
On the other hand, the administrators of AMEC-BCCM, AMEC Science High School and
the AMEC-Institute of Mass Communication in their effort to minimize expenses in terms
of salary are absorbing or continues to accept rejects. For example how many teachers in
AMEC are former teachers of Aquinas University but were removed because of immorality?
Does it mean that the present administration of AMEC have the total definite moral foundation
from catholic administrator of Aquinas University. I will prove to you my friends, that AMEC
is a dumping ground, garbage, not merely of moral and physical misfits. Probably they only
qualify in terms of intellect. The Dean of Student Affairs of AMEC is Justita Lola, as the family
name implies. She is too old to work, being an old woman. Is the AMEC administration
exploiting the very [e]nterprising or compromising and undemanding Lola? Could it be that
AMEC is just patiently making use of Dean Justita Lola were if she is very old. As in

atmospheric situation zero visibility the plane cannot land, meaning she is very old, low pay
follows. By the way, Dean Justita Lola is also the chairman of the committee on scholarship in
AMEC. She had retired from Bicol University a long time ago but AMEC has patiently made
use of her.
xxx
MEL RIMA:
xxx My friends based on the expose, AMEC is a dumping ground for moral and physically misfit
people. What does this mean? Immoral and physically misfits as teachers.
May I say Im sorry to Dean Justita Lola. But this is the truth. The truth is this, that your are no
longer fit to teach. You are too old. As an aviation, your case is zero visibility. Dont insist.
xxx Why did AMEC still absorb her as a teacher, a dean, and chairman of the scholarship
committee at that. The reason is practical cost saving in salaries, because an old person is not
fastidious, so long as she has money to buy the ingredient of beetle juice. The elderly can get by
thats why she (Lola) was taken in as Dean.
xxx
xxx On our end our task is to attend to the interests of students. It is likely that the students
would be influenced by evil. When they become members of society outside of campus will
be liabilities rather than assets. What do you expect from a doctor who while studying at
AMEC is so much burdened with unreasonable imposition? What do you expect from a student
who aside from peculiar problems because not all students are rich in their struggle to
improve their social status are even more burdened with false regulations. xxx[9] (Emphasis
supplied)
The complaint further alleged that AMEC is a reputable learning institution. With the supposed
exposs, FBNI, Rima and Alegre transmitted malicious imputations, and as such, destroyed
plaintiffs (AMEC and Ago) reputation. AMEC and Ago included FBNI as defendant for
allegedly failing to exercise due diligence in the selection and supervision of its employees,
particularly Rima and Alegre.
On 18 June 1990, FBNI, Rima and Alegre, through Atty. Rozil Lozares, filed an Answer[10]
alleging that the broadcasts against AMEC were fair and true. FBNI, Rima and Alegre claimed
that they were plainly impelled by a sense of public duty to report the goings-on in AMEC,
[which is] an institution imbued with public interest.
Thereafter, trial ensued. During the presentation of the evidence for the defense, Atty. Edmundo
Cea, collaborating counsel of Atty. Lozares, filed a Motion to Dismiss[11] on FBNIs behalf.
The trial court denied the motion to dismiss. Consequently, FBNI filed a separate Answer
claiming that it exercised due diligence in the selection and supervision of Rima and Alegre.

FBNI claimed that before hiring a broadcaster, the broadcaster should (1) file an application; (2)
be interviewed; and (3) undergo an apprenticeship and training program after passing the
interview. FBNI likewise claimed that it always reminds its broadcasters to observe truth,
fairness and objectivity in their broadcasts and to refrain from using libelous and indecent
language. Moreover, FBNI requires all broadcasters to pass the Kapisanan ng mga Brodkaster
sa Pilipinas (KBP) accreditation test and to secure a KBP permit.
On 14 December 1992, the trial court rendered a Decision[12] finding FBNI and Alegre liable
for libel except Rima. The trial court held that the broadcasts are libelous per se. The trial court
rejected the broadcasters claim that their utterances were the result of straight reporting because
it had no factual basis. The broadcasters did not even verify their reports before airing them to
show good faith. In holding FBNI liable for libel, the trial court found that FBNI failed to
exercise diligence in the selection and supervision of its employees.
In absolving Rima from the charge, the trial court ruled that Rimas only participation was when
he agreed with Alegres expos. The trial court found Rimas statement within the bounds of
freedom of speech, expression, and of the press. The dispositive portion of the decision reads:
WHEREFORE, premises considered, this court finds for the plaintiff. Considering the degree
of damages caused by the controversial utterances, which are not found by this court to be
really very serious and damaging, and there being no showing that indeed the enrollment
of plaintiff school dropped, defendants Hermogenes Jun Alegre, Jr. and Filipinas
Broadcasting Network (owner of the radio station DZRC), are hereby jointly and severally
ordered to pay plaintiff Ago Medical and Educational Center-Bicol Christian College of
Medicine (AMEC-BCCM) the amount of P300,000.00 moral damages, plus P30,000.00
reimbursement of attorneys fees, and to pay the costs of suit.
SO ORDERED. [13] (Emphasis supplied)
Both parties, namely, FBNI, Rima and Alegre, on one hand, and AMEC and Ago, on the other,
appealed the decision to the Court of Appeals. The Court of Appeals affirmed the trial courts
judgment with modification. The appellate court made Rima solidarily liable with FBNI and
Alegre. The appellate court denied Agos claim for damages and attorneys fees because the
broadcasts were directed against AMEC, and not against her. The dispositive portion of the
Court of Appeals decision reads:
WHEREFORE, the decision appealed from is hereby AFFIRMED, subject to the modification
that broadcaster Mel Rima is SOLIDARILY ADJUDGED liable with FBN[I] and
Hermo[g]enes Alegre.
SO ORDERED.[14]
FBNI, Rima and Alegre filed a motion for reconsideration which the Court of Appeals denied in
its 26 January 2000 Resolution.

Hence, FBNI filed this petition.[15]

The Ruling of the Court of Appeals
The Court of Appeals upheld the trial courts ruling that the questioned broadcasts are libelous
per se and that FBNI, Rima and Alegre failed to overcome the legal presumption of malice. The
Court of Appeals found Rima and Alegres claim that they were actuated by their moral and
social duty to inform the public of the students gripes as insufficient to justify the utterance of
the defamatory remarks.
Finding no factual basis for the imputations against AMECs administrators, the Court of
Appeals ruled that the broadcasts were made with reckless disregard as to whether they were
true or false. The appellate court pointed out that FBNI, Rima and Alegre failed to present in
court any of the students who allegedly complained against AMEC. Rima and Alegre merely
gave a single name when asked to identify the students. According to the Court of Appeals,
these circumstances cast doubt on the veracity of the broadcasters claim that they were
impelled by their moral and social duty to inform the public about the students gripes.
The Court of Appeals found Rima also liable for libel since he remarked that (1) AMEC-BCCM
is a dumping ground for morally and physically misfit teachers; (2) AMEC obtained the services
of Dean Justita Lola to minimize expenses on its employees salaries; and (3) AMEC burdened
the students with unreasonable imposition and false regulations.[16]
The Court of Appeals held that FBNI failed to exercise due diligence in the selection and
supervision of its employees for allowing Rima and Alegre to make the radio broadcasts without
the proper KBP accreditation. The Court of Appeals denied Agos claim for damages and
attorneys fees because the libelous remarks were directed against AMEC, and not against her.
The Court of Appeals adjudged FBNI, Rima and Alegre solidarily liable to pay AMEC moral
damages, attorneys fees and costs of suit.
Issues
FBNI raises the following issues for resolution:
I.

WHETHER THE BROADCASTS ARE LIBELOUS;

II.

WHETHER AMEC IS ENTITLED TO MORAL DAMAGES;

III.
IV.

WHETHER THE AWARD OF ATTORNEYS FEES IS PROPER; and

WHETHER FBNI IS SOLIDARILY LIABLE WITH RIMA AND ALEGRE FOR
PAYMENT OF MORAL DAMAGES, ATTORNEYS FEES AND COSTS OF
SUIT.

The Courts Ruling

We deny the petition.

This is a civil action for damages as a result of the allegedly defamatory remarks of Rima and
Alegre against AMEC.[17] While AMEC did not point out clearly the legal basis for its
complaint, a reading of the complaint reveals that AMECs cause of action is based on Articles
30 and 33 of the Civil Code. Article 30[18] authorizes a separate civil action to recover civil
liability arising from a criminal offense. On the other hand, Article 33[19] particularly provides
that the injured party may bring a separate civil action for damages in cases of defamation, fraud,
and physical injuries. AMEC also invokes Article 19[20] of the Civil Code to justify its claim
for damages. AMEC cites Articles 2176[21] and 2180[22] of the Civil Code to hold FBNI
solidarily liable with Rima and Alegre.
I.
Whether the broadcasts are libelous
A libel[23] is a public and malicious imputation of a crime, or of a vice or defect, real or
imaginary, or any act or omission, condition, status, or circumstance tending to cause the
dishonor, discredit, or contempt of a natural or juridical person, or to blacken the memory of one
who is dead.[24]
There is no question that the broadcasts were made public and imputed to AMEC defects or
circumstances tending to cause it dishonor, discredit and contempt. Rima and Alegres remarks
such as greed for money on the part of AMECs administrators; AMEC is a dumping ground,
garbage of xxx moral and physical misfits; and AMEC students who graduate will be liabilities
rather than assets of the society are libelous per se. Taken as a whole, the broadcasts suggest
that AMEC is a money-making institution where physically and morally unfit teachers abound.
However, FBNI contends that the broadcasts are not malicious. FBNI claims that Rima and
Alegre were plainly impelled by their civic duty to air the students gripes. FBNI alleges that
there is no evidence that ill will or spite motivated Rima and Alegre in making the broadcasts.
FBNI further points out that Rima and Alegre exerted efforts to obtain AMECs side and gave
Ago the opportunity to defend AMEC and its administrators. FBNI concludes that since there is
no malice, there is no libel.
FBNIs contentions are untenable.
Every defamatory imputation is presumed malicious.[25] Rima and Alegre failed to show
adequately their good intention and justifiable motive in airing the supposed gripes of the
students. As hosts of a documentary or public affairs program, Rima and Alegre should have
presented the public issues free from inaccurate and misleading information.[26] Hearing the
students alleged complaints a month before the expos,[27] they had sufficient time to verify
their sources and information. However, Rima and Alegre hardly made a thorough investigation

of the students alleged gripes. Neither did they inquire about nor confirm the purported
irregularities in AMEC from the Department of Education, Culture and Sports. Alegre testified
that he merely went to AMEC to verify his report from an alleged AMEC official who refused to
disclose any information. Alegre simply relied on the words of the students because they were
many and not because there is proof that what they are saying is true.[28] This plainly shows
Rima and Alegres reckless disregard of whether their report was true or not.
Contrary to FBNIs claim, the broadcasts were not the result of straight reporting.
Significantly, some courts in the United States apply the privilege of neutral reportage in libel
cases involving matters of public interest or public figures. Under this privilege, a republisher
who accurately and disinterestedly reports certain defamatory statements made against public
figures is shielded from liability, regardless of the republishers subjective awareness of the truth
or falsity of the accusation.[29] Rima and Alegre cannot invoke the privilege of neutral reportage
because unfounded comments abound in the broadcasts. Moreover, there is no existing
controversy involving AMEC when the broadcasts were made. The privilege of neutral
reportage applies where the defamed person is a public figure who is involved in an existing
controversy, and a party to that controversy makes the defamatory statement.[30]
However, FBNI argues vigorously that malice in law does not apply to this case. Citing Borjal
v. Court of Appeals,[31] FBNI contends that the broadcasts fall within the coverage of
qualifiedly privileged communications for being commentaries on matters of public interest.
Such being the case, AMEC should prove malice in fact or actual malice. Since AMEC
allegedly failed to prove actual malice, there is no libel.
FBNIs reliance on Borjal is misplaced. In Borjal, the Court elucidated on the doctrine of fair
comment, thus:
[F]air commentaries on matters of public interest are privileged and constitute a valid defense in
an action for libel or slander. The doctrine of fair comment means that while in general every
discreditable imputation publicly made is deemed false, because every man is presumed innocent
until his guilt is judicially proved, and every false imputation is deemed malicious, nevertheless,
when the discreditable imputation is directed against a public person in his public capacity, it is
not necessarily actionable. In order that such discreditable imputation to a public official
may be actionable, it must either be a false allegation of fact or a comment based on a false
supposition. If the comment is an expression of opinion, based on established facts, then it is
immaterial that the opinion happens to be mistaken, as long as it might reasonably be inferred
from the facts.[32] (Emphasis supplied)
True, AMEC is a private learning institution whose business of educating students is genuinely
imbued with public interest. The welfare of the youth in general and AMECs students in
particular is a matter which the public has the right to know. Thus, similar to the newspaper
articles in Borjal, the subject broadcasts dealt with matters of public interest. However, unlike in
Borjal, the questioned broadcasts are not based on established facts. The record supports the
following findings of the trial court:

xxx Although defendants claim that they were motivated by consistent reports of students and
parents against plaintiff, yet, defendants have not presented in court, nor even gave name of a
single student who made the complaint to them, much less present written complaint or petition
to that effect. To accept this defense of defendants is too dangerous because it could easily give
license to the media to malign people and establishments based on flimsy excuses that there were
reports to them although they could not satisfactorily establish it. Such laxity would encourage
careless and irresponsible broadcasting which is inimical to public interests.
Secondly, there is reason to believe that defendant radio broadcasters, contrary to the mandates
of their duties, did not verify and analyze the truth of the reports before they aired it, in order to
prove that they are in good faith.
Alegre contended that plaintiff school had no permit and is not accredited to offer Physical
Therapy courses. Yet, plaintiff produced a certificate coming from DECS that as of Sept. 22,
1987 or more than 2 years before the controversial broadcast, accreditation to offer Physical
Therapy course had already been given the plaintiff, which certificate is signed by no less than
the Secretary of Education and Culture herself, Lourdes R. Quisumbing (Exh. C-rebuttal).
Defendants could have easily known this were they careful enough to verify. And yet,
defendants were very categorical and sounded too positive when they made the erroneous report
that plaintiff had no permit to offer Physical Therapy courses which they were offering.
The allegation that plaintiff was getting tremendous aids from foreign foundations like Mcdonald
Foundation prove not to be true also. The truth is there is no Mcdonald Foundation existing.
Although a big building of plaintiff school was given the name Mcdonald building, that was only
in order to honor the first missionary in Bicol of plaintiffs religion, as explained by Dr. Lita
Ago. Contrary to the claim of defendants over the air, not a single centavo appears to be
received by plaintiff school from the aforementioned McDonald Foundation which does not
exist.
Defendants did not even also bother to prove their claim, though denied by Dra. Ago, that when
medical students fail in one subject, they are made to repeat all the other subject[s], even those
they have already passed, nor their claim that the school charges laboratory fees even if there are
no laboratories in the school. No evidence was presented to prove the bases for these claims, at
least in order to give semblance of good faith.
As for the allegation that plaintiff is the dumping ground for misfits, and immoral teachers,
defendant[s] singled out Dean Justita Lola who is said to be so old, with zero visibility already.
Dean Lola testified in court last Jan. 21, 1991, and was found to be 75 years old. xxx Even older
people prove to be effective teachers like Supreme Court Justices who are still very much in
demand as law professors in their late years. Counsel for defendants is past 75 but is found by
this court to be still very sharp and effective. So is plaintiffs counsel.
Dr. Lola was observed by this court not to be physically decrepit yet, nor mentally infirmed, but
is still alert and docile.

The contention that plaintiffs graduates become liabilities rather than assets of our society is a
mere conclusion. Being from the place himself, this court is aware that majority of the medical
graduates of plaintiffs pass the board examination easily and become prosperous and responsible
professionals.[33]
Had the comments been an expression of opinion based on established facts, it is immaterial that
the opinion happens to be mistaken, as long as it might reasonably be inferred from the facts.[34]
However, the comments of Rima and Alegre were not backed up by facts. Therefore, the
broadcasts are not privileged and remain libelous per se.
The broadcasts also violate the Radio Code[35] of the Kapisanan ng mga Brodkaster sa
Pilipinas, Ink. (Radio Code). Item I(B) of the Radio Code provides:
B. PUBLIC AFFAIRS, PUBLIC ISSUES AND COMMENTARIES
1.

xxx

4.

Public affairs program shall present public issues free from personal bias,
prejudice and inaccurate and misleading information. x x x Furthermore, the
station shall strive to present balanced discussion of issues. x x x.

xxx
7.

The station shall be responsible at all times in the supervision of public affairs,
public issues and commentary programs so that they conform to the provisions and
standards of this code.

8.

It shall be the responsibility of the newscaster, commentator, host and announcer to

protect public interest, general welfare and good order in the presentation of public
affairs and public issues.[36] (Emphasis supplied)

The broadcasts fail to meet the standards prescribed in the Radio Code, which lays down the
code of ethical conduct governing practitioners in the radio broadcast industry. The Radio Code
is a voluntary code of conduct imposed by the radio broadcast industry on its own members. The
Radio Code is a public warranty by the radio broadcast industry that radio broadcast practitioners
are subject to a code by which their conduct are measured for lapses, liability and sanctions.
The public has a right to expect and demand that radio broadcast practitioners live up to the code
of conduct of their profession, just like other professionals. A professional code of conduct
provides the standards for determining whether a person has acted justly, honestly and with good
faith in the exercise of his rights and performance of his duties as required by Article 19[37] of
the 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 manner contrary to
morals or good customs under Article 21[38] of the Civil Code.

II.
Whether AMEC is entitled to moral damages
FBNI contends that AMEC is not entitled to moral damages because it is a corporation.[39]
A juridical person is generally not entitled to moral damages because, unlike a natural person, it
cannot experience physical suffering or such sentiments as wounded feelings, serious anxiety,
mental anguish or moral shock.[40] The Court of Appeals cites Mambulao Lumber Co. v. PNB,
et al.[41] to justify the award of moral damages. However, the Courts statement in Mambulao
that a corporation may have a good reputation which, if besmirched, may also be a ground for
the award of moral damages is an obiter dictum.[42]
Nevertheless, AMECs claim for moral damages falls under item 7 of Article 2219[43] of the
Civil Code. This provision expressly authorizes the recovery of moral damages in cases of libel,
slander or any other form of defamation. Article 2219(7) does not qualify whether the plaintiff is
a natural or juridical person. Therefore, a juridical person such as a corporation can validly
complain for libel or any other form of defamation and claim for moral damages.[44]
Moreover, where the broadcast is libelous per se, the law implies damages.[45] In such a case,
evidence of an honest mistake or the want of character or reputation of the party libeled goes
only in mitigation of damages.[46] Neither in such a case is the plaintiff required to introduce
evidence of actual damages as a condition precedent to the recovery of some damages.[47] In
this case, the broadcasts are libelous per se. Thus, AMEC is entitled to moral damages.
However, we find the award of P300,000 moral damages unreasonable. The record shows that
even though the broadcasts were libelous per se, AMEC has not suffered any substantial or
material damage to its reputation. Therefore, we reduce the award of moral damages from
P300,000 to P150,000.
III.
Whether the award of attorneys fees is proper
FBNI contends that since AMEC is not entitled to moral damages, there is no basis for the award
of attorneys fees. FBNI adds that the instant case does not fall under the enumeration in Article
2208[48] of the Civil Code.
The award of attorneys fees is not proper because AMEC failed to justify satisfactorily its claim
for attorneys fees. AMEC did not adduce evidence to warrant the award of attorneys fees.
Moreover, both the trial and appellate courts failed to explicitly state in their respective decisions
the rationale for the award of attorneys fees.[49] In Inter-Asia Investment Industries, Inc. v.
Court of Appeals,[50] we held that:
[I]t is an accepted doctrine that the award thereof as an item of damages is the exception rather
than the rule, and counsels fees are not to be awarded every time a party wins a suit. The
power of the court to award attorneys fees under Article 2208 of the Civil Code demands

factual, legal and equitable justification, without which the award is a conclusion without a
premise, its basis being improperly left to speculation and conjecture. In all events, the court
must explicitly state in the text of the decision, and not only in the decretal portion thereof, the
legal reason for the award of attorneys fees.[51] (Emphasis supplied)
While it mentioned about the award of attorneys fees by stating that it lies within the discretion
of the court and depends upon the circumstances of each case, the Court of Appeals failed to
point out any circumstance to justify the award.
IV.
Whether FBNI is solidarily liable with Rima and Alegre
for moral damages, attorneys fees
and costs of suit
FBNI contends that it is not solidarily liable with Rima and Alegre for the payment of damages
and attorneys fees because it exercised due diligence in the selection and supervision of its
employees, particularly Rima and Alegre. FBNI maintains that its broadcasters, including Rima
and Alegre, undergo a very regimented process before they are allowed to go on air. Those
who apply for broadcaster are subjected to interviews, examinations and an apprenticeship
program.
FBNI further argues that Alegres age and lack of training are irrelevant to his competence as a
broadcaster. FBNI points out that the minor deficiencies in the KBP accreditation of Rima and
Alegre do not in any way prove that FBNI did not exercise the diligence of a good father of a
family in selecting and supervising them. Rimas accreditation lapsed due to his non-payment
of the KBP annual fees while Alegres accreditation card was delayed allegedly for reasons
attributable to the KBP Manila Office. FBNI claims that membership in the KBP is merely
voluntary and not required by any law or government regulation.
FBNIs arguments do not persuade us.
The basis of the present action is a tort. Joint tort feasors are jointly and severally liable for the
tort which they commit.[52] Joint tort feasors are all the persons who command, instigate,
promote, encourage, advise, countenance, cooperate in, aid or abet the commission of a tort, or
who approve of it after it is done, if done for their benefit.[53] Thus, AMEC correctly anchored
its cause of action against FBNI on Articles 2176 and 2180 of the Civil Code.
As operator of DZRC-AM and employer of Rima and Alegre, FBNI is solidarily liable to pay for
damages arising from the libelous broadcasts. As stated by the Court of Appeals, recovery for
defamatory statements published by radio or television may be had from the owner of the
station, a licensee, the operator of the station, or a person who procures, or participates in, the
making of the defamatory statements.[54] An employer and employee are solidarily liable for a
defamatory statement by the employee within the course and scope of his or her employment, at
least when the employer authorizes or ratifies the defamation.[55] In this case, Rima and Alegre
were clearly performing their official duties as hosts of FBNIs radio program Expos when they

aired the broadcasts. FBNI neither alleged nor proved that Rima and Alegre went beyond the
scope of their work at that time. There was likewise no showing that FBNI did not authorize and
ratify the defamatory broadcasts.
Moreover, there is insufficient evidence on record that FBNI exercised due diligence in the
selection and supervision of its employees, particularly Rima and Alegre. FBNI merely showed
that it exercised diligence in the selection of its broadcasters without introducing any evidence to
prove that it observed the same diligence in the supervision of Rima and Alegre. FBNI did not
show how it exercised diligence in supervising its broadcasters. FBNIs alleged constant
reminder to its broadcasters to observe truth, fairness and objectivity and to refrain from using
libelous and indecent language is not enough to prove due diligence in the supervision of its
broadcasters. Adequate training of the broadcasters on the industrys code of conduct, sufficient
information on libel laws, and continuous evaluation of the broadcasters performance are but a
few of the many ways of showing diligence in the supervision of broadcasters.
FBNI claims that it has taken all the precaution in the selection of Rima and Alegre as
broadcasters, bearing in mind their qualifications. However, no clear and convincing evidence
shows that Rima and Alegre underwent FBNIs regimented process of application.
Furthermore, FBNI admits that Rima and Alegre had deficiencies in their KBP accreditation,[56]
which is one of FBNIs requirements before it hires a broadcaster. Significantly, membership in
the KBP, while voluntary, indicates the broadcasters strong commitment to observe the
broadcast industrys rules and regulations. Clearly, these circumstances show FBNIs lack of
diligence in selecting and supervising Rima and Alegre. Hence, FBNI is solidarily liable to pay
damages together with Rima and Alegre.
WHEREFORE, we DENY the instant petition. We AFFIRM the Decision of 4 January 1999
and Resolution of 26 January 2000 of the Court of Appeals in CA-G.R. CV No. 40151 with the
MODIFICATION that the award of moral damages is reduced from P300,000 to P150,000 and
the award of attorneys fees is deleted. Costs against petitioner.
SO ORDERED.
[G.R. No. 118680. March 5, 2001]
MARIA ELENA RODRIGUEZ PEDROSA, petitioner, vs. THE HON. COURT OF APPEALS,
JOSE, CARMEN, MERCEDES & RAMON, all surnamed RODRIGUEZ, ROSALINA
RODRIGUEZ, CHAN LUNG FAI, MATEO TAN TE, TE ENG SUY, LORETA TE,
VICTORIO S. DETALIA, JEROME DEIPARINE, PETRONILO S. DETALIA, HUBERT
CHIU YULO, PATERIO N. LAO, LORENSITA M. PADILLA, IMMACULATE
CONCEPCION COLLEGE AND LILIAN EXPRESS, INC. and TIO TUAN, respondents.
DECISION
QUISUMBING, J.:

This petition assails the decision of the Court of Appeals dated May 23, 1994 which affirmed the
judgment of the Regional Trial Court, Branch 15, of Ozamiz City in Civil Case No. OZ-1397.
The facts of this case are as follows:
On April 8, 1946, the spouses Miguel Rodriguez and Rosalina J. de Rodriguez initiated
proceedings before the CFI of Ozamiz City for the legal adoption of herein petitioner, Maria
Elena Rodriguez Pedrosa. On August 1, 1946, the CFI granted the petition and declared
petitioner Pedrosa the adopted child of Miguel and Rosalina.
On April 29, 1972, Miguel died intestate. Thereafter, petitioner and Rosalina entered into an
extrajudicial settlement of Miguels estate, adjudicating between themselves in equal proportion
the estate of Miguel.
On November 21, 1972, private respondents filed an action to annul the adoption of petitioner
before the CFI of Ozamiz City, with petitioner and herein respondent Rosalina as defendants
docketed as OZ 349.
On August 28, 1974, the CFI denied the petition and upheld the validity of the adoption.
Thereafter, the private respondents appealed said decision to the Court of Appeals.
On March 11, 1983, while said appeal was pending, the Rodriguezes entered into an extrajudicial
settlement with respondent Rosalina for the partition of the estate of Miguel and of another sister,
Pilar. Rosalina acted as the representative of the heirs of Miguel Rodriguez. Pilar had no heirs
except his brothers and sisters.
The Deed of Extrajudicial Settlement and Partition covered fourteen parcels of land covering a
total area of 224,883 square meters. These properties were divided among Jose, Carmen,
Mercedes, Ramon and the heirs of Miguel, represented solely by Rosalina. The heirs of Miguel
were given 226 square meters of parcel 2, and 9,567 square meters and 24,457 square meters of
parcels 7 and 9, respectively.lix[1] The total land area allocated to the heirs of Miguel was 34,250
square meters.
Armed with the Deed of Extrajudicial Settlement and Partition, respondents Rodriguezes were
able to secure new Transfer Certificates of Title (TCTs) and were able to transfer some parcels to
the other respondents herein.lix[2]
Lots 504-A-6, 504-B-3 and 504-C-4, portions of Parcel 3, designated as Lot 504, were
transferred to respondents Chuan Lung Fai,lix[3] but not included in the Deed of Settlement and
Partition, were transferred to respondent Lilian Express, Inc. and are now registered under TCT
No. T-11337. Parcel 6, Lot 560, was subdivided among Ramon, Jose, Carmen and Mercedes
and was designated as Lots 560-A, 560-B, 560-C, 560-D and 560-E. Lot 560-A covering 500
square meters was transferred to respondent Victorino Detalllix[4] and was subsequently
transferred to Jerome Deiparine who registered it under his name under TCT No. T-10706. Lot
560-B with 500 square meters was transferred to respondent Petronilo Detallalix[5] and was later

transferred to respondent Hubert Chiu Yulo who registered it under his name under TCT No. T11305. Lot 560-C was transferred and registered under the name of respondent Paterio Lao with
TCT No. T-10206. Lot 560-D was sold to and subsequently registered in the name of Lorensita
M. Padilla under TCT No. T-10207. The remaining portion, Lot 560-E consisting of 43,608
square meters was bought by respondent Immaculate Concepcion College and was registered in
its name under TCT No. T-10208.lix[6]
On June 19, 1986, the parties in the appeal which sought to annul the adoption of petitioner
Pedrosa filed a joint Motion to Dismiss. On June 25, 1986, the Court of Appeals dismissed the
appeal but upheld the validity of the adoption of petitioner.
Thereafter, petitioner sent her daughter, Loreto Jocelyn, to claim their share of the properties
from the Rodriguezes. The latter refused saying that Maria Elena and Loreto were not heirs
since they were not their blood relatives.
Petitioner, then, filed a complaint to annul the 1983 partition. The said complaint was filed on
January 28, 1987. Said complaint was later amended on March 25, 1987 to include the
allegation that earnest efforts toward a compromise were made between the plaintiffs and the
defendants, but the same failed.lix[7]
The Regional Trial Court dismissed the complaint.
Petitioner appealed to the Court of Appeals. The appellate court affirmed the decision of the trial
court. Its ruling was premised on the following grounds:lix[8]
1)
that the participation of Rosalina has already estopped her from questioning the validity
of the partition, and since she is already estopped, it naturally follows that Maria Elena, her
successor-in-interest, is likewise estopped, applying Article 1439 of the Civil Code;
2)
that the appeal of Maria Elena and her claim that the partition is null and void is
weakened by her inconsistent claim that the partition would have been alright had she been given
a more equitable share;
3)
the action is essentially an action for rescission and had been filed late considering that it
was filed beyond the 4 year period provided for in Article 1100 of the Civil Code;lix[9]
4)

that fraud and/or bad faith was never established.

Petitioner filed a Motion for Reconsideration, which was denied by the Court of Appeals in a
Resolution dated December 20, 1994.lix[10]
Hence, this petition wherein the petitioner asserts that the following errors were allegedly
committed by the Court of Appeals in -

I.
FINDING THAT THE EXTRAJUDICIAL SETTLEMENT AND PARTITION
ENTERED INTO BY DEFENDANT JUREDINI AND DEFENDANTS-APPELLANTS
RODRIGUEZES WAS VALID AND BINDING UPON THE PLAINTIFF-APPELLANT WHO
DID NOT PARTICIPATE IN SAID TRANSACTION
II.
CONCLUDING THAT THE CLAIM OF PLAINTIFF-APPELLANT HAVE
ALREADY PRESCRIBED TWO (2) YEARS AFTER PUBLICATION OF THE
EXTRAJUDICIAL SETTLEMENT AND PARTITION IN THE NEWSPAPER OF GENERAL
CIRCULATION
III. ...CONCLUDING THAT THE CLAIM OF PLAINTIFF-APPELLANT IS BARRED OR
ESTOPPED IN FILING THIS CASE (sic) IN VIEW OF THE DISMISSAL OF THE APPEAL
IN CIVIL CASE NO. OZ 349 INTERPOSED BY HEREIN DEFENDANTS-APPELLEES
WHO WERE THEN PLAINTIFFS-APPELLANTS IN AC[C]-G.R. NO. SP-00208
IV. SUSTAINING THE DEFENDANT-APPELLEES CLAIM THAT AS THEY HAVE
NOT AS YET RECOGNIZED PLAINTIFF-APPELLANT AS AN ADOPTED DAUGHTER
OF MIGUEL RODRIGUEZ IT WAS NOT NECESSARY FOR THEM TO HAVE HER
PARTICIPATE IN THE EXTRAJUDICIAL SETTLEMENT, EXHIBITS S AND I
V.
CONCLUDING THAT THE PLAINTIFF-APPELLANT HAD NOT
CONCLUSIVELY SHOWN THAT MIGUEL RODRIGUEZ WAS A CO-OWNER OF THE
LANDS SOLD AND HENCE IT FOLLOWS THAT SHE HAS NO RIGHT OF REDEMPTION
OF THOSE LANDS
VI. FINDING THAT PORTION OF LOTS NOS. 504 AND 560 SOLD TO THE OTHER
DEFENDANTSAPPELLEES WERE CLEAN AND FREE FROM ENCUMBRANCES OR
ANY FLAWS HENCE WERE VALID
VII. FINDING THAT THE PLANTIFFAPPELLANT NEVER APPEARED IN COURT
TO TESTIFY OR REBUT THE ASSERTIONS OF THE DEFENDANTSAPPELLANTS
THAT THERE WAS A VALID PARTITION
VIII. AWARDING PLAINTIFFAPPELLANT DAMAGES FOR THE INCOME OF HER
SHARE IN THE PROPERTIES IN QUESTIONlix[11]
In sum, the issues to be resolved in our view are (1) whether or not the complaint for annulment
of the Deed of Extrajudicial Settlement and Partition had already prescribed; (2) whether or
not said deed is valid; and (3) whether or not the petitioner is entitled to recover the lots which
had already been transferred to the respondent buyers.
Petitioner argues that the complaint for annulment of the extrajudicial partition has not yet
prescribed since the prescriptive period which should be applied is four years following the case
of Beltran vs. Ayson, 4 SCRA 69 (1962). She also avers that Sec. 4, Rule 74 which provides for
a two-year prescriptive period needs two requirements. One, the party assailing the partition

must have been given notice, and two, the party assailing the partition must have participated
therein. Petitioner insists these requirements are not present in her case,lix[12] since she did not
participate in the Deed of Extrajudicial Settlement and Partition. She cites Villaluz vs. Neme, 7
SCRA 27, 30 (1963), where we held that a deed of extrajudicial partition executed without
including some of the heirs, who had no knowledge and consent to the same, is fraudulent. She
asserts that she is an adoptive daughter and thus an heir of Miguel.lix[13]
Petitioner also contends that the respondent buyers were buyers in bad faith since they failed to
exercise the necessary due diligence required before purchasing the lots in question.lix[14] In the
alternative, petitioner wants to redeem the said lots as a co-owner of respondent Rodriguezes under the provisions of
Article 1620 of the New Civil Code.lix[15]

Lastly, petitioner asserts that she will suffer lesion if the partition would be allowed. She asks
for the rescission of the said partitioning under Articles 165-175 of the Civil Code.lix[16]
Respondents, in response, claim that the action of petitioner had already prescribed. In addition,
they argue that petitioner, Maria Elena, and Rosalina already have their shares in the estate of
Miguel Rodriguez reflected in the compromise agreement they entered into with the respondent
Rodriguezes in AC- G.R. SP 00208. Finally, respondents aver that the non-participation of
Maria Elena in the extrajudicial partition was understandable since her status as an adopted child
was then under litigation. In any case, they assert that the shares of Miguels heirs were
adequately protected in the said partition.lix[17]
Section 4, Rule 74lix[18] provides for a two year prescriptive period (1) to persons who have
participated or taken part or had notice of the extrajudicial partition, and in addition (2) when the
provisions of Section 1lix[19] of Rule 74 have been strictly complied with, i.e., that all the
persons or heirs of the decedent have taken part in the extrajudicial settlement or are represented
by themselves or through guardians.lix[20]
Petitioner, as the records confirm, did not participate in the extrajudicial partition. Patently then,
the two-year prescriptive period is not applicable in her case.
The applicable prescriptive period here is four (4) years as provided in Gerona vs. De Guzman,
11 SCRA 153 (1964), which held that:
[The action to annul] a deed of extrajudicial settlement upon the ground of fraud...may be filed
within four years from the discovery of the fraud. Such discovery is deemed to have taken place
when said instrument was filed with the Register of Deeds and new certificates of title were
issued in the name of respondents exclusively.lix[21]
Considering that the complaint of the petitioner was filed on January 28, 1987, or three years and
ten months after the questioned extrajudicial settlement dated March 11, 1983, was executed, we
hold that her action against the respondents on the basis of fraud has not yet prescribed.
Section 1 of Rule 74 of the Rules of Court is the applicable rule on publication of extrajudicial
settlement. It states:

The fact of the extrajudicial settlement or administration shall be published in a newspaper of

general circulation in the manner provided in the next succeeding section; but no extrajudicial
settlement shall be binding upon any person who has not participated therein or had no notice
thereof.lix[22]
Under said provision, without the participation of all persons involved in the proceedings, the
extrajudicial settlement cannot be binding on said persons. The rule contemplates a notice which
must be sent out or issued before the Deed of Settlement and/or Partition is agreed upon, i.e., a
notice calling all interested parties to participate in the said deed of extrajudicial settlement and
partition, not after, which was when publication was done in the instant case. Following Rule 74
and the ruling in Beltran vs. Ayson, since Maria Elena did not participate in the said partition, the
settlement is not binding on her.
The provision of Section 4, Rule 74 will also not apply when the deed of extrajudicial partition is
sought to be annulled on the ground of fraud. A deed of extrajudicial partition executed without
including some of the heirs, who had no knowledge of and consent to the same, is fraudulent and
vicious.lix[23] Maria Elena is an heir of Miguel together with her adopting mother, Rosalina.
Being the lone descendant of Miguel, she excludes the collateral relatives of Miguel from
participating in his estate, following the provisions of Article 1003 of the Civil Code.lix[24] The
private respondent Rodriguezes cannot claim that they were not aware of Maria Elenas adoption
since they even filed an action to annul the decree of adoption. Neither can they claim that their
actions were valid since the adoption of Maria Elena was still being questioned at the time they
executed the deed of partition. The complaint seeking to annul the adoption was filed only
twenty six (26) years after the decree of adoption, patently a much delayed response to prevent
Maria Elena from inheriting from her adoptive parents. The decree of adoption was valid and
existing. With this factual setting, it is patent that private respondents executed the deed of
partition in bad faith with intent to defraud Maria Elena.
In the case of Segura vs. Segura, the Court held:
This section [referring to section 4, Rule 74] provides in gist that a person who has been deprived
of his lawful participation in the estate of the decedent, whether as heir or as creditor, must assert
his claim within two years after the extrajudicial or summary settlement of such estate under
Sections 1 and 2 respectively of the same Rule 74. Thereafter, he will be precluded from doing
so as the right will have prescribed.
It is clear that Section 1 of Rule 74 does not apply to the partition in question which was null and
void as far as the plaintiffs were concerned. The rule covers only valid partitions. The partition
in the present case was invalid because it excluded six of the nine heirs who were entitled to
equal shares in the partitioned property. Under the rule, no extrajudicial settlement shall be
binding upon any person who has not participated therein or had no notice thereof. As the
partition was a total nullity and did not affect the excluded heirs, it was not correct for the trial
court to hold that their right to challenge the partition had prescribed after two years from its
execution in 1941.lix[25]

To say that Maria Elena was represented by Rosalina in the partitioning is imprecise. Maria
Elena, the adopted child, was no longer a minor at the time Miguel died. Rosalina, only
represented her own interests and not those of Maria Elena. Since Miguel predeceased Pilar, a
sister, his estate automatically vested to his child and widow, in equal shares. Respondent
Rodriguezes interests did not include Miguels estate but only Pilars estate.
Could petitioner still redeem the properties from buyers? Given the circumstances in this case,
we are constrained to hold that this is not the proper forum to decide this issue. The properties
sought to be recovered by the petitioner are now all registered under the name of third parties.
Well settled is the doctrine that a Torrens Title cannot be collaterally attacked. The validity of
the title can only be raised in an action expressly instituted for such purpose.lix[26]
Petitioner asks for the award of damages. No receipts, agreements or any other documentary
evidence was presented to justify such claim for damages. Actual damages, to be recoverable,
must be proved with a reasonable degree of certainty. Courts cannot simply rely on speculation,
conjecture or guesswork in determining the fact and amount of damages.lix[27] The same is true
for moral damages. These cannot be awarded in the absence of any factual basis.lix[28] The
unsubstantiated testimony of Loreto Jocelyn Pedrosa is hearsay and has no probative value. It is
settled in jurisprudence that damages may not be awarded on the basis of hearsay evidence.lix[29]
Nonetheless, the failure of the petitioner to substantiate her claims for damages does not mean
that she will be totally deprived of any damages. Under the law, nominal damages are awarded,
so that a plaintiffs right, which has been invaded or violated by defendants may be vindicated
and recognized.lix[30]
Considering that (1) technically, petitioner sustained injury but which, unfortunately, was not
adequately and properly proved, (2) petitioner was unlawfully deprived of her legal participation
in the partition of the estate of Miguel, her adoptive father, (3) respondents had transferred
portions of the properties involved to third parties, and (4) this case has dragged on for more than
a decade, we find it reasonable to grant in petitioners favor nominal damages in recognition of
the existence of a technical injury.lix[31] The amount to be awarded as such damages should at
least commensurate to the injury sustained by the petitioner considering the concept and purpose
of said damages.lix[32] Such award is given in view of the peculiar circumstances cited and the
special reasons extant in this case.lix[33] Thus, the grant of ONE HUNDRED THOUSAND
(P100,000.00) PESOS to petitioner as damages is proper in view of the technical injury she has
suffered.
WHEREFORE, the petition is GRANTED. The assailed decision of the Court of Appeals is
hereby REVERSED and SET ASIDE. The Deed of Extrajudicial Settlement and Partition
executed by private respondents on March 11, 1983 is declared invalid. The amount of
P100,000.00 is hereby awarded to petitioner as damages to be paid by private respondents, who
are also ordered to pay the costs.
SO ORDERED.

PEDROSA, vs. THE HON. COURT OF APPEALS

G.R. No. 118680. March 5, 2001
FACTS
Miguel Rodriguez died intestate survived by his wife Rosalina and their legally adopted daughter Maria Pedrosa, the petitioner. Rosalina and
Maria entered into an extra judicial settlement of his estate.
The other Private respondents, the Rodriguezes, however filed an action an action to annul Marias
adoption which the CFI upheld. It was also appealed to the Court of Appeals which also upheld the adoption as legal. In the meantime, Pilar, the
sister of Miguel also passed away with no other heirs but her brothers and sisters, the private respondents. Who then entered into an extrajudicial
settlement with respondent Rosalina for the partition of the estate of Miguel and of his sister, Pilar. Rosalina acted as the representative of the
heirs of Miguel Rodriguez. The Deed of Extrajudicial Settlement and Partition covered fourteen parcels of land covering a total area of 224,883
square meters. These properties were divided among Jose, Carmen, Mercedes, Ramon and the heirs of Miguel, represented solely by Rosalina.
Armed with the Deed of Extrajudicial Settlement and Partition, respondents Rodriguezes were able to secure new Transfer Certificates of Title
(TCTs) and were able to transfer some parcels to the other respondents herein. Petitioner Maria tried to claim their share of the properties and
after being unable to do so, filed a complaint to annul the partition. Her complaint was dismissed by the RTC and on appeal was also dismissed
by the CA.
ISSUES
(1) whether or not the complaint for annulment of the Deed of Extrajudicial Settlement and Partition had already prescribed;
(2) whether or not said deed is valid; (3) whether or not the petitioner is entitled to recover the lots which had already been transferred to the
respondent buyers.
RULING
1.No. The complaint for the annulment has not prescribed Section 4, Rule 74
]
provides for a two year prescriptive period (1) to persons who have participated or taken part or had notice of the extrajudicial partition, and in
addition (2) when the provisions of Section 1of Rule 74 have been strictly complied with,
i.e
., that all the persons or heirs of the decedent have taken part in the extrajudicial settlement or are represented by themselves or through
guardians.
Petitioner, as the records confirm, did not participate in the extrajudicial partition. So the two-year prescriptive period is not applicable in her
case. The applicable prescriptive period here is four (4) years as provided in
Gerona vs. De Guzman,
11 SCRA 153 (1964), which held that: [The action to annul] a deed of
extrajudicial settlement upon the ground of fraud...may be filed
within four years from the discovery of the fraud. Such discovery is deemed to have taken place when said instrument was filed with the Register
of Deeds and new certificates of title were issued in the name of respondents exclusively. It is clear that Section 1 of Rule 74 does not apply to
the partition in question which was null and void as far as the plaintiffs were concerned. The rule covers only valid partitions. The partition in the
present case was invalid because it excluded six of the nine heirs who were entitled to equal shares in the partitioned property.
Under the rule, no extrajudicial settlement shall be binding upon any person
who has not participated therein or had no not
ice thereof. As the partition was a total nullity and did
not affect the excluded heirs, it was not correct for the trial court to hold that their right to challenge the partition had prescribed after two years
from its execution in 1941
2.No. The deed of partition is not valid. No extrajudicial settlement shall be binding upon any person who has not participated therein or had no
notice thereof. Under Rule 74, without the participation of all persons involved in the proceedings, the extrajudicial settlement cannot be binding
on said persons. The rule contemplates a notice which must be sent out or issued before the Deed of Settlement and/or Partition is agreed upon,
i.e
., a notice calling all interested parties to participate in the said deed of extrajudicial settlement and partition, not after, which was when
publication was done in the instant case. Following Rule 74 and the ruling in
Beltran vs. Ayson,
since Maria Elena did not participate in the said partition, the settlement is not binding on her. The provision of Section 4, Rule 74 will also not
apply when the deed of extrajudicial partition is sought to be annulled on the ground of fraud. A deed of extrajudicial partition executed without
including some of the heirs, who had no knowledge of and consent to the same, is fraudulent and vicious.
Maria Elena is an heir of Miguel together with her adopting mother, Rosalina. Being the lone descendant of Miguel, she excludes the collateral
relatives of Miguel from participating in his estate, following the provisions of Article 1003 of the Civil Code
3.The court ruled that this is not the proper forum to decide this issue. The properties sought to be recovered by the petitioner are now all
registered under the name of third parties. Well settled is the doctrine that a
Torrens Title
cannot be collaterally attacked. The validity of the title can only be raised in an action expressly instituted for such purpose.

[G.R. No. 141011. July 19, 2001]

CITYTRUST BANKING CORPORATION (now Bank of the Philippine Islands), petitioner, vs.
ISAGANI C. VILLANUEVA, respondent.
[G.R. No. 141028. July 19, 2001]
ISAGANI C. VILLANUEVA, petitioner, vs. CITYTRUST BANKING CORPORATION,
respondent.
DECISION
DAVIDE, JR., C.J.:

In these consolidated cases, the Court is called upon to determine whether the repeated dishonor
of a check drawn against a well-funded account but bearing the account number of another
depositor with the same name and surname as the drawer would entitle the drawer to
compensatory and moral damages and to attorneys fees.
The antecedent facts are as follows:
Sometime in February 1984, Isagani C. Villanueva (hereafter VILLANUEVA) opened a savings
account and a current account with Citytrust Banking Corporation (hereafter the BANK), which
were assigned account numbers 1-033-02337-1 and 33-00977-5, respectively, with an automatic
transfer arrangement.
On 21 May 1986, VILLANUEVA deposited some money in his savings account with the
BANKs Legaspi Village Branch in Makati, Metro Manila. Realizing that he had run out of
blank checks, VILLANUEVA requested a new checkbook from one of the BANKs customer
service representatives. He then filled up a checkbook requisition slip with the obligatory
particulars, except for his current account number which he could not remember. He expressed
his predicament to a lady customer service representative of the BANK, who in turn assured him
that she could supply the information from the BANKs account records. After signing the
requisition slip, he gave it to her.lix[1]
Pia Rempillo, another customer service representative of the BANK, saw VILLANUEVAs
checkbook requisition slip. She took it and proceeded to check the BANKs checkbook register
which contained all the names and account numbers of the BANKs clients who were issued
checkbooks. Upon seeing the name Isagani Villanueva -- Account No. 33-00446-3 in the
checkbook register, Rempillo copied the aforesaid account number on the space intended for it in
VILLANUEVAs requisition slip.lix[2]
On 17 June 1986, VILLANUEVA received from the BANK his requested checkbook. On the
same day, he immediately signed Check No. 396701 bearing the amount of P50,000 payable to
the order of Kingly Commodities Traders and Multi Resources, Inc. (hereafter Kingly
Commodities). VILLANUEVA thereafter delivered the check to Helen Chu, his investment
consultant at Kingly Commodities, with his express instruction to use said check in placing a

trading order at Kingly Commodities future trading business as soon as a favorable opportunity
presented itself.lix[3]
Two days later, or on 19 June 1986, VILLANUEVA received a call from Helen Chu, informing
him that she had already placed a trading order in his behalf and delivered the check to Kingly
Commodities. The check was deposited with the China Banking Corporation. The next day, he
deposited P31,600 in cash to his savings account to cover the full amount of the check he issued.
His deposits in both accounts totalled P51,304.91.lix[4]
However, on 23 June 1986, VILLANUEVAs Check No. 396701 was dishonored due to
insufficiency of funds and disparity in the signature. VILLANUEVA called Kingly Commodities
and explained that there was a mistake in the dishonor of the check because he had sufficient
funds. Forthwith on the same day, VILLANUEVA called up the BANKs Legaspi Village
Branch Operations Manager, Maritess Gamboa, and inquired about the dishonor of his wellfunded check. Gamboa promised to look into the matter and instructed VILLANUEVA to
advise his payee, Kingly Commodities, to re-deposit the check. Gamboa assured VILLANUEVA
that the check would be honored after the sufficiency of the funds was ascertained.lix[5]
On 26 June 1986 at about 4:00 p.m., VILLANUEVA learned that his check was again
dishonored due to insufficiency of funds and a stop- payment order he allegedly issued.
Dismayed by the turn of events, VILLANUEVA called up the BANK and inquired from
Gamboa the reason for the dishonor of his well-funded check and the alleged stop-payment order
which he never issued. Gamboa promised to investigate the matter and to call VILLANUEVA
in fifteen (15) minutes.lix[6] In the meantime, she advised VILLANUEVA to re-deposit the
check.
VILLANUEVA then requested Lawrence Chin of Kingly Commodities to give him until 5:30
p.m. that same day to make good his P50,000 check. He then proceeded to the BANKs Legaspi
Village Branch Office, together with his investment consultant and his trading partner, to
personally inquire into the matter. They were met by Marilou Genuino, the BANKs Branch
Manager. There he complained that his trading order was rejected because of the dishonor of the
check and that Kingly Commodities threatened to close his trading account unless his check
payment would be made good before 5:30 p.m. that day. After making the necessary
investigation, Genuino related to VILLANUEVA that the reason for the dishonor of the check
was that the account number assigned to his new checkbook was the account number of another
depositor also named Isagani Villanueva but with a different middle initial.lix[7]
To resolve the matter, Genuino promised to send to Kingly Commodities a managers check for
P50,000 before 5:30 p.m., the deadline given to VILLANUEVA. She also personally called
Kingly Commodities and explained the reason for the dishonor of the check.lix[8]
On 30 June 1986, VILLANUEVA sent a letterlix[9] to the BANK addressed to the President, Jose
Facundo, demanding indemnification for alleged losses and damages suffered by him as a result
of the dishonor of his well-funded check. He demanded the amount of P70,000 as

indemnification for actual damages in the form of lost profits and P2 Million for moral and other
damages.
On 10 July 1986, in answer to VILLANUEVAs letter, Gregorio Anonas III, the BANKs Senior
Vice-President, apologized for the unfortunate oversight, but reminded VILLANUEVA that the
dishonor of his check was due to his failure to state his current account number in his requisition
slip. Anonas further stated that as soon as the mistake was discovered, the BANK promptly sent
a managers check to Kingly Commodities before 5:30 p.m. on 26 June 1986 to avoid any
damage the dishonor of the check might have caused.lix[10]
Failing to obtain from the BANK a favorable action on his demand for indemnification,
VILLANUEVA filed on 27 August 1986 a complaint for damages based on breach of contract
and/or quasi-delict before the Regional Trial Court of Makati City. The case was docketed as
Civil Case No. 14749 and was raffled to Branch 63 thereof.
VILLANUEVA alleged in his complaint that the BANK breached its contractual obligation to
him as a depositor because of its repeated dishonor of his valid and well-funded check. The
breach arose from the BANKs gross negligence and culpable recklessness in supplying the
wrong account number. As a consequence, he suffered and sustained (1) actual damages
consisting of loss of profits in the amount of at least P240,000, for he was not allowed to trade by
Kingly Commodities; and (2) P2 Million as moral damages because of the intolerable physical
inconvenience, discomfort, extreme humiliation, indignities, etc., that he had borne before his
peers and colleagues in the firm, his trading partners, and the officers of Kingly Commodities.
He prayed for an additional award of P500,000 for exemplary damages, attorneys fees, litigation
expenses and costs of the suit.lix[11]
In its answer, the BANK alleged that VILLANUEVA suffered no actionable injury, much less
damages, considering his blatant irresponsibility in not remembering his current account number
and in failing to bring his checkbook re-order slip form on which his account number was
inscribed when he requested a new set of checks. His negligence in verifying the account
number of the new set of checks issued to him also contributed to the dishonor of his check. The
BANK claimed that it acted in good faith when it twice dishonored the check. It further asserted
that VILLANUEVAs negligence was the proximate cause of his self-proclaimed injury; and the
alleged losses and damages could not likewise be deemed the natural and probable consequences
of the BANKs breach of obligation, had there been any. Finally, it claimed that VILLANUEVA
acted with malice in filing the case, and interposed counterclaims of P500,000 as exemplary
damages; P250,000 as attorneys fees; and actual damages as may be determined by the
court.lix[12]
After due proceedings, the trial court rendered on 3 July 1992 a decisionlix[13] dismissing the
complaint and the compulsory counterclaim for lack of merit. To the trial court, the basic issue
was whether it was VILLANUEVAs or the BANKs negligence which was the proximate cause
of the formers alleged injury. After an evaluation of the respective allegations and evidence of
the parties, the trial court found that VILLANUEVAs negligence set the chain of events which
resulted in his alleged losses and damages. His negligence consisted in his failure to (a) indicate

his current account number when he filled up his requisition slip for a new set of checks; (b)
remember his account number; (c) bring the used checkbook to which was attached the pre-order
requisition slip on which the account number was pre-indicated; (d) give the requisition slip to
the care and custody of a BANK officer or employee instead of leaving the requisition slip on
top of one of the tables of the BANK; and (e) verify the account number of the new set of checks
when it was delivered to him. These omissions directly resulted in the dishonor of his check
drawn from an account bearing the account number of another BANK client whose name and
surname were similar to his. VILLANUEVA then must bear the consequent damages and losses
he allegedly suffered.
The trial court conceded, however, that the BANK was negligent when it failed to supply
VILLANUEVAs correct account number despite its promise to do so; but its negligence was
merely contributory, which would have reduced the damages recoverable by VILLANUEVA
had the latter proved his claims for actual, moral and exemplary damages, and attorneys fees.
Likewise, the trial court doubted that VILLANUEVA sustained actual damages in the amount of
P240,000 due to loss of profits as averred in the complaint considering that his initial claim
against the BANK for actual loss was merely P70, 000lix[14] and the evidence presented in
support thereof was hearsay, unreliable and not the best evidence.
VILLANUEVA appealed to the Court of Appeals. The appeal was docketed as CA-G.R. CV
No. 40931.
In his appeal, VILLANUEVA maintained that the BANK was guilty of gross or culpable
negligence amounting to bad faith when its customer service representative furnished an
erroneous account number. He further contended that the same was the proximate cause of the
repeated dishonor of his check. He should, therefore, be entitled to an award of actual, moral
and exemplary damages, including attorneys fees and costs of the suit.
The Court of Appeals, in its decision of 2 February 1999,lix[15] ruled that when the BANK
voluntarily processed the requisition slip without the requisite account number being supplied by
the applicant, it in effect took upon itself the obligation to supply the correct account number.
Thus, when the new checkbook was released to VILLANUEVA on 17 June 1986, the BANK
was deemed to have waived any defect in the requisition slip and estopped from putting the
blame on VILLANUEVAs failure to indicate his account number. VILLANUEVA had every
right to assume that everything was in order in his application for a new checkbook; for, after all,
he was banking with a world class universal bank. The banking industry is imbued with public
interest and is mandated by law to serve its clients with extraordinary care and diligence.
The Court of Appeals also considered the BANKs voluntary processing of the requisition slip as
the cause which in the natural and continuous sequence, unbroken by any efficient intervening
cause, produced the injury and without which the result would not have occurred.lix[16]
However, although it conceded that the BANKs negligence was not attended with malice and
bad faith, it nonetheless awarded moral damages in the amount of P100,000. It also awarded
attorneys fees in the amount of P50,000, since VILLANUEVA was compelled to incur expenses

to protect his interests by reason of the unjustified act or omission of the BANK. However, it
rejected VILLANUEVAs claim for compensatory damages and affirmed the trial courts
finding thereon.
Upon the deniallix[17] of their respective motions for reconsideration, both VILLANUEVA and
the BANK appealed to us by way of petition for review.
In its petition, the BANK ascribes to the Court of Appeals as reversible errors its (1) reversal of
the court a quos decision; (2) declaration that the proximate and efficient cause of the injury
allegedly suffered by VILLANUEVA was the BANKs processing of the checkbook and
assigning an erroneous account number, and not the negligent act of VILLANUEVA in leaving
the checkbook requisition slip on top of one of the desks with the account number entry blank;
and (3) award of moral damages and attorneys fees despite the absence of a finding of bad faith
on the part of the BANK.
In his petition, VILLANUEVA asserts that the Court of Appeals erred in holding that his actual
losses in the amount of P234,059.04 was not sufficiently proved with reasonable certainty. Had
his fully-funded check not been dishonored twice, his four trading orders with Kingly
Commodities consisting of two (2) open sell positions on 17 and 18 of June 1986 and two (2)
settle buy orders on 26 June 1986 would have earned him profits in the amount he claimed. He
emphatically maintains that the loss had been satisfactorily proved by the testimony of Helen
Chu, his investment consultant. Ms. Chus testimony was not controverted; hence, it should
have been considered and admitted as factually true. Considering that his claim for actual
damages has been adequately established and that the BANK committed gross negligence
amounting to bad faith, his concomitant demand for exemplary damages should likewise be
awarded.
The issue of whether VILLANUEVA suffered actual or compensatory damages in the form of
loss of profits is factual. Both the Court of Appeals and the trial court have ascertained that
VILLANUEVA was unable to prove his demand for compensatory damages arising from loss.
His evidence thereon was found inadequate, uncorroborated, speculative, hearsay and not the
best evidence. Basic is the jurisprudential principle that in determining actual damages, the court
cannot rely on mere assertions, speculations, conjectures or guesswork but must depend on
competent proof and on the best obtainable evidence of the actual amount of the loss.lix[18]
Actual damages cannot be presumed but must be duly proved with reasonable certainty.lix[19]
It must also be stressed that the unanimity on the factual ascertainment on this point by the trial
court and the Court of Appeals bars us from supplanting their finding and substituting it with our
own assessment. Well-entrenched in our jurisprudence is the doctrine that the factual
determinations of the lower courts are conclusive and binding upon appellate courts and hence
should not be disturbed. None of the recognized exceptions to said principle exists in this case to
warrant a reexamination of such finding. Besides, our jurisdiction in cases brought before us
from the Court of Appeals is limited to the review of errors of law.lix[20]

Nonetheless, is VILLANUEVA entitled to the moral damages and attorneys fees granted by the
Court of Appeals?
Moral damages include physical suffering, mental anguish, fright, serious anxiety, besmirched
reputation, wounded feelings, moral shock, social humiliation, and similar injury.lix[21] Although
incapable of pecuniary computation, moral damages may be recovered if they are the proximate
result of the defendants wrongful act or omission.lix[22] Thus, case law establishes the requisites
for the award of moral damages, viz: (1) there must be an injury, whether physical, mental or
psychological, clearly sustained by the claimant; (2) there must be a culpable act or omission
factually established; (3) the wrongful act or omission of the defendant is the proximate cause of
the injury sustained by the claimant; and (4) the award of damages is predicated on any of the
cases stated in Article 2219 of the Civil Code.lix[23]
It is beyond cavil that VILLANUEVA had sufficient funds for the check. Had his account
number been correct, the check would not have been dishonored. Hence, we can say that
VILLANUEVAs injury arose from the dishonor of his well-funded check. We have already
ruled that the dishonor of the check does not entitle him to compensatory damages. But, could
the dishonor result in his alleged intolerable physical inconvenience and discomfort, extreme
humiliation, indignities, etc, which he had borne before his peers, trading partners and officers of
Kingly Commodities? True, we find that under the circumstances of this case, VILLANUEVA
might have suffered some form of inconvenience and discomfort as a result of the dishonor of his
check. However, the same could not have been so grave or intolerable as he attempts to portray
or impress upon us.
Further, it is clear from the records that the BANK was able to remedy the caveat of Kingly
Commodities to VILLANUEVA that his trading account would be closed at 5:30 p.m. on 26
June 1986. The BANK was able to issue a managers check in favor of Kingly Commodities
before the deadline. It was able to likewise explain to Kingly Commodities the circumstances
surrounding the unfortunate situation. Verily, the alleged embarrassment or inconvenience
caused to VILLANUEVA as a result of the incident was timely and adequately contained,
corrected, mitigated, if not entirely eradicated. VILLANUEVA, thus, failed to support his claim
for moral damages. In short, none of the circumstances mentioned in Article 2219 of the Civil
Code exists to sanction the award for moral damages.
The award of attorneys fees should likewise be deleted. The general rule is that attorneys fees
cannot be recovered as part of damages because of the policy that no premium should be placed
on the right to litigate. They are not to be awarded every time a party wins a suit. The power of
the court to award attorneys fees under Article 2208 of the Civil Code demands factual, legal
and equitable justification. Even when a claimant is compelled to litigate with third persons or to
incur expenses to protect his rights, still attorneys fees may not be awarded where there is no
sufficient showing of bad faith in the parties persistence of a case other than an erroneous
conviction of the righteousness of his cause.lix[24]
In view of the foregoing discussion, we need not deliberate on the dispute as to whether it was
the BANKs or VILLANUEVAs negligence which was the proximate cause of the latters

injury because, in the first place, he did not sustain any compensable injury. If any damage had
been suffered at all, it could be equivalent to damnum absque injuria, i.e., damage without injury
or damage or injury inflicted without injustice, or loss or damage without violation of a legal
right, or a wrong done to a man for which the law provides no remedy.lix[25]
WHEREFORE, the decision of the Court of Appeals in CA-G.R. CV No. 40931 is hereby
REVERSED, and the judgment of the Regional Trial Court of Makati City, Branch 63, in Civil
Case No. 14749 dismissing the complaint and the counterclaim is hereby REINSTATED.
No costs.
SO ORDERED.
SCC CHEMICALS CORPORATION, petitioner, vs. THE HONORABLE COURT OF
APPEALS, STATE INVESTMENT HOUSE, INC., DANILO ARRIETA and LEOPOLDO
HALILI, respondents.
RESOLUTION
QUISUMBING, J.:
Before us is a petition for review, pursuant to Rule 45 of the Rules of Court, of the Decision of
the Court of Appeals dated in November 12, 1996 in CA-G.R. CV No. 45742 entitled State
Investment House, Inc., v. Danilo Arrieta, et al., and SCC Chemical Corporation. The
questioned decision affirmed in toto the decision of the Regional Trial Court of Manila, Branch
33, dated March 22, 1993, in Civil Case No. 84-25881, the dispositive portion of which reads:
WHEREFORE, premises considered, judgment is hereby rendered in favor of the plaintiff and
against the defendants ordering the latter to pay jointly and severally the plaintiff the following:
a) To pay plaintiff State Investment House, Inc., the sum of P150,483.16 with interest thereon at
30% per annum reckond (sic) from April, 1984 until the whole amount is fully paid; b) To pay
plaintiff an amount equivalent to 25% of the total amount due and demandable as attorneys fees
and to pay the cost(s) of suit.
SO ORDERED.lix[1]
Equally challenged in this petition is the Resolution of the appellate court dated February 27,
1997, denying SCC Chemicals Corporations motion for reconsideration.
The background of this case, as culled from the decision of the Court of Appeals, is as follows:
On December 13, 1983, SCC Chemicals Corporation (SCC for brevity) through its chairman,
private respondent Danilo Arrieta and vice president, Pablo (Pablito) Bermundo, obtained a loan
from State Investment House Inc., (hereinafter SIHI) in the amount of P129,824.48. The loan
carried an annual interest rate of 30% plus penalty charges of 2% per month on the remaining

balance of the principal upon non-payment on the due date-January 12, 1984. To secure the
payment of the loan, Danilo Arrieta and private respondent Leopoldo Halili executed a
Comprehensive Surety Agreement binding themselves jointly and severally to pay the obligation
on the maturity date. SCC failed to pay the loan when it matured. SIHI then sent demand letters
to SCC, Arrieta and Halili, but notwithstanding receipt thereof, no payment was made.
On August 2, 1984, SIHI filed Civil Case No. 84-25881 for a sum of money with a prayer for
preliminary attachment against SCC, Arrieta, and Halili with the Regional Trial Court of Manila.
In its answer, SCC asserted SIHIs lack of cause of action. Petitioner contended that the
promissory note upon which SIHI anchored its cause of action was null, void, and of no binding
effect for lack or failure of consideration.
The case was then set for pre-trial. The parties were allowed to meet out-of-court in an effort to
settle the dispute amicably. No settlement was reached, but the following stipulation of facts was
agreed upon:
1. Parties agree that this Court has jurisdiction over the plaintiff and the defendant and that it has
jurisdiction to try and decide this case on its merits and that plaintiff and the defendant have each
the capacity to sue and to be sued in this present action;
2. Parties agree that plaintiff sent a demand letter to the defendant SCC Chemical Corporation
dated April 4, 1984 together with a statement of account of even date which were both received
by the herein defendant; and
3. Parties finally agree that the plaintiff and the defendant SCC Chemical Corporation the latter
acting through defendants Danilo E. Arrieta and Pablito Bermundo executed a promissory note
last December 13, 1983 for the amount of P129,824.48 with maturity date on January 12,
1984.lix[2]
The case then proceeded to trial on the sole issue of whether or not the defendants were liable to
the plaintiff and to what extent was the liability.
SIHI presented one witness to prove its claim. The cross-examination of said witness was
postponed several times due to one reason or another at the instance of either party. The case was
calendared several times for hearing but each time, SCC or its counsel failed to appear despite
notice. SCC was finally declared by the trial court to have waived its right to cross-examine the
witness of SIHI and the case was deemed submitted for decision.
On March 22, 1993, the lower court promulgated its decision in favor of SIHI.
Aggrieved by the verdict, SCC elevated the case to the Court of Appeals where it was docketed
as CA-G.R. CV No. 45742.

On appeal, SCC contended that SIHI had failed to show, by a preponderance of evidence, that
the latter had a case against it. SCC argued that the lone witness presented by SIHI to prove its
claim was insufficient as the competency of the witness was not established and there was no
showing that he had personal knowledge of the transaction. SCC further maintained that no proof
was shown of the genuineness of the signatures in the documentary exhibits presented as
evidence and that these signatures were neither marked nor offered in evidence by SIHI. Finally,
SCC pointed out that the original copies of the documents were not presented in court.
On November 12, 1996, the appellate court affirmed in toto the judgment appealed from.
On December 11, 1996 SCC filed its motion for reconsideration, which the Court of Appeals
denied in its resolution dated February 27, 1997.
Hence, petitioners recourse to this Court relying on the following assignments of error:
I
THE RESPONDENT COURT OF APPEALS GRAVELY ERRED IN FINDING THAT
PRIVATE RESPONDENT PROVED ITS CAUSE OF ACTION AND OVERCAME ITS
BURDEN OF PROOF.
II
THE RESPONDENT COURT OF APPEALS GRAVELY ERRED IN AWARDING
ATTORNEYS FEES TO THE PRIVATE RESPONDENT.
We find the pertinent issues submitted for resolution to be:
(1) Whether or not the Court of Appeals made an error of law in holding that private respondent
SIHI had proved its cause of action by preponderant evidence; and
(2) Whether or not the Court of Appeals erred in upholding the award of attorneys fees to SIHI.
Anent the first issue, petitioner contends that SIHI introduced documentary evidence through the
testimony of a witness whose competence was not established and whose personal knowledge of
the truthfulness of the facts testified to was not demonstrated. It argues that the same was in
violation of Sections 36lix[3] and 48,lix[4] Rule 130 of the Rules of Court and it was manifest
error for the Court of Appeals to have ruled otherwise. In addition, SCC points out that the sole
witness of SIHI did not profess to have seen the document presented in evidence executed or
written by SCC. Thus, no proof of its genuineness was adduced. SIHI thus ran afoul of Section
2,lix[5] Rule 132 of the Rules of Court, which requires proof of due execution and authenticity
of private documents before the same can be received as evidence. Petitioner likewise submits
that none of the signatures affixed in the documentary evidence presented by SIHI were offered
in evidence. It vehemently argues that such was in violation of the requirement of Section
34,lix[6] Rule 132 of the Rules of Court. It was thus an error of law on the part of the appellate

court to consider the same. Finally, petitioner posits that the non-production of the originals of
the documents presented in evidence allows the presumption of suppression of evidence
provided for in Section 3 (e),lix[7] Rule 131 of the Rules of Court, to come into play.
Petitioners arguments lack merit; they fail to persuade us.
We note that the Court of Appeals found that SCC failed to appear several times on scheduled
hearing dates despite due notice to it and counsel. On all those scheduled hearing dates,
petitioner was supposed to cross-examine the lone witness offered by SIHI to prove its case.
Petitioner now charges the appellate court with committing an error of law when it failed to
disallow the admission in evidence of said testimony pursuant to the hearsay rule contained in
Section 36, Rule 130 of the Rules of Court.
Rule 130, Section 36 reads:
SEC. 36. Testimony generally confined to personal knowledge; hearsay excluded. A witness
can testify only to those facts which he knows of his personal knowledge; that is, which are
derived from his own perception, except as otherwise provided in these rules.
Petitioners reliance on Section 36, Rule 130 of the Rules of Court is misplaced. As a rule,
hearsay evidence is excluded and carries no probative value.lix[8] However, the rule does admit
of an exception. Where a party failed to object to hearsay evidence, then the same is
admissible.lix[9] The rationale for this exception is to be found in the right of a litigant to crossexamine. It is settled that it is the opportunity to cross-examine which negates the claim that the
matters testified to by a witness are hearsay.lix[10] However, the right to cross-examine may be
waived. The repeated failure of a party to cross-examine the witness is an implied waiver of such
right. Petitioner was afforded several opportunities by the trial court to cross-examine the other
partys witness. Petitioner repeatedly failed to take advantage of these opportunities. No error
was thus committed by the respondent court when it sustained the trial courts finding that
petitioner had waived its right to cross-examine the opposing partys witness. It is now too late
for petitioner to be raising this matter of hearsay evidence.
Nor was the assailed testimony hearsay. The Court of Appeals correctly found that the witness of
SIHI was a competent witness as he testified to facts, which he knew of his personal knowledge.
Thus, the requirements of Section 36, Rule 130 of the Rules of Court as to the admissibility of
his testimony were satisfied.
Respecting petitioners other submissions, the same are moot and academic. As correctly found
by the Court of Appeals, petitioners admission as to the execution of the promissory note by it
through private respondent Arrieta and Bermundo at pre-trial sufficed to settle the question of the
genuineness of signatures. The admission having been made in a stipulation of facts at pre-trial
by the parties, it must be treated as a judicial admission. Under Section 4,lix[11] Rule 129 of the
Rules of Court, a judicial admission requires no proof.

Nor will petitioners reliance on the best evidence rulelix[12] advance its cause. Respondent
SIHI had no need to present the original of the documents as there was already a judicial
admission by petitioner at pre-trial of the execution of the promissory note and receipt of the
demand letter. It is now too late for petitioner to be questioning their authenticity. Its admission
of the existence of these documents was sufficient to establish its obligation. Petitioner failed to
submit any evidence to the contrary or proof of payment or other forms of extinguishment of said
obligation. No reversible error was thus committed by the appellate court when it held petitioner
liable on its obligation, pursuant to Article 1159 of the Civil Code which reads:
ART. 1159. Obligations arising from contracts have the force of law between the contracting
parties and should be complied with in good faith.
On the second issue, petitioner charges the Court of Appeals with reversible error for having
sustained the trial courts award of attorneys fees. Petitioner relies on Radio Communications of
the Philippines v. Rodriguez, 182 SCRA 899,909 (1990), where we held that when attorneys
fees are awarded, the reason for the award of attorneys fees must be stated in the text of the
courts decision. Petitioner submits that since the trial court did not state any reason for
awarding the same, the award of attorneys fees should have been disallowed by the appellate
court.
We find for petitioner in this regard.
It is settled that the award of attorneys fees is the exception rather than the rule, hence it is
necessary for the trial court to make findings of fact and law, which would bring the case within
the exception and justify the grant of the award.lix[13] Otherwise stated, given the failure by the
trial court to explicitly state the rationale for the award of attorneys fees, the same shall be
disallowed. In the present case, a perusal of the records shows that the trial court failed to explain
the award of attorneys fees. We hold that the same should thereby be deleted.
WHEREFORE, the instant petition is PARTLY GRANTED. The decision dated November 12,
1996 of the Court of Appeals is AFFIRMED WITH MODIFICATION that the award of
attorneys fees to private respondent SIHI is hereby deleted. No pronouncement as to costs.
SO ORDERED.