THIRD DIVISION The defendant is further ordered to pay the
amount of P50,000.00 as fair and reasonable
G.R. No. 99301 March 13, 1997
VICTOR KIERULF, LUCILA H. KIERULF and PORFIRIO
LEGASPI, petitioners,
vs.
THE COURT OF APPEALS and PANTRANCO NORTH
EXPRESS, INCORPORATED, respondents.
G.R. No. 99343 March 13, 1997
PANTRANCO NORTH EXPRESS, INCORPORATED, petitioner,
vs.
VICTOR KIERULF, LUCILA H. KIERULF and PORFIRIO
LEGASPI, respondents.
PANGANIBAN, J.:
How much moral, exemplary and actual damages are victims of
vehicular accidents entitled to?
In G.R. No. 99301, the victims of the vehicular mishap pray for an
increase in the award of damages, over and above those granted
by the appellate court. In this case, the husband of the victim of the
vehicular accident claims compensation/damages for the loss of
his right to marital consortium which, according to him, has been
diminished due to the disfigurement suffered by his wife. In G.R.
No. 99343, the transport company which owned the bus that
collided with the victims' pickup truck, asks for exoneration by
invoking an alleged fortuitous event as the cause of the mishap.
Petitioners in both cases assail the Decision, 1 dated March 13,
1991, in CA-GR CV No. 23361 of the Court of Appeals, Sixth
Division 2 ordering the following: 3
For reasons indicated and in the light of the law
and jurisprudence applicable to the case at bar,
the judgment of the trial court is hereby
modified as follows:
Under the first cause of action, the defendant is
hereby ordered to pay Lucila H. Kierulf the
following:
(1) For actual damages incurred for
hospitalization, medical case (sic) and doctor's
fees, the sum of P241,861.81;
(2) For moral damages the sum of
P200,000.00;
(3) For exemplary damages the amount of
P100,000.00.
Under the second cause of action, to pay Victor
Kierulf, by way of indemnification damage to
the Isuzu Carry All with plate No. UV PGS 798,
the amount of P96,825.15.
Under the third cause of action, to pay Porfirio
Legaspi the following:
(1) For moral damages in the amount of
P25,000.00;
(2) To reimburse the plaintiff the amount of
P6,328.19 for actual damages incurred in the
treatment and hospitalization of the driver
Porfirio Legaspi.
attorney's fees.
And to pay the costs of suit.
Respondent Court of Appeals modified the decision of the
Regional Trial Court of Quezon City, Branch 92, 4rendered on May
24, 1989 in Civil Case No. Q-50732 for damages. The dispositive
portion of the said decision is quoted below: 5
WHEREFORE, in view of the foregoing,
judgment is hereby rendered against the
defendant, ordering Pantranco to pay:
Under the First Cause of Action
1. In favor of plaintiff Lucia H. Kierulf actual
damages in the amount on ONE HUNDRED
SEVENTY FOUR THOUSAND ONE
HUNDRED and 77/100 (P174,100.77) PESOS;
2. To pay said plaintiff moral damages in the
amount of ONE HUNDRED THOUSAND and
00/100 (P100,000.00) PESOS;
3. To pay exemplary damages in the amount of
TEN THOUSAND and 00/100 (P10,000.00)
PESOS.
Under the Second Cause of Action
1. To pay plaintiff Victor Kierulf the amount of
NINETY SIX THOUSAND EIGHT HUNDRED
TWENTY FIVE and 15/100 (P96,825.15)
PESOS by way of indemnification for the
damages to the Isuzu Carry All with plate No.
UV PGS 796 registered in his name.
Under the Third Cause of Action
1. To pay the plaintiff spouses by way of
reimbursement for actual damages incurred for
the treatment of injuries sustained by their
driver Porfirio Legaspi in the amount of SIX
THOUSAND THREE HUNDRED TWENTY
EIGHT and 19/100 (P6,328.19) PESOS; and
2. To pay plaintiff Porfirio Legaspi moral
damages in the amount of TEN THOUSAND
and 00/100 (P10,000.00) PESOS.
Defendant is further ordered to pay the amount
of P25,000.00 for and as attorney's fees, and to
pay costs.
All other claims and counterclaims are
dismissed.
The Facts
The following may be culled from the undisputed factual findings of
the trial court and Respondent Court of Appeals:
The initial investigation conducted by Pfc. D.O. Cornelio disclosed
that at about 7:45 p.m. of 28 February 1987, the Pantranco bus,
bearing plate number AVE-845 (TB PIL 86), was traveling along
Epifanio de los Santos Avenue (EDSA) from Congressional
Avenue towards Clover Leaf, Balintawak. Before it reached the
corner of Oliveros Drive, the driver lost control of the bus, causing
it to swerve to the left, and then to fly over the center island
occupying the east-bound lane of EDSA. The front of the bus
bumped the front portion of an Isuzu pickup driven by Legaspi,
which was moving along Congressional Avenue heading towards
Roosevelt Avenue. As a result, the points of contact of both
vehicles were damaged and physical injuries were inflicted on
Legaspi and his passenger Lucila Kierulf, both of whom were
treated at the Quezon City General Hospital. The bus also hit and
injured a pedestrian who was then crossing EDSA.
Despite the impact, said bus continued to move forward and its
front portion rammed against a Caltex gasoline station, damaging
its building and gasoline dispensing equipment.
As a consequence of the incident, Lucila suffered injuries, as
stated in the medical report 6 of the examining physician, Dr. Pedro
P. Solis of the Quezon City General Hospital. The injuries
sustained by Lucila required major surgeries like "tracheotomy,
open reduction, mandibular fracture, intermaxillary repair of
multiple laceration" and prolonged treatment by specialists. Per
medical report of Dr. Alex L. Castillo, Legaspi also suffered
injuries. 7
The front portion of the pickup truck, owned by Spouses Kierulf,
bearing plate number UV PGS 798, was smashed to pieces. The
cost of repair was estimated at P107,583.50.
Pantranco, in its petition, 8 adds that on said day, the above-
mentioned bus was driven by Jose Malanum. While cruising along
EDSA, a used engine differential accidentally and suddenly
dropped from a junk truck in front of the bus. Said differential hit
the under chassis of the bus, throwing Malanum off his seat and
making him lose control of said bus. The bus swerved to the left,
hit the center island, and bumped the pickup of the spouses.
The Issues
Spouses Kierulf and their driver Legaspi raise the following
assignment of errors in this appeal: 9
A bound to analyze and weigh all over again the evidence already
The respondent court of appeals erred in
awarding only P200,000.00 and P25,000.00 as
and for moral damages for the petitioners
Kierulf and Legaspi respectively when it should
at least have been P1,000,000.00 and
P100,000.00 respectively.
B the trial court that gross negligence was the real cause of the
The respondent court of appeals erred in
awarding only P100,000.00 to the petitioners
Kierulf and nothing to petitioner Legaspi as and
for exemplary damages when it should have at
least been P500,000.00 and P50,000.00
respectively.
C a fortuitous event. We agree with the trial
The respondent court of appeals erred in not
awarding any amount for the lost income due to
the petitioner Lucila H. Kierulf.
D 40-50 kph is certainly not a manifestation of
The respondent court of appeals erred in not
awarding the amount of P107,583.50 for the
damages sustained by the Isuzu carry-all pick-
up truck.
E separates the East bound from the West bound
The respondent court of appeals erred in not
awarding any legal interest on the sums
awarded.
On the other hand, Pantranco raises the following assignment of
errors: 10
4.1 The Honorable Court of Appeals erred in
holding that the driver of Pantranco was
negligent.
4.2 The Honorable Court of Appeals erred in
holding that the proximate cause of the
accident was the negligence of Pantranco and
not a fortuitous event; and
4.2 (sic) The Honorable Court of Appeals erred
in awarding excessive damages.
In sum, Spouses Kierulf and Legaspi argue that the damages
awarded were inadequate while Pantranco counters that they were
astronomical, bloated and not duly proved. 11
The Court's Ruling
First Issue: Negligence and Proximate
Cause Are Factual Issues
Even on appeal, Pantranco insists that its driver was not negligent
and that the mishap was due to a fortuitous event. February 28,
1987, the date of the incident, was a Saturday; hence, driving at
the speed of 40-50 kilometers per hour (kph) was prudent. It
contends that the proximate cause was the accidental dropping of
a used engine differential by a junk truck immediately ahead of the
bus. 12
As to what really caused the bus to careen to the opposite lane of
EDSA and collide with the pickup truck driven by Legaspi is
a factual issue which this Court cannot pass upon. As a rule, the
jurisdiction of this Court is limited to the review of errors of
law allegedly committed by the appellate court. This Court is not
considered in the proceedings below. 13
Although the Court may review factual issues in some
instances, 14 the case at bar does not fall under any one of them.
The fact that there is no conflict between the findings of the trial
court and respondent Court bolsters our position that a review of
the facts found by respondent Court is not necessary. 15 There
being no conflict between the findings of the Court of Appeals and
collision, we see no reason to digress from the standard rule.
We quote with concurrence the factual findings of the appellate
and trial courts, showing that the accident was, contrary to the
belief of Pantranco, the result of the gross negligence of its driver.
To wit: 16
The vehicular accident was certainly not due to
court's findings that the proximate cause was
the negligence of the defendant's driver, such
as: (1) Driving at that part of EDSA at 7:45 P.M.
from Congressional Avenue towards Clover
Leaf overpass in the direction of Balintawak at
good driving habit of a careful and prudent man
exercising the extraordinary diligence required
by law. Traffic in that place and at that time of
the day is always heavy. (2) Losing control of
the wheel in such a place crowded with moving
vehicles, jumping over the island which
lane of EDSA indicate that the defendant's bus
was traveling at a speed limit beyond what a
prudent and careful driver is expected of, if
such driver were exercising due diligence
 required by law. (3) Finally, crossing over the
island and traversing the opposite lane and
hitting an oncoming vehicle with such force as
to smash the front of such vehicle and finally
being forced to stop by bumping against a
Caltex service station — all show not only
negligence, but recklessness of the defendant's
driver. (4) If defendant's driver was not driving
fast, was not recklessly negligent and had
exercised due care and prudence, with due
respect to human life and to others travelling in
the same place, the driver could have stopped
the bus the moment it crossed the island, and
avoided crossing over to the other lane and
bumping against vehicles travelling in opposite
direction. The defendant's driver did not take
any evasive action and utterly failed to adopt
any measure to avoid injuries and damage to
others because he "lost control of the bus",
which was like a juggernaut, let loose in a big
crowd, smashing everything on its path.
Second Issue: Moral Damages
Complainants aver that the moral damages awarded by
Respondent Court are "clearly and woefully not enough." The
established guideline in awarding moral damages takes into
consideration several factors, some of which are the social and
financial standing of the injured parties and 17 their wounded moral
feelings and personal pride. 18 The Kierulf spouses add that the
Respondent Court should have considered another factor: the loss
of their conjugal fellowship and the impairment or destruction of
their sexual life. 19
The spouses aver that the disfigurement of Lucila's physical
appearance cannot but affect their marital right to "consortium"
which would have remained normal were it not for the accident.
Thus, the moral damages awarded in favor of Lucila should be
increased to P1,000,000.00, not only for Lucila but also for her
husband Victor who also suffered "psychologically." A California
case, Rodriguez vs. Bethlehem Steel Corporation, 20 is cited as
authority for the claim of damages by reason of loss or marital
consortium, i.e. loss of conjugal fellowship and sexual relations. 21
Pantranco rebuts that Victor's claim of moral damages on alleged
loss of consortium is without legal basis. Article 2219 of the Civil
Code provides that only the person suffering the injury may claim
moral damages. Additionally, no evidence was adduced to show
that the consortium had indeed been impaired and the Court
cannot presume that marital relations disappeared with the
accident. 22
The Courts notes that the Rodriguez case clearly reversed
the original common law view first enunciated in the case
of Deshotel vs. Atchison, 23 that a wife could not recover for the
loss of her husband's services by the act of a third
party. Rodriguez ruled that when a person is injured to the extent
that he/she is no longer capable of giving love, affection, comfort
and sexual relations to his or her spouse, that spouse has suffered
a direct and real personal loss. The loss is immediate and
consequential rather than remote and unforeseeable; it is personal
to the spouse and separate and distinct from that of the injured
person.
Rodriguez involved a couple in their early 20s, who were married
for only 16 months and full of dreams of building a family of their
own, when the husband was struck and almost paralyzed by a
falling 600-pound pipe. The wife testified how her life had
deteriorated because her husband became a lifelong invalid,
confined to the home, bedridden and in constant need of
assistance for his bodily functions; and how her social, recreational
and sexual life had been severely restricted. It also deprived her of
the chance to bear their children. As a constant witness to her
husband's pain, mental anguish and frustration, she was always
nervous, tense, depressed and had trouble sleeping, eating and
concentrating. Thus, the California court awarded her damages for
loss of consortium.
Whether Rodriguez may be cited as authority to support the award
of moral damages to Victor and/or Lucila Kierulf for "loss of
consortium," however, cannot be properly considered in this case.
Victor's claim for deprivation of his right to consortium, although
argued before Respondent Court, is not supported by the evidence
on record. His wife might have been badly disfigured, but he had
not testified that, in consequence thereof, his right to marital
consortium was affected. Clearly, Victor (and for that matter,
Lucila) had failed to make out a case for loss of consortium, unlike
the Rodriguez spouse. Again, we emphasize that this claim is
factual in origin and must find basis not only in the evidence
presented but also in the findings of the Respondent Court. For
lack of factual basis, such claim cannot be ruled upon by this Court
at this time.
Third Issue: No Consideration of Social and
Financial Standing in this Case
The social and financial standing of Lucila cannot be considered in
awarding moral damages. The factual circumstances prior to the
accident show that no "rude and rough" reception, no "menacing
attitude," no "supercilious manner," no "abusive language and
highly scornful reference" was given her. The social and financial
standing of a claimant of moral damages may be considered in
awarding moral damages only if he or she was subjected to
contemptuous conduct despite the offender's knowledge of his or
her social and financial standing. 24
Be that as it may, it is still proper to award moral damages to
Petitioner Lucila for her physical sufferings, mental anguish, fright,
serious anxiety and wounded feelings. She sustained multiple
injuries on the scalp, limbs and ribs. She lost all her teeth. She had
to undergo several corrective operations and treatments. Despite
treatment and surgery, her chin was still numb and thick. She felt
that she has not fully recovered from her injuries. She even had to
undergo a second operation on her gums for her dentures to fit.
She suffered sleepless nights and shock as a consequence of the
vehicular accident. 25 In this light and considering further the length
of time spent in prosecuting the complaint and this appeal, we find
the sum of P400,000.00 as moral damages for Petitioner Lucila to
be fair and just under the circumstances.
Fourth Issue: Exemplary Damages
Complainants also pray for an increase of exemplary damages to
P500,000.00 and P50,000 for Spouses Kierulf and Legaspi,
respectively. This prayer is based on the pronouncement of this
Court in Batangas Transportation Company vs. Caguimbal 26 that
"it is high time to impress effectively upon public utility operators
the nature and extent of their responsibility in respect of the safety
of their passengers and their duty to exercise greater care in the
selection of drivers and conductors . . . ."
Pantranco opposes this, for under Article 2231 of the Civil Code,
"exemplary damages may be granted if the defendant acted with
gross negligence." And allegedly, gross negligence is sorely
lacking in the instant case.
Exemplary damages are designed to permit the courts to mould
behavior that has socially deleterious consequences, and its
imposition is required by public policy to suppress the wanton acts
of an offender. 27However, it cannot be recovered as a matter of
right. It is based entirely on the discretion of the
Court. 28Jurisprudence sets certain requirements before exemplary
damages may be awarded, to wit: 29
 (1) (T)hey may be imposed by way of example
or correction only in addition, among others, to
compensatory damages, and cannot be
recovered as a matter of right, their
determination depending upon the amount of
compensatory damages that may be awarded
to the claimant;
(2) the claimant must first establish his right to
moral, temperate, liquidated or compensatory
damages; and
(3) the wrongful act must be accompanied by
bad faith, and the award would be allowed only
if the guilty party acted in a wanton, fraudulent,
reckless, oppressive or malevolent manner.
The claim of Lucila has been favorably considered in view of the
finding of gross negligence by Respondent Court on the part of
Pantranco. This is made clear by Respondent Court in granting
Lucila's claim of exemplary damages: 30
(P)ublic utility operators like the defendant,
have made a mockery of our laws, rules and
regulations governing operations of motor
vehicles and have ignored either deliberately or
through negligent disregard of their duties to
exercise extraordinary degree of diligence for
the safety of the travelling public and their
passengers. . . . .
To give teeth to this warning, the exemplary damages awarded to
Petitioner Lucila is increased to P200,000.00. The fact of gross
negligence duly proven, we believe that Legaspi, being also a
victim of gross negligence, should also receive exemplary
damages. Under the facts proven, the Court awards him P25,000
as exemplary damages.
Fifth Issue: Loss of Earnings as a Component of
Damages
Lost income in the amount of P16,500.00 is also claimed by
Legaspi stating that his "whole future has been
jeopardized." 31 This, in turn, is not rebutted by Pantranco.
It should be noted that Respondent Court already considered this
when it stated that the award of P25,000.00 included
compensation for "mental anguish and emotional strain of not
earning anything with a family to support." Moral damages, though
incapable of pecuniary estimation, are in the category of an award
designed to compensate the claimant for actual injury and are not
meant to enrich complainant at the expense of defendant. 32
We find, however, the claim of Legaspi to be duly substantiated.
Pantranco failed to rebut the claim of Porfirio that he had been
incapacitated for ten (10) months and that during said period he
did not have any income. Considering that, prior to the accident,
he was employed as a driver and was earning P1,650.00 a month,
his claim for P16,500.00 as compensation for loss of earning
capacity for said period is amply supported by the records 33 and is
demandable under Article 2205 of the Civil Code. 34
Complainants contend that Lucila is also entitled to damages for
"loss or impairment of earning capacity in cases of temporary or
permanent personal injury" under Article 2205 of the Civil Code.
Notably, both the trial court and public respondent denied this
prayer because of her failure to produce her income tax returns for
the years 1985 and 1986, notwithstanding the production of her
1983 and 1984 income tax returns.
Pantranco opposes the above claim for loss of earning capacity on
the ground that there is no proof "that for the two years
immediately preceding the accident Lucila was indeed deriving
income from some source which was cut off by the accident. 35
We agree with the findings of Respondent Court that Lucila's claim
of loss of earning capacity has not been duly proven. The alleged
loss must be established by factual evidence for it partakes of
actual damages. A party is entitled to adequate compensation for
such pecuniary loss actually suffered and duly proved. Such
damages, to be recoverable, must not only be capable of proof,
but must actually be shown with a reasonable degree of certainty.
We have emphasized that these damages cannot be presumed,
and courts in making an award must point out specific facts which
can serve as basis for measuring whatever compensatory or
actual damages are borne. 36 Mere proof of Lucila's earnings
consisting of her 1983 and 1984 income tax returns would not
suffice to prove earnings for the years 1985 and 1986. The
incident happened on February 28, 1987. If indeed Lucila had
been earning P50,000.00 every month prior to the accident, as she
alleged, there are evidentiary proofs for such earnings other than
income tax returns such as, bur not limited to, payroll receipts,
payments to the SSS, or withholding tax paid every month. Sad to
say, these other proofs have not been presented, and we cannot
presume that they exist on the strength of the word of Lucila alone.
Sixth Issue: Reduction of Actual Damages on
the Pickup Based on an Estimate
Complainants contend that the reduction of 10% from the written
estimate of the cost of repairs by the trial court is pure
speculation. 37 Pantranco opposes this by pointing out that judicial
notice is made by respondent Court of the propensity of motor
repair shops to exaggerate their estimates. 38
An estimate, as it is categorized, is not an actual expense incurred
or to be incurred in the repair. The reduction made by respondent
Court is reasonable considering that in this instance such estimate
was secured by the complainants themselves.
Epilogue
This Court cannot remind the bench and the bar often enough that
in order that moral damages may be awarded, there must be
pleading and proof of moral suffering, mental anguish, fright and
the like. While no proof of pecuniary loss is necessary in order that
moral damages may be awarded, the amount of indemnity being
left to the discretion of the court, 39 it is nevertheless essential that
the claimant should satisfactorily show the existence of the factual
basis of
damages 40 and its causal connection to defendant's acts. This is
so because moral damages, though incapable of pecuniary
estimation, are in the category of an award designed to
compensate the claimant for actual injury suffered and not to
impose a penalty on the wrongdoer. 41 In Francisco
vs. GSIS, 42 the Court held that there must be clear testimony on
the anguish and other forms of mental suffering. Thus, if the
plaintiff fails to take the witness stand and testify as to his/her
social humiliation, wounded feelings and anxiety, moral damages
cannot be awarded. In Cocoland Development Corporation
vs. National Labor Relations Commission, 43 the Court held that
"additional facts must be pleaded and proven to warrant the grant
of moral damages under the Civil Code, these being, . . . social
humiliation, wounded feelings, grave anxiety, etc., that resulted
therefrom."
Moral damages are awarded to enable the injured party to obtain
means, diversions or amusements that will serve to alleviate the
moral suffering he/she has undergone, by reason of the
defendant's culpable action. 44 Its award is aimed at restoration, as
much as possible, of the spiritual status quo ante; thus, it must be
proportionate to the suffering inflicted. 45 Since each case must be
governed by its own peculiar circumstances, there is no hard and
fast rule in determining the proper amount. The yardstick should
be that the amount awarded should not be so palpably and
scandalously excessive as to indicate that it was the result of
passion, prejudice or corruption on the part of the trial
judge. 46 Neither should it be so little or so paltry that it rubs salt to
the injury already inflicted on plaintiffs.

WHEREFORE, premises considered, the petition for review in

G.R. No. 99301 is PARTIALLY GRANTED, while that of Pantranco
North Express, Inc., in G.R. No. 99343 is DISMISSED. The
Decision appealed from is AFFIRMED with MODIFICATION. The
award of moral damages to Lucila and Legaspi is hereby
INCREASED to P400,000.00 and P50,000.00 respectively;
exemplary damages to Lucila is INCREASED to P200,000.00.
Legaspi is awarded exemplary damages of P50,000.00. The
amount of P 16,500.00 as actual or compensatory damages is also
GRANTED to Legaspi. All other awards of Respondent Court of
Appeals are AFFIRMED. Pantranco shall also PAY legal interest of
6% per annum on all sums awarded from the date of promulgation
of the decision of the trial court, May 24, 1989, until actual
payment.

SO ORDERED.

Narvasa, C.J., Davide, Jr., Melo and Francisco, JJ., concur.

 SECOND DIVISION
G.R. No. 121998 March 9, 2000
PEOPLE OF THE PHILIPPINES, plaintiff-appellee,
vs.
TEODORICO CLEOPAS and FLORENCIO PIRAME, accused,
FLORENCIO PIRAME, accused-appellant.
QUISUMBING, J.:
On appeal is the decision dated January 5, 1995, of the Regional
Trial Court of Tagbilaran City, Branch 1, in Criminal Case No. 8343
finding the accused Teodorico Cleopas and Florencio Pirame
guilty of murder beyond reasonable doubt. 1
The facts of the case, as found by the trial court, are as follows:
The factual findings of the Court based on the testimony
of the witnesses for the prosecution and the defense are,
as follows, to wit:
a) That in morning of March 18, 1993 near the house of
Demetrio Cleopas, father of the accused Teodorico
Cleopas and Epifanio Cleopas at Barangay Tubog, Ubay,
Bohol, the eye-witness Cipriano Supero saw the victim in
the instant case Pedro Torrenueva while being held by
the accused Florencio Perame (sic) the accused Epifanio
Cleopas struck him with an iron pipe and by the accused
Teodorico Cleopas with a piece of wood, hitting the
aforementioned victim Pedro Torrenueva on the
forehead, which, as a consequence, fell on the ground
dead;
b) That to cover the discovery of the commission of the
crime the dead body of the victim Pedro Torrenueva was
buried in the well near the house of Demetrio Cleopas
father of the accused Epifanio Cleopas who is still at
large and the accused Teodorico Cleopas;
c) That the testimony of the other witnesses for the
prosecution SPO2 Sabeniano Atopan, Candida Cosip,
Evelyn Torrenueva and Pedro Acquiat viewed in their
totality with the testimony of the eye-witness Cipriano
Supero points to the accused Teodorico Cleopas,
Epifanio Cleopas and Florencio Pirame as the
perepetrators (sic) of the crime as charged. 2
On May 13, 1993, the three accused, Teodorico Cleopas, Epifanio
Cleopas and Florencio Pirame, were charged with the crime of
murder under the following information:
That on or about the 18th day of March, 1993, in the
municipality of Ubay, province of Bohol, Philippines, and
within the jurisdiction of this Honorable Court, the
abovenamed accused conspiring, confederating and
mutually helping one another, with intent to kill, armed
with stainless pipe and a piece of wood, with treachery,
evident premeditation and abuse of superior strength, did
then and there willfully, unlawfully and feloniously, attack,
assault and strike one Pedro Torrenueva who was
unarmed and unaware thereof with the said stainless
pipe and piece of wood thereby inflicting fatal injuries on
the different parts of the victim's body which resulted to
his immediate death; to the damage and prejudice of the
heirs of the deceased to be proved during the trial of the
case.1âwphi1.nêt
Acts committed contrary to the provisions of Art. 248 of
the Revised Penal Code.3
Upon arraignment, Florencio Pirame and Teodorico Cleopas
entered a plea of not guilty. Epifanio Cleopas was not arraigned,
being at large.4 Thereafter, trial on the merits ensued.
The prosecution presented the following witnesses: (1) SPO2
Sabiniano Atupan, who led the police team that conducted the
investigation of the killing: (2) Dr. Arnold Cagulada, the Municipal
Health Officer of Ubay, Bohol, who examined the cavader of the
victim; (3) Candida Cusip,5 an aunt of the victim ventured towards
the house of accused Teodorico Cleopas on the day of the
incident; (4) Evelyn Torrenueva, the wife of the victim, who
corroborated the testimony of Cusip and testified as to the
damages incurred by her due to her husband's death; (5) Pedro
Acquiat, who joined the police in the search for the victim's body;
and (6) Cipriano Supero, the alleged eyewitness to the killing who
identified all the three accused as the victim's assailants.
In turn, the defense presented accused Teodorico Cleopas and
appellant Florencio Pirame, who both testified on their behalf.
On January 5, 1995, the Regional Trial Court of Tagbilaran City,
Branch I, rendered its decision finding Teodorico Cleopas and
Florencio Pirame guilty of the crime of murder. It disposed:
PREMISES, CONSIDERED, the Court finds the accused
Teodorico Cleopas and Florencio Pirame guilty of the
crime of Murder punished under Article 248 of the
Revised Penal Code and hereby sentences each one of
them to suffer an imprisonment of RECLUSION
PERPETUA, with the accessories of the law and to pay
the cost.
The accused Teodorico Cleopas and Florencio Pirame
are further ordered to indemnify the surviving spouse of
the deceased victim Pedro Torrenueva in the amount of
Fifty Thousand Pesos (P50,000.00) each and the amount
of Twenty Three Thousand Fourteen (sic) Pesos
(23,214.00) representing burial and incidental expenses
and Fifty Thousand Pesos each (P50,000) representing
moral and exemplary damages and in all instances
without subsidiary imprisonment in case of insolvency.
It appearing that the accused in the instant case
Teodorico Cleopas and Florencio Pirame have
undergone preventive imprisonment they are entitled to
the full time of their preventive imprisonment to be
deducted from their term of sentence if they have not
executed a waiver otherwise they will only be entitled to
4/5 of the time have undergone preventive imprisonment
to be deducted from their term of sentence if they have
not executed a waiver.
The foregoing separate Decision does not affect the
accused Epifanio Cleopas who is still at large who will be
tried separately as soon as he shall have been arrested.
SO ORDERED.6
Only Florencio Pirame appealed from the decision of the trial court.
He assigns the following errors in his brief:
I
THE TRIAL COURT COMMITTED GRAVE ERROR IN
RELYING ON THE WEAKNESS OF THE DEFENSE
 EVIDENCE RATHER THAN ON THE STRENGTH OF
THE EVIDENCE FOR THE PROSECUTION IN FINDING
THE ACCUSED-APPELLANT PIRAME GUILTY OF
MURDER BEYOND REASONABLE DOUBT.
II
THE TRIAL COURT COMMITTED GRAVE ERROR IN
GIVING CREDENCE TO THE TESTIMONY OF
PROSECUTION WITNESSES CIPRIANO SUPERO
AND CANDIDA CUCIP IMPLICATING ACCUSED-
APPELLANT FLORENCIO PIRAME IN THE CRIME OF
MURDER DESPITE THEIR MANIFEST
UNBELIEVABLE, IMPROBABLE AND UNRELIABLE
TESTIMONY.7
In his brief, appellant alleges that the declaration of Demetrio
Cleopas, both in the course of police investigation and in a sworn
statement, to the effect that his two sons were responsible for the
killing did not make any mention of him, hence, he should not have
been implicated. Such declaration, appellant contends, as made in
the sworn statement, should have been considered by the trial
court as part of the res gestae. In addition, he urges that the trial
court should have considered the testimony of accused Teodorico
Cleopas, who testified that he did not see appellant on the date of
the incident. He also contends that contrary to the trial court's
view, there was no "uniting point" or corroboration between the
testimonies of Cipriano Supero, the alleged eyewitness to the
incident, and that of the other prosecution witnesses. Supero's
testimony, he further claims, should not have been considered by
the trial court as this witness was a coached and rehearsed
witness, who testified only two months after the incident, and
whose testimony is allegedly not worthy of belief. Appellant also
asserts that while he invokes the weak defense of alibi, the
evidence against him is likewise weak, and did not prove his guilt
beyond reasonable doubt. Lastly, appellant contends that the trial
court erred in finding him to be a co-conspirator of the other two
accused.
In its brief, the Office of the Solicitor General contends that the
positive identification by prosecution witness Cipriano Supero of
appellant at the scene of the crime should prevail over appellant's
denial and alibi. It further argues that a conspiracy to kill the victim
was present.
Taken together, these contentions of appellant and the appellee
point to one, issue, which is the credibility of witnesses in this
case. We find that credibility preponderates in favor of the
prosecution, and against the appellant.
Appellant makes much of the testimony of prosecution witness
SPO2 Atupan. This witness testified that in the course of police
investigation, Demetrio Cleopas, father of accused Teodorico and
Epifanio Cleopas, said that his two sons were responsible for the
killing, Demetrio reiterated the same allegation in a sworn
statement made before the Ubay Police on March 24,
1993, 8 which appellant also relies upon to support his claim of
innocence. This particular allegation in the sworn statement,
appellant urges, should be considered as part of the res gestae, as
it "grew out of the main fact, shed light upon it, and which are (sic)
unpremeditated, spontaneous, and made at a time so near,
subsequent to the main act, as to exclude the idea of deliberation
and fabrication.9
This assertion made by Demetrio Cleopas in his sworn statement
is not part of the res gestae. Res gestae refers to those
exclamations and statements made by either the participants,
victims, or spectators immediately before, during, or immediately
after the commission of the crime, when the circumstances are
such that the statements were made as a spontaneous reaction or
utterance inspired by the excitement of the occasion and there was
no opportunity for the declarant to deliberate and to fabricate a
false statement. 10 The allegations made by Demetrio Cleopas in
his sworn statement were not made immediately after the killing of
the victim. They were made on March 24, 1993, or six days after
the killing of the victim on March 18. As we have held that a
statement given a day after the incident in answer to questions
propounded in an investigation cannot be considered part of
the res gestae, 11 so too with the declarations of Demetrio Cleopas
in his sworn statement.
Moreover, resort to the very sworn statement invoked by appellant
would reveal that Demetrio Cleopas himself was in no position to
identify all the perpetrators of the crime. The pertinent portion of
the statement reads as follows:
Q: Do you remember where were you on March 18,
1993?
A: Yes, I was in our nipa hut near our house.
Q: What were (sic) the unusual incident that you have
witness (sic) on that day; (sic)
A: On March 18, 1993 at 10:00 o'clock in the morning
more or less. I heard a shout from my wife that's why I
went near to her and what I have seen was a man lying
on the ground which in my belief was already dead.
Q: What was the cause of death of that person?
A: When I asked my son Epifanio Cleopas alias "Paning"
what was that incident and he answered that they
mutually struck him because he boxed one on (sic) my
son named Teodorico Cleopas @ "Tidoy". 12
It is clear that Demetrio Cleopas did not see the actual killing of the
victim. He only learned of the details of the killing from his son
Epifanio. Thus, SPO2 Atupan's testimony that Demetrio Cleopas
named his sons as the perpetrators of the crime, without mention
of appellant Florencio Pirame, and which declaration was based
on Epifanio Cleopas' admission of guilt for the killing, is in effect
hearsay twice removed. It cannot be used to absolve appellant of
his participation in the crime. Further still, the testimony of used
Teodorico Cleopas that he never saw appellant on the date of the
incident, 13 does not support the declarations of Demetrio Cleopas,
as Teodorico's testimony cannot be expected to implicate a co-
accused, being self-serving as it is.
Appellant next assails the trial court's dictum to the effect that the
testimonies of the prosecution witnesses, viewed in their totality,
point to the guilt of all three accused, including appellant. 14 He
claims that it was only Cipriano Supero who testified that he saw
appellant hold the arms of the victim while the other two accused
hit him on the head with a stick and a not steel pipe. This, he
asserts, was not corroborated by any other prosecution witness,
hence there was no "unifying point" in their testimonies.
That the testimony of Supero was not corroborated by any other
witness is no moment. It is axiomatic that the testimonies of
witnesses are weighed, not numbered, and the testimony of a
single witness may suffice for conviction if found trustworthy and
reliable. That the prosecution had only one eyewitness to implicate
appellant hardly negates its cause. There is no law, which requires
that the testimony of a single witness needs corroboration except
where the law expressly mandates such corroboration. 15 Indeed,
the testimony of a single witness, when positive and credible, is
sufficient to support a conviction even of murder. Hence, a finding
of guilt may be based on the uncorroborated testimony of a single
witness when the trial court finds such testimony positive and
credible. 16
On this score, appellant that the testimony of Cipriano Supero
should not have been considered by the trial court, as Supero is
allegedly a coached and rehearsed witness. In effect, appellant
assails Supero's credibility. He points out that on direct
examination, Supero initially stated that the killing took place
"inside the house of Demetrio Cleopas", but later on modified his
answer to clarify that the victim was killed "outside the house." 17 In
addition, appellant emphasizes that it took Supero two months
after the death of the victim to come out and volunteer to two
testify as to what he had seen transpire on the morning of March
18, 1993. Appellant asserts that this delay further proves that
Supero was a rehearsed witness.
These contentions are without merit. The initial lapse in Supero's
testimony as to whether the crime was committed inside or outside
of the house of Demetrio Cleopas was eventually settled by the
trial court when it asked clarificatory questions. Supero was
nonetheless able to testify on the actual killing of the victim, as well
as identify all the perpetrators of the crime. The earlier
inconsistency in his testimony, slight as it is, cannot suffice to
impeach this witness. Settled is the rule that inconsistencies in the
testimonies of witnesses when referring only to minor details and
collateral matters do not affect either the substance of their
declaration, their veracity, or the weight of their testimony.
Although there may be inconsistencies on minor details, the same
do not impair the credibility of the witnesses where there is
consistency in relating the principal occurrence and positive
identification of the assailants. Slight contradictions in fact even
serve to strengthen the sincerity of the witness and prove that his
testimony is not rehearsed. They are safeguards against
memorized perjury. 18
Further still, the delay of Supero in volunteering to testify on the
incident is of little consequence. At the time Supero witnessed the
killing, all he saw was the striking of the victim by the assailants
while appellant held the victim's arms. The victim then fell to the
ground, motionless. Thereafter, Supero left, fearful of what he had
seen. 19 He did not divulge this to anyone else except his mother,
for they were afraid of being involved in that matter. 20
At the time he witnessed the incident, Supero was not aware that
the victim had died as a result of the assault. He came to know
that the victim died only two months after, when word spread that
the body of the victim was discovered in the well of Demetrio
Cleopas. 21 Upon learning of the victim's fate, he came forward to
reveal what he had seen when he testified in open court. Hence,
appellant cannot claim that Supero's report and testimony on the
incident was belatedly made. Thus, the two-month delay in
reporting the account of the eyewitness in this case does not give
rise to any doubt on the veracity thereof. As we have held, the
belated report and the reluctance of witnesses to testify in criminal
actions is a matter of judicial notice. 22
Against Supero's positive identification of appellant as the person
who held the hands of the victim while accused Teodorico and
Epifanio Cleopas struck him, appellant advanced the defense of
alibi. He testified that he was harvesting palay the whole day at
Barangay Corazon, San Miguel, Bohol on March 18, 1993. 23 The
distance of the house of Demetrio Cleopas from his house, which
is located at the center of Barangay Corazon, 24 was estimated by
him to be seven kilometers. 25 We find this distance of seven
kilometers to be less than sufficient for purposes of an air-tight
alibi. Alibi is an affirmative defense and, considering that it is easy
to conduct, when an accused relies thereon, he has the burden of
proving it, i.e., that he could not have been at the scene of the
crime at the time of its commission. For alibi to prosper, an
accused must prove that not only was he absent at the scene of
the crime at the time of its commission, but also that it was
physically impossible for him to be so situated at said
instance. 26This, appellant failed to do, more so when his claim that
he was harvesting palay on the day the killing took place was not
corroborated by anyone else.
Appellant asserts that the trial erred in finding appellant a
conspirator, hence guilty of murder beyond reasonable doubt. We
find the trial court's finding of the existence of a conspiracy to kill
the victim well-taken. Cipriano Supero's testimony discloses that
appellant held the victim's arms in a cross-wise manner while
Epifanio and Teodorico Cleopas struck the victim on the forehead
with a steel pipe and a long piece of wood, respectively.
Thereafter, the victim fell to the ground. 27 These concurrent
actions of appellant and his co-accused reveal a mutual intention
and determination to kill the victim, an indicator of conspiracy.
Conspiracy, in order to exist, does not require an agreement for an
appreciable period prior to the commission of the crime; it exists if,
at the time of the commission of the offense, the accused had the
same purpose and was united in its execution. 28 The fact that
appellant conspired in the commission of the crime charged was
sufficiently and convincingly shown by his active participation in
holding the victim to render him immobile, thus enabling the other
two accused to consummate their dastardly act of killing the
victim. 29
We note, however, that the trial court in its decision did not make
any definitive finding on the circumstances which qualified the
crime to murder. While the information charging appellant and the
other accused alleged that the commission of the crime was
attended by treachery, evident premeditation and abuse of
superior strength, the court did not expound upon or point to the
existence of these aggravating circumstances in the case at bar. In
other words, it did not state its basis for qualifying the crime to
murder. We are thus required to determine if the crime at bar could
be qualified to murder, to resolve this appeal. It is axiomatic that an
appeal, once accepted by this Court, throws the entire case open
to review, and that this Court has the authority to review matters,
not specifically raised or assigned as errors by the parties, if their
consideration is necessary in arriving at a just resolution of the
case. 30
In the present case, the prosecution alleged the attendance of
treachery in the commission of the crime. The requisites for
treachery to be a qualifying circumstance are: (1) the employment
means, method, or manner of execution which will ensure the
safety of the malefactor from defensive or retaliating acts on the
part of the victim, no opportunity being given to the latter to defend
himself or to retaliate; and (2) deliberate or conscious adoption of
such means, method, or manner of execution. 31
Cipriano Supero testified that appellant Florencio Pirame held the
arms of the victim while Epifanio and Teodorico Cleopas struck the
victim on the head, causing his death. The victim was defenseless
during the attack as his hands were restrained by appellant,
facilitating the beating of the victim by the other perpetrators.
Clearly, the manner by which the victim was restrained and
assaulted was deliberately and consciously adopted by his
assailants to ensure. Thus, there was treachery in the killing of the
victim, as the offenders employed means, methods or forms in the
execution thereof which tended directly and specially to insure its
execution, without risk to themselves arising from the defense
which the victim might take. 32
The attendance of evident premeditation in the commission of the
crime, though alleged in the information, is not supported by the
evidence, as there is no showing as to when appellant and his co-
accused determined to kill the victim. Likewise, abuse of superior
strength, being absorbed by treachery, 33 cannot be considered as
an aggravating circumstance in this case.
As treachery was resent when the victim as killed, we find that the
crime of murder was committed by appellant and his co-accused.
At the time of the commission of the crime, the imposable penalty
for murder was reclusion temporal in its maximum period to death.
There being no aggravating or mitigating circumstances attending
the killing, the applicable penalty would thus be the medium period
of the imposable penalty, which is reclusion perpetua. 34

We concur with the trial court's award of P50,000.00 each from

appellant Florencio Pirame and co-accused Teodorico Cleopas as
death indemnity to the victim's heirs, which is in line with current
jurisprudence. We also find the amount of P23,214.00 awarded by
the trial court as "burial and incidental expenses" supported by the
records. 35The award of P50,000.00 from each accused as moral
and exemplary damages, however, is unsupported. The widow of
the victim did not testify on any mental anguish or emotional
distress, which she suffered as a result of her husband's death.
The absence of any generic aggravating circumstance attending
the crime likewise precludes the award of exemplary damages.

WHEREFORE, the instant appeal is DENIED. The decision of the

Regional Trial Court convicting appellant Florencio Pirame of the
crime of murder and sentencing him to reclusion perpetua, and to
pay the widow of the victim P50,000.00 as civil indemnity and
P23,214.00 as actual damages, as well as the costs is
AFFIRMED, but the award of P50,000.00 as moral and exemplary
damages is hereby DELETED, there being no legal and factual
basis therefor.1âwphi1.nêt

SO ORDERED.

Bellosillo, Mendoza, Buena and De Leon, Jr., JJ., concur.

 FIRST DIVISION
G.R. No. 134784 December 9, 2002
CARLOS ARCONA y MOBAN, petitioner,
vs.
THE COURT OF APPEALS and PEOPLE OF THE
PHILIPPINES, respondents.
DECISION
YNARES-SANTIAGO, J.:
Petitioner Carlos Arcona y Moban1 and his brother Benito Arcona y
Moban were charged with Murder and Frustrated Murder 2 in
separate information which read:
Criminal Case No. 6408 (Murder)
That on or about the 27th day of June, 1986 at Barangay Labog,
Municipality of Brooke’s Point, Province of Palawan, Philippines,
and within the jurisdiction of this Honorable Court the above-
named accused conspiring, confederating together and mutually
helping one another, with intent to kill and with evident
premeditation and treachery, did then and there willfully, unlawfully
and feloniously attack, assault and stab one NAPOLEON ONG
with a bladed weapon to wit; a knife hitting him in vital part of his
body and inflicting upon him injury which was the direct and
immediate cause of his death shortly thereafter.
Criminal Case No. 6409 (Frustrated Murder)
That on or about the 27th day of June 1986 at Barangay Labog,
Municipality of Brooke’s Point, Province of Palawan, Philippines,
and within the jurisdiction of this Honorable Court the above-
named accused conspiring, confederating together and mutually
helping one another, with evident premeditation and treachery and
with intent to kill did then and there willfully, unlawfully and
feloniously attack, assault, strike and beat with a bamboo pole one
EDGARDO TALANQUINES hitting him on different parts of his
body and inflicting upon him injuries which would have caused his
death thru performing all the acts of execution which would have
produced the crime of murder as a consequence but nevertheless
did not produce it by reason of causes independent of the will of
the accused that is EDGARDO TALANQUINES have parried the
blows, escape away from his assailant and by the timely and able
medical assistance rendered to said Edgardo Talanquines which
prevented his death.
On arraignment both accused pleaded "not guilty". Thereafter, the
cases were jointly tried.
It appears that at around 7:30 in the evening of June 27, 1986,
Napoleon Ong and Edgardo Talanquines were walking along the
national highway at Barangay Labog, Brooke’s Point, Palawan, on
their way home after coming from a birthday party. When they
were near the house of Jerry Boston, Edgardo heard a loud thud.
He turned around saw Napoleon slump to the ground. Suddenly,
someone hit Edgardo from behind with a piece of bamboo, causing
him to fall. He saw no one in the immediate premises except
petitioner. Edgardo then stood up and ran towards the house of
Cesar Umapas to ask for help.
Prosecution witness Leo Zaragoza testified that he was standing in
front of Jerry Boston’ house, about seven (7) meters away, when
he saw petitioner stab Napoleon.
Napoleon expired on the way to the hospital. Dr. Joaquin Fabellon,
who conducted the autopsy on Napoleon’s body, certified that the
cause of death was the stab wound sustained at the stomach area
just above the waistline.
Petitioner voluntarily surrendered to T/Sgt. Romeo Laging at the
PC Detachment Command in Barangay Lugod.
In his defense, petitioner alleged that in the evening of June 27,
1986, he was walking alone when he met Napoleon Ong and
Edgardo Talanquines. Without any provocation, Napoleon
suddenly drew his bolo and shouted, "Caloy, I will kill
you!"3 Napoleon swung the bolo at him twice but missed him.
Petitioner then drew out his knife and stabbed Napoleon. When he
saw Edgardo Talanquines rushing towards him, he grabbed a
piece of bamboo from the newly constructed culvert and hit the
former on the left arm. Talanquines ran away. Petitioner also left
the premises and went home. On the way, he met his brother,
Benito, and together they proceeded to their house. 4
After trial, the court a quo rendered judgment in Criminal Case No.
6408 convicting petitioner of Homicide and acquitting Benito
Arcona. In Criminal Case No. 6409, the trial court convicted Benito
Arcona of Slight Physical Injuries and acquitted petitioner. The
dispositive portion of the decision5 reads:
WHEREFORE, premises considered, the Court renders judgment
in Criminal Case No. 6408 finding Carlos Arcona y Moban GUILTY
beyond reasonable doubt of the crime of Homicide under Art. 249
of the Revised Penal Code, with the mitigating circumstance of
voluntary surrender to authorities and no aggravating
circumstances. He is hereby sentenced to suffer the indeterminate
penalty of SIX (6) YEARS and ONE (1) DAY of PRISION MAYOR
as MINIMUM to FOURTEEN (14) YEARS and ONE (1) DAY OF
RECLUSION TEMPORAL as MAXIMUM, and to indemnify the
heirs of Napoleon Ong the sum of THIRTY THOUSAND PESOS
(P30,000.00) for his death, TEN THOUSAND PESOS
(P10,000.00) as actual damages and TEN THOUSAND PESOS
(P10,000.00) as moral damages. Benito Arcona is acquitted of the
crime charged, for failure of Prosecution to prove his guilt beyond
reasonable doubt.
In Criminal Case No. 6409, Benito Arcona is found GUILTY
beyond reasonable doubt of the crime of Slight Physical injuries
and is sentenced to suffer imprisonment of TWENTY (20) DAYS of
ARRESTO MENOR and to indemnify Edgardo Talanquines the
sum of TEN THOUSAND PESOS (P 10,000.00) as actual
damages. Carlos Arcona is ACQUITTED of the crime charged for
failure of Prosecution to prove his guilt beyond reasonable doubt.
Only petitioner appealed to the Court of Appeals, assailing his
conviction for Homicide in Criminal Case No. 6408. On January
28, 1997, the Court of Appeals affirmed the findings of the trial
court but increased the civil indemnity to P50,000.00, thus:
WHEREFORE, for all the foregoing, the decision of the trial court
finding appellant Carlos Arcona guilty of Homicide mitigated by his
voluntary surrender to the authorities is hereby AFFIRMED, with
the sole modification that the civil indemnity Carlos Arcona shall
pay to the heirs of Napoleon Ong is hereby increased to Fifty
Thousand Pesos (P50,000.00).6
Petitioner filed the instant petition for review. He maintains that he
acted in self-defense when he stabbed Napoleon and hit Edgardo
with a bamboo stick. He contends that Napoleon committed
unlawful aggression when drew an unsheathed bolo and
attempted to hack him with it twice. Moreover, petitioner invokes
the testimony of Jerry Boston, to the effect that before the stabbing
incident he heard somebody shout, "Caloy, patayon kita." (Caloy, I
will kill you!)7
We are not persuaded. It is settled jurisprudence that when an
accused invokes self-defense, the onus probandi to show that the
killing was justified shifts to him. Even if the prosecution evidence
was weak, it could not be readily dismissed considering that the
accused had openly admitted his responsibility for the killing. 8
To prove self-defense, the accused must show with clear and
convincing evidence that: (1) he is not the unlawful aggressor; (2)
there was lack of sufficient provocation on his part; and (3) he
employed reasonable means to prevent or repel the aggression.
Self-defense, like alibi, is a defense easy to concoct. It is axiomatic
that once an accused had admitted that he inflicted fatal injuries on
the deceased, it is incumbent upon him, in order to avoid criminal
liability, to prove the justifying circumstance claimed by him with
clear, satisfactory and convincing evidence. 9
The question whether accused-appellant acted in self-defense is
essentially a question of fact. In self-defense, unlawful aggression
is a primordial element.10
In the case at bar, the trial court was evidently not satisfied and
convinced with petitioner’s claim that Napoleon was the unlawful
aggressor, thus:
It has been established that a bolo identified as belonging to
Napoleon Ong was found at the scene of the crime. The Court is
also convinced that the stabbing incident was preceded by the
sounds of a scuffle or fight because it was these unusual noises
which led Leo Zaragosa and Benito Arcona to go out of the house
of Jerry Boston in order to investigate what had happened.
However, the presence of the bolo of Napoleon Ong, and the
shout of "Caloy, I will kill you" allegedly uttered by the deceased
are circumstantial evidence and not sufficient to conclude that the
deceased had committed acts of unlawful aggression which
justified the stabbing by accused Carlos Arcona.11
We agree with the findings of the trial court. The presence of
Napoleon’s unsheathed bolo at the crime scene and the scattered
bamboo sticks suggest a number of scenarios. While the physical
evidence may suggest that Napoleon drew the bolo from its
scabbard, such fact alone would not in any way satisfactorily
support the conclusion that, indeed, Napoleon was the unlawful
aggressor.
Likewise, the trial court was correct in refusing to give any weight
to the shout, "Caloy, I will kill you!" which Jerry Boston allegedly
heard immediately prior to the actual stabbing incident. Indeed,
Jerry Boston testified that "somebody" shouted those words. He
did not categorically say that it was Napoleon. Even granting that
Napoleon uttered those words, it was still possible that he said it
while being assaulted by petitioner.
Significantly, Jerry only heard the shouted words but never saw
the sequence of events preceding the stabbing incident, thereby
rendering doubtful the contention that Napoleon was the unlawful
aggressor. Simply, these circumstances are insufficient to
conclusively establish that Napoleon was the unlawful
aggressor.lavvphil.net
Parenthetically, the Court of Appeals concurred with the findings of
the trial court and even concluded that the physical evidence only
made petitioner’s claim improbable, thus:
Accused-appellant miserably failed to convince the trial court that
the stabbing was indeed in self-defense. Accused-appellant’s
version that he was waylaid by Edgardo Talanquines and the
deceased Napoleon Ong is highly improbable because he
escaped the alleged ambush without a single scratch considering
that there were allegedly two (2) attackers and one was even
armed with a bolo (TSN, March 27, 1990, pp. 3, 7 and 9).
Moreover, accused-appellant’s claim that Edgardo Talanquines
rushed him is also questionable because appellant who was then
already armed with a knife was purportedly attacked by Mr.
Talanquines who was not at all armed (Ibid, p. 10). 12
In fine, the plea of self-defense cannot be justifiably entertained
where it is not only uncorroborated by any separate competent
evidence but also extremely doubtful in itself. Accused-appellant
having failed to discharge the burden proving his defense, his
conviction shall of necessity follow, on the basis of his admission
to the killing.13
We have consistently ruled that the trial judge is the best person to
evaluate the veracity of a witness’s testimony as he is in the most
ideal position to see the demeanor, actuation and countenance of
a witness. Hence, we do not generally disturb the findings of the
trial court except in cases where the judge acted arbitrarily. 14 In the
case at bar, petitioner failed to point out any arbitrariness on the
part of the trial court.
Thus, we find that the court a quo was correct in convicting
petitioner of Homicide attended by the mitigating circumstance of
voluntary surrender and no aggravating circumstance. The penalty
prescribed by law for Homicide, reclusion temporal, shall be
imposed in its minimum period, pursuant to Article 64 (2) of the
Revised Penal Code. Under the Indeterminate Sentence Law,
petitioner shall be entitled to a minimum term of imprisonment to
be taken from the penalty next lower in degree, prision mayor.
Therefore, the indeterminate sentence imposed on him by the trial
court, ranging from six (6) years and one (1) day of prision mayor,
as minimum, to fourteen (14) years and one (1) day of reclusion
temporal, as maximum, is affirmed.
Likewise, the Court of Appeals was correct in increasing the
amount of civil indemnity to P50,000.00, in line with existing
jurisprudence.15 In cases of murder, homicide, parricide and rape,
civil indemnity in the amount of P50,000.00 is automatically
granted to the offended party or his heirs in case of his death,
without need of further evidence other than the fact of the
commission of the crime.16
On the other hand, the award of moral damages in the sum of P
10,000.00 must be increased to P50,000.00. As borne out by
human nature and experience, a violent death invariably and
necessarily brings about emotional pain and anguish on the part of
the victim’s family. It is inherently human to suffer sorrow, torment,
pain and anger when a loved one becomes the victim of a violent
or brutal killing. Such violent death or brutal killing not only steals
from the family of the deceased his precious life, deprives them
forever of his love, affection and support, but often leaves them
with the gnawing feeling that an injustice has been done to them.
For this reason, moral damages must be awarded even in the
absence of any allegation and proof of the heirs’ emotional
suffering.17
Finally, the award of actual damages in the amount of P10,000.00
does not appear to have been substantiated. Only those expenses
which are duly proven, or those that appear to have been
genuinely incurred in connection with the death, wake or burial of
the victim, will be recognized in court.18 Hence, the same must be
deleted.1awph!l.net
WHEREFORE, in view of the foregoing, the petition for review is
DENIED. The decision of the Court of Appeals, finding petitioner
Carlos Arvuna y Morban guilty beyond reasonable doubt of
Homicide, attended by the mitigating circumstance of voluntary
surrender, and sentencing him to suffer the indeterminate penalty
of six (6) years and one (1) day of prision mayor, as minimum, to
fourteen (14) years and one (1) day of reclusion temporal, as
maximum, and to pay the heirs of the deceased Napoleon Ong the
sum of P50,000.00 as civil indemnity, is AFFIRMED with
MODIFICATION. As modified, petitioner is further ordered to pay
the heirs of the deceased moral damages in the increased amount
of P50,000.00. The award of actual damages is deleted for lack of
factual and legal basis.

SO ORDERED.

Davide, Jr., C.J., (Chairman), Vitug, Carpio, and Azcuna, JJ.,

concur.
 SECOND DIVISION
G.R. No. 170813 April 16, 2008
B.F. METAL (CORPORATION), petitioners,
vs.
SPS. ROLANDO M. LOMOTAN and LINAFLOR LOMOTAN and
RICO UMUYON, respondents.
DECISION
TINGA, J.:
Before the Court is a petition for review on certiorari under Rule 45
of the 1997 Rules of Civil Procedure, assailing the award of
damages against petitioner in the Decision1 and Resolution2 of the
Court of Appeals in CA-G.R. CV No. 58655. The Court of Appeals
affirmed with modification the Decision of the Regional Trial Court
(RTC), Branch 72, Antipolo, Rizal in Civil Case No. 1567-A, which
found petitioner corporation and its driver, Onofre V. Rivera,
solidarily liable to respondents for damages.
The following factual antecedents are not disputed.
In the morning of 03 May 1989, respondent Rico Umuyon
("Umuyon") was driving the owner-type jeep owned by
respondents, Spouses Rolando and Linaflor Lomotan ("Spouses
Lomotan"). The jeep was cruising along Felix Avenue in Cainta,
Rizal at a moderate speed of 20 to 30 kilometers per hour.
Suddenly, at the opposite lane, the speeding ten-wheeler truck
driven by Onofre Rivera overtook a car by invading the lane being
traversed by the jeep and rammed into the jeep. The jeep was a
total wreck while Umuyon suffered "blunt thoracic injury with
multiple rib fracture, fractured scapula (L), with
pneumohemothorax," which entailed his hospitalization for 19
days. Also in view of the injuries he sustained, Umuyon could no
longer drive, reducing his daily income from P150.00 to P100.00.
On 27 October 1989, respondents instituted a separate and
independent civil action for damages against petitioner BF Metal
Corporation ("petitioner") and Rivera before the Regional Trial
Court (RTC) of Antipolo, Rizal. The complaint essentially alleged
that defendant Rivera’s gross negligence and recklessness was
the immediate and proximate cause of the vehicular accident and
that petitioner failed to exercise the required diligence in the
selection and supervision of Rivera. The complaint prayed for the
award of actual, exemplary and moral damages and attorney’s
fees in favor of respondents.
In the Answer, petitioner and Rivera denied the allegations in the
complaint and averred that respondents were not the proper
parties-in-interest to prosecute the action, not being the registered
owner of the jeep; that the sole and proximate cause of the
accident was the fault and negligence of Umuyon; and that
petitioner exercised due diligence in the selection and supervision
of its employees.
During the trial, respondents offered the testimonies of Umuyon,
SPO1 Rico Canaria, SPO4 Theodore Cadaweg and Nicanor
Fajardo, the auto-repair shop owner who gave a cost estimate for
the repair of the wrecked jeep. Among the documentary evidence
presented were the 1989 cost estimate of Pagawaan Motors,
Inc.,3 which pegged the repair cost of the jeep at P96,000.00, and
the cost estimate of Fajardo Motor Works4 done in 1993, which
reflected an increased repair cost at P130,655.00. They also
presented in evidence a copy of the Decision of the RTC, Assisting
Branch 74, Cainta, Rizal in Criminal Case No. 4742,
entitled People of the Philippines v. Onofre V. Rivera, finding
Rivera guilty of reckless imprudence resulting in damage to
property with physical injuries.
For its part, petitioner presented at the hearing Rivera himself and
Habner Revarez, petitioner’s production control superintendent.
Included in its documentary evidence were written guidelines in
preventive maintenance of vehicles and safety driving rules for
drivers.
On 21 April 1997, the trial court rendered its Decision, the
dispositive portion of which reads:
WHEREFORE, premises considered, judgment is hereby
rendered ordering defendants to pay jointly and severally
to herein plaintiffs the following sums:
(a) Actual --- i. P96,700.00 for cost of
Damages the owner-type jeep
ii. P15,000.00 medical
expenses
iii. P50,000.00 for loss of
earnings
(b) Moral --- P100,000.00
Damages
(c) Exemplary --- P100,000.00
Damages
(d) Attorney’s --- P25,000.00 plus P1,000.00
Fees for every Court appearance
Costs of Suit.
SO ORDERED.5
The trial court declared Rivera negligent when he failed to
determine with certainty that the opposite lane was clear before
overtaking the vehicle in front of the truck he was driving. It also
found petitioner negligent in the selection and supervision of its
employees when it failed to prove the proper dissemination of
safety driving instructions to its drivers.
Petitioner and Rivera appealed the decision to the Court of
Appeals.
On 13 April 2005, the Court of Appeals rendered the assailed
Decision. It affirmed the trial court’s finding that Rivera’s
negligence was the proximate cause of the accident and that
petitioner was liable under Article 21806 of the Civil Code for its
negligence in the selection and supervision of its employees.
However, the appellate court modified the amount of damages
awarded to respondents. The dispositive portion of the Decision
reads:
WHEREFORE, the decision appealed from is
AFFIRMED with MODIFICATION to read as follows:
"WHEREFORE, premises considered,
judgment is hereby rendered ordering
defendants to pay jointly and severally to herein
plaintiffs the following sums:
 (a) Actual --- i. P130,655.00, for
Damages cost of repairing
the owner-type
jeep.
ii. P10,167.99 in
medical expenses.
iii. P2,850.00 for
lost earnings
during medical
treatment.
(b) Moral --- P100,000.00
Damages
(c) --- P100,000.00
Exemplary
Damages
(d) Attorney’s --- P25,000.00
Fees
Costs of suit."
SO ORDERED.7
On 12 December 2005, the Court of Appeals denied the motion for
reconsideration of its Decision. Only petitioner filed the instant
petition, expressly stating that it is assailing only the damages
awarded by the appellate court.
The instant petition raises the following issues: (1) whether the
amount of actual damages based only on a job estimate should be
lowered; (2) whether Spouses Lomotan are also entitled to moral
damages; and (3) whether the award of exemplary damages and
attorneys is warranted. For their part, respondents contend that the
aforementioned issues are factual in nature and therefore beyond
the province of a petitioner for review under Rule 45.
This is not the first instance where the Court has given due course
to a Rule 45 petition seeking solely the review of the award of
damages.8 A party’s entitlement to damages is ultimately a
question of law because not only must it be proved factually but
also its legal justification must be shown. In any case, the trial
court and the appellate court have different findings as to the
amount of damages to which respondents are entitled. When the
factual findings of the trial and appellate courts are conflicting, the
Court is constrained to look into the evidence presented before the
trial court so as to resolve the herein appeal. 9
The trial court split the award of actual damages into three items,
namely, the cost of the wrecked jeep, the medical expenses
incurred by respondent Umuyon and the monetary value of his
earning capacity. On appeal, the Court of Appeals reduced the
amount of medical expenses and loss of earning capacity to which
respondent Umuyon is entitled but increased from P96,700.00
to P130,655.00 the award in favor of Spouses Lomotan for the
cost of repairing the wrecked jeep.
The instant petition assails only the modified valuation of the
wrecked jeep. Petitioner points out that the alleged cost of
repairing the jeep pegged at P130,655.00 has not been incurred
but is only a job estimate or a sum total of the expenses yet to be
incurred for its repair. It argues that the best evidence obtainable
to prove with a reasonable degree of certainty the value of the jeep
is the acquisition cost or the purchase price of the jeep minus
depreciation for one year of use equivalent to 10% of the purchase
price.
Petitioner’s argument is partly meritorious.
Except as provided by law or by stipulation, one is entitled to an
adequate compensation only for such pecuniary loss suffered by
him as he has duly proved. Such compensation is referred to as
actual or compensatory damages.10 Actual damages are such
compensation or damages for an injury that will put the injured
party in the position in which he had been before he was injured.
They pertain to such injuries or losses that are actually sustained
and susceptible of measurement. To justify an award of actual
damages, there must be competent proof of the actual amount of
loss. Credence can be given only to claims which are duly
supported by receipts.11
In People v. Gopio,12 the Court allowed the reimbursement of only
the laboratory fee that was duly receipted as "the rest of the
documents, which the prosecution presented to prove the actual
expenses incurred by the victim, were merely a doctor’s
prescription and a handwritten list of food expenses." 13 In Viron
Transportation Co., Inc. v. Delos Santos,14 the Court particularly
disallowed the award of actual damages, considering that the
actual damages suffered by private respondents therein were
based only on a job estimate and a photo showing the damage to
the truck and no competent proof on the specific amounts of actual
damages suffered was presented.
In the instant case, no evidence was submitted to show the
amount actually spent for the repair or replacement of the wrecked
jeep. Spouses Lomotan presented two different cost estimates to
prove the alleged actual damage of the wrecked jeep. Exhibit "B,"
is a job estimate by Pagawaan Motors, Inc., which pegged the
repair cost of the jeep at P96,000.00, while Exhibit "M," estimated
the cost of repair at P130,655.00. Following Viron, neither estimate
is competent to prove actual damages. Courts cannot simply rely
on speculation, conjecture or guesswork in determining the fact
and amount of damages.15
As correctly pointed out by petitioner, the best evidence to prove
the value of the wrecked jeep is reflected in Exhibit "I," the Deed of
Sale showing the jeep’s acquisition cost at P72,000.00. However,
the depreciation value of equivalent to 10% of the acquisition cost
cannot be deducted from it in the absence of proof in support
thereof.
Petitioner also questions the award of moral and exemplary
damages in favor of Spouses Lomotan. It argues that the award of
moral damages was premised on the resulting physical injuries
arising from the quasi-delict; since only respondent Umuyon
suffered physical injuries, the award should pertain solely to him.
Correspondingly, the award of exemplary damages should pertain
only to respondent Umuyon since only the latter is entitled to moral
damages, petitioner adds.
In the case of moral damages, recovery is more an exception
rather than the rule. Moral damages are not punitive in nature but
are designed to compensate and alleviate the physical suffering,
mental anguish, fright, serious anxiety, besmirched reputation,
wounded feelings, moral shock, social humiliation, and similar
harm unjustly caused to a person. In order that an award of moral
damages can be aptly justified, the claimant must be able to
satisfactorily prove that he has suffered such damages and that
the injury causing it has sprung from any of the cases listed in
Articles 221916 and 222017 of the Civil Code. Then, too, the
damages must be shown to be the proximate result of a wrongful
act or omission. The claimant must establish the factual basis of
the damages and its causal tie with the acts of the defendant. In
fine, an award of moral damages would require, firstly, evidence of
besmirched reputation or physical, mental or psychological
suffering sustained by the claimant; secondly, a culpable act or
omission factually established; thirdly, proof that the wrongful act
or omission of the defendant is the proximate cause of the
damages sustained by the claimant; and fourthly, that the case is
predicated on any of the instances expressed or envisioned by
Article 2219 and Article 2220 of the Civil Code. 18
In culpa aquiliana, or quasi-delict, (a) when an act or omission
causes physical injuries, or (b) where the defendant is guilty of
intentional tort, moral damages may aptly be recovered. This rule
also applies, as aforestated, to breaches of contract where the
defendant acted fraudulently or in bad faith. In culpa criminal,
moral damages could be lawfully due when the accused is found
guilty of physical injuries, lascivious acts, adultery or concubinage,
illegal or arbitrary detention, illegal arrest, illegal search, or
defamation.19
the appellate court’s award of attorney’s fees in the amount
of P25,000.00.
WHEREFORE, the instant petition for certiorari is PARTIALLY
GRANTED. The Decision of the Court of Appeals in CA-G.R. CV
No. 58655 is AFFIRMED with MODIFICATION. The award of
actual damages for the cost of repairing the owner-type jeep is
hereby REDUCED to P72,000.00 while the moral damages
of P30,000.00 is awarded solely to respondent Umuyon. All other
awards of the Court of Appeals are AFFIRMED. Following
jurisprudence,30petitioner is ordered to PAY legal interest of 6%
per annum from the date of promulgation of the Decision dated 21
April 1997 of the Regional Trial Court, Branch 72, Antipolo, Rizal
and 12% per annum from the time the Decision of this Court
attains finality, on all sums awarded until their full satisfaction.
SO ORDERED.

Undoubtedly, petitioner is liable for the moral damages suffered by

respondent Umuyon. Its liability is based on a quasi-delict or on its
negligence in the supervision and selection of its driver, causing
the vehicular accident and physical injuries to respondent Umuyon.
Rivera is also liable for moral damages to respondent Umuyon
based on either culpa criminal or quasi-delict. Since the decision in
the criminal case, which found Rivera guilty of criminal negligence,
did not award moral damages, the same may be awarded in the
instant civil action for damages.

Jurisprudence show that in criminal offenses resulting to the death

of the victim, an award within the range of P50,000.00
to P100,000.00 as moral damages has become the trend. 20 Under
the circumstances, because respondent Umuyon did not die but
had become permanently incapacitated to drive as a result of the
accident, the award of P30,000.00 for moral damages in his favor
is justified.21

However, there is no legal basis in awarding moral damages to

Spouses Lomotan whether arising from the criminal negligence
committed by Rivera or based on the negligence of petitioner
under Article 2180.22 Article 221923speaks of recovery of moral
damages in case of a criminal offense resulting in physical injuries
or quasi-delictscausing physical injuries, the two instances where
Rivera and petitioner are liable for moral damages to respondent
Umuyon. Article 222024 does speak of awarding moral damages
where there is injury to property, but the injury must be willful and
the circumstances show that such damages are justly due. There
being no proof that the accident was willful, Article 2220 does not
apply.

Exemplary or corrective damages are imposed, by way of example

or correction for the public good, in addition to moral, temperate,
liquidated or compensatory damages.25 Exemplary damages
cannot be recovered as a matter of right; the court will decide
whether or not they should be adjudicated. 26 In quasi-delicts,
exemplary damages may be granted if the defendant acted with
gross negligence.27 While the amount of the exemplary damages
need not be proved, the plaintiff must show that he is entitled to
moral, temperate or compensatory damages before the court may
consider the question of whether or not exemplary damages
should be awarded.28

As correctly pointed out by the Court of Appeals, Spouses

Lomotan have shown that they are entitled to compensatory
damages while respondent Umuyon can recover both
compensatory and moral damages. To serve as an example for
the public good, the Court affirms the award of exemplary
damages in the amount of P100,000.00 to respondents. Because
exemplary damages are awarded, attorney’s fees may also be
awarded in consonance with Article 2208 (1).29 The Court affirms
 SECOND DIVISION
G.R. No. 174470 April 27, 2007
[Formerly G. R. Nos. 159844-46]
PEOPLE OF THE PHILIPPINES, Appellee,
vs.
FILOMINO LIZANO y MARVILLA Appellant.
DECISION
TINGA, J.:
For consideration is an appeal by Filomino Lizano y
Marvilla1 (appellant) from the Decision2 dated 28 April 2006 of the
Court of Appeals in CA-G.R. CR-H.C. No. 01659, affirming the 30
May 2003 Decision3 of the Regional Trial Court (RTC) of Calauag,
Quezon, which found him guilty beyond reasonable doubt of the
crime of rape.
On 20 February 1997, appellant was charged with three (3) counts
of rape in three (3) separate Informations, which, except for the
date, similarly read as follow:
That on or about the month of January 1996, at Sitio San Jose
Ilaya, Barangay Sta. Cecilia, in the Municipality of Tagkawayan,
Province of Quezon, Philippines and within the jurisdiction of this
Honorable Court, the above-named accused, who is the uncle of
the offended party, with lewd design, by means of force, violence
and intimidation, did then and there willfully, unlawfully and
feloniously have carnal knowledge of one [AAA], 4 a minor, 11
years of age, against her will.
Contrary to law.5
The two (2) other Informations6 alleged that appellant had raped
AAA on 18 and 19 January 1997, respectively.
Appellant pleaded not guilty on all three charges. Trial then
proceeded.
The victim, AAA, testified that she had been staying in her
grandmother’s house in Barangay Sta. Cecilia, Tagkawayan,
Quezon, together with appellant and his wife, BBB who is AAA’s
aunt. Sometime in January 1996, AAA, who was then only 11
years old, was sleeping inside the house when appellant lay down
beside her and began undressing her while threatening to kill her,
her grandmother and aunt should she reveal his acts to anybody.
Afterwards, appellant also took off his clothes. He then went on top
of AAA and inserted his penis into her vagina, causing her to feel
pain.7 A year later, on 18 January 1997, appellant raped AAA
again. The following day, at around 10:30 a.m., appellant raped
her for the third time. She, however, declared during direct-
examination that there were only slight penetrations in these two
occasions.8 AAA was only forced to disclose the incident to an
uncle, a brother of her mother, upon the prodding of BBB, who
chanced upon AAA while inside the room of appellant. 9
The prosecution also presented CCC to testify on the age of her
daughter, AAA. CCC stated in court that AAA was born on 14 May
1985.10 AAA’s birth certificate11 attesting to the same data was
likewise presented in court.
The third witness for the prosecution was Delia Mayuga Ayuda, a
Medical Clerk at the Tagkawayan District Hospital, whose duty
was to keep all the files of the patients in the hospital. She
identified the signature of Dr. Juvy Paz Purino in the Medico-Legal
Certificate which contained the following findings:
- superficial lacerations at 6 o’clock and 8 o’clock
positions, hymen
NOI- Allegedly raped by someone
DOI- January 18, 1997
TOI- P.M.
POI- San Jose Tagkawayan, Quezon12
Appellant testified on his behalf, raising denial and alibi as
defenses. Appellant denied raping AAA sometime January
1996.13 He averred that on 19 January 1997, he was driving his
tricycle the whole day and got home 11 a.m. the next day. He
however recalled an incident where he asked AAA to get a spare
part of a tricycle in the living room. Unable to follow his orders,
appellant followed AAA inside the house. It was at that moment
when his wife, BBB, arrived and accused him of raping
AAA.14 Appellant maintained that BBB had induced AAA to charge
him with rape because of their frequent quarrels.15
The trial court found the first incident of rape as credible and found
appellant guilty in Criminal Case No. 2857-C. However, he was
acquitted in Criminal Case Nos. 2858-C and 2859-C for
insufficiency of evidence.16
From the decision in Criminal Case No. 2857-C, appellant directly
appealed to this Court. Conformably with our ruling in People v.
Mateo,17 the appeal was remanded to the Court of Appeals for
intermediate review.
On 28 April 2006, the Court of Appeals promulgated a Decision
dismissing the appeal and affirming in toto the decision of the
RTC.
Both parties opted not to file Supplemental Briefs and instead
adopted their Briefs before the appellate court. 18
In this appeal, appellant contends that the prosecution’s evidence
is insufficient to sustain his conviction, especially taking into
account the alleged delay on the part of the victim in reporting the
rape. Thus, the resolution of this case hinges on the
straightforward issue of whether the prosecution was able to
establish appellant’s guilt beyond reasonable doubt based on the
complainant’s testimony.
In the prosecution of rape cases, conviction or acquittal depends
on the credence to be accorded to the complainant’s testimony
because of the fact that usually the participants are the only
witnesses to the occurrences.19 Thus, the issue boils down to
credibility. Significantly, findings of fact of the trial court should not
be disturbed on appeal since conclusions as to the credibility of
witnesses in rape cases hinge heavily on the sound judgment of
the trial court which is in a better position to decide the question,
having heard the witnesses and observed their deportment and
manner of testifying.20
In the case at bar, the trial court aptly observed:
In the first incident, the private complainant AAA then an 11 years
old [sic] girl in a clear, convincing and straightforward manner
testified how the accused Filomino Lizano undressed her and then
afterwards, he undressed also, put himself on top of her and
inserted his penis to her private part. AAA clearly stated that the
accused’s penis was able to fully penetrate her vagina and it was
painful. . . Her clear account of the first incident of rape
unequivocally show that she was indeed raped by the accused
Filomino Lizano.21
We find no cogent reason to depart from these findings. During the
direct examination, AAA recounted the rape incident and positively
identified appellant as the perpetrator, thus:
Q: Do you know this Filomino Lizano?
A: Yes, sir.
Q: Why do you know him?
A: He is the husband of my auntie, sir.
xxxx
Q: If this Filomino Lizano is in Court, will you be able to point to
him?
A: Yes, sir.
Q: Please do so. (Witness pointing to a man who identified himself
to be Filomino Lizano).
Q: Now, in January, 1996, how old were you then?
A: 11 years old, sir.
Q: And on that month, do you remember any unusual incident that
happened to you?
A: Yes, sir.
Q: And what was that unusual incident?
A: I was raped by Filomino Lizano, sir.
Q: Where?
A: In the house of my grandmother, sir.
Q: Where is that house of your Lola located?
A: In Brgy. Sta. Cecilia, Tagkawayan, Quezon.
Q: Will you tell or relay to this Court that particular incident that you
are referring to that you were raped by Filomino Lizano?
A: He slept beside me, sir.
Q: And after sleeping beside you, what did he do if he did
anything?
A: He undressed me, sir.
Q: After undressing you, did he do anything more?
A: He told me not to tell anybody.
Q: And did he tell you what will happen if you will tell anyone about
that incident?
xxxx
WITNESS:
Because if I inform [sic] about the incident, he will kill us, sir.
FISCAL BONIFACIO
Q: When you say "us," whom was he referring to?
A: My grandmother, auntie, and myself, sir.
Q: After he undressed you, is there anything more he did?
A: He undressed himself also, sir.
Q: Then anything more?
A: He put himself on top of me, sir.
Q: And when he put himself on top of you, did he do anything
more?
A: He entered his penis to my private part, sir.
Q: Do you know if he was able to fully penetrate his penis on your
private part?
A: Yes, sir.
Q: What did you feel when he was doing that?
A: It was painful, sir.22
In her sworn statement23 taken before the Police Station in
Tagkawayan Quezon, AAA narrated the same details contained in
her testimony before the trial court.
These positive declarations bolster the inevitable conclusion that
appellant had indeed raped AAA. The trial court correctly lent
credence to the straightforward version of the victim as against the
bare denial by appellant. It has been an oft-repeated rule that mere
denial, if unsubstantiated by clear and convincing evidence, has no
weight in law and cannot be given greater evidentiary value than
the positive testimony of a rape victim. 24 As between a categorical
testimony that rings of truth on one hand, and a bare denial on the
other, the former is generally held to prevail. 25
Appellant’s main argument, however, is premised on the delay
incurred by the victim in reporting the crime. Appellant underscores
the failure of the victim to report the alleged rape which occurred in
January 1996 even when there was no showing that appellant was
continuously threatening her after the said incident.26
His does not persuade.
The Solicitor General correctly points out that delay in reporting a
rape incident does not impair the credibility of the victim in the face
of threats of death or physical violence. 27 Indeed, delay in
revealing the commission of rape is not an indication of a
fabricated charge. Such intimidation must be viewed in light of the
victim's perception and judgment at the time of the commission of
the crime and not by any hard and fast rule. It is enough that the
intimidation produces a fear that if the victim does not yield to the
perverse impulses of the accused, something would happen to her
at the moment, or even thereafter, as when she is threatened with
death if she would report the incident.28

AAA satisfactorily explained the delay. Appellant threatened to kill

her, her grandmother and aunt should she report the incident to
anybody.29 This immediate threat directed at AAA, who was then
only eleven (11) years old, engendered fear on her part to reveal
the unpleasant incident. A rape victim cannot, after all, be
expected to summon the courage to report a sexual assault
committed against her person, where the act was accompanied by
a death threat.30

Under Article 335 of the Revised Penal Code, rape, which is

punishable by reclusion perpetua is committed by having carnal
knowledge of a woman under any of the following circumstances:

1. By using force or intimidation;

2. When the woman is deprived of reason or otherwise

unconscious;

3. When the woman is under twelve years of age or is

demented.

Hence, the trial court correctly imposed the penalty of reclusion

perpetua for the rape of AAA, who was then under 12 years old, as
proven by the prosecution through the testimony of her mother and
the presentation of AAA’s birth certificate. We affirm the trial
court’s award of civil indemnity and moral damages each in the
amounts of ₱50,000.00 in line with current jurisprudence. 31 Civil
indemnity is automatically imposed upon the accused without need
of proof other than the fact of the commission of rape. Moral
damages is also automatically granted in rape cases without need
of further proof other than the commission of the crime because it
is assumed that a rape victim had actually suffered moral injuries
entitling her to such award.32

WHEREFORE, in view of the foregoing, the Decision of the Court

of Appeals dated 28 April 2006 is AFFIRMED. Appellant
FILOMINO LIZANO y MARVILLA is hereby found guilty beyond
reasonable doubt of statutory rape and is sentenced to suffer the
penalty of reclusion perpetua, and is ordered to pay the victim the
amounts of ₱50,000.00 as civil indemnity and ₱50,000.00 as moral
damages.

SO ORDERED.
 THIRD DIVISION
G.R. No. 179570 February 4, 2010
EGAP MADSALI, SAJIRON LAJIM and MARON
LAJIM, Petitioner,
vs.
PEOPLE OF THE PHILIPPINES, Respondent.
DECISION
PERALTA, J.:
This is an appeal from the Decision1of the Court of Appeals (CA) in
CA-G.R. CR-HC No. 00475, affirming the Decision of the Regional
Trial Court (RTC) of Palawan, Puerto Princesa City, Branch 50,
finding accused Sajiron Lajim and Maron Lajim 2 guilty beyond
reasonable doubt of the crime of abduction with rape in Criminal
Case No. 12281 and finding accused Egap Madsali and Sajiron
Lajim guilty beyond reasonable doubt of the crime of serious illegal
detention in Criminal Case No. 12309.
In view of our decision in People v. Cabalquinto,3 the real name
and identity of the rape victim, as well as the members of her
immediate family, are withheld. In this regard, the rape victim is
herein referred to as AAA; her mother, BBB; and her father, CCC.
In Criminal Case No. 12281, Sajiron Lajim (Sajiron) and Maron
Lajim (Maron) were charged with the crime of abduction with rape
in an Information4 dated March 17, 1995, which reads:
That on or about the 1st day of July, 1994, in Barangay Malitub,
Municipality of Bataraza, Province of Palawan, Philippines, and
within the jurisdiction of this Honorable Court, the above-named
accused conspiring, confederating together and helping one
another and by means of force, threat, violence and intimidation,
while armed with a bladed weapon known as "Badong", did then
and there willfully, unlawfully and feloniously take and carry away
one AAA, a girl of 16 years of age, against her will and consent
and brought to the forest and on the occasion thereof the said
accused by means of force, threat, violence and intimidation, and
while armed with a knife, accused Sahiron Lajim, with lewd design,
did then and there willfully, unlawfully and feloniously have carnal
knowledge with said AAA, against her will and consent, to her
damage and prejudice.
That on the occasion of the said Rape, accused Maron Lajim
helped Sahiron Lajim by acting as look-out during the commission
of the said crime.
CONTRARY TO LAW.
In Criminal Case No. 12309, Egap Madsali (Egap) and Sajiron
Lajim (Sajiron) were charged with the crime of serious illegal
detention in an Amended Information5 dated August 28, 1995,
which reads:
That on or about the 2nd day of July, 1994 in the morning up to
December 15, 1994, at Barangay Malitub, Municipality of
Bataraza, Province of Palawan, Philippines, and within the
jurisdiction of this Honorable Court, the above-named accused
conspiring, confederating together and mutually helping one
another, with the use of force, violence and intimidation, did then
and there willfully, unlawfully and feloniously take and detain AAA,
an unmarried woman under 15 years of age in the house of Egap
Madsali thereby depriving said AAA of her liberty all against her
will and as a result of that illegal detention, said AAA was not able
to go home to her mother for a period of more than five (5) months.
CONTRARY TO LAW.
Upon motion of the private prosecutor and with the conformity of
the Provincial Prosecutor's Office, Criminal Case No. 12309 was
consolidated with Criminal Case No. 12281, pending before the
RTC of Palawan, Puerto Princesa City, Branch 50.
Sajiron was arraigned on April 21, 1995 in Criminal Case No.
12281 and on September 21, 1995 in Criminal Case No. 12309.
He pleaded not guilty to both charges. Egap was arrested and,
thereafter, arraigned on March 8, 1996. He pleaded not guilty in
Criminal Case No. 12309. Maron was arrested and, later,
arraigned on March 11, 1996. He pleaded not guilty in Criminal
Case No. 12281. A joint trial ensued. However, in July 1996, Egap
escaped while under the custody of prison guards.
The evidence presented by the prosecution are as follows:
On July 1, 1994, around 3:30 o'clock in the afternoon, fifteen-year-
old AAA and her aunt Inon Dama were fetching water in a cave in
Barangay (Brgy.) Malitub, Bataraza, Palawan. Suddenly, Sajiron
arrived, running towards them and carrying a badong (bolo). They
tried to run away, but Sajiron overtook them. He held the hair of
AAA and told her, "Sara, you go with me. If you will not go with me,
I will kill you." Inon Dama came to AAA's rescue, but Sajiron tried
to hack her. Luckily, she was able to shield herself with a plastic
container. AAA was crying while she held her aunt's hand. Sajiron
then drew his gun, which was tucked in his waist, pointed it at Inon
Dama and said, "If you will not go, I will shoot you." Inon Dama
went home and reported the incident to AAA's mother. When Inon
Dama left the place, Maron, Sajiron's father, suddenly appeared
with a gun and told AAA to come with them. When AAA refused,
Sajiron and Maron tied her hands behind her back, covered her
mouth with a piece of cloth, and brought her to the forest. There,
AAA was untied and undressed, leaving only her bra on. While
Sajiron was undressing AAA, she pleaded with him not to abuse
her, but Sajiron told her that if she would submit to his desire, her
life would be spared. Sajiron held her breast, touched her private
parts and inserted his sex organ inside her vagina. AAA resisted,
but to no avail. She felt pain and she noticed blood on her private
parts. She was sexually abused three times on the ground, where
she was made to lie down on a bed of leaves. During the entire
time that AAA was being abused by Sajiron, Maron stood guard
and watched them. They left the forest at around 10:00 o'clock in
the morning of the following day and brought AAA to the house of
Egap, where she was detained in a room. Sajiron instructed Egap
to guard AAA and to shoot her if she would attempt to escape.
On July 2, 1994, AAA’s mother came to get AAA, but Egap refused
and threatened to kill her daughter if she would report the matter to
the authorities. Out of fear of losing her daughter, she went home
and did not report the incident to the police authorities. 6 Egap
asked AAA if she wanted to marry Sajiron, but she refused. AAA
was then forced to sign an unknown document, which she was not
able to read.
Nine days after the abduction, or on July 11, 1994, upon
instruction of Egap, AAA and Sajiron were married by Imam Musli
Muhammad. The marriage was solemnized against AAA's will and
without the presence of her parents. After the marriage, AAA and
Sajiron lived in the house of Egap, together with the latter's wife,
children and mother-in-law. AAA stayed in one room with Sajiron.
While detained, AAA did not try to escape, because her house was
very far from the place where she was held captive, and her
captors threatened to kill her and her family if she would attempt to
escape. During her detention, Sajiron abused her twice every
night. She was free to roam within the vicinity of the house but she
was usually accompanied by Egap's wife who served as her
guard. She was also guarded and threatened by Egap's sons. She
got pregnant after some time.
On November 24, 1994, BBB and Inon Dama went to Puerto
Princesa City to report AAA's abduction to the proper authorities.
AAA was detained at the house of Egap from July 2, 1994 until
December 15, 1994. On December 16, 1994, Sajiron and Egap
were arrested by the police.
The defense, on the other hand, denied having committed the
crimes charged. Sajiron claimed that he and AAA were engaged
for three years prior to their elopement. During the period of their
engagement, Sajiron lived with AAA in her mother's house. AAA
married Sajiron voluntarily and out of her own free will. The sexual
intercourse between AAA and Sajiron was consensual. The
defense further claimed that AAA merely filed criminal charges
against Sajiron because he did not pay the dowry (dower) in the
amount of ₱10,000.00 to AAA's parents. Sajiron asserted that he
did not pay the dowry because he had already rendered services
to AAA's family for about three years prior to his marriage with
AAA. After the marriage, Sajiron and AAA were brought by the
latter's father to his house in Balabac, Palawan. They stayed there
for about four months. Then they went to Brgy. Malitub, Bataraza,
Palawan and stayed at the house of Egap for about two weeks.
Sajiron was thereafter arrested by the authorities. He only learned
that a case for abduction with rape was filed against him by AAA
when he was being interrogated by the Bataraza Police.
On July 25, 2002, the RTC rendered a Decision7 finding Sajiron
and Maron guilty beyond reasonable doubt of the crime of
abduction with rape. Egap and Sajiron were also found guilty
beyond reasonable doubt of the crime of serious illegal detention.
The dispositive portion of the Decision is as follows:
WHEREFORE, premises considered, this Court finds the accused
guilty beyond reasonable doubt of the crime charged, to suffer
imprisonment as follows:
1. In Criminal Case No. 12281, the accused Sa[j]iron
Lajim and Maron Lajim are hereby sentenced to suffer
the penalty of Reclusion Perpetua or forty (years) and
each of the accused are ordered to indemnify the
complainant AAA the same amount of ₱50,000.00 as
and for civil indemnity;
2. In Criminal Case No. 12309, the accused Egap
Madsali and Sa[j]iron Lajim are hereby sentenced to
suffer the penalty of Reclusion Perpetua and both
accused are ordered to separately indemnify the
complainant AAA the amount of ₱50,000.00 as and for
civil indemnity.
SO ORDERED.
Petitioners filed a Notice of Appeal, and the records of the case
were forwarded to this Court. However, pursuant to this Court’s
ruling in People v. Mateo,8 the case was transferred to the CA. The
CA rendered a Decision dated July 31, 2007 affirming the decision
of the trial court in Criminal Case Nos. 12281 and 12309.
Hence, this petition assigning the following errors:
THE HONORABLE COURT OF APPEALS ERRED IN IGNORING
THE IMPLICATION OF THE 5-MONTH INACTION BY THE
PRIVATE COMPLAINANT'S MOTHER IN REPORTING THE
ALLEGED ADBUCTION AND ILLEGAL DETENTION OF HER
DAUGHTER; AND
THE HONORABLE COURT OF APPEALS ERRED IN IGNORING
THE UNREBUTTED TESTIMONY OF THE PRIVATE
COMPLAINANT'S OWN FATHER.
With respect to the first assigned error, petitioners allege that the
five-month inaction of BBB through his failure to report the alleged
abduction and illegal detention of her daughter is totally
inconsistent with AAA's claim that she was abducted and illegally
detained.
We are not persuaded.
Delay in reporting an incident of rape due to death threats does not
affect the credibility of the complainant, nor can it be taken against
her. The charge of rape is rendered doubtful only if the delay was
unreasonable and unexplained. 9 BBB explained that she did not
immediately report the abduction, rape and detention of her
daughter to the authorities, because Egap threatened to kill
AAA,10 who was then in his custody.
Further, BBB testified that, on another occasion, Egap threatened
to kill her if she dared to report the matter to the authorities. True
enough, when Egap learned that she did what he forbade her to
do, he made good his threat and shot her at the back. 11 Thus,
BBB's delay in reporting the incident for five months should not be
taken against her.
Anent the second assignment of error, petitioners argue that the
unrebutted testimonies of CCC and Imam Musli Muhammad cast a
reasonable doubt on the charge against them. CCC testified that
Sajiron courted his daughter and proposed marriage after their
three-year courtship. He claimed that he gave his consent to the
marriage of his daughter to Sajiron. Prior to the marriage, CCC
said that he was even able to talk to his daughter and his wife, and
both were amenable to the marriage. AAA never mentioned to him
anything about having been kidnapped or raped. Neither did his
wife tell him of their daughter's alleged harrowing experience. He
and his wife were present during the marriage celebration.
Again, the testimony of CCC fails to persuade Us. AAA testified
that she had never seen her father since she was a child, as her
father had abandoned them.12 BBB testified that she and her
husband had been separated for a long time, and she did not know
his whereabouts. She further said that CCC left their place in
March 1983 to go to Malaysia, and that was the last time she saw
him.13 CCC's allegation that his wife was present during the
marriage celebration was also controverted by the testimonies of
AAA, her mother, and Imam Musli Muhammad. Thus, save for
CCC's self-serving allegations, he could not muster any sufficient
evidence to beef up those allegations. It is also very surprising that
CCC, after his long absence, suddenly appeared and testified for
the defense. CCC would like to impress upon this Court that he
has maintained constant communication with his family; however,
no single witness was presented to corroborate this claim.
Furthermore, CCC, in his Malayang Sinumpaang Salaysay14 dated
December 28, 1995, alleged that in 1991, his wife wrote and
informed him that Sajiron asked for their daughter's hand in
marriage. CCC replied that he was giving his permission for their
daughter to marry. In the same salaysay, he also said that Egap
wrote him a letter on July 4, 1994 and instructed him to proceed to
Malitub, Bataraza to discuss the intended marriage of AAA and
Sajiron. However, records are bereft of proof of the existence of
these letters. Clearly, these allegations, being unsupported by
evidence, are self-serving and cannot be given any probative
value.
Moreover, Imam Musli Mohammad, while testifying as prosecution
witness, attested that the parents of AAA and Sajiron were not
present during the marriage,15 thus controverting CCC's allegation
that he was present and gave consent to the marriage. Although
Imam Musli Muhammad, when presented as an accused witness,
recanted his earlier testimony that CCC was not present at the
wedding, the same cannot be given credit. Recantations are
frowned upon by the courts. A recantation of a testimony is
exceedingly unreliable, for there is always the probability that such
recantation may later on be itself repudiated. Courts look with
disfavor upon retractions, because they can easily be obtained
from witnesses through intimidation or for monetary
considerations. Hence, a retraction does not necessarily negate an
earlier declaration. They are generally unreliable and looked upon
with considerable disfavor by the courts. 16 Moreover, it would be a
dangerous rule to reject the testimony taken before a court of
justice, simply because the witness who has given it later on
changes his mind for one reason or another. 17
As to the defense of denial, the same is inherently weak. Denial is
a self-serving negative evidence, which cannot be given greater
weight than that of the declaration of a credible witness who
testifies on affirmative matters. Like alibi, denial is an inherently
weak defense, which cannot prevail over the positive and credible
testimonies of the prosecution witnesses. Denial cannot prevail
over the positive testimonies of prosecution witnesses who were
not shown to have any ill motive to testify against petitioner. 18
The assertion of the accused that the reason why a criminal case
was filed against him was his failure to pay the ₱10,000.00 dowry
is too lame to be accepted as true. No young Filipina of decent
repute would publicly admit she has been raped unless that is the
truth. Even in these modern times, this principle holds true. 19 When
the offended parties are young and immature girls from 12 to 16,
as in this case, courts are inclined to lend credence to their version
of what transpired, considering not only their relative vulnerability,
but also the public humiliation to which they would be exposed by
a court trial, if their accusation were not true.20
It is highly improbable that a young girl, such as AAA, would
concoct a horrid story and impute to the accused a crime so grave
and subject herself and her family to the humiliation and invasive
ordeal of a public trial just to avenge the alleged non-payment of
the dowry, unless she be impelled by a genuine desire to expose
the truth, vindicate her honor and seek justice she so greatly
deserves.
Neither is the Court convinced of the "sweetheart theory," the
defense of the accused, by alleging that AAA and Sajiron were
engaged for three years prior to their elopement and marriage. If
there were indeed romantic relationship between AAA and Sajiron,
as the latter claims, her normal reaction would have been to cover
up for the man she supposedly loved. On the contrary, AAA lost no
time in reporting the incident to the National Bureau of
Investigation,21 right after she was rescued by the authorities.
Moreover, the "sweetheart theory" proffered by the accused is
effectively an admission of carnal knowledge of the victim, which
consequently places on him the burden of proving the supposed
relationship by substantial evidence.22 The "sweetheart theory"
hardly deserves any attention when an accused does not present
any evidence, such as love letters, gifts, pictures, and the like to
show that, indeed, he and the victim were sweethearts.23 In the
case at bar, Sajiron was unable to present any evidence to prove
their relationship. Clearly, the "sweetheart theory" is a self-serving
defense and mere fabrication of the accused to exculpate himself
and his cohorts from the charges filed against them. It bears
stressing that during her testimony before the trial court, AAA
vehemently denied that she and Sajiron were sweethearts and
firmly declared that the latter never lived in their house. 24
More importantly, in rape cases, the credibility of the victim's
testimony is almost always the single most important factor. When
the victim's testimony is credible, it may be the sole basis for the
accused's conviction.25 This is so because, owing to the nature of
the offense, in many cases, the only evidence that can be given
regarding the matter is the testimony of the offended party. 26
In the case at bar, the trial court found AAA's testimony credible.
The trial court held that AAA's testimony was clear, categorical and
consistent. She remained steadfast in her assertions and
unfaltering in her testimony given in court on the unfortunate
incident.27 The trial court found that AAA positively identified
Sajiron and Maron as her abductors and narrated how she was
taken and thrice raped by Sajiron in the forest. AAA recounted her
sordid experience as follows:
AAA on Direct-Examination by Private Prosecutor
Narrazid.
Q: On July 1, 1994 more or less at 3:30 p.m. do you
remember where you were?
A: Yes ma’am.
Q: Where were you?
A: We fetched water on July 1, 1994.
Q: Where?
A: In a cave, ma’am.
Q: Was there anything unusual that happened during that
time?
A: Yes ma’am.
Q: What was that incident?
A: I noticed that Sahiron Lajim run towards me and held
me by my hair. He was carrying a Barong and he was
forcing me to go with him but I refused ma’am.
Q: And what did you do if any when he forced you to go
with him?
A: He threatened me to kill me if I will not go with him.
What I did was to hold the hair of Inon Dama who came
to my rescue, ma’am.
Q: What did Sahiron Lajim do if any?
A: He hacked Inon Dama but was not hit and it was the
container that was hit, ma’am. And Sahiron Lajim left and
I was forced to go with him telling me, "go with me if you
do not want to die."
Q: When this Inon Dama left what happened next and
you were left alone with Sahiron Lajim?
A: His father suddenly appeared who was also carrying a
gun.
Q: What happened next?
A: The father of Sahiron Lajim told me to go with them
but I refused. What they did was to tie my hands behind
my back and my mouth was covered by them by a piece
of cloth, ma’am.
Q: And after that what happened next?
A: Then they brought me to the forest ma’am. Q: And you stated that his organ entered your private
part again for the second time, how long?
Q: And when you were in the forest what happened
next? A I did not notice anymore how long was it, ma’am.

A: Sahiron Lajim raped me while his father was watching Q: And you stated Madam Witness that you were
ma’am. repeatedly raped that night, is that correct?

Q: And how did Sahiron Lajim raped you? A: Yes ma’am.

A: When we reached the forest my hands were untied Q: Up to what time?

and my dress were removed and only my bra was left
ma’am. A: The first time that he raped me was about 7:00 o’clock
in the evening, the second was midnight. And the third
Q: Who removed your dress? was 3:00 o’clock in the morning.

A: Sahiron Lajim ma’am. Q: Were you able to sleep that night?

Q: And you stated that it was only your bra that was left A: No ma’am.
in your body how about your panty?
Q: At the time when you were raped for the first time
A: It was already removed. where was the father of Sahiron Lajim?

Q: While Sahiron Lajim was undressing you what did you A: He was guarding ma’am.
do, if any?
Q: How far was his father?
A: I pleaded to him not to pursue his intention and
Sahiron Lajim threatened me that if I will allow him to do A: He was near a tree which was 10 meters away from
such thing to me he will not kill me, ma’am. us.

Q: And did he hold the private parts of your body? Q: Now, the place where you were brought by Sahiron
Lajim is a forest?
A: Yes ma’am. (witness pointing to her bust, and the
lower part of her body)
A: Yes ma’am.

Q: What other part did Sahiron Lajim touch in your body? Q: Was there a hut in that forest?

A: My private part, my vagina, ma’am. A: None ma’am, we were at a place where there were big
trees, ma’am.
Q: What else did he do to you?
Q: So, you mean to say you were raped on the ground?
A: He inserted his organ to my vagina. Then after raping
me he required me to wear my blouse. He repeated the
A: Yes ma’am.
act again for two times up to the following day, ma’am.

Q: Without any blanket?

Q: How long was the private part of Sahiron Lajim inside
your private part?
A: He got some leaves of trees, ma’am.
A: A little bit long. Nearing one (1) hour.
Q: What did he do with that leaves of trees?
Q: That was the first time his organ entered your private
part? A: He secured some leaves and placed it on the ground,
which served as mat, ma’am.
A: Yes ma’am.
Q: Now, the second and the third time that Sahiron Lajim
raped you where was his father?
Q: Did you notice anything in your private part?

A: He was also there, ma’am.28 (Emphasis supplied)

A: I have seen blood. I was even pushing him away.

xxxx
Q: How did you feel at that time when his organ was
inside your private part?
As a rule, this Court gives great weight to the trial court’s
evaluation of the testimony of a witness, because the trial court
A: It was painful, ma’am.
had the opportunity to observe the facial expression, gesture, and
tone of voice of a witness while testifying, thus, putting it in a better
position to determine whether a witness was lying or telling the
truth.29
However, the Court does not agree with the findings of the CA
affirming the trial court's judgment finding Sajiron and Maron guilty
of abduction and rape in Criminal Case No. 12281. An appeal in a
criminal case opens the entire case for review on any question,
including one not raised by the parties 30 Article 342 of the Revised
Penal Code spells out the elements of the crime of forcible
abduction, thus: (a) that the person abducted is a woman,
regardless of her age, civil status, or reputation; (b) that the
abduction is against her will; and (c) that the abduction is with lewd
designs.
A reading of the Information in Criminal Case No. 12281, for
abduction with rape, would readily show that the allegations
therein do not charge the accused with forcible abduction, because
the taking, as alleged, was not with lewd designs. The only act that
was alleged to have been attended with lewd design was the act of
rape. Upon further perusal of the allegations in the information, it
appears that the crime charged was actually the special complex
crime of kidnapping and serious illegal detention and rape, defined
and penalized under Article 267 of the Revised Penal Code.
Although the information does not specifically allege the
term "kidnap or detain," the information specifically used the
terms "take" and "carry away." To "kidnap" is to carry away by
unlawful force or fraud or to seize and detain for the purpose of so
carrying away.31 Whereas, to "take" is to get into one's hand or into
one's possession, power, or control by force or strategem. 32 Thus,
the word take, plus the accompanying phrase carry away, as
alleged in the information, was sufficient to inform the accused that
they were charged with unlawfully taking and detaining AAA.
Further, the real nature of the criminal charge is determined not
from the caption or preamble of the information or from the
specification of the provision of law alleged to have been violated,
they being conclusions of law which in no way affect the legal
aspects of the information, but from the actual recital of facts as
alleged in the body of the information. 33 Simply put, the crime
charged is determined by the information's accusatory portion and
not by its denomination.
The accusatory portion of the information alleges that AAA was
taken and carried away by Sajiron and Maron against her will and
brought to the forest; and, on the occasion thereof, Sajiron -- by
means of force, threat, violence and intimidation -- had carnal
knowledge of AAA.
The elements of kidnapping and serious illegal detention under
Article 267 of the Revised Penal Code34 are: (1) the offender is a
private individual; (2) he kidnaps or detains another or in any other
manner deprives the latter of his liberty; (3) the act of detention or
kidnapping is illegal; and (4) in the commission of the offense, any
of the following circumstances are present: (a) the kidnapping or
detention lasts for more than 3 days; or (b) it is committed by
simulating public authority; or (c) any serious physical injuries are
inflicted upon the person kidnapped or detained or threats to kill
him are made; or (d) the person kidnapped or detained is a minor,
female, or a public officer.35
In the case at bar, Sajiron and Maron, who are private individuals,
forcibly took and dragged AAA, a minor, to the forest and held her
captive against her will. The crime of serious illegal detention
consists not only of placing a person in an enclosure, but also of
detaining him or depriving him in any manner of his liberty. 36 For
there to be kidnapping, it is enough that the victim is restrained
from going home.37 Its essence is the actual deprivation of the
victim's liberty, coupled with indubitable proof of the intent of the
accused to effect such deprivation.38 In the present case, although
AAA was not actually confined in an enclosed place, she was
clearly restrained and deprived of her liberty, because she was tied
up and her mouth stuffed with a piece of cloth, thus, making it very
easy to physically drag her to the forest away from her home.
The crime of rape was also proven beyond reasonable doubt in
this case. Sajiron succeeded in having carnal knowledge of AAA
through the use of force and intimidation. For fear of losing her life,
AAA had no choice but to give in to Sajiron's beastly and lustful
assault.
Clearly, conspiracy between Sajiron and Maron attended the
commission of forcible abduction and the subsequent rape of AAA.
Conspiracy exists when two or more persons come to an
agreement concerning a felony and decide to commit it.39 It may
be inferred from the acts of the accused before, during or after the
commission of the crime which, when taken together, would be
enough to reveal a community of criminal design, as the proof of
conspiracy is frequently made by evidence of a chain of
circumstances. Once established, all the conspirators are
criminally liable as co-principals regardless of the degree of
participation of each of them, for in the contemplation of the law,
the act of one is the act of all.40 In the case at bar, it was proven
that Sajiron and Maron cooperated to prevent AAA from resisting
her abduction by tying her hands behind her back and putting a
piece of cloth in her mouth. Maron watched and stood guard to
make sure that no one would interrupt or prevent the bestial act
perpetrated by his son against AAA. Maron did not endeavor to
prevent his son from raping AAA thrice. The next morning, Sajiron
and Maron brought AAA to the house of Egap to detain her there.
The last paragraph of Art. 267 of the Revised Penal Code provides
that if the victim is killed or dies as a consequence of the detention,
or is raped or subjected to torture or dehumanizing acts, the
maximum penalty shall be imposed. In People v. Larrañaga,41 the
Court explained that this provision gives rise to a special complex
crime:
This amendment introduced in our criminal statutes, the concept of
'special complex crime' of kidnapping with murder or homicide. It
effectively eliminated the distinction drawn by the courts between
those cases where the killing of the kidnapped victim was
purposely sought by the accused, and those where the killing of
the victim was not deliberately resorted to but was merely an
afterthought. Consequently, the rule now is: Where the person
kidnapped is killed in the course of the detention, regardless of
whether the killing was purposely sought or was merely an
afterthought, the kidnapping and murder or homicide can no longer
be complexed under Art. 48, nor be treated as separate crimes,
but shall be punished as a special complex crime under the last
paragraph of Art. 267, as amended by R.A. No. 7659."
Where the law provides a single penalty for two or more
component offenses, the resulting crime is called a special
complex crime. Some of the special complex crimes under the
Revised Penal Code are (1) robbery with homicide, (2) robbery
with rape, (3) kidnapping with serious physical injuries, (4)
kidnapping with murder or homicide, and (5) rape with homicide. In
a special complex crime, the prosecution must necessarily prove
each of the component offenses with the same precision that
would be necessary if they were made the subject of separate
complaints. As earlier mentioned, R.A. No. 7659 amended Article
267 of the Revised Penal Code by adding thereto this provision:
"When the victim is killed or dies as a consequence of the
detention, or is raped, or is subjected to torture or dehumanizing
acts, the maximum penalty shall be imposed; and that this
provision gives rise to a special complex crime. (Italics in the
original)
Thus, we hold that Sajiron and Maron are guilty beyond
reasonable doubt of the special complex crime of kidnapping and
serious illegal detention with rape in Criminal Case No. 12281.
In Criminal Case No. 12309, we also find Sajiron guilty beyond
reasonable doubt of the crime of serious illegal detention.
All the elements of the crime of serious illegal detention are
present in the instant case: AAA, a female and a minor, testified
that on July 2, 1994, after she was raped in the forest, she was
brought to and detained at the house of Egap and forced to
cohabit with Sajiron. From the very start of her detention on July 2,
1994, Egap directed Sajiron to guard her, and shoot her if she
attempted to escape.42 She did not dare to escape because the
accused threatened to kill her and her family if she attempted to
flee.43
AAA was also guarded by Egap's wife. 44 Even the two sons of
Egap, upon the latter's instruction, constantly guarded and
threatened her to keep her from leaving.45 In fine, the accused had
successfully instilled fear in AAA's mind that escaping would cause
her not only her own life, but also the lives of her loved ones.
To give a color of legitimacy to AAA's detention, Sajiron married
AAA. However, the marriage between her and Sajiron is
considered irregular under the Code of Muslim Personal Laws
(Presidential Decree No. 1083). Art. 15 (b) of said the law provides
that no marriage contract shall be perfected unless the essential
requisite of mutual consent of the parties be freely given. And
under Art. 32 of the same law, if the consent of either party is
vitiated by violence, intimidation, fraud, deceit or
misrepresentation, the marriage is considered irregular (fasid) from
the time of its celebration.
AAA did not give her consent to the wedding. 46 The marriage was
solemnized only upon the instruction of Egap. 47She was also
forced to sign the marriage contract without the presence of her
parents or any of her relatives.48 She did not want to marry Sajiron
because she did not love him.49 The Imam who solemnized their
marriage did not even ask for the consent of the parties. 50 He was
merely compelled to solemnize the marriage because he was
afraid of Egap, and the latter threatened him. 51 Clearly, the
marriage ceremony was a farce, and was only orchestrated by the
accused in an attempt to exculpate themselves from criminal
responsibility.
Anent Criminal Case No. 12309, the prescribed penalty for serious
illegal detention under Art. 267 of the Revised Penal Code, as
amended by Republic Act (R. A.) No. 7659, is reclusion perpetua
to death. There being no aggravating or modifying circumstance in
the commission of the offense, the proper penalty to be imposed
is reclusion perpetua, pursuant to Art. 63 of the Revised Penal
Code.
As to Criminal Case No. 12281, the penalty for the special
complex crime of kidnapping and serious illegal detention and rape
is death. However, R.A. No. 9346, entitled "An Act Prohibiting the
Imposition of Death Penalty in the Philippines," which was
approved on June 24, 2006, prohibits the imposition of the death
penalty. Thus, the penalty of death is reduced to reclusion
perpetua,52 without eligibility for parole.53
As to accused Egap, his act of escaping from his police escort
during the pendency of his case and his subsequent unexplained
absence during the promulgation of the decision convicting him of
the crime charged has divested him of the right to avail himself of
any remedy that may be available to him, including his right to
appeal. In a recent case, this Court held that once an accused
jumps bail or flees to a foreign country, or escapes from prison or
confinement, he loses his standing in court; and unless he
surrenders or submits to the jurisdiction of the court, he is deemed
to have waived any right to seek relief from it. 54 Hence, insofar as
accused Egap is concerned, the judgment against him became
final and executory upon the lapse of fifteen (15) days from
promulgation of the judgment.
As to the award of damages.
In Criminal Case No. 12281, AAA is entitled to civil indemnity in
line with prevailing jurisprudence that civil indemnification is
mandatory upon the finding of rape.55
In People v. Quiachon,56 even if the penalty of death is not to be
imposed because of the prohibition in R.A. No. 9346, the civil
indemnity of ₱75,000.00 is proper, because it is not dependent on
the actual imposition of the death penalty but on the fact that
qualifying circumstances warranting the imposition of the death
penalty attended the commission of the offense. As explained
in People v. Salome,57 while R.A. No. 9346 prohibits the imposition
of the death penalty, the fact remains that the penalty provided for
by the law for a heinous offense is still death, and the offense is
still heinous. Accordingly, the civil indemnity for AAA is
₱75,000.00.
In addition, AAA is entitled to moral damages pursuant to Art. 2219
of the Civil Code,58 without the necessity of additional pleadings or
proof other than the fact of rape.59 Moral damages is granted in
recognition of the victim's injury necessarily resulting from the
odious crime of rape.60 Such award is separate and distinct from
the civil indemnity.61 Therefore, the Court awards the amount of
₱75,000.00 as moral damages.1avvphi1
In Criminal Case No. 12309, for serious illegal detention, the trial
court's award of ₱50,000 civil indemnity to AAA was proper, in line
with prevailing jurisprudence.62
We also find that AAA is entitled to moral damages pursuant to Art.
2219 of the Civil Code, which provides that moral damages may
be recovered in cases of illegal detention.63 This is predicated on
AAA's having suffered serious anxiety and fright when she was
detained for more than five months. Thus, the Court awards the
amount of ₱50,000.00 as moral damages.64
Finally, AAA was sexually abused on July 1, 1994 and gave birth
on April 8, 1995. There was no showing that AAA had previously
been sexually abused or had sexual relations with other men.
Further, Dr. Ma. Rebethia Alcala, a Municipal Health Officer of
Bataraza, Palawan, testified that since AAA gave birth on April 8,
1995, the baby must have been conceived sometime in July 1994,
which was at or about the time of the commission of the rape.
Therefore, it can be logically deduced that Sajiron is the father of
the child. Under Art. 345 of the Revised Penal Code, 65 he is civilly
liable for the support of his offspring. Hence, he is directed to
provide support to the victim's child born out of the rape, subject to
the amount and conditions to be determined by the trial court, after
due notice and hearing, in accordance with Art. 201 of the Family
Code.66
WHEREFORE, the appeal is DENIED. The Decision of the Court
of Appeals in CA-G.R. CR-HC No. 00475
is AFFIRMED with MODIFICATIONS as follows:
(a) In Criminal Case No. 12281, accused Sajiron Lajim
and Maron Lajim are found guilty beyond reasonable
doubt of the special complex crime of kidnapping and
serious illegal detention with rape under Article 267 of the
Revised Penal Code, as amended by Republic Act No.
7659, and are sentenced to suffer the penalty
of reclusion perpetua, without eligibility for parole, and to
 pay jointly and severally, the offended party AAA, the
amounts of ₱75,000.00 as civil indemnity and
₱75,000.00 as moral damages. Accused Sajiron Lajim is
further ordered to support the offspring born as a
consequence of the rape. The amount of support shall be
determined by the trial court after due notice and hearing,
with support in arrears to be reckoned from the date the
appealed decision was promulgated by the trial court;
and

(b) In Criminal Case No. 12309, accused Sajiron Lajim is

found guilty beyond reasonable doubt of the crime of
kidnapping and serious illegal detention under Article 267
of the Revised Penal Code, as amended by Republic Act
No. 7659, and is sentenced to suffer the penalty
of reclusion perpetua and to pay the amounts of
₱50,000.00 as civil indemnity and ₱50,000.00 as moral
damages.

SO ORDERED.
 THIRD DIVISION
G.R. No. 82146 January 22, 1990
EULOGIO OCCENA, petitioner,
vs.
HON. PEDRO M. ICAMINA, Presiding Judge, Branch X of the
Regional Trial Court Sixth Judicial Region, San Jose, Antique;
THE PEOPLE OF THE PHILIPPINES, represented by the
Honorable Provincial Fiscal of Antique; and CRISTINA
VEGAFRIA, respondents.
Comelec Legal Assistance Office for petitioner.
Comelec Legal Assistance Officer for private respondent.
FERNAN, C.J.:
On May 31, 1979, herein petitioner Eulogio Occena instituted
before the Second Municipal Circuit Trial Court of Sibalom, San
Remigio — Belison, Province of Antique, Criminal Case No. 1717,
a criminal complaint for Grave Oral Defamation against herein
private respondent Cristina Vegafria for allegedly openly, publicly
and maliciously uttering the following insulting words and
statements: "Gago ikaw nga Barangay Captain, montisco, traidor,
malugus, Hudas," which, freely translated, mean: "You are a
foolish Barangay Captain, ignoramus, traitor, tyrant, Judas" and
other words and statements of similar import which caused great
and irreparable damage and injury to his person and honor.
Private respondent as accused therein entered a plea of not guilty.
Trial thereafter ensued, at which petitioner, without reserving his
right to file a separate civil action for damages actively intervened
thru a private prosecutor.
After trial, private respondent was convicted of the offense of Slight
Oral Defamation and was sentenced to pay a fine of Fifty Pesos
(P50.00) with subsidiary imprisonment in case of insolvency and to
pay the costs. No damages were awarded to petitioner in view of
the trial court's opinion that "the facts and circumstances of the
case as adduced by the evidence do not warrant the awarding of
moral damages." 1
Disagreeing, petitioner sought relief from the Regional Trial Court,
which in a decision dated March 16, 1987 disposed of petitioner's
appeal as follows:
IN VIEW OF ALL THE FOREGOING, the civil aspect of
the lower court's decision of April 20, 1981 subject of this
appeal, for lack of merit, is hereby DENIED.
After the decision shall have become final, remand the
records of this case to the court of origin, Second
Municipal Circuit Trial Court of Sibalom, San Remigio-
Belison, Antique, for the execution of its decision on the
criminal aspect.
SO ORDERED. 2
Petitioner is now before us by way of a petition for review
on certiorari seeking to annul the RTC decision for being contrary
to Article 100 of the Revised Penal Code providing that every
person criminally liable for a felony is also civilly liable, and Article
2219 of the New Civil Code providing that moral damages may be
recovered in libel, slander or any other form of defamation. He
submits that public respondent RTC erred in relying on the cases
of Roa vs. de la Cruz, 107 Phil. 10 and Tan vs. Standard Vacuum
Oil Co., et al., 91 Phil. 672 cited therein. He differentiates said
cases from the case at bar by saying that in the case of Roa, the
decision of the trial court had become final before Maria C. Roa
instituted a civil action for damages; whereas in the instant case,
the decision of the trial court has not yet become final by reason of
the timely appeal interposed by him and no civil action for
damages has been instituted by petitioner against private
respondent for the same cause. Tan, on the other hand,
contemplates of two actions, one criminal and one civil, and the
prosecution of the criminal case had resulted in the acquittal of the
accused, which is not the situation here where the civil aspect was
impliedly instituted with the criminal action in accordance with
Section 1, Rule 111, of the Rules of Court.
Private respondent for her part argues that the decision of the trial
court carries with it the final adjudication of her civil liability. Since
petitioner chose to actively intervene in the criminal action without
reserving his right to file a separate civil action for damages, he
assumed the risk that in the event he failed to recover damages he
cannot appeal from the decision of the lower court.
We find merit in the petition.
The issues confronting us in the instant petition is whether or not
the decision of the Second Municipal Trial Court of Sibalom, San-
Remigio-Belison, Province of Antique constitutes the final
adjudication on the merits of private respondent's civil liability; and
whether or not petitioner is entitled to an award of damages arising
from the remarks uttered by private respondent and found by the
trial court to be defamatory.
The decision of the Municipal Circuit Trial Court as affirmed by the
Regional Trial Court in Criminal Case No. 1709 cannot be
considered as a final adjudication on the civil liability of private
respondent simply because said decision has not yet become final
due to the timely appeal filed by petitioner with respect to the civil
liability of the accused in said case. It was only the unappealed
criminal aspect of the case which has become final.
In the case of People vs. Coloma, 105 Phil. 1287, we categorically
stated that from a judgment convicting the accused, two (2)
appeals may, accordingly, be taken. The accused may seek a
review of said judgment, as regards both civil and criminal actions;
while the complainant may appeal with respect only to the civil
action, either because the lower court has refused to award
damages or because the award made is unsatisfactory to him. The
right of either to appeal or not to appeal in the event of conviction
of the accused is not dependent upon the other. Thus, private
respondent's theory that in actively intervening in the criminal
action, petitioner waived his right to appeal from the decision that
may be rendered therein, is incorrect and inaccurate. Petitioner
may, as he did, appeal from the decision on the civil aspect which
is deemed instituted with the criminal action and such appeal,
timely taken, prevents the decision on the civil liability from
attaining finality.
We tackle the second issue by determining the basis of civil liability
arising from crime. Civil obligations arising from criminal offenses
are governed by Article 100 of the Revised Penal Code which
provides that "(E)very person criminally liable for a felony is also
civilly liable," in relation to Article 2177 of the Civil Code on quasi-
delict, the provisions for independent civil actions in the Chapter on
Human Relations and the provisions regulating damages, also
found in the Civil Code.
Underlying the legal principle that a person who is criminally liable
is also civilly liable is the view that from the standpoint of its
effects, a crime has dual character: (1) as an offense against the
state because of the disturbance of the social order; and (2) as an
offense against the private person injured by the crime unless it
involves the crime of treason, rebellion, espionage, contempt and
others wherein no civil liability arises on the part of the offender
either because there are no damages to be compensated or there
is no private person injured by the crime. 3

In the ultimate analysis, what gives rise to the civil liability is really
the obligation of everyone to repair or to make whole the damage
caused to another by reason of his act or omission, whether done
intentional or negligently and whether or not punishable by law. 4

In the case at bar, private respondent was found guilty of slight

oral defamation and sentenced to a fine of P50.00 with subsidiary
imprisonment in case of insolvency, but no civil liability arising from
the felonious act of the accused was adjudged. This is erroneous.
As a general rule, a person who is found to be criminally liable
offends two (2) entities: the state or society in which he lives and
the individual member of the society or private person who was
injured or damaged by the punishable act or omission. The offense
of which private respondent was found guilty is not one of those
felonies where no civil liability results because either there is no
offended party or no damage was caused to a private person.
There is here an offended party, whose main contention precisely
is that he suffered damages in view of the defamatory words and
statements uttered by private respondent, in the amount of Ten
Thousand Pesos (P10,000.00) as moral damages and the further
sum of Ten Thousand Pesos (P10,000) as exemplary damages.

Article 2219, par. (7) of the Civil Code allows the recovery of moral
damages in case of libel, slander or any other form of defamation
This provision of law establishes the right of an offended party in a
case for oral defamation to recover from the guilty party damages
for injury to his feelings and reputation. The offended party is
likewise allowed to recover punitive or exemplary damages.

It must be remembered that every defamatory imputation is

presumed to be malicious, even if it be true, if no good intention
and justifiable motive for making it is shown. And malice may be
inferred from the style and tone of publication 5 subject to certain
exceptions which are not present in the case at bar.

Calling petitioner who was a barangay captain an ignoramus,

traitor, tyrant and Judas is clearly an imputation of defects in
petitioner's character sufficient to cause him embarrassment and
social humiliation. Petitioner testified to the feelings of shame and
anguish he suffered as a result of the incident complained of. 6 It is
patently error for the trial court to overlook this vital piece of
evidence and to conclude that the "facts and circumstances of the
case as adduced by the evidence do not warrant the awarding of
moral damages." Having misapprehended the facts, the trial
court's findings with respect thereto is not conclusive upon us.

From the evidence presented, we rule that for the injury to his
feelings and reputation, being a barangay captain, petitioner is
entitled to moral damages in the sum of P5,000.00 and a further
sum of P5,000.00 as exemplary damages.

WHEREFORE, the petition is hereby GRANTED. The decision of

the Regional Trial Court is hereby MODIFIED and private
respondent is ordered to pay petitioner the amount of P5,000.00
as moral damages and another P5,000.00 as exemplary damages.
Costs against private respondent.

SO ORDERED.

Gutierrez, Jr., Feliciano, Bidin and Cortés JJ., concur

 THIRD DIVISION
G.R. No. 130030 June 25, 1999
EXPERTRAVEL & TOURS, INC., petitioner,
vs.
THE HON. COURT OF APPEALS and RICARDO
LO, respondents.
VITUG, J.:
Petitioner, Expertravel and Tours, Inc., seeks in the instant petition
for review on certiorari a modification of the decision, dated 20
March 1997, of the Court of Appeals affirming in toto the 07th
November 1994 judgment of the Regional Trial Court (Branch 5) of
Manila, the dispositive portion of which reads:
WHEREFORE, in view of all the foregoing,
judgment is rendered declaring the instant suit
DISMISSED, and hereby orders the plaintiff to
pay defendant Ricardo Lo moral damages in
the amount of P30,000.00; attorney's fees in
the amount of P10,000.00, and to pay the costs
of the suit.
No pronouncement as to other damages for
lack of evidence to warrant the same. 1
The factual and case settings of the controversy are culled from
the pleadings on record and the assailed decision of the appellate
court and that of the court a quo.
On 07 October 1987, Expertravel & Tours, Inc., ("Expertravel"), a
domestic corporation engaged in the travel agency business,
issued to private respondent Ricardo Lo four round-trip plane
tickets for Hongkong, together with hotel accommodations and
transfers, for a total cost of P39,677.20. Alleging that Lo had failed
to pay the amount due, Expertravel caused several demands to be
made. Since the demands were ignored by Lo, Expertravel filed a
court complaint for recovery of the amount claimed plus damages.
Respondent Lo explained, in his answer, that his account with
Expertravel had already been fully paid. The outstanding account
was remitted to Expertravel through its then Chairperson, Ms. Ma.
Rocio de Vega, who was theretofore authorized to deal with the
clients of Expertravel. The payment was evidenced by a Monte de
Piedad Check No. 291559, dated 06 October 1987, for P42,175.20
for which Ms. de Vega, in turn, issued City Trust Check No.
417920 in favor of Expertravel for the amount of P50,000.00, with
the notation "placement advance for Ricardo Lo, etc." Per its own
invoice, Expertravel received the sum on 10 October 1987.
The trial court, affirmed by the appellate court, held that the
payment made by Lo was valid and bidding on petitioner
Expertravel. Even on the assumption that Ms. de Vera had not
been specifically authorized by Expertravel, both courts said, the
fact that the amount "delivered to the latter remain(ed) in its
possession up to the present, mean(t) that the amount redounded
to the benefit of petitioner Expertravel, in view of the second
paragraph of Article 1241 of the Civil Code to the effect that
payment made to a third person shall also be valid in so far as it
has rebounded to the benefit of the creditor."
In this recourse, petitioner confines itself to the following related
legal issues; viz.:
I. Can moral damages be recovered in a clearly
unfounded suit?
II. Can moral damages be awarded for
negligence or quasi-delict that did not result to
physical injury to the offended party?2
There is merit in the petition.
Moral damages are not punitive in nature but are designed to
compensate3 and alleviate in some way the physical suffering,
mental anguish, fright, serious anxiety, besmirched reputation,
wounded feelings, moral shock, social humiliation, and similar
injury unjustly caused to a person. Although incapable of pecuniary
computation, moral damages, nevertheless, must somehow be
proportional to and in approximation of the suffering
inflicted.4 Such damages, to be recoverable, must be the
proximate result of a wrongful act or omission the factual basis for
which is satisfactorily established by the aggrieved party. 5 An
award of moral damages would require certain conditions to be
met; to wit: (1) First, there must be an injury, whether physical,
mental or psychological, clearly sustained by the claimant;
(2) second, there must be a culpable act or omission factually
established; (3) third, the wrongful act or omission of the defendant
is the proximate cause of the injury sustained by the claimant; and
(4) fourth, the award of damages is predicated on any of the cases
stated in Article 2219.6 Under the provisions of this law, in culpa
contractual or breach of contract, moral damages may be
recovered when the defendant acted in bad faith or was guilty of
gross negligence (amounting to bad faith) or in wanton disregard
of his contractual obligation and, exceptionally, when the act of
breach of contract itself is constitutive of tort resulting in physical
injuries.7 By special rule in Article 1764, in relation to Article 2206,
of the Civil Code, moral damages may also be awarded in case
the death of a passenger results from a breach of carriage.
In culpa aquiliana, or quasi-delict, (a) when an act or omission
causes physical injuries, or (b) where the defendant is guilty of
intentional tort,8 moral damages may aptly be recovered. This rule
also applies, as aforestated, to contracts when breached by tort.
In culpa criminal, moral damages could be lawfully due when the
accused is found guilty of physical injuries, lascivious acts,
adultery or concubinage, illegal or arbitrary detention, illegal arrest,
illegal search, or defamation. Malicious prosecution can also give
rise to a claim for moral damages. The term "analogous cases,"
referred to in Article 2219, following the ejusdem generis rule, must
be held similar to those expressly enumerated by the law. 9
Although the institution of a clearly unfounded civil suit can at
times be a legal justification for an award of attorney's fees, 10 such
filing, however, has almost invariably been held not to be a ground
for an award of moral
damages. 11 The rationale for the rule is that the law could not
have meant to impose a penalty on the right to litigate. The
anguish suffered by a person for having been made a defendant in
a civil suit would be no different from the usual worry and anxiety
suffered by anyone who is haled to court, a situation that cannot by
itself be a cogent reason for the award of moral damages. 12 If the
rule were otherwise, then moral damages must every time be
awarded in favor of the prevailing defendant against an
unsuccessful plaintiff.13
The Court confirms, once again, the foregoing rules.
WHEREFORE, the petition is GRANTED and the award of moral
damages to respondent Ricardo Lo under the assailed decision is
DELETED. In its other aspects, the appealed decision shall remain
undisturbed. No costs.1âwphi1.nêt
SO ORDERED.
Panganiban, Purisima and Gonzaga-Reyes, JJ., concur.
Romero, J., abroad, on official business leave.
 SECOND DIVISION
G.R. No. 208462 December 10, 2014
SPOUSES CARLOS J. SUNTAY and ROSARIO R.
SUNTAY, Petitioners,
vs.
KEYSER MERCANTILE, INC., Respondent.
DECISION
MENDOZA, J.:
This is a petition for review on certiorari seeking to reverse and set
aside the September 7, 2012 Decision1 and the August 8, 2013
Resolution2 of the Court of Appeals (CA) in CA-G.R. CV No.
94677, entitled Keyser Mercantile, Inc., v. Spouses Carlos and
Rosario Suntay" involving the ownership of Unit G and two (2)
parking slots in Bayfront's Tmver Condominium.
The Facts
On October 20, 1989, Eugenia Gocolay, chairperson and president
of respondent Keyser Mercantile, Inc. (Keyser), entered into a
contract to sell with Bayfront Development Corporation (Baxfront)
for the purchase on installment basis of a condominium unit in
Bayfront Tower Condominium located at A. Mabini Street, Malate,
Manila. The subject of the sale was Unit G of the said
condominium project consisting of 163.59 square meters with the
privilege to use two (2) parking slots covered by Condominium
Certificate of Title (CCT)No. 15802. This Contract to Sell 3 was not
registered with the Register of Deeds ofManila. Thus, the subject
unit remained in the name of Bayfront with a clean title.
On July 7, 1990, petitioner spouses Carlos and Rosario Suntay
(Spouses Suntay) also purchased several condominium units on
the 4th floor of Bayfront Tower Condominium through another
contract to sell. Despite payment of the full purchase price,
however, Bayfront failed to deliver the condominium units. When
Bayfront failed to reimburse the full purchase price, Spouses
Suntay filed an action against it before the Housing and Land Use
Regulatory Board (HLURB) for violation of Presidential Decree
(P.D.) No. 957 and P.D. No. 1344, rescission of contract, sum of
money, and damages.
In its decision, dated April 23 1994, the HLURB rescinded the
Contract to Sell between Bayfront and Spouses Suntay and
ordered Bayfront to pay Spouses Suntay the total amount of
2,752,068.60 as purchase price with interest. Consequently, on
November 16, 1994, the HLURB issued a writ of execution. 4
Upon the application of Spouses Suntay, the Sheriffs of the
Regional Trial Court (RTC) of Manila levied Bayfront’s titled
properties, including the subject condominium Unit G and the two
parking slots. Considering that CCT No. 15802 was still registered
under Bayfront with a clean title, the sheriffs deemed it proper to
be levied. The levy on execution5 in favor of Spouses Suntay was
duly recorded in the Register of Deeds of Manila on January 18,
1995.
The auction sale was conducted on February 23, 1995, and
Spouses Suntay were the highest bidder. Consequently, on March
1, 1995, the Certificate of Sale6 in favor of Spouses Suntay was
issued. This was duly annotated at the back of CCT No. 15802 on
April 7, 1995. Meanwhile, the Deed of Absolute Sale 7 between
Bayfront and Keyser involving the subject property was finally
executed on November 9, 1995. The latter allegedly paid the full
purchase price sometime in 1991. When Keyser was about to
register the said deed of absolute sale in February 1996, it
discovered the Notice of Levy and the Certificate of Sale annotated
at the back of CCT No. 15802 in favor of Spouses Suntay.
Nevertheless, on March 12, 1996, the Register of Deeds cancelled
the title of Bayfront and issued CCT No. 264748 in the name of
Keyser but carried over the annotation of the Suntays. 9
Subsequently, the sheriff’s Final Deed of Sale10 was executed on
April 16, 1996 in favor of the Suntays upon the expiration of the
one (1) year period of redemption from the earlier auction sale.
CCT No. 26474 of Keyser was cancelled and, thereafter, CCT No.
34250-A11 was issued in the name of Spouses Suntay.
Keyser then filed a complaint for annulment of auction sale and
cancellation of notice of levy before the HLURB, docketed as
HLURB Case No. REM 032196-9152. In its decision, dated
November 18, 1996, the HLURB ruled in favor of Keyser. Spouses
Suntay appealed the decision to the Office of the Presidentand
later to the CA but both affirmed the HLURB judgment.
On appeal before this Court, however, the HLURB decision was
set aside. In its September 23, 2005 Decision, the Court ruled that
the HLURB had no jurisdiction over controversies between
condominium unit owners and the issue of ownership, possession
or interest in the disputed condominium units could not be
adjudicated by the HLURB due to its limited jurisdiction under P.D.
No. 957 and P.D. No. 1344.
RTC Ruling
Undaunted, on March 24, 2006, Keyser filed before the RTC of
Manila a new complaint for annulment of auction sale, writ of
execution, declaration of nullity of title, and reconveyance of
property with damages against Spouses Suntay, docketed asCivil
Case No. 06-114716. In their answer, Spouses Suntay denied the
material allegations of the complaint and interposed special and
affirmative defenses of res judicata, forum shopping, prescription,
and lack of cause of action.
On October 19, 2009, the RTC rendered a Decision12 in favor of
Keyser. It explained that when Spouses Suntay registered the
Certificate of Sale, the condominium unit was already registered in
the name of Keyser. It also held that the auction sale was irregular
due to lack of posting and publication of notices. The RTC thus
disposed:
WHEREFORE, premises considered, the Court hereby declares
the auction sale as null and void, orders the Registry of Deeds to
reinstate the title of Keyser Mercantile Inc. and to pay the costs.
SO ORDERED.13
CA Ruling
Spouses Suntay elevated the decision to the CA. In its September
7, 2012 Decision, the CA denied the appealas it found that
Spouses Suntay did not acquire the subject property because at
the time it was levied, Bayfront had already sold the condominium
unit to Keyser. Considering that the judgment debtor had no
interest in the property, Spouses Suntay, as purchasers at the
auction sale, also acquired no interest. The decretal portion of the
CA decision reads: WHEREFORE,in view of the foregoing
considerations, the Decision dated October 19, 2009 of the
Regional Trial Court (RTC) of Manila, Branch 21, in Civil Case No.
06-114716, is AFFIRMED.
SO ORDERED.14
Spouses Suntay filed a motion for reconsideration, but it was
denied in the August 8, 2013 Resolution of the CA.
Hence, this petition, anchored on the following
STATEMENT OF ISSUES
I
WHETHER OR NOT THE COURT OF APPEALS COMMITTED A
REVERSIBLE ERROR IN SUSTAINING THE TRIAL COURT’S
DECISION BY NOT DISMISSINGTHE COMPLAINT CASE OF
HEREIN RESPONDENT ON GROUND OF PRESCRIPTION OF
ACTIONS UNDER ARTICLE 1146 OFTHE CIVIL CODE OF THE
PHILIPPINES, AS WELL AS, DUE TO ESTOPPEL BY LACHES;
II
WHETHER OR NOT THE COURT OFAPPEALS IN SUSTAINING
THE DECISION OF THE COURT A QUO COMMITTED A
SERIOUS REVERSIBLE ERROR IN NOT APPLYING SECTION
52 OF P.D. 1529 AND ARTICLE 1544 OF THE CIVIL CODE OF
THE PHILIPPINES BY FINDING THAT HEREIN PETITIONERS
HAVE BETTER RIGHTS OF OWNERSHIP OVER THE SUBJECT
CONDOMINIUM PROPERTY IN LITIGATION;
III
WHETHER OR NOT THE COURT OF APPEALS COMMITTED A
REVERSIBLE ERROR IN SUSTAINING THE TRIAL COURT’S
DECISION BY NOT DISMISSINGTHE COMPLAINT FOR LACK
OF VALID AND LEGITIMATE CAUSEOF ACTION OF HEREIN
RESPONDENT AGAINST HEREIN PETITIONERS;
IV
WHETHER OR NOT THE COURT OF APPEALS COMMITTED A
REVERSIBLE ERROR IN SUSTAINING THE TRIAL COURT’S
DECISION BY NOT DISMISSING THE COMPLAINT ON
GROUND OF FORUM SHOPPING;
V when the following requisites concur: (1) the former judgment is
WHETHER OR NOT THE COURT OF APPEALS COMMITTED A
REVERSIBLE ERROR IN SUSTAINING THE TRIAL COURT’S
DECISION BY NOT DISMISSING THE COMPLAINT [ON]
GROUND OF RES JUDICATA;
VI
WHETHER OR NOT THE COURT OF APPEALS COMMITTED A
REVERSIBLE ERROR IN SUSTAINING THE TRIAL COURT’S
DECISION BY NOT AWARDING DAMAGES AND ATTORNEY’S
FEES IN FAVOR OF HEREIN PETITIONERS.15
Spouses Suntay contend that res judicata existed. They assert that
HLURB Case No. REM-032196-9152 involved the same cause of
action, parties and subject matter with Civil Case No. 06-114716
before the RTC. Considering that the former case had been
decided on appeal by this Court, then there was already res
judicata in the RTC case. They likewise claim the existence of
forum shopping in the refiling of the case with the RTC for the
second time on March 24, 2006.
Spouses Suntay also raise the issue of prescription because
Article 1146 of the New Civil Code16 provides that actions resulting
in injury prescribe after four (4) years. The resulting injury started
on January 18, 1995. They argue that the correct reckoning period
was March 24, 2006 when Civil Case No. 06-114716 was filed in
the RTC; and that a period of more or less twelve (12) years had
lapsed and the action had already prescribed. HLURB Case No.
REM-032196-9152 filed on March 21, 1996 should not have been
considered to have tolled the prescriptive period because it had a
null and void judgment due to lack of jurisdiction.
Spouses Suntay argue that the CA erred in not applying Section
52 of P.D. No. 1529 and Article 1544 of the New Civil Code. Their
right as purchasers in a public action should havebeen preferred
because their right acquired thereunder retroacts to the date of
registration of the Notice of Levy on January 18, 1995 and the
subsequent auction sale on February 23, 1995. They claim that
their right over the subject property is superior over that of Keyser
because they purchased the subject property in a legitimate
auction sale prior to Keyser’s registration of the deed of absolute
sale.
Spouses Suntay also pray for moral, exemplary damages and
attorney’s fees. They allegedly experienced mental anguish,
besmirched reputation, sleepless nights, and wounded feelings
warranting moral damages. They contend that exemplary
damages should also be awarded in view of the reckless and
wanton attitude of Keyser in instituting a groundless action against
them. Furthermore, Spouses Suntay were constrained to hire the
services of counsel to defend their right against a baseless action.
The Court’s Ruling
The petition is meritorious.
No res judicata, forum
shopping and prescription in
this case
As to the procedural matters, the Court finds that the grounds
invoked by Spouses Suntay are inapplicable. First, the defense of
res judicata must fail. The doctrine of res judicatais a fundamental
principle of law which precludes parties from re-litigating issues
actually litigated and determined by a prior and final
judgment.17 Res judicata constituting bar by prior judgment occurs
final; (2) it is rendered by a court having jurisdiction over the
subject matter and the parties; (3) it isa judgment or an order on
the merits; and (4) there is identity of parties, of subject matter,
and of causes of action.18
The previous case instituted by Keyser in the HLURB was denied
on appeal by this Court based on lack of jurisdiction. Thus, the
third requisite of res judicata is not present because the previous
case was not adjudicated on the merits as it was denied on
jurisdictional grounds.
There is no forum shopping either in this case. To determine
whether a party violated the rule against forum shopping, the
elements of litis pendentiamust be present, or the final judgment in
one case amounts to res judicata in another.19 Since there is no
res judicata in this case, then there is no forum shopping either.
The defense of prescription is likewise unavailing. In Fulton
Insurance Company v. Manila Railroad Company,20 this Court
ruled that the filing of the first action interrupted the running of the
period, and then declared that, at any rate, the second action was
filed within the balance of the remaining period. Applying Article
1155 of the New Civil Code in that case, 21 the interruption took
place when the first action was filed in the Court of First Instance
of Manila. The interruption lasted during the pendency of the action
until the order of dismissal for alleged lack of jurisdiction became
final.
In the present case, the prescriptive period was interrupted when
HLURB Case No. REM-032196-9152 was filed on March 21, 1996.
The interruption lasted during the pendency of the action and until
the judgment of dismissal due to lack of jurisdiction was rendered
on the September 23, 2005. Thus, the filing of Civil Case No. 06-
114716 on March 24, 2006 was squarely within the prescriptive
period of four (4) years.
Spouses Suntay properly relied
on the Certificate of Title of
Bayfront
Now, the Court proceeds to the substantial issues. This Court finds
that the petition is meritorious applying the Torrens System of
Land Registration. The main purpose of the Torrens system is to
avoid possible conflicts of title to real estate and to facilitate
transactions relative thereto by giving the public the right to rely
upon the face of a Torrens certificate of title and to dispense with
the need of inquiring further, except when the party concerned has
actual knowledge of facts and circumstances that should impel a
reasonably cautious man to makesuch further inquiry. Every
person dealing with a registered land may safely rely on the
correctness of the certificate of title issued therefor and the law will
in no way oblige him to go beyond the certificate to determine the
condition of the property.22
Again to stress, any buyer or mortgagee of realty covered by a
Torrens certificate of title, in the absence of any suspicion, is not
obligated to look beyond the certificate to investigate the title of the
seller appearing on the face of the certificate. And, heis charged
with notice only of such burdens and claims as are annotated on
the title.23
In the case at bench, the subject property was registered land
under the Torrens System covered by CCT No. 15802 with
Bayfront as the registered owner. At the time that the Notice of
Levy was annotated on January 18, 1995, the title had no previous
encumbrances and liens. Evidently, it was a clean title. The
Certificate of Sale, pursuant to an auction sale, was also annotated
on April 7,1995, with Bayfront still as the registered owner.
It was only on March 12, 1996, almosta year later, that Keyser was
able to register its Deed of Absolute Sale with Bayfront. Prior to
such date, Spouses Suntay appropriately relied on the Torrens title
of Bayfront to enforce the latter’s judgment debt.
Because "the act of registration is the operative act to convey or
affect the land insofar as third persons are concerned," 24 it follows
that where there is nothing in the certificate of title toindicate any
cloud or vice in the ownership of the property, or any encumbrance
thereon, the purchaser is not required to explore farther than what
the Torrens title upon its face indicates in quest for any hidden
defect or inchoate right thatmay subsequently defeat his right
thereto. If the rule were otherwise, the efficacy and conclusiveness
of the certificate of title which the Torrens system seeks to insure
would entirely be futile and nugatory. The public shall then be
denied of its foremost motivation for respecting and observing the
Torrens system of registration.25
When the notice of levy and certificate of sale were annotated on
the title, the subject property was unoccupied and no circumstance
existed that might suggest to Spouses Suntay that it was owned by
another individual.26 Records reveal that it was only later, on
January 6, 1999, that the subject property was discovered by the
sheriffs to be padlocked.27 The administrator of the condominium
did not even knowthe whereabouts of the alleged owner.28 To
reiterate, absent any peculiar circumstance, Spouses Suntay could
not be required to disregard the clean title of Bayfront and invest
their time, effort and resources to scrutinize every square feet of
the subject property. This Court is convinced that Spouses Suntay
properly relied on the genuineness and legitimacy of Bayfront’s
Torrens certificate of title when they had their liens annotated
thereon.
Levy on execution is superior to
the subsequent registration of
the deed of absolute sale.
The CA stated in its decision that when the subject property was
levied and subjected to an execution sale, Bayfront had already
sold it to Keyser. As such, Spouses Suntay no longer acquired the
right over the subject property from Bayfront because the latter, as
judgment debtor, had nothing more to pass.29 Earlier, the RTC
held that at the time Spouses Suntay were to register the auction
sale, the subject property was already registered in Keyser’s name
and, thus, they were fully aware of the earlier sale. It was too late
for Spouses Suntayto deny their knowledge of Keyser’s title. The
RTC also found the auction sale questionable due to the lack of
posting and publication of notice.30
The Court disagrees with the lower courts. They had completely
overlooked the significance of a levy on execution. The doctrine is
wellsettled that a levy on execution duly registered takes
preference over a prior unregistered sale. Even if the prior salewas
subsequently registered before the sale in execution but after the
levy was duly made, the validity of the execution sale should be
maintained because it retroacts to the date of the levy. Otherwise,
the preference created by the levy would be meaningless and
illusory.31
In this case, the contract to sell between Keyser and Bayfront was
executed on October 20, 1989, but the deed of absolute sale was
only made on November 9, 1995 and registered on March 12,
1996. The Notice of Levy in favor of Spouses Suntay was
registered on January 18, 1995, while the Certificate of Sale on
April 7, 1995, both dates clearly ahead of Keyser’s registration of
its Deed of Absolute Sale. Evidently, applying the doctrine of
primus tempore, potior jure(first in time, stronger in right), Spouses
Suntay have a better right than Keyser.
In the case of Uy v. Spouses Medina32 which dealt with essentially
the same issues, the Court wrote:
Considering that the sale was not registered earlier, the right of
petitioner over the land became subordinate and subject to the
preference created over the earlier annotated levy in favor of Swift.
The levy of execution registered and annotated on September 1,
1998 takes precedence over the sale of the land to petitioner on
February 16, 1997, despite the subsequent registration on
September 14, 1998 of the prior sale. Such preference in favor of
the levy on execution retroacts to the date of levy for to hold
otherwise will render the preference nugatory and meaningless.
xxx
The settled rule is that levyon attachment, duly registered, takes
preference over a prior unregistered sale. This result is a
necessary consequence of the fact that the property involved was
duly covered by the Torrens system which works under the
fundamental principle that registration is the operative act which
gives validity to the transfer or creates a lien upon the land. The
preference created by the levy on attachment is not diminished
even by the subsequent registration of the prior sale. This is so
because an attachment is a proceeding in rem. It is against the
particular property, enforceable against the whole world. The
attaching creditor acquires a specific lien on the attached property
which nothing can subsequently destroy except the very
dissolution of the attachment or levy itself. Such a proceeding, in
effect, means that the property attached is an indebted thing and a
virtual condemnation of it to pay the owner’s debt. The lien
continues until the debt is paid, or sale is had under execution
issued on the judgment, or until the judgment is satisfied, or the
attachment discharged or vacated in some manner provided by
law.

[Emphases supplied]

The Court does not agree with the RTC either that the auction sale
had glaring irregularities. Assisting Sheriff Rufo Bernardo Jr.,
testifying as Keyser’s witness, categorically stated that they had
posted notices of the auction sale and had conducted the
bidding.33 The documentary evidence of S pouses Suntay also
shows that publication of the auction sale was indeed complied
with.34

No award of actual, moral and

exemplary damages

Finally, the Court cannot grant the claim for damages by Spouses
Suntay. The filing alone of a civil action should not be a ground for
an award of moral damages in the same way that a clearly
unfounded civil action is not among the grounds for moral
damages.35 Spouses Suntay failed to show a compelling reason to
warrant the award of moral damages aside from their bare
allegations.

As to the award of exemplary damages, Article 2229 of the New

Civil Code provides that exemplary damages may be imposed by
way of example or correction for the public good, in addition to the
moral, temperate, liquidated or compensatory damages. 36 The
claimant, however, must first establish his right to moral,
temperate, liquidated or compensatory damages. In this case,
because Spouses Suntay failed to prove their entitlement to moral
or compensatory damages, there could be no award of exemplary
damages.

Spouses Suntay are not entitled to attorney's fees

either.1âwphi1 The settled rule is that no premium should be
placed on the right to litigate and that not every winning party is
entitled to an automatic grant of attorney's fees. 37

WHEREFORE, the petition is GRANTED. The September 7, 2012

Decision and the August 8, 2013 Resolution of the Court of
Appeals (CA) in CA-G.R. CV No. 94677 are REVERSED and SET
ASIDE. Accordingly, the Court hereby declares the auction sale as
valid and binding on Keyser Mercantile, Inc. and all other
subsequent registrants.

SO ORDERED.
 THIRD DIVISION
G.R. No. 129584 December 3, 1998
TRIPLE EIGHT INTEGRATED SERVICES, INC., petitioner,
vs.
NATIONAL LABOR RELATIONS COMMISSION, HON. LABOR
ARBITER POTENCIANO S. CANIZARES, JR. and ERLINDA
OSDANA, respondents.
ROMERO, J.:
In this petition for certiorari now before us, petitioner Triple Eight
Integrated Services Inc. seeks to annul the decision 1 of public
respondent National Labor Relations Commission (First Division,
Quezon City) dated March 11, 1997 affirming the August 20, 1996
decision 2 of Labor Arbiter Potenciano Canizares. Petitioner was
ordered to pay private respondent Erlinda Osdana her salaries for
the unexpired portion of her employment contract, unpaid salaries,
salary differential, moral and exemplary damages, as well as
attorney's fees. On April 28, 1997, the NLRC denied petitioner's
motion for reconsideration. 3
The antecedent facts follow.
Sometime in August 1992, private respondent Osdana was
recruited by petitioner for employment with the latter's principal,
Gulf Catering Company (GCC), a firm based in the Kingdom of
Saudi Arabia. Under the original employment contract, Osdana
was engaged to work as "Food Server" for a period of thirty-six
(36) months with a salary of five hundred fifty Saudi rials (SR550).
Osdana claims she was required by petitioner to pay a total of
eleven thousand nine hundred fifty pesos (P11,950.00) in
placement fees and other charges, for which no receipt was
issued. She was likewise asked to undergo a medical examination
conducted by the Philippine Medical Tests System, a duly
accredited clinic for overseas workers, which found her to be "Fit of
Employment."
Subsequently, petitioner asked Osdana to sign another
"Contractor
Employee Agreement" 4 which provided that she would be
employed as a waitress for twelve (12) months with a salary of two
hundred eighty US dollars ($280). It was this employment
agreement which was approved by the Philippine Overseas
Employment Administration (POEA).
On September 16, 1992, Osdana left for Riyadh, Saudi Arabia,
and commenced working for GCC. She was assigned to the
College of Public Administration of the Oleysha University and,
contrary to the terms and conditions of the employment contract,
was made to wash dishes, cooking pots, and utensils, perform
janitorial work and other tasks which were unrelated to her job
designation as waitress. Making matters worse was the fact that
she was made to work a gruelling twelve-hour shift, from six
o'clock in the morning to six o'clock in the evening, without
overtime pay.
Because of the long hours and the strenuous nature of her work,
Osdana suffered from numbness and pain in her arms. The pain
was such that she had to be confined at the Ladies Villa, a housing
facility of GCC, from June 18 to August 22, 1993, during which
period, she was not paid her salaries.
After said confinement, Osdana was allowed to resume work, this
time as Food Server and Cook at the Hota Bani Tameem Hospital,
where she worked seven days a week from August 22 to October
5, 1993. Again, she was not compensated.
Then, from October 6 to October 23, 1993, Osdana was again
confined at the Ladies Villa for no apparent reason. During this
period, she was still not paid her salary.
On October 24, 1993, she was re-assigned to the Oleysha
University to wash dishes and do other menial tasks. As with her
previous assignment at the said University, Osdana worked long
hours and under harsh conditions. Because of this, she was
diagnosed as having Bilateral Carpal Tunnel Syndrome, a
condition precipitated by activities requiring "repeated flexion,
pronation, and supination of the wrist and characterized by
excruciating pain and numbness in the arms." 5
As the pain became unbearable, Osdana had to be hospitalized.
She underwent two surgical operations, one in January 1994,
another on April 23, 1994. Between these operations, she was not
given any work assignments even if she was willing and able to do
light work in accordance with her doctor's advice. Again, Osdana
was not paid any compensation for the period between February to
April 22, 1994.
After her second operation, Osdana was discharged From the
hospital on April 25, 1994. The medical report stated that "she had
very good improvement of the symptoms and she was discharged
on the second day of the
operation. 6
Four days later, however, she was dismissed from work, allegedly
or, the ground of illness. She was not given any separation pay nor
was she paid her salaries for the periods when she was not
allowed to work.
Upon her return to the Philippines, Osdana sought the help of
petitioner, but to no avail. She was thus constrained to file a
complaint before the POEA against petitioner, praying for unpaid
and underpaid salaries, salaries for the unexpired portion of the
employment contract, moral and exemplary damages and
attorney's fees, as well as the revocation, cancellation, suspension
and/or imposition of administrative sanctions against petitioner.
Pursuant to Republic Act No. 8042, otherwise known as the
Migrant Workers and Overseas Filipinos Act of 1995, the case was
transferred to the arbitration branch of the NLRC and assigned to
Labor Arbiter Canizares.
In a decision dated August 20, 1996, the labor arbiter ruled in favor
of Osdana. The dispositive portion of the decision follows:
Wherefore, the respondent is hereby ordered to
pay the complainant US$2,499.00 as salaries
for the unexpired portion of the contract, and
US$1,076.00 as unpaid salary and salary
differential, or its equivalent in Philippine Peso.
The respondent is likewise ordered to pay the
complainant P50,000 moral damages, and
P20,000 exemplary damages.
The respondent is further ordered to pay the
complainant 10% of the monetary award as
attorney's fee.
Other claims are hereby dismissed for lack of
sufficient evidence.
 SO ORDERED.
Aggrieved by the labor arbiter's decision, petitioner appealed to the
NLRC, which affirmed the decision in question on March 11, 1997.
Petitioner's motion for reconsideration was likewise denied by the
NLRC in its order dated April 28, 1997.
Hence, this petition for certiorari.
Petitioner alleges grave abuse of discretion on the part of the
public respondents for the following reasons: (a) ruling in favor of
Osdana even if there was no factual or legal basis for the award
and, (b) holding petitioner solely liable for her claims despite the
fact that its liability is joint and several with its principal, GCC.
At the outset, petitioner argues that "public respondent Labor
Arbiter gravely abused his discretion when he rendered the
questioned decision dated August 20, 1996 without stating the
facts and the law where he derived his conclusions." 7 In support of
this argument, petitioner cites the first paragraph of Article VIII,
Section 14 of the Constitution: "No decision shall be rendered by
any court without expressing therein clearly and distinctly the facts
and the law on which it is based."
On this point, it is enough to note that the decisions of both the
labor arbiter and the NLRC were based mainly on the facts and
allegations in Osdana's position paper and supporting documents.
We find these sufficient to constitute substantial evidence to
support the questioned decisions. Generally, findings of facts
of quasi-judicial agencies like the NLRC are accorded great
respect and, at times, even finality if supported by substantial
evidence. "Substantial evidence" is such amount of relevant
evidence which a reasonable mind might accept as adequate to
justify a conclusions. 8
Moreover, well-settled is the rule that if doubts exist between the
evidence presented by the employer and the employee, the scales
of justice must be tilted in favor of the latter. Thus, in controversies
between a worker and her employer, doubts reasonably arising
from the evidence or in the interpretation of agreements should be
resolved in favor of the former.
Petitioner, for its part, was given the same opportunity to file its
own position paper but instead, it opted to file a two-page Answer
With Special And Affirmative Defenses, denying generally the
allegations of the complaint. 9
As observed by the labor arbiter, "The record shows the
complainant fled complaint (sic), position paper, and supporting
documents, and prosecuted her case diligently; while the
respondent merely tried to settle the case amicably, failing even to
file its position paper." 10 The present case being one for illegal
dismissal, it was incumbent upon petitioner employer to show by
substantial evidence that the termination was validly made. In
termination cases, the burden of proof rests on the employer to
show that the dismissal is for a just cause. 11 Having failed to file
its position paper and to support its denials and affirmative
defenses in its answer, petitioner cannot now fault the labor arbiter
and the NLRC for relying on the facts as laid down by Osdana in
her position paper and supported by other documents. The
essence of due process is that a party be afforded reasonable
opportunity to be heard and to submit any evidence he may have
in support of his defense, 12 and this is exactly what petitioner was
accorded, although it chose not to fully avail thereof.
This Court, therefore, upholds the finding of herein public
respondents that the facts and the evidence on record adduced by
Osdana and taken in relation to the answer of petitioner show that
indeed there was breach of the employment contract and illegal
dismissal committed by petitioner's principal.
Petitioner claims that public respondents committed grave abuse
of discretion when they ruled that Osdana had been illegally
dismissed by GCC. It maintains that the award for salaries for the
unexpired portion of the contract was improper because Osdana
was validly dismissed on the ground of illness.
The argument must fail.
In its Answer, Memorandum of Appeal, 13 Petition
for Certiorari, 14 and Consolidated Reply, 15 petitioner consistently
asserted that Osdana was validly repatriated for medical reasons,
but it failed to substantiate its claim that such repatriation was
justified and done in accordance with law.
Art. 284 of the Labor Code is clear on the matter of termination by
reason of disease or illness, viz:
Art. 284. Disease as a ground for termination
— An employer may terminate the services of
an employee who has been found to be
suffering from any disease and whose
continued employment is prohibited by law or
prejudicial to his health as well as the health of
his co-employees: . . . .
Specifically, Section 8, Rule 1, Book VI of the Omnibus Rules
Implementing the Labor Code provides:
Sec. 8. Disease as a ground for dismissal —
Where the employee suffers from a disease
and his continued employment is prohibited by
law or prejudicial to his health or to the health
of his co-employees, the employer shall not
terminate his employment unless there is a
certification by competent public authority that
the disease is of such nature or at such a stage
that it cannot be cured within a period of six 6
months with proper medical treatment. If the
disease or ailment can be cured within the
period, the employer shall not terminate the
employee but shall ask the employee to take a
leave. The employer shall reinstate such
employee to his former position immediately
upon the restoration of his normal
health. (Emphasis supplied).
Viewed in the light of the foregoing provisions, the manner by
which Osdana was terminated was clearly in violation of the Labor
Code and its implementing rules and regulations.
In the first place, Osdana's continued employment despite her
illness was not prohibited by law nor was it prejudicial to her
health, as well as that of her co-employees. In fact, the medical
report issued after her second operation stated that "she had very
good improvement of the symptoms." Besides, "Carpal Tunnel
Syndrome" is not a contagious disease.
Petitioner attributes good faith on the part of its principal, claiming
that "It was the concern for the welfare and physical well being
(sic) of private respondent that drove her employer to take the
painful decision of terminating her from the service and having her
repatriated to the Philippines at its expense. The employer did not
want to risk the aggravation of the illness of private respondent
which could have been the logical consequence were private
respondent allowed to continue with her job." 16
The Court notes, however, that aside from these bare allegations,
petitioner has not presented any medical certificate or similar
document from a competent public health authority in support of its
claims.
On the medical certificate requirement, petitioner erroneously
argues that "private respondent was employed in Saudi Arabia and
not here in the Philippines. Hence, there was a physical
impossibility to secure from a Philippine public health authority the
alluded medical certificate that public respondent's illness will not
be cured within a period of six months." 17
Petitioner entirely misses the point, as counsel for private
respondent states in the Comment. 18 The rule simply prescribes a
"certification by a competent public health authority" and not a
"Philippine public health authority."
If, indeed, Osdana was physically unfit to continue her
employment, her employer could have easily obtained a
certification to that effect from a competent public health authority
in Saudi Arabia, thereby heading off any complaint for illegal
dismissal.
The requirement for a medical certificate under Article 284 of the
Labor Code cannot be dispensed with; otherwise, it would sanction
the unilateral and arbitrary determination by the employer of the
gravity or extent of the employee's illness and thus defeat the
public policy on the protection of labor. As the Court observed
in Prieto v. NLRC, 19 "The Court is not unaware of the many
abuses suffered by our overseas workers in the foreign land where
they have ventured, usually with heavy hearts, in pursuit of a more
fulfilling future. Breach of contract, maltreatment, rape, insufficient
nourishment, sub-human lodgings, insults and other forms of
debasement, are only a few of the inhumane acts to which they
are subjected by their foreign employers, who probably feel they
can do as they please in their country. While these workers may
indeed have relatively little defense against exploitation while they
are abroad, that disadvantage must not continue to burden them
when they return to their own territory to voice their muted
complaint. There is no reason why, in their own land, the
protection of our own laws cannot be extended to them in full
measure for the redress of their grievances."
Petitioner likewise attempts to sidestep the medical certificate
requirement by contending that since Osdana was working in
Saudi Arabia, her employment was subject to the laws of the host
country. Apparently, petitioner hopes to make it appear that the
labor laws of Saudi Arabia do not require any certification by a
competent public health authority in the dismissal of employees
due to illness.
Again, petitioner's argument is without merit.
First, established is the rule that lex loci contactus (the law of the
place where the contract is made) governs in this jurisdiction.
There is no question that the contract of employment in this case
was perfected here in the Philippines. Therefore, the Labor Code,
its implementing rules and regulations, and other laws affecting
labor apply in this case. Furthermore, settled is the rule that the
courts of the forum will not enforce any foreign claim obnoxious to
the forum's public policy. 20 Here in the Philippines, employment
agreements are more than contractual in nature. The Constitution
itself, in Article XIII Section 3, guarantees the special protection of
workers, to wit:
The State shall afford fill protection to labor,
local and overseas, organized and
unorganized, and promote full employment and
equality of employment opportunities for all.
It shall guarantee the rights of all workers to
self-organization, collective bargaining and
negotiations, and peaceful concerted activities,
including the right to strike in accordance with
law. They shall be entitled to security of tenure,
humane conditions of work, and a living wage.
They shall also participate in policy and
decision-making processes affecting their rights
and benefits as may be provided by law.
xxx xxx xxx
This public policy should be borne in mind in this case because to
allow foreign employers to determine for and by themselves
whether an overseas contract worker may be dismissed on the
ground of illness would encourage illegal or arbitrary pre-
termination of employment contracts.
As regards the monetary award of salaries for the unexpired
portion of the employment contract, unpaid salaries and salary
differential granted by public respondents to Osdana, petitioner
assails the same for being contrary to law, evidence and existing
jurisprudence, all of which therefore constitutes grave abuse of
discretion.
Although this contention is without merit, the award for salaries for
the unexpired portion of the contract must, however, be reduced.
Paragraph 5, Section 10 of R.A. No. 8042, applies in this case,
thus:
In case of termination of overseas employment
without just, valid or authorized cause as
defined by law or contract, the worker shall be
entitled to the full reimbursement of his
placement fee with interest at twelve percent
(12%) per annum, plus his salaries for the
unexpired portion of his employment contract or
for three (3) months for every year of the
unexpired term, whichever is less.
In the case at bar, while it would appear that the employment
contract approved by the POEA was only for a period of twelve
months, Osdana's actual stint with the foreign principal lasted for
one year and seven-and-a-half months. It may be inferred,
therefore, that the employer renewed her employment contract for
another year. Thus, the award for the unexpired portion of the
contract should have been US$1,260 (US$280 x 4 1/2 months) or
its equivalent in Philippine pesos, not US$2,499 as adjudged by
the labor arbiter and affirmed by the NLRC.
As for the award for unpaid salaries and differential amounting to
US$ 1,076 representing seven months' unpaid salaries and one
month underpaid salary, the same is proper because, as correctly
pointed out by Osdana, the "no work, no pay" rule relied upon by
petitioner does not apply in this case. In the first place, the fact that
she had not worked from June 18 to August 22, 1993 and then
from January 24 to April 29, 1994, was due to her illness which
was clearly work-related. Second, from August 23 to October 5,
1993, Osdana actually worked as food server and cook for seven
days a week at the Hota Bani Tameem Hospital, but was not paid
any salary for the said period. Finally, from October 6 to October
23, 1993, she was confined to quarters and was not given any
work for no reason at all.
Now, with respect to the award of moral and exemplary damages,
the same is likewise proper but should be reduced. Worth
reiterating is the rule that moral damages are recoverable where
the dismissal of the employee was attended by bad faith or fraud
or constituted an act oppressive to labor, or was done in a manner
contrary to morals, good customs, or public policy. 21 Likewise,
exemplary damages may be awarded if the dismissal was effected
in a wanton, oppressive or malevolent manner. 22

According to the facts of the case as stated by public respondent,

Osdana was made to perform such menial chores, as dishwashing
and janitorial work, among others, contrary to her job designation
as waitress. She was also made to work long hours without
overtime pay. Because of such arduous working conditions, she
developed Carpal Tunnel Syndrome. Her illness was such that she
had to undergo surgery twice. Since her employer determined for
itself that she was no longer fit to continue working, they sent her
home posthaste without as much as separation pay or
compensation for the months when she was unable to work
because of her illness. Since the employer is deemed to have
acted in bad faith, the award for attorney's fees is likewise upheld.

Finally, petitioner alleges save abuse of discretion on the part of

public respondents for holding it solely liable for the claims of
Osdana despite the fact that its liability with the principal is joint
and several.

Petitioner misunderstands the decision in question. It should be

noted that contrary to petitioner's interpretation, the decision of the
labor arbiter which was affirmed by the NLRC did not really
absolve the foreign principal.

Petitioner was the only one held liable for Osdana's monetary
claims because it was the only respondent named in the complaint
and it does not appear that petitioner took steps to have its
principal included as co-respondent. Thus, the POEA, and later the
labor arbiter, did not acquire jurisdiction over the foreign principal.

This is not to say, however, that GCC may not be field liable at all.
Petitioner can still claim reimbursement or contribution from it for
the amounts awarded to the illegally-dismissed employee.

WHEREFORE, in view of the foregoing, the instant petition is

DISMISSED. Accordingly, the decisions of the labor arbiter dated
August 20, 1996, and of the NLRC dated March 11, 1997, are
AFFIRMED with the MODIFICATION that the award to private
respondent Osdana should be one thousand two hundred sixty US
dollars (US$1,260), or its equivalent in Philippine pesos, as
salaries for the unexpired portion of the employment contract, and
one thousand seventy six US dollars (US$1,076), or its equivalent
in Philippine pesos, representing unpaid salaries for seven (7)
months and underpaid salary for one (1) month, plus interest.

Petitioner is likewise ordered to pay private respondent

P30,000.00 in moral damages, P10,000.00 in exemplary damages
and 10% attorney's fees.

This decision is without prejudice to any remedy or claim for

reimbursement or contribution petitioner may institute against its
foreign principal, Gulf Catering Company. No pronouncement as to
costs.

SO ORDERED.

Kapunan, Purisima and Pardo, JJ., concur.

 SECOND DIVISION
G.R. No. 120706 January 31, 2000
RODRIGO CONCEPCION, petitioner,
vs.
COURT OF APPEALS and SPS. NESTOR NICOLAS and
ALLEM NICOLAS, respondents.
BELLOSILLO, J.:
Petitioner Rodrigo Concepcion assails in this petition for review
on certiorari the Decision of the Court of Appeals dated 12
December 1994 which affirmed the decision of the Regional Trial
Court of Pasig City ordering him to pay respondent spouses
Nestor Nicolas and Allem Nicolas the sums of P50,000.00 for
moral damages, P25,000.00 for exemplary damages and
P10,000.00 for attorney's fees, plus the costs of suit.* Petitioner
claims absence of factual and legal basis for the award of
damages.
The courts a quo found that sometime in 1985 the spouses Nestor
Nicolas and Allem Nicolas resided at No. 51 M. Concepcion St.,
San Joaquin, Pasig City, in an apartment leased to them by the
owner thereof, Florence "Bing" Concepcion, who also resided in
the same compound where the apartment was located. Nestor
Nicolas was then engaged in the business of supplying
government agencies and private entities with office equipment,
appliances and other fixtures on a cash purchase or credit basis.
Florence Concepcion joined this venture by contributing capital on
condition that after her capital investment was returned to her, any
profit earned would be divided equally between her and Nestor.
Sometime in the second week of July 1985 Rodrigo Concepcion,
brother of the deceased husband of Florence, angrily accosted
Nestor at the latter's apartment and accused him of conducting an
adulterous relationship with Florence. He shouted, "Hoy Nestor,
kabit ka ni Bing! . . . Binigyan ka pa pala ni Bing Concepcion ng
P100,000.00 para umakyat ng Baguio. Pagkaakyat mo at ng
asawa mo doon ay bababa ka uli para magkasarilinan kayo ni
Bing."1
To clarify matters, Nestor went with Rodrigo, upon the latter's dare,
to see some relatives of the Concepcion family who allegedly knew
about the relationship. However, those whom they were able to
see denied knowledge of the alleged affair. The same accusation
was hurled by Rodrigo against Nestor when the two (2) confronted
Florence at the terrace of her residence. Florence denied the
imputations and Rodrigo backtracked saying that he just heard the
rumor from a relative. Thereafter, however, Rodrigo called
Florence over the telephone reiterating his accusation and
threatening her that should something happen to his sick mother,
in case the latter learned about the affair, he would kill
Florence.1âwphi1.nêt
As a result of this incident, Nestor Nicolas felt extreme
embarrassment and shame to the extent that he could no longer
face his neighbors. Florence Concepcion also ceased to do
business with him by not contributing capital anymore so much so
that the business venture of the Nicolas spouses declined as they
could no longer cope with their commitments to their clients and
customers. To make matters worse, Allem Nicolas started to doubt
Nestor's fidelity resulting in frequent bickerings and quarrels during
which Allem even expressed her desire to leave her husband.
Consequently, Nestor was forced to write Rodrigo demanding
public apology and payment of damages. Rodrigo pointedly
ignored the demand, for which reason the Nicolas spouses filed a
civil suit against him for damages.
In his defense, Rodrigo denied that he maligned Nestor by
accusing him publicly of being Florence's lover. He reasoned out
that he only desired to protect the name and reputation of the
Concepcion family which was why he sought an appointment with
Nestor through Florence's son Roncali to ventilate his feelings
about the matter. Initially, he discussed with Nestor certain aspects
of the joint venture in a friendly and amiable manner, and then only
casually asked the latter about his rumored affair with his sister-in-
law.
In contesting the decision of the appellate court, petitioner Rodrigo
Concepcion raises the following issues: (a) whether there is basis
in law for the award of damages to private respondents, the
Nicolas spouses; and, (b) whether there is basis to review the facts
which are of weight and influence but which were overlooked and
misapplied by the respondent appellate court.
Petitioner argues that in awarding damages to private
respondents, the Court of Appeals was without legal basis to justify
its verdict. The alleged act imputed to him by respondent spouses
does not fall under Arts. 262 and 22193 of the Civil Code since it
does not constitute libel, slander, or any other form of defamation.
Neither does it involve prying into the privacy of another's
residence or meddling with or disturbing the private life or family
relation of another. Petitioner also insists that certain facts and
circumstances of the case were manifestly overlooked,
misunderstood or glossed over by respondent court which, if
considered, would change the verdict. Impugning the credibility of
the witnesses for private respondents and the manner by which
the testimonial evidence was analyzed and evaluated by the trial
court, petitioner criticized the appellate court for not taking into
account the fact that the trial judge who penned the decision was
in no position to observe first-hand the demeanor of the witnesses
of respondent spouses as he was not the original judge who heard
the case. Thus, his decision rendered was flawed.
The Court has ruled often enough that its jurisdiction in a petition
for review on certiorari under Rule 45 of the Revised Rules of
Court is limited to reviewing only errors of law, not of fact, unless
the factual findings complained of are devoid of support by the
evidence on record or the assailed judgment is based on
misapprehension of facts.4The reason behind this is that the
Supreme Court respects the findings of the trial court on the issue
of credibility of witnesses, considering that it is in a better position
to decide the question, having heard the witnesses themselves
and observed their deportment and manner of testifying during the
trial.5 Thus it accords the highest respect, even finality, to the
evaluation made by the lower court of the testimonies of the
witnesses presented before it.
The Court is also aware of the long settled rule that when the issue
is on the credibility of witnesses, appellate courts will not generally
disturb the findings of the trial court; however, its factual findings
may nonetheless be reversed if by the evidence on record or lack
of it, it appears that the trial court erred. 6 In this respect, the Court
is not generally inclined to review the findings of fact of the Court
of Appeals unless its findings are erroneous, absurd, speculative,
conjectural, conflicting, tainted with grave abuse of discretion, or
contrary to the findings culled by the trial court of origin. 7 This rule
of course cannot be unqualifiedly applied to a case where the
judge who penned the decision was not the one who heard the
case, because not having heard the testimonies himself, the judge
would not be in a better position than the appellate courts to make
such determination.8
However, it is also axiomatic that the fact alone that the judge who
heard the evidence was not the one who rendered the judgment
but merely relied on the record of the case does not render his
judgment erroneous or irregular. This is so even if the judge did
not have the fullest opportunity to weigh the testimonies not having
heard all the witnesses speak nor observed their deportment and
manner of testifying. Thus the Court generally will not find any
misapprehension of facts as it can be fairly assumed under the
principle of regularity of performance of duties of public officers
that the transcripts of stenographic notes were thoroughly
scrutinized and evaluated by the judge himself.
Has sufficient reason then been laid before us by petitioner to
engender doubt as to the factual findings of the court a quo? We
find none. A painstaking review of the evidence on record
convinces us not to disturb the judgment appealed from. The fact
that the case was handled by different judges brooks no
consideration at all, for preponderant evidence consistent with their
claim for damages has been adduced by private respondents as to
foreclose a reversal. Otherwise, everytime a Judge who heard a
case, wholly or partially, dies or lives the service, the case cannot
be decided and a new trial will have to be conducted. That would
be absurb; inconceivable.
According to petitioner, private respondents' evidence is
inconsistent as to time, place and persons who heard the alleged
defamatory statement. We find this to be a gratuitous observation,
for the testimonies of all the witnesses for the respondents are
unanimous that the defamatory incident happened in the afternoon
at the front door of the apartment of the Nicolas spouses in the
presence of some friends and neighbors, and later on, with the
accusation being repeated in the presence of Florence, at the
terrace of her house. That this finding appears to be in conflict with
the allegation in the complaint as to the time of the incident bears
no momentous significance since an allegation in a pleading is not
evidence; it is a declaration that has to be proved by evidence. If
evidence contrary to the allegation is presented, such evidence
controls, not the allegation in the pleading itself, although
admittedly it may dent the credibility of the witnesses. But not in
the instant case.
It is also argued by petitioner that private respondents failed to
present as witnesses the persons they named as eyewitnesses to
the incident and that they presented instead one Romeo Villaruel
who was not named as a possible witness during the pre-trial
proceedings. Charging that Villaruel's testimony is not credible and
should never have been accorded any weight at all, petitioner
capitalizes on the fact that a great distance separates Villaruel's
residence and that of private respondents as reflected in their
house numbers, the former's number being No. 223 M.
Concepcion St., while that of the Nicolas spouses, No. 51 along
the same street. This being so, petitioner concludes, Villaruel could
not have witnessed the ugly confrontation between Rodrigo and
Nestor. It appears however from Villaruel's testimony that at the
time of the incident complained of, he was staying in an apartment
inside the compound adjacent to that of the Nicolas spouses.
Whether his apartment was then numbered 223 is not stated.
What is definite and clear is his statement that he and Nestor
Nicolas were neighbors on 14 July 1985.
There are other inconsistencies pointed out by petitioner in the
testimonial evidence of private respondents but these are not of
such significance as to alter the finding of facts of the lower court.
Minor inconsistencies even guarantee truthfulness and candor, for
they erase any suspicion of a rehearsed
testimony.9 Inconsistencies in the testimonies of witnesses with on
minor details and collateral matters do not affect the substance of
their testimonies.10
All told, these factual findings provide enough basis in law for the
award of damages by the Court of Appeals in favor of
respondents. We reject petitioner's posture that no legal provision
supports such award, the incident complained of neither falling
under Art. 2219 nor Art. 26 of the Civil Code. It does not need
further elucidation that the incident charged of petitioner was no
less than an invasion on the right of respondent Nestor as a
person. The philosophy behind Art. 26 underscores the necessity
for its inclusion in our civil law. The Code Commission stressed in
no uncertain terms that the human personality must be exalted.
The sacredness of human personality is a concomitant
consideration of every plan for human amelioration. The
touchstone of every system of law, of the culture and civilization of
every country, is how far it dignifies man. If the statutes
insufficiently protect a person from being unjustly humiliated, in
short, if human personality is not exalted — then the laws are
indeed defective.11 Thus, under this article, the rights of persons
are amply protected, and damages are provided for violations of a
person's dignity, personality, privacy and peace of mind.
It is petitioner's position that the act imputed to him does not
constitute any of those enumerated in Arts 26 and 2219. In this
respect, the law is clear. The violations mentioned in the codal
provisions are not exclusive but are merely examples and do not
preclude other similar or analogous acts. Damages therefore are
allowable for actions against a person's dignity, such as profane,
insulting, humiliating, scandalous or abusive language. 12 Under Art.
2217 of the Civil Code, moral damages which include physical
suffering, mental anguish, fright, serious anxiety, besmirched
reputation, wounded feelings, moral shock, social humiliation, and
similar injury, although incapable of pecuniary computation, may
be recovered if they are the proximate result of the defendant's
wrongful act or omission.
There is no question that private respondent Nestor Nicolas
suffered mental anguish, besmirched reputation, wounded feelings
and social humiliation as a proximate result of petitioner's abusive,
scandalous and insulting language. Petitioner attempted to
exculpate himself by claiming that he made an appointment to see
Nestor through a nephew, Roncali, the son of Florence, so he
could talk with Nestor to find out the truth about his rumored illicit
relationship with Florence. He said that he wanted to protect his
nephews and nieces and the name of his late brother (Florence's
husband).13 How he could be convinced by some way other than a
denial by Nestor, and how he would protect his nephews and
nieces and his family's name if the rumor were true, he did not say.
Petitioner admitted that he had already talked with Florence herself
over the telephone about the issue, with the latter vehemently
denying the alleged immoral relationship. Yet, he could not let the
matter rest on the strength of the denial of his sister-in-law. He had
to go and confront Nestor, even in public, to the latter's humiliation.
Testifying that until that very afternoon of his meeting with Nestor
he never knew respondent, had never seen him before, and was
unaware of his business partnership with Florence, his subsequent
declarations on the witness stand however belie this lack of
knowledge about the business venture for in that alleged
encounter he asked Nestor how the business was going, what
were the collection problems, and how was the money being
spent. He even knew that the name of the business, Floral
Enterprises, was coined by combining the first syllables of the
name Florence and Allem, the name of Nestor's wife. He said that
he casually asked Nestor about the rumor between him and
Florence which Nestor denied. Not content with such denial, he
dared Nestor to go with him to speak to his relatives who were the
source of his information. Nestor went with him and those they
were able to talk to denied the rumor.
We cannot help noting this inordinate interest of petitioner to know
the truth about the rumor and why he was not satisfied with the
separate denials made by Florence and Nestor. He had to confront
Nestor face to face, invade the latter's privacy and hurl defamatory
words at him in the presence of his wife and children, neighbors
and friends, accusing him — a married man — of having an
adulterous relationship with Florence. This definitely caused
private respondent much shame and embarrassment that he could
no longer show himself in his neighborhood without feeling
distraught and debased. This brought dissension and distrust in his
family where before there was none. This is why a few days after
the incident, he communicated with petitioner demanding public
apology and payment of damages, which petitioner ignored.

If indeed the confrontation as described by private respondents did

not actually happen, then there would have been no cause or
motive at all for them to consult with their lawyer, immediately
demand an apology, and not obtaining a response from petitioner,
file an action for damages against the latter. That they decided to
go to court to seek redress bespeaks of the validity of their claim.
On the other hand, it is interesting to note that while explaining at
great length why Florence Concepcion testified against him,
petitioner never advanced any reason why the Nicolas spouses,
persons he never knew and with whom he had no dealings in the
past, would sue him for damages. It also has not escaped our
attention that, faced with a lawsuit by private respondents,
petitioner sent his lawyer, a certain Atty. Causapin, to talk not to
the Nicolas spouses but to Florence, asking her not to be involved
in the case, otherwise her name would be messily dragged into it.
Quite succinctly, Florence told the lawyer that it was not for her to
decide and that she could not do anything about it as she was not
a party to the court case.1âwphi1.nêt

WHEREFORE, in light of the foregoing premises, the assailed

Decision of the Court of Appeals affirming the judgment of the
Regional Trial Court of Pasig City, Br. 167, holding Rodrigo
Concepcion liable to the spouses Nestor Nicolas and Allem
Nicolas for F50,000.00 as moral damages, P25,000.00 for
exemplary damages, P10,000.00 for attorney's fees, plus costs of
suit, is AFFIRMED.

SO ORDERED.

Mendoza, Quisumbing, Buena and De Leon, Jr., JJ., concur.

 THIRD DIVISION
G.R. No. 188715 April 6, 2011
Petitioner,
vs.
FEDERICO P. CARIN, Respondent.
DECISION
CARPIO MORALES, J.:
Assailed via this petition for review of petitioner Rodolfo N. Regala
is the May 26, 2009 Decision1 of the Court of Appeals which
affirmed with modification the May 29, 2006 Decision 2 of the
Regional Trial Court (RTC) of Las Piñas City, Br. 255 in Civil Case
No. LP-99-0058, ordering petitioner to pay respondent Federico P.
Carin moral and exemplary damages and attorney’s fees.
Petitioner and respondent are adjacent neighbors at Spirig Street,
BF Resort Village, Las Piñas City. When petitioner decided to
renovate his one storey residence by constructing a second floor,
he under the guise of merely building an extension to his
residence, approached respondent sometime in May 1998 for
permission to bore a hole through a perimeter wall shared by both
their respective properties, to which respondent verbally consented
on condition that petitioner would clean the area affected by the
work.
As earlier indicated, petitioner’s real intention was to build a
second floor, in fact with a terrace atop the dividing wall. In the
course of the construction of the second floor, respondent and his
wife Marietta suffered from the dust and dirt which fell on their
property. As petitioner failed to address the problem to
respondent’s satisfaction, respondent filed a letter-complaint3 with
the Office of the City Engineer and Building Official of Las Piñas
City on June 9, 1998.
In his letter-complaint, respondent related that, despite the lack of
a building permit for the construction of a second floor, petitioner
had demolished the dividing wall, failed to clean the debris falling
therefrom, allowed his laborers to come in and out of his
(respondent’s) property without permission by simply jumping over
the wall, and trampled on his vegetable garden; and that despite
his protestations, petitioner persisted in proceeding with the
construction, he claiming to be the owner of the perimeter wall.
Several "sumbongs"4 (complaints) were soon lodged by
respondent before the Office of Barangay Talon Dos against
petitioner for encroachment, rampant invasion of privacy and
damages arising from the construction, and for illegal construction
of scaffoldings inside his (respondent’s) property.
As no satisfactory agreement was reached at the last barangay
conciliation proceedings in December 1998, and petitioner having
continued the construction work despite issuance of several stop-
work notices from the City Engineer’s Office for lack of building
permit, respondent filed on March 1999 a complaint 5 for damages
against petitioner before the RTC of Las Piñas City.
In his complaint, respondent alleged in the main that, instead of
boring just one hole as agreed upon, petitioner demolished the
whole length of the wall from top to bottom into five parts for the
purpose of constructing a second floor with terrace; and that debris
and dust piled up on respondent’s property ruining his garden and
forcing him to, among other things, shut some of the windows of
his house. Respondent thus prayed for the award of moral and
exemplary damages.
Petitioner, denying respondent’s allegations, claimed in his
Answer6 that he was the sole and exclusive owner of the wall
referred to as a perimeter wall, the same having been built within
the confines of his property and being part and parcel of the house
and lot package he purchased from the developer, BF Homes,
Inc., in 1981; that the issue of its ownership has never been raised
by respondent or his predecessor; and that securing the consent of
respondent and his neighbors was a mere formality in compliance
with the requirements of the Building Official to facilitate the
issuance of a building permit, hence, it should not be taken to
mean that he (petitioner) acknowledges respondent to be a co-
owner of the wall. He added that he eventually secured the
requisite building permit7 in March 1999 and had duly paid the
administrative fine.8
Further, petitioner, denying that a demolition of the whole length of
the wall took place, claimed that he and his contractor’s laborers
had been diligently cleaning respondent’s area after every day’s
work until respondent arrogantly demanded the dismantling of the
scaffoldings, and barred the workforce from, and threatening to
shoot anyone entering the premises; and that the complaint was
instituted by respondent as leverage to force him to withdraw the
criminal case for slander and light threats 9 which he had earlier
filed against respondent for uttering threats and obscenities
against him in connection with the construction work.
At the trial, after respondent and his wife confirmed the material
allegations of the complaint, petitioner took the witness stand and
presented his witnesses.
Architect Antonio Punzalan III10 testified that he installed GI sheets
to prevent debris from falling onto respondent’s property and had
instructed his workers to clean the affected area after every work
day at 5:00 p.m., but they were later barred by respondent from
entering his property.
Engineer Crisostomo Chan11 from the Office of the Building Official
of Las Piñas City testified, among other things, on the
circumstances surrounding the complaint for illegal construction
filed by respondent and that a building permit was eventually
issued to petitioner on March 15, 1999.
Engineer Sonia Haduca12 declared that upon a joint survey
conducted on the properties of both petitioner and respondent in
December 1998 to determine their exact boundaries, she found an
encroachment by petitioner of six centimeters at the lower portion
of the existing wall negligible, since the Land Survey Law permits
an encroachment of up to ten centimeters.
By Decision of May 29, 2006, Branch 255 of the Las Piñas City
RTC rendered judgment in favor of respondent whom it awarded
moral damages in the sum of ₱100,000, exemplary damages of
₱100,000 and attorney’s fees of ₱50,000 plus costs of suit.13
In finding for respondent, the trial court declared that, apart from
the fact that petitioner knowingly commenced the renovation of his
house without the requisite building permit from the City Engineer’s
Office, he misrepresented to respondent his true intent of
introducing renovations. For, it found that instead of just boring a
hole in the perimeter wall as originally proposed, petitioner divided
the wall into several sections to serve as a foundation for his
firewall (which ended up higher than the perimeter wall) and the
second storey of his house.
The trial court further declared that respondent and his family had
thus to contend with the noise, dust and debris occasioned by the
construction, which petitioner and his work crew failed to address
despite respondent’s protestations, by refusing to clean the mess
or install the necessary safety devices.
Applying Article 2176 of the Civil Code on quasi-delicts, the trial
court ruled that petitioner was at fault and negligent for failing to
undertake sufficient safety measures to prevent inconvenience and
damage to respondent to thus entitle respondent to moral and
exemplary damages.
On appeal by petitioner, the Court of Appeals affirmed the trial
court’s decision with modification by reducing the award of moral
and exemplary damages to ₱50,000 and ₱25,000, respectively.
The appellate court anchored its affirmance on Article 19 of the
New Civil Code which directs every person to, in the exercise of
his rights and in the performance of his duties, act with justice, and
observe honesty and good faith.
By Resolution14 of July 10, 2009, the appellate court denied
petitioner’s motion for reconsideration as well as respondent’s
prayer in his Comment that the original awards made by the trial
court be restored.
Hence, petitioner’s present petition faulting the appellate court in
Affirming with modification the decision of the trial
court….considering the absence of any competent proof to warrant
the grant of moral and exemplary damages as well as attorney’s
fees.15 (underscoring supplied)
Petitioner maintains that since moral and exemplary damages are
compensatory in nature, being meant neither to punish nor enrich,
the claimant must establish that not only did he sustain injury but
also that the other party had acted in bad faith or was motivated by
ill will. To petitioner, respondents failed to discharge this burden.
He adds that the trial court did not delve into whether petitioner’s
renovations were the primary cause of respondent’s claimed
injuries, viz violation of privacy, sleepless nights and mental
anguish, among other things, as it instead focused on the lack of a
building permit as basis for the awards.
Rebutting the testimony of respondent’s wife as to the alleged
unauthorized intrusion of petitioner’s workers into respondent’s
property in order to erect scaffoldings, petitioner points out that
such an undertaking would take a considerable length of time and
could not have gone unnoticed had consent not been given by
respondent.
Moreover, petitioner posits, if consent had truly been withheld,
there was nothing to prevent respondent from dismantling or
immediately removing the offending structures – a course of action
he did not even attempt.
In his Comment16 to the petition, respondent quotes heavily from
the appellate and trial court’s findings that fault and negligence
attended petitioner’s renovation, thus justifying the award of
damages. He goes on to reiterate his plea that the awards given
by the trial court in its decision of May 29, 2006 should be
reinstated.
The petition is partly impressed with merit.
The trial court’s award of moral and exemplary damages, as
affirmed by the appellate court, was premised on the damage and
suffering sustained by respondent arising from quasi-delict under
Article 217617 of the Civil Code. Thus the trial court explained:
Indeed, there was fault or negligence on the part of the defendant
when he did not provide sufficient safety measures to prevent
causing a lot of inconvenience and disturbance to the plaintiff and
his family. The evidence presented by the plaintiff regarding the
dirt or debris, as well as the absence of devices or safety
measures to prevent the same from falling inside plaintiff’s
property, were duly established. It did not help the cause of the
defendant that he made a lot of misrepresentations regarding the
renovations on his house and he did not initially have a building
permit for the same. In fact, it was only after the construction works
were completed that the said permit was issued and upon payment
of an administrative fine by the defendant.18
In prayers for moral damages, however, recovery is more an
exception rather than the rule. Moral damages are not meant to be
punitive but are designed to compensate and alleviate the physical
suffering, mental anguish, fright, serious anxiety, besmirched
reputation, wounded feelings, moral shock, social humiliation, and
similar harm unjustly caused to a person. To be entitled to such an
award, the claimant must satisfactorily prove that he has suffered
damages and that the injury causing it has sprung from any of the
cases listed in Articles 221919 and 222020 of the Civil Code.
Moreover, the damages must be shown to be the proximate result
of a wrongful act or omission. The claimant must thus establish the
factual basis of the damages and its causal tie with the acts of the
defendant.
In fine, an award of moral damages calls for the presentation of 1)
evidence of besmirched reputation or physical, mental or
psychological suffering sustained by the claimant; 2) a culpable act
or omission factually established; 3) proof that the wrongful act or
omission of the defendant is the proximate cause of the damages
sustained by the claimant; and 4) the proof that the act is
predicated on any of the instances expressed or envisioned by
Article 2219 and Article 2220 of the Civil Code.21
In the present case, respondent failed to establish by clear and
convincing evidence that the injuries he sustained were the
proximate effect of petitioner’s act or omission. It thus becomes
necessary to instead look into the manner by which petitioner
carried out his renovations to determine whether this was directly
responsible for any distress respondent may have suffered since
the law requires that a wrongful or illegal act or omission must
have preceded the damages sustained by the claimant.
It bears noting that petitioner was engaged in the lawful exercise of
his property rights to introduce renovations to his abode. While he
initially did not have a building permit and may have
misrepresented his real intent when he initially sought
respondent’s consent, the lack of the permit was inconsequential
since it only rendered petitioner liable to administrative sanctions
or penalties.1avvphi1
The testimony of petitioner and his witnesses, specifically Architect
Punzalan, demonstrates that they had actually taken measures to
prevent, or at the very least, minimize the damage to respondent’s
property occasioned by the construction work. Architect Punzalan
details how upon reaching an agreement with petitioner for the
construction of the second floor, he (Punzalan) surveyed
petitioner’s property based on the Transfer Certificate of Title
(TCT) and Tax Declarations22 and found that the perimeter wall
was within the confines of petitioner’s property; that he, together
with petitioner, secured the consent of the neighbors (including
respondent) prior to the start of the renovation as reflected in a
Neighbor’s Consent23 dated June 12, 1998; before the construction
began, he undertook measures to prevent debris from falling into
respondent’s property such as the installation of GI sheet strainers,
the construction of scaffoldings24 on respondent’s property, the
instructions to his workers to clean the area before leaving at 5:00
p.m;25 and that the workers conducted daily clean-up of
respondent’s property with his consent, until animosity developed
between the parties.26
Malice or bad faith implies a conscious and intentional design to do
a wrongful act for a dishonest purpose or moral obliquity; it is
different from the negative idea of negligence in that malice or bad
faith contemplates a state of mind affirmatively operating with
furtive design or ill will.27 While the Court harbors no doubt that the
incidents which gave rise to this dispute have brought anxiety and
anguish to respondent, it is unconvinced that the damage inflicted
upon respondent’s property was malicious or willful, an element
crucial to merit an award of moral damages under Article 2220 of
the Civil Code.

Necessarily, the Court is not inclined to award exemplary

damages.28

Petitioner, however, cannot steer clear from any liability

whatsoever. Respondent and his family’s rights to the peaceful
enjoyment of their property have, at the very least, been
inconvenienced from the incident borne of petitioner’s construction
work. Any pecuniary loss or damage suffered by respondent
cannot be established as the records are bereft of any factual
evidence to establish the same. Nominal damages may thus be
adjudicated in order that a right of the plaintiff, respondent herein,
which has been violated or invaded by the defendant, petitioner
herein, may be vindicated or recognized, and not for the purpose
of indemnifying the plaintiff for any loss suffered by him. 29

WHEREFORE, the petition is GRANTED. The May 26, 2009

Decision of the Court of Appeals is VACATED. The Court orders
petitioner to pay respondent the sum of ₱25,000 as nominal
damages.

No costs.

SO ORDERED.
 SECOND DIVISION
G.R. No. 142029 February 28, 2001
ERLINDA FRANCISCO, doing business in the name and style of
Cebu Fountainhead Bakeshop and JULIANA
PAMAONG, petitioners,
vs.
RICARDO FERRER, JR., ANNETTE FERRER, ERNESTO LO
AND REBECCA LO, respondents.
PARDO, J.:
Appeal via certiorari1 taken by petitioners from the decision of the
Court of Appeals2 increasing the trial court's award of moral
damages to Ricardo Ferrer, Jr., Annette Ferrer, Ernesto Lo and
Rebecca Lo to two hundred fifty thousand pesos (P250,000.00)
and awarding exemplary damages in the amount of one hundred
thousand pesos (P100,000.00), in addition to the following:
"1. The cost of the wedding cake in the amount of
P3,175.00;
"2. Attorney's fees in the amount of P10,000.00; and
"3. Cost of litigation."
The facts, as found by the Court of Appeals, 3 are as follows:
"On November 19, 1992 Mrs. Rebecca Lo and her
daughter Annette Ferrer ordered a three-layered cake
from Fountainhead Bakeshop, Mango Avenue Branch. It
was then agreed that the wedding cake shall be
delivered at 5:00 o'clock in the afternoon at the Cebu
Country Club, Cebu City, stating clearly that the wedding
is scheduled on December 14, 1992.
"Plaintiffs made their first deposit in the amount of
P1,000.00 on November 19, 1992 and two weeks
thereafter made a full payment on the remaining balance.
"On the day of the wedding, December 14, 1992,
plaintiffs arrived at the Cebu Country Club around 6:00
o'clock in the evening. They immediately notice the
absence of the wedding cake.
"At 7:00 o'clock in the evening they made a follow-up call
to Fountainhead Bakeshop and was informed that it was
probably late because of the traffic.
"At 8:00 o'clock they were informed that no wedding cake
will be delivered because the order slip got lost. Plaintiffs
were then compelled to buy the only available cake at the
Cebu Country Club which was a sans rival. Even though
they felt that it was a poor substitute to a wedding cake,
the cutting of the cake is always a part of the ceremony.
"At 10:00 o'clock in the evening, the wedding cake
arrived but plaintiffs declined to accept it, besides their
order was a three-layered cake and what was actually
delivered was a two-layered one.
"Subsequently, defendant Erlinda Francisco sent a letter
of apology accompanied with a P5,000.00 check,
however, the same was declined by plaintiffs because
they felt it was inadequate.
"Two weeks after the wedding, defendant Erlinda
Francisco called Mrs. Rebecca Lo and apologized.
"Ricardo Ferrer, son-in-law of Rebecca Lo corroborated
the latter's testimony, stating that two weeks after the
wedding, as a result of the non-delivery of the wedding
cake, Ramon Montinola, the son-in-law of Erlinda
Francisco, went to Rebecca Lo's residence and offered
the sum of P5,000.00 to indemnify for the damage done,
but it was rejected."4
On March 12, 1993, respondents filed with the Regional Trial
Court, Cebu City an action for breach of contract with damages
against petitioners.5
After due trial, on May 19, 1995, the trial court rendered a decision
in favor of plaintiffs [herein defendants], the dispositive portion of
which reads as follows:
"THE FOREGOING CONSIDERED, judgment is hereby
rendered in favor of the plaintiffs and against Erlinda
Francisco.
"Directing the latter to pay the former the following:
"1. The cost of the wedding cake in the amount of
P3,175.00;
"2. Moral damages in the amount of P30,000.00;
"3. Attorney's fees in the amount of P10,000.00; and
"4. Cost of litigation.
"SO ORDERED."6
On May 25, 1995, petitioners appealed to the Court of Appeals. 7
After due proceedings, on July 05, 1999, the Court of Appeals
promulgated its decision modifying the appealed decision as set
out in the opening paragraph of this opinion. 8
Hence, this appeal.9
The issues raised are (1) whether the Court of Appeals erred in
affirming the trial court's award of moral damages and increasing
the amount from thirty thousand (30,000.00) to two hundred fifty
thousand pesos (P250,000.00); and (2) whether the Court of
Appeals was justified in awarding in addition to moral damages,
exemplary damages of one hundred thousand pesos
(P100,000.00).1âwphi1.nêt
Petitioners submit that the Court of Appeals and the trial court
erred in awarding moral damages in favor of respondents because
moral damages are recoverable in breach of contract cases only
where the breach was palpably wanton, reckless, malicious, in bad
faith, oppressive or abusive.10
We agree. "To recover moral damages in an action for breach of
contract, the breach must be palpably wanton, reckless, malicious,
in bad faith, oppressive or abusive."11
"Under the provisions of this law, 12 in culpa contractual or breach
of contract, moral damages may be recovered when the defendant
acted in bad faith or was guilty of gross negligence (amounting to
bad faith) or in wanton disregard of his contractual obligation and,
exceptionally, when the act of breach of contract itself is
constitutive of tort resulting in physical injuries."13
"Moral damages may be awarded in breaches of contracts where
the defendant acted fraudulently or in bad faith." 14
any kind or where there has been a breach of contract and no
substantial injury or actual damages whatsoever have been or can
be shown.'"27 Nominal damages may be awarded "to a plaintiff
whose right has been violated or invaded by the defendant, for the
purpose of vindicating or recognizing that right, not for
indemnifying the plaintiff for any loss suffered."28

"Bad faith does not simply connote bad judgment or negligence, it

WHEREFORE, the Court GRANTS the petition. The
imports a dishonest purpose or some moral obliquity and
conscious doing of a wrong, a breach of known duty through some Court REVERSES the decision of the Court of Appeals in CA-G.
motive or interest or ill will that partakes of the nature of fraud." 15 R. CV No. 50894, and in lieu thereof, sentences petitioners to pay
respondents, as follows:

In this case, "[w]e find no such fraud or bad faith." 16

"Moral damages are in the category of an award designed to
compensate the claimant for actual injury suffered and not to
impose a penalty on the wrongdoer."17
1. The cost of the wedding cake in the amount of
P3,175.00;
2. Nominal damages in the amount of P10,000.00;

"The person claiming moral damages must prove the existence of 3. Attorney's fees in the amount of P10,000.00; and
bad faith by clear and convincing evidence for the law always
presumes good faith. It is not enough that one merely suffered 4. Costs of litigation.
sleepless nights, mental anguish, serious anxiety as the result of
the actuations of the other party. Invariably such action must be No costs in this instance.
shown to have been willfully done in bad faith or will ill
motive."18 "Mere allegations of besmirched reputation,
embarrassment and sleepless nights are insufficient to warrant an SO ORDERED.
award for moral damages. It must be shown that the proximate
cause thereof was the unlawful act or omission of the [private Davide, Jr., Puno, Kapunan, and Ynares-Santiago, JJ., concur.
respondent] petitioners."19

"An award of moral damages would require certain conditions to

be met, to wit: (1) first, there must be an injury, whether physical,
mental or psychological, clearly sustained by the claimant;
(2) second, there must be culpable act or omission factually
established; (3) third, the wrongful act or omission of the defendant
is the proximate cause of the injury sustained by the claimant; and
(4) fourth, the award of damages is predicated on any of the cases
stated in Article 2219" of the Civil Code.21

"It must again be stressed that moral damages are emphatically

not intended to enrich a plaintiff at the expense of the
defendant."22 "When awarded, moral damages must not be
palpably and scandalously excessive as to indicate that it was the
result of passion, prejudice or corruption on the part of the trial
court judge"23 or appellate court justices.24

In the same fashion, to warrant the award of exemplary damages,

"[t]he wrongful act must be accompanied by bad faith, and an
award of damages would be allowed only if the guilty party acted in
a wanton, fraudulent, reckless or malevolent manner." 25

"The requirements of an award of exemplary damages are: (1)

they may be imposed by way of example in addition to
compensatory damages, and only after the claimant's right to them
has been established; (2) that they can not be recovered as a
matter of right, their determination depending upon the amount of
compensatory damages that may be awarded to the claimant; (3)
the act must be accompanied by bad faith or done in a wanton,
fraudulent, oppressive or malevolent manner."26

Nevertheless, the facts show that when confronted with their

failure to deliver on the wedding day the wedding cake ordered
and paid for, petitioners gave the lame excuse that delivery was
probably delayed because of the traffic, when in truth, no cake
could be delivered because the order slip got lost. For such
prevarication, petitioners must be held liable for nominal damages
for insensitivity, inadvertence or inattention to their customer's
anxiety and need of the hour. "Nominal damages are 'recoverable
where a legal right is technically violated and must be vindicated
against an invasion that has produced no actual present loss of
 SECOND DIVISION
G.R. No. 141761 July 28, 2006
BANKARD, INC., petitioner,
vs.
DR. ANTONIO NOVAK FELICIANO, respondent.
DECISION
PUNO, J.:
Before us is a petition for review under Rule 45 of the May 31,
1999 Decision1 and January 28, 2000 Resolution2 of the Court of
Appeals in CA-G.R. CV No. 56734 which modified the July 22,
1997 Decision3 of the Regional Trial Court (RTC) of Makati City,
Branch 148, in Civil Case No. 95-1492.
The facts are as follows:
Respondent Dr. Antonio Novak Feliciano is the holder of PCIBank
Mastercard No. 5407-2610-0000-5864, issued and managed by
petitioner Bankard, Inc. An extension of the card, PCIBank
Mastercard No. 5407-2611-0000-5863, was issued to his wife,
Mrs. Marietta N. Feliciano.
On June 19, 1995, respondent used his PCIBank Mastercard No.
5407-2610-0000-5864 to pay a breakfast bill in Toronto, Canada.
The card was, however, dishonored for payment. Respondent's
guests, Dr. Bellaflor Bumanlag and three other Filipino doctors
based in Canada, had to pay the bill. Respondent immediately
called the US toll-free number of petitioner to inquire on the cause
of dishonor. He was informed that the reason was the nonpayment
of his last billing statement. Respondent denied that he failed to
pay, and requested the person on the line to verify the correct
status of his credit card again. Respondent likewise called his
secretary in the Philippines to confirm the fact of payment, and
requested her to advise petitioner's office in Manila.
The following day, respondent met with Dr. Bumanlag to reimburse
her for the cost of the breakfast the previous day. Thereafter, Dr.
Bumanlag accompanied the respondent to the Eddie Bauer
Fairview Mall, a prestigious mall in Toronto, where the latter
bought several dressing items. Respondent presented his
PCIBank Mastercard No. 5407-2610-0000-5864 for payment.
Again, the card was dishonored to the embarrassment of the
respondent. Worse, the manager of the department store
confiscated the card in front of Dr. Bumanlag and other shoppers.
Respondent protested but the manager called security and forcibly
retained the card. To end the commotion that ensued, respondent
just asked for a receipt for the confiscated card.
On October 5, 1995, respondent filed a complaint against
petitioner Bankard, Inc. and Mastercard International for breach of
contractual rights and damages before the RTC-Makati City,
docketed as Civil Case No. 95-1492. Respondent alleged that he
is a holder in good standing for more than ten (10) years of
PCIBank Mastercard No. 5407-2610-0000-5864, and that
petitioner and Mastercard International reneged on their
agreement by suspending the services of the card without notice to
him. As a result of the suspension and confiscation of his card in
Toronto, Canada, respondent suffered social humiliation,
embarrassment and besmirched reputation. The Canadian-based
doctors, who were his guests during the breakfast meeting in
Toronto and whom he expected to donate at least fifty thousand
Canadian dollars to his charitable clinic in Makati, withdrew their
contributions because of the incidents. Respondent prayed
for P1,000,000.00 in actual damages representing the peso
equivalent of the aborted contributions, P1,000,000.00 for moral
damages, P200,000.00 for exemplary damages, and P100,000.00
for attorney's fees and costs of suit.
In defense, petitioner claimed due diligence before suspending the
privileges of respondent's credit card. Petitioner alleged that on
June 13, 1995, it received a fraud alert or warning bulletin4 from
Bank International Indonesia. A fraud alert or warning bulletin is a
notice by telex5 or telephone addressed to the issuer of a card
when a fraudulent or counterfeit use of the card has been detected
or suspected by an acquirer. In the June 13, 1995 fraud alert,
PCIBank Mastercard No. 5407-2611-0000-5863 was listed as
having had a suspected counterfeit transaction in Indonesia on
June 11, 1995. Petitioner's fraud analyst, Mr. Ferdinand Lopez,
then accessed petitioner's directory of cardholders to identify the
holder of PCIBank Mastercard No. 5407-2611-0000-5863. The
directory showed that the principal cardholder for PCIBank
Mastercard No. 5407-2611-0000-5863 was respondent Dr. Antonio
Novak Feliciano, and that the credit card was the extension card
issued to his wife, Marietta Feliciano. Mr. Lopez immediately called
respondent at his clinic but the latter was not there. Neither he nor
his wife was at home. Consequently, Mr. Lopez left his name,
telephone number, and a message for respondent to return his
call, to the woman who answered the phone. He likewise inquired
from the woman whether respondent and his wife were in the
country or whether they had just arrived from abroad. The woman
answered "no." With that information and considering that
Indonesia has a high incidence of counterfeit credit card
transactions, Mr. Lopez concluded that the transaction involving
PCIBank Mastercard No. 5407-2611-0000-5863 was counterfeit.
He sent a notice of card account blocking to the Authorization
Department. He likewise sent a written notice to the Felicianos that
PCIBank Mastercard No. 5407-2611-0000-5863 had a counterfeit
movement in another country and that petitioner is temporarily
suspending the services of the card including the principal card,
PCIBank Mastercard No. 5407-2610-0000-5864, pending
investigation on the matter. The Felicianos were required to submit
an affidavit of disclaim and photocopies of their passports. The
Felicianos did not respond to the notification.
On July 22, 1997, the trial court decided the case in favor of
respondent.6It found that petitioner's negligence was the
immediate and proximate cause of respondent's injury. Although
the claim for actual damages was disallowed for lack of proof,
petitioner was ordered to pay: (1) P1,000,000.00 as moral
damages, (2) P200,000.00 as exemplary damages, and
(3) P100,000.00 for attorney's fees and costs of suit. Petitioner
was likewise ordered to restore respondent's good name with the
merchant establishment in Canada which confiscated his
Mastercard, and to return the card with apologies to respondent.
Petitioner assailed the decision in a petition for review with the
Court of Appeals. In its Decision dated May 31, 1999, 7the Court of
Appeals affirmed the trial court's finding of negligence on the part
of the petitioner. However, the appellate court modified the trial
court's decision by deleting the award for exemplary damages, and
by reducing moral damages to P800,000.00, and attorney's fees
and costs of suit to P50,000.00. Actual damages was still
disallowed for lack of proof. Petitioner's motion for partial
reconsideration was denied. Hence, this petition.
Petitioner assigns the following errors:
I.
THE COURT OF APPEALS ERRED IN AWARDING
RESPONDENT MORAL DAMAGES IN THE
EXCESSIVE AND UNPRECEDENTED AMOUNT
OF P800,000.00, WITHOUT ANY LEGAL OR FACTUAL
BASIS, CONSIDERING THAT:
 A. NO EVIDENCE WAS PRESENTED TO
SHOW THAT PETITIONER ACTED
FRAUDULENTLY OR IN BAD FAITH OR IN A
WANTON, RECKLESS AND OPPRESSIVE
MANNER IN SUSPENDING RESPONDENT'S
CREDIT CARD.
B. EVEN AS IT WAS RESPONDENT'S DUTY
TO AFFIRMATIVELY PROVE HIS CLAIM FOR
MORAL DAMAGES, PETITIONER HAS DULY
ESTABLISHED THAT IT WAS PROMPTED TO
SUSPEND THE CREDIT CARD OF
RESPONDENT SOLELY TO PROTECT
ITSELF AND THE RESPONDENT FROM
ANYONE WRONGFULLY USING HIS CREDIT
CARD AND NOT OUT OF MALICE, OR ANY
DELIBERATE INTENT TO CAUSE HARM TO
RESPONDENT.
C. CONTRARY TO THE FINDINGS OF THE
TRIAL COURT WHICH THE COURT OF
APPEALS AFFIRMED, PETITIONER WAS
NOT GUILTY OF NEGLIGENCE IN
SUSPENDING RESPONDENT'S CREDIT
CARD. ASSUMING ARGUENDO THAT
PETITIONER WAS NEGLIGENT IN DOING
SO, THE SAME DOES NOT WARRANT A
FINDING OF MALICE OR BAD FAITH AS TO
JUSTIFY GRANTING AN AWARD OF MORAL
DAMAGES IN THE STAGGERING AMOUNT
OF P800,000.00.
D. IN THE ABSENCE OF AN AWARD OF
ACTUAL DAMAGES, RESPONDENT IS NOT
ENTITLED TO MORAL DAMAGES.
E. THE HONORABLE COURT HAS
REPEATEDLY ADMONISHED AGAINST
GRANTING EXCESSIVE MORAL DAMAGES
WHICH ARE NOT INTENDED TO ENRICH A
COMPLAINANT AT THE EXPENSE OF A
DEFENDANT.
II.
THE COURT OF APPEALS ERRED IN AWARDING
ATTORNEY'S FEES TO RESPONDENT
CONSIDERING THAT PETITIONER ACTED IN GOOD
FAITH AND WITH DUE DILIGENCE IN SUSPENDING
RESPONDENT'S CREDIT CARD.
III.
THE COURT OF APPEALS ERRED IN TOTALLY
DISREGARDING THE CONTRACT BETWEEN THE
PARTIES WHICH, AMONG OTHERS, EXPRESSLY
STIPULATES THAT RESPONDENT WOULD HOLD
PETITIONER "FREE AND HARMLESS FROM ANY
CLAIM OF DAMAGES ARISING FROM THE FAILURE
OF ANY ACCREDITED ESTABLISHMENT TO HONOR"
HIS CREDIT CARD.
IV.
THE COURT OF APPEALS ERRED IN NOT FINDING
THAT RESPONDENT WAS CONTRIBUTORILY
NEGLIGENT IN CONTINUING TO USE HIS CREDIT
CARD ON 20 JUNE 1995 DESPITE THE FACT THAT IT
HAD ALREADY BEEN PREVIOUSLY DISHONORED
THE DAY BEFORE WHEN HE FIRST ATTEMPTED TO
USE IT AFTER HIS PURPORTED BREAKFAST
MEETING WITH SOME DOCTORS.
We shall now resolve the issue of whether petitioner is liable to
respondent for moral damages and attorney's fees.
The award of moral damages is governed by Section 1, Chapter 3,
Title XVIII, Book IV of the Civil Code. Article 2220 provides:
Willful injury to property may be a legal ground for
awarding moral damages if the court should find that,
under the circumstances, such damages are justly
due. The same rule applies to breaches of contract
where the defendant acted fraudulently or in bad
faith. (emphasis added)
Under the foregoing, moral damages may be recovered in culpa
contractual where the defendant acted in bad faith or with malice in
the breach of the contract.8Malice or bad faith implies moral
obliquity or a conscious and intentional design to do a wrongful act
for a dishonest
purpose.9However,a conscious or intentional design need not
always be present since negligence may occasionally be so gross
as to amount to malice or bad faith. 10 Bad faith, in the context of
Art. 2220 of the Civil Code, includes gross negligence.11 Thus, we
have held in a number of cases that moral damages may be
awarded in culpa contractual or breach of contract when the
defendant acted fraudulently or in bad faith, or is guilty of gross
negligence amounting to bad faith, or in wanton disregard of his
contractual obligations.12
Petitioner alleged that it suspended the privileges of respondent's
credit card only after it received the fraud alert from Indonesia, and
after its fraud analyst, Mr. Lopez, tried to contact both the
respondent and his wife at his clinic and at home. At first blush,
bad faith or malice appears not to be attributable to petitioner.
However, we find that its efforts at personally contacting
respondent regarding the suspension of his credit card fall short of
the degree of diligence required by the circumstances.
Petitioner received the fraud alert on June 13, 1995. The following
day, petitioner's fraud analyst tried to call up respondent at his
clinic and at home, to no avail. Apart from this attempt, however,
no further effort was exerted to personally inform respondent about
the cancellation of his card. Petitioner had more than enough time
within which to do so considering that it was not until four (4) days
later or June 18, 1995 that respondent left for Canada. But,
petitioner's Mr. Lopez contented himself with just leaving a
message with an unidentified woman in respondent's house for the
latter to return his call. Before receiving the return call,
respondent's PCIBank Mastercard No. 5407-2610-0000-5864 and
that of his wife, PCIBank Mastercard No. 5407-2611-0000-5863,
had been blocked on June 15, 1995. To be sure, a notice of card
account blocking was sent to respondent. However, by the
ordinary course of mail, the notice was not expected to reach
respondent for several days yet. Despite the possibility that
respondent or his wife may have occasion to use their credit cards,
petitioner's fraud analyst made no further attempt to contact and
warn them. Thus, respondent left for Canada on June 18, 1995
armed with his PCIBank Mastercard No. 5407-2610-0000-5864 but
totally unaware that the card had been blocked three (3) days
previously, and that he was not to use the same.
Petitioner claims that it suspended respondent's card to protect
him from fraudulent transactions. However, while petitioner's
motive has to be lauded, we find it lamentable that petitioner was
not equally zealous in protecting respondent from potentially
embarrassing and humiliating situations that may arise from the
unsuspecting use of his suspended PCIBank Mastercard No.
5407-2610-0000-5864. Considering the widespread use of access
devices in commercial and other transactions,13 petitioner and
other issuers of credit cards should not only guard against
fraudulent uses of credit cards but should also be protective of
genuine uses thereof by the true cardholders. In the case at bar,
the duty is much more demanding for the evidence shows that
respondent is a credit cardholder for more than ten (10) years in
good standing, and has not been shown to have violated any of
the provisions of his credit card agreement with petitioner.
Considering the attendant circumstances, we find petitioner to
have been grossly negligent in suspending respondent's credit
card. To reiterate, moral damages may be awarded in a breach of
contract when the defendant acted fraudulently or in bad faith, or is
guilty of gross negligence amounting to bad faith. 14

With respect to the amount of moral damages to be awarded, the

well-entrenched principle is that the grant thereof depends upon
the discretion of the court considering the circumstances of each
case.15 In the case at bar, it is undisputed that respondent's
PCIBank Mastercard No. 5407-2610-0000-5864 was dishonored in
a foreign country where the respondent was not expected to have
family members or close friends nearby to lend him a helping
hand. It was twice dishonored in public places. Worse, the card
was first dishonored during a breakfast-cum-business meeting with
respected medical colleagues based in that country. Respondent
had absolutely no inkling then that there was a problem with his
card. Moreover, he had no reason to think that something was
amiss since he is a member in good standing for more than ten
(10) years and had no previous bad experience with the card.
However, since moral damages are patently not meant to enrich
the complainant at the expense of the defendant and should only
be commensurate with the actual loss or injury suffered, 16 we
reduce the amount awarded by the Court of Appeals
from P800,000.00 to P500,000.00.

We likewise affirm the award for attorney's fees. Plaintiff was

compelled to litigate to protect his interest, and the lower courts
deemed it just and equitable to award him attorney's fees.17 The
respondent had to vindicate his rights up to the highest court of the
land.

IN VIEW WHEREOF, the petition is DENIED. The assailed

Decision of the Court of Appeals, dated May 31, 1999, granting
moral damages and attorney's fees to respondent, as well as its
Resolution dated January 28, 2000 in CA-G.R. CV No. 56734,
is AFFIRMED with the sole modification that the amount of moral
damages is REDUCED to P500,000.00.

SO ORDERED.

Sandoval-Gutierrez, Corona, Azcuna, Garcia, J.J., concur.

 SECOND DIVISION
G.R. No. 156654 November 20, 2008
PHILIPPINE AIRLINES, INC., petitioner
vs.
VICENTE LOPEZ, JR., respondent.
RESOLUTION
QUISUMBING, J.:
This petition for review assails the Decision1 dated June 20, 2002
and the Resolution2 dated December 10, 2002 of the Court of
Appeals in CA-G.R. CV No. 53360 which affirmed in toto the
Decision3 dated April 19, 1995 of the Regional Trial Court (RTC) of
Manila, Branch 24 in Civil Case No. 92-60199. The RTC had
ordered petitioner Philippine Airlines, Inc. (PAL) to pay respondent
Vicente Lopez, Jr. P100,000 moral damages, P20,000 exemplary
damages and P30,000 attorney's fees plus costs of suit.
The antecedent facts are as follows:
In a Complaint4 dated February 11, 1992, filed with the RTC of
Manila, Branch 24, Lopez claimed that PAL had unjustifiably
downgraded his seat from business to economy class in his return
flight from Bangkok to Manila last November 30, 1991, and that, in
view thereof, PAL should be directed to pay him moral damages of
at least P100,000, exemplary damages of at least P20,000,
attorney's fees in the sum of P30,000, as well as the costs of suit.
To support his claim, Lopez averred that he purchased a Manila-
Hongkong-Bangkok-Manila PAL business class ticket and that his
return flight to Manila was confirmed by PAL's booking personnel
in Bangkok on November 26, 1991. He also mentioned that he
was surprised to learn during his check-in for the said return flight
that his status as business class passenger was changed to
economy class, and that PAL was not able to offer any valid
explanation for the sudden change when he protested the change.
Lopez added that although aggrieved, he nevertheless took the
said flight as an economy class passenger because he had
important appointments in Manila.
For its part, PAL denied any liability and claimed that whatever
damage Lopez had suffered was due to his own fault. PAL
explained that the terms and conditions of the contract of carriage
required Lopez to reconfirm his booking for the Bangkok-to-Manila
leg of his trip, and that he did not protest the economy seat given
to him when the change in his accommodations was read to him
by the person who received his phone reconfirmation. PAL also
asserted that Lopez did not complain against his economy seat
during the check-in and that he raised the issue only after the flight
was over.5 Thus, PAL prayed that the case be dismissed for lack
of merit.6
In its Decision dated April 19, 1995, the trial court held PAL liable
for damages. It said that PAL's contention that Lopez might have
thought that he was holding an economy class ticket or that he
waived his right to have a business class seat is untenable,
considering that Lopez is an experienced businessman and a
Bachelor of Science degree holder.
It also noted that the following showed that PAL's employees had
been negligent in booking and confirming Lopez's travel
accommodations from Bangkok to Manila: (1) the admission of
PAL's booking personnel7 that she affixed the validation sticker on
Lopez's ticket on the basis of the passenger's name list showing
that his reservation was for an economy class seat without
examining or checking the latter's ticket during his booking
validation; and (2) the admission of PAL's check-in clerk8 at the
Bangkok Airport that when Lopez checked-in for his return trip to
Manila, she similarly gave Lopez an economy boarding pass
based on the information found in the coupon of the ticket and the
passenger manifest without checking the latter's ticket. The trial
court said that had PAL's employees examined his ticket in those
instances, the error or oversight which might have resulted from
the phoned-in booking could have been easily rectified. 9
Thus, citing Articles 173310 and 222011 of the Civil Code and the
case of Ortigas, Jr. v. Lufthansa German Airlines,12 the trial court
held that the inattention and lack of care on the part of the
common carrier, in this case PAL, resulting in the failure of the
passenger to be accommodated in the class contracted for
amounts to bad faith or fraud, making it liable for damages. 13 The
trial court likewise awarded attorney's fees in favor of Lopez after
noting that Lopez was forced to litigate in order to assert his
rights.14
The dispositive portion of the trial court's decision reads:
Based on all the foregoing therefore, the Court finds in
favor of the plaintiff and against the defendant and orders
defendant to pay plaintiff, as prayed for in the complaint,
the following amounts: P100,000.00 for moral
damages; P20,000.00 for exemplary damages
and P30,000.00 for attorney's fees and also to pay for
the cost of suit. All amounts awarded to bear legal
interest from date of this decision.
SO ORDERED.15
On appeal, the Court of Appeals affirmed in toto the trial court's
decision after having been fully convinced of the negligence of
PAL's employees and after finding PAL's defenses to be unworthy
of belief and contrary to common observation and experience.
PAL moved for reconsideration but it was denied. Hence, this
petition.
In our Resolution16 dated September 26, 2007, we suspended the
proceedings of this case and directed PAL to submit a status
report on its then ongoing corporate rehabilitation. Pursuant to our
directive, PAL submitted a Manifestation/Compliance17 dated
October 22, 2007, informing us of the Securities and Exchange
Commission Order18 dated September 28, 2007, which granted its
request to exit from corporate rehabilitation. Thus, we now resolve
the instant petition.
Petitioner contends that:
I.
THE COURT OF APPEALS ERRED IN NOT RULING
THAT IN AN OPEN-DATED CONTRACT OF
CARRIAGE, THE PARTIES ARE FREE TO AGREE ON
THE TERMS THEREOF ON THE DATE LEFT OPEN.
II.
THE COURT OF APPEALS ERRED IN NOT RULING
THAT RESPONDENT'S CONTRIBUTORY
NEGLIGENCE PREVENTS HIM FROM RECOVERING
DAMAGES FROM PETITIONER.
III.
 THE COURT OF APPEALS ERRED IN NOT RULING CA-G.R. CV No. 53360 are AFFIRMED. Costs against the
THAT IN MORAL DAMAGES RECOVERABLE IN petitioner.
BREACHES OF CONTRACTS, THE TERMS "FRAUD"
AND "BAD FAITH" HAVE REFERENCE TO WANTON,
SO ORDERED.
RECKLESS, OPPRESSIVE, OR MALEVOLENT
CONDUCT.

IV.

THE COURT OF APPEALS ERRED IN NOT RULING

THAT EXEMPLARY DAMAGES ARE NOT
RECOVERABLE IN THE ABSENCE OF FRAUD OR
BAD FAITH.

V.

THE COURT OF APPEALS ERRED IN NOT RULING

THAT AWARD OF ATTORNEY'S FEES IS NOT
PROPER IN THE ABSENCE OF GROSS AND EVIDENT
BAD FAITH ON THE PART OF PETITIONER.19

Simply put, the issues are: (1) Did the Court of Appeals err in not
ruling that Lopez agreed or allowed his business class seat to be
downgraded to economy class? (2) Did the Court of Appeals err in
not ruling that Lopez's alleged contributory negligence was the
proximate cause of the downgrading of his seat? and (3) Did the
Court of Appeals err in awarding moral damages, exemplary
damages and attorney's fees in favor of Lopez in view of the
alleged absence of fraud or bad faith of PAL?

A perusal of the aforesaid issues readily shows that the same are
questions of facts since its resolution would entail a re-evaluation
of the evidence presented before the trial court.20 Thus, we could
not take cognizance of such issues considering the settled rule
that our review under Rule 45 is confined to questions of law. It is
true that there are several exceptions21 to the said rule; however,
none finds application in this case.

Moreover, we had already specifically held that issues on the

existence of negligence, fraud and bad faith are questions of fact. 22

We had also observed that PAL is also guilty of raising prohibited

new matters23 and in changing its theory of defense24 since it is
only in the present petition that it alleged the contributory
negligence of Lopez.

PAL's procedural lapses notwithstanding, we had nevertheless

carefully reviewed the records of this case and found no
compelling reason to depart from the uniform factual findings of the
trial court and the Court of Appeals that: (1) it was the negligence
of PAL which caused the downgrading of the seat of Lopez; and
(2) the aforesaid negligence of PAL amounted to fraud or bad faith,
considering our ruling in Ortigas.25

Moreover, we cannot agree with PAL that the amount of moral

damages awarded by the trial court, as affirmed by the Court of
Appeals, was excessive. In Mercury Drug Corporation v.
Baking,26 we had stated that "there is no hard-and-fast rule in
determining what would be a fair and reasonable amount of moral
damages, since each case must be governed by its own peculiar
facts. However, it must be commensurate to the loss or injury
suffered."27 Taking into account the attending circumstances here,
we believe that the amount of P100,000 awarded as moral
damages is appropriate.

WHEREFORE, the assailed Decision dated June 20, 2002 and

Resolution dated December 10, 2002 of the Court of Appeals in
 FIRST DIVISION
G.R. No. 157009 March 17, 2010
SULPICIO LINES, INC., Petitioner,
vs.
DOMINGO E. CURSO, LUCIA E. CURSO, MELECIO E. CURSO,
SEGUNDO E. CURSO, VIRGILIO E. CURSO, DIOSDADA E.
CURSO, and CECILIA E. CURSO, Respondents.
DECISION
BERSAMIN, J.:
Are the surviving brothers and sisters of a passenger of a vessel
that sinks during a voyage entitled to recover moral damages from
the vessel owner as common carrier?
This is the question presented in the appeal taken by the common
carrier from the reversal by the Court of Appeals (CA) of the
decision of the Regional Trial Court (RTC) dismissing the
complaint for various damages filed by the surviving brothers and
sisters of the late Dr. Cenon E. Curso upon a finding that force
majeure had caused the sinking. The CA awarded moral and other
damages to the surviving brothers and sisters.
Antecedents
On October 23, 1988, Dr. Curso boarded at the port of Manila the
MV Doña Marilyn, an inter-island vessel owned and operated by
petitioner Sulpicio Lines, Inc., bound for Tacloban City.
Unfortunately, the MV Doña Marilyn sank in the afternoon of
October 24, 1988 while at sea due to the inclement sea and
weather conditions brought about by Typhoon Unsang. The body
of Dr. Curso was not recovered, along with hundreds of other
passengers of the ill-fated vessel. At the time of his death, Dr.
Curso was 48 years old, and employed as a resident physician at
the Naval District Hospital in Naval, Biliran. He had a basic
monthly salary of ₱3,940.00, and would have retired from
government service by December 20, 2004 at the age of 65.
On January 21, 1993, the respondents, allegedly the surviving
brothers and sisters of Dr. Curso, sued the petitioner in the RTC in
Naval, Biliran to claim damages based on breach of contract of
carriage by sea, averring that the petitioner had acted negligently
in transporting Dr. Curso and the other passengers. They stated,
among others, that their parents had predeceased Dr. Curso, who
died single and without issue; and that, as such, they were Dr.
Curso’s surviving heirs and successors in interest entitled to
recover moral and other damages.1 They prayed for judgment, as
follows: (a) compensatory damages of ₱1,924,809.00; (b) moral
damages of ₱100,000.00; (c) exemplary or corrective damages in
the amount deemed proper and just; (d) expenses of litigation of at
least ₱50,000.00; (e) attorney’s fees of ₱50,000.00; and (f) costs
of suit.
The petitioner denied liability, insisting that the sinking of the
vessel was due to force majeure (i.e., Typhoon Unsang), which
exempted a common carrier from liability. It averred that the
MV Doña Marilyn was seaworthy in all respects, and was in fact
cleared by the Philippine Coast Guard for the voyage; and that
after the accident it conducted intensive search and rescue
operations and extended assistance and aid to the victims and
their families.
Ruling of the RTC
On July 28, 1995, the RTC dismissed the complaint upon its
finding that the sinking of the vessel was due to force majeure. The
RTC concluded that the officers of the MV Doña Marilyn had acted
with the diligence required of a common carrier; that the sinking of
the vessel and the death of its passengers, including Dr. Curso,
could not have been avoided; that there was no basis to consider
the MV Doña Marilyn not seaworthy at the time of the voyage; that
the findings of the Special Board of Marine Inquiry (SBMI)
constituted to investigate the disaster absolved the petitioner, its
officers, and crew of any negligence and administrative liability;
and that the respondents failed to prove their claim for damages.
Ruling of the CA
The respondents appealed to the CA, contending that the RTC
erred: (a) in considering itself barred from entertaining the case by
the findings of fact of the SBMI in SBMI-ADM Case No. 08-88; (b)
in not holding that the petitioner was negligent and did not exercise
the required diligence and care in conducting Dr. Curso to his
destination; (c) in not finding that the MV Doña Marilyn was
unseaworthy at the time of its sinking; and (d) in not awarding
damages to them.2
In its decision dated September 16, 2002,3 the CA held and
disposed:
Based on the events described by the appellee’s witness, the
Court found inadequate proof to show that Sulpicio Lines, Inc., or
its officers and crew, had exercised the required degree of
diligence to acquit the appellee of liability.
In the first place, the court finds inadequate explanation why the
officers of the M.V. Doña Marilyn had not apprised themselves of
the weather reports on the approach of typhoon "Unsang" which
had the power of a signal no. 3 cyclone, bearing upon the general
direction of the path of the M.V. Doña Marilyn. If the officers and
crew of the Doña Marilyn had indeed been adequately monitoring
the strength and direction of the typhoon, and had acted promptly
and competently to avoid the same, then such a mishap would not
have occurred.
Furthermore, there was no account of the acts and decision of the
crew of the ill-fated ship from 8:00 PM on October 23, 1988 when
the Chief Mate left his post until 4:00 AM the next day when he
resumed duty. It does not appear what occurred during that time,
or what weather reports were received and acted upon by the ship
captain. What happened during such time is important in
determining what information about the typhoon was gathered and
how the ship officers reached their decision to just change course,
and not take shelter while a strong typhoon was approaching.
Furthermore, the Court doubts the fitness of the ship for the
voyage, since at the first sign of bad weather, the ship’s hydraulic
system failed and had to be repaired mid-voyage, making the
vessel a virtual derelict amidst a raging storm at sea. It is part of
the appellee’s extraordinary diligence as a common carrier to
make sure that its ships can withstand the forces that bear upon
them during a voyage, whether they be the ordinary stress of the
sea during a calm voyage or the rage of a storm. The fact that the
stud bolts in the ships hydraulic system gave way while the ship
was at sea discredits the theory that the appellee exercised due
diligence in maintaining the seaworthy condition of the M.V. Doña
Marilyn. xxx.4
xxx
Aside from these, the defendant must compensate the plaintiffs for
moral damages that they suffered as a result of the negligence
attending the loss of the M.V. Doña Marilyn. Plaintiffs, have
established that they took great pains to recover, in vain, the body
of their brother, at their own cost, while suffering great grief due to
the loss of a loved one. Furthermore, Plaintiffs were unable to
recover the body of their brother. Moral damages worth
₱100,000.00 is proper.
WHEREFORE, premises considered, the appealed decision of the
RTC of Naval, Biliran, Branch 16, rendered in Civil Case No. B-
0851, is hereby SET ASIDE. In lieu thereof, judgment is hereby
rendered, finding the defendant-appellee Sulpicio Lines, Inc, to
have been negligent in transporting the deceased Cenon E. Curso
who was on board the ill-fated M.V. Doña Marilyn, resulting in his
untimely death. Defendant-appellee is hereby ordered to pay the
plaintiffs heirs of Cenon E. Curso the following:
(1) Death indemnity in the amount of ₱50,000.00;
(2) Loss of Earning Capacity in the amount of
₱504,241.20;
(3) Moral Damages in the amount of ₱100,000.00.
(4) Costs of the suit.5
Hence, this appeal, in which the petitioner insists that the CA
committed grievous errors in holding that the respondents were
entitled to moral damages as the brothers and sisters of the late
Dr. Curso; that the CA thereby disregarded Article 1764 and Article
2206 of the Civil Code, and the ruling in Receiver for North Negros
Sugar Co., Inc. v. Ybañez,6 whereby the Supreme Court
disallowed the award of moral damages in favor of the brothers
and sisters of a deceased passenger in an action upon breach of a
contract of carriage.7
Issues
The petitioner raises the following issues:
ARE THE BROTHERS AND SISTERS OF A DECEASED
PASSENGER IN A CASE OF BREACH OF CONTRACT OF
CARRIAGE ENTITLED TO AN AWARD OF MORAL DAMAGES
AGAINST THE CARRIER?
ASSUMING (THAT) THEY ARE ENTITLED TO CLAIM MORAL
DAMAGES, SHOULD THE AWARD BE GRANTED OR GIVEN TO
THE BROTHER OR SISTER NOTWITHSTANDING (THE) LACK
OF EVIDENCE AS REGARDS HIS OR HER PERSONAL
SUFFERING?
Ruling
The petition is meritorious.
As a general rule, moral damages are not recoverable in actions
for damages predicated on a breach of contract, unless there is
fraud or bad faith.8 As an exception, moral damages may be
awarded in case of breach of contract of carriage that results in the
death of a passenger,9 in accordance with Article 1764, in relation
to Article 2206 (3), of the Civil Code, which provide:
Article 1764. Damages in cases comprised in this Section shall be
awarded in accordance with Title XVIII of this Book, concerning
Damages. Article 2206 shall also apply to the death of a
passenger caused by the breach of contract by a common carrier.
Article 2206. The amount of damages for death caused by a crime
or quasi-delict shall be at least three thousand pesos, even though
there may have been mitigating circumstances. In addition:
(1) The defendant shall be liable for the loss of the
earning capacity of the deceased, and the indemnity
shall be paid to the heirs of the latter; such indemnity
shall in every case be assessed and awarded by the
court, unless the deceased on account of permanent
physical disability not caused by the defendant, had no
earning capacity at the time of his death;
(2) If the deceased was obliged to give support according
to the provisions of article 291, the recipient who is not
an heir called to the decedent's inheritance by the law of
testate or intestate succession, may demand support
from the person causing the death, for a period not
exceeding five years, the exact duration to be fixed by
the court;
(3) The spouse, legitimate and illegitimate descendants
and ascendants of the deceased may demand moral
damages for mental anguish by reason of the death of
the deceased.
The foregoing legal provisions set forth the persons entitled to
moral damages. The omission from Article 2206 (3) of the brothers
and sisters of the deceased passenger reveals the legislative
intent to exclude them from the recovery of moral damages for
mental anguish by reason of the death of the deceased. Inclusio
unius est exclusio alterius.10 The solemn power and duty of the
courts to interpret and apply the law do not include the power to
correct the law by reading into it what is not written therein. 11 Thus,
the CA erred in awarding moral damages to the respondents.
The petitioner has correctly relied on the holding in Receiver for
North Negros Sugar Company, Inc. v. Ybañez, 12 to the effect that
in case of death caused by quasi-delict, the brother of the
deceased was not entitled to the award of moral damages based
on Article 2206 of the Civil Code.
Essentially, the purpose of moral damages is indemnity or
reparation, that is, to enable the injured party to obtain the means,
diversions, or amusements that will serve to alleviate the moral
suffering he has undergone by reason of the tragic event.
According to Villanueva v. Salvador,13 the conditions for awarding
moral damages are: (a) there must be an injury, whether physical,
mental, or psychological, clearly substantiated by the claimant; (b)
there must be a culpable act or omission factually established; (c)
the wrongful act or omission of the defendant must be the
proximate cause of the injury sustained by the claimant; and (d)
the award of damages is predicated on any of the cases stated in
Article 2219 of the Civil Code.
To be entitled to moral damages, the respondents must have a
right based upon law. It is true that under Article 100314 of the Civil
Code they succeeded to the entire estate of the late Dr. Curso in
the absence of the latter’s descendants, ascendants, illegitimate
children, and surviving spouse. However, they were not included
among the persons entitled to recover moral damages, as
enumerated in Article 2219 of the Civil Code, viz:
Article 2219. Moral damages may be recovered in the following
and analogous cases:
(1) A criminal offense resulting in physical injuries;
(2) Quasi-delicts causing physical injuries;
 (3) Seduction, abduction, rape or other lascivious acts;

(4) Adultery or concubinage;

(5) Illegal or arbitrary detention or arrest;

(6) Illegal search;

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

(8) Malicious prosecution;

(9) Acts mentioned in article 309;

(10) Acts and actions referred to in articles 21, 26, 27,

28, 29, 30, 32, 34 and 35.

The parents of the female seduced, abducted, raped or abused

referred to in No. 3 of this article, may also recover moral
damages.

The spouse, descendants, ascendants and brothers and sisters

may bring the action mentioned in No. 9 of this article, in the order
named.1avvphi1

Article 2219 circumscribes the instances in which moral damages

may be awarded. The provision does not include succession in the
collateral line as a source of the right to recover moral damages.
The usage of the phrase analogous cases in the provision means
simply that the situation must be held similar to those expressly
enumerated in the law in question15 following the ejusdem
generis rule. Hence, Article 1003 of the Civil Code is not
concerned with recovery of moral damages.

In fine, moral damages may be recovered in an action upon

breach of contract of carriage only when: (a) where death of a
passenger results, or (b) it is proved that the carrier was guilty of
fraud and bad faith, even if death does not result. 16 Article 2206 of
the Civil Code entitles the descendants, ascendants, illegitimate
children, and surviving spouse of the deceased passenger to
demand moral damages for mental anguish by reason of the death
of the deceased.17

WHEREFORE, the petition for review on certiorari is granted, and

the award made to the respondents in the decision dated
September 16, 2002 of the Court of Appeals of moral damages
amounting to ₱100,000.00 is deleted and set aside.

SO ORDERED.

LUCAS P. BERSAMIN
Associate Justice
 FIRST DIVISION
G.R. No. 128690 January 21, 1999
ABS-CBN BROADCASTING CORPORATION, petitioner,
vs.
HONORABLE COURT OF APPEALS, REPUBLIC
BROADCASTING CORP, VIVA PRODUCTION, INC., and
VICENTE DEL ROSARIO, respondents.
DAVIDE, JR., CJ.:
In this petition for review on certiorari, petitioner ABS-CBN
Broadcasting Corp. (hereafter ABS-CBN) seeks to reverse and set
aside the decision 1 of 31 October 1996 and the resolution 2 of 10
March 1997 of the Court of Appeals in CA-G.R. CV No. 44125.
The former affirmed with modification the decision 3 of 28 April
1993 of the Regional Trial Court (RTC) of Quezon City, Branch 80,
in Civil Case No. Q-92-12309. The latter denied the motion to
reconsider the decision of 31 October 1996.
The antecedents, as found by the RTC and adopted by the Court
of Appeals, are as follows:
In 1990, ABS-CBN and Viva executed a Film
Exhibition Agreement (Exh. "A") whereby Viva
gave ABS-CBN an exclusive right to exhibit
some Viva films. Sometime in December 1991,
in accordance with paragraph 2.4 [sic] of said
agreement stating that —.
1.4 ABS-CBN shall have the right of first refusal
to the next twenty-four (24) Viva films for TV
telecast under such terms as may be agreed
upon by the parties hereto, provided, however,
that such right shall be exercised by ABS-CBN
from the actual offer in writing.
Viva, through defendant Del Rosario, offered
ABS-CBN, through its vice-president Charo
Santos-Concio, a list of three(3) film packages
(36 title) from which ABS-CBN may exercise its
right of first refusal under the afore-said
agreement (Exhs. "1" par, 2, "2," "2-A'' and "2-
B"-Viva). ABS-CBN, however through Mrs.
Concio, "can tick off only ten (10) titles" (from
the list) "we can purchase" (Exh. "3" - Viva) and
therefore did not accept said list (TSN, June 8,
1992, pp. 9-10). The titles ticked off by Mrs.
Concio are not the subject of the case at bar
except the film ''Maging Sino Ka Man."
For further enlightenment, this rejection letter
dated January 06, 1992 (Exh "3" - Viva) is
hereby quoted:
6 January 1992
Dear Vic,
This is not a very formal business letter I am
writing to you as I would like to express my
difficulty in recommending the purchase of the
three film packages you are offering ABS-CBN.
From among the three packages I can only tick
off 10 titles we can purchase. Please see
attached. I hope you will understand my
position. Most of the action pictures in the list
do not have big action stars in the cast. They
are not for primetime. In line with this I wish to
mention that I have not scheduled for telecast
several action pictures in out very first contract
because of the cheap production value of these
movies as well as the lack of big action stars.
As a film producer, I am sure you understand
what I am trying to say as Viva produces only
big action pictures.
In fact, I would like to request two (2) additional
runs for these movies as I can only schedule
them in our non-primetime slots. We have to
cover the amount that was paid for these
movies because as you very well know that
non-primetime advertising rates are very low.
These are the unaired titles in the first contract.
1. Kontra Persa [sic].
2. Raider Platoon.
3. Underground guerillas
4. Tiger Command
5. Boy de Sabog
6. Lady Commando
7. Batang Matadero
8. Rebelyon
I hope you will consider this request of mine.
The other dramatic films have been offered to
us before and have been rejected because of
the ruling of MTRCB to have them aired at 9:00
p.m. due to their very adult themes.
As for the 10 titles I have choosen [sic] from the
3 packages please consider including all the
other Viva movies produced last year. I have
quite an attractive offer to make.
Thanking you and with my warmest regards.
(Signed)
Charo Santos-Concio
On February 27, 1992, defendant Del Rosario
approached ABS-CBN's Ms. Concio, with a list
consisting of 52 original movie titles (i.e. not yet
aired on television) including the 14 titles
subject of the present case, as well as 104 re-
runs (previously aired on television) from which
ABS-CBN may choose another 52 titles, as a
total of 156 titles, proposing to sell to ABS-CBN
airing rights over this package of 52 originals
and 52 re-runs for P60,000,000.00 of which
P30,000,000.00 will be in cash and
P30,000,000.00 worth of television spots (Exh.
"4" to "4-C" Viva; "9" -Viva).
 On April 2, 1992, defendant Del Rosario and
ABS-CBN general manager, Eugenio Lopez III,
met at the Tamarind Grill Restaurant in Quezon
City to discuss the package proposal of Viva.
What transpired in that lunch meeting is the
subject of conflicting versions. Mr. Lopez
testified that he and Mr. Del Rosario allegedly
agreed that ABS-CRN was granted exclusive
film rights to fourteen (14) films for a total
consideration of P36 million; that he allegedly
put this agreement as to the price and number
of films in a "napkin'' and signed it and gave it
to Mr. Del Rosario (Exh. D; TSN, pp. 24-26, 77-
78, June 8, 1992). On the other hand, Del
Rosario denied having made any agreement
with Lopez regarding the 14 Viva films; denied
the existence of a napkin in which Lopez wrote
something; and insisted that what he and
Lopez discussed at the lunch meeting was
Viva's film package offer of 104 films (52
originals and 52 re-runs) for a total price of P60
million. Mr. Lopez promising [sic]to make a
counter proposal which came in the form of a
proposal contract Annex "C" of the complaint
(Exh. "1"·- Viva; Exh. "C" - ABS-CBN).
On April 06, 1992, Del Rosario and Mr.
Graciano Gozon of RBS Senior vice-president
for Finance discussed the terms and conditions
of Viva's offer to sell the 104 films, after the
rejection of the same package by ABS-CBN.
On April 07, 1992, defendant Del Rosario
received through his secretary, a handwritten
note from Ms. Concio, (Exh. "5" - Viva), which
reads: "Here's the draft of the contract. I hope
you find everything in order," to which was
attached a draft exhibition agreement (Exh.
"C''- ABS-CBN; Exh. "9" - Viva, p. 3) a counter-
proposal covering 53 films, 52 of which came
from the list sent by defendant Del Rosario and
one film was added by Ms. Concio, for a
consideration of P35 million. Exhibit "C"
provides that ABS-CBN is granted films right to
53 films and contains a right of first refusal to
"1992 Viva Films." The said counter proposal
was however rejected by Viva's Board of
Directors [in the] evening of the same day, April
7, 1992, as Viva would not sell anything less
than the package of 104 films for P60 million
pesos (Exh. "9" - Viva), and such rejection was
relayed to Ms. Concio.
On April 29, 1992, after the rejection of ABS-
CBN and following several negotiations and
meetings defendant Del Rosario and Viva's
President Teresita Cruz, in consideration of
P60 million, signed a letter of agreement dated
April 24, 1992. granting RBS the exclusive right
to air 104 Viva-produced and/or acquired films
(Exh. "7-A" - RBS; Exh. "4" - RBS) including the
fourteen (14) films subject of the present
case. 4
On 27 May 1992, ABS-CBN filed before the RTC a complaint for
specific performance with a prayer for a writ of preliminary
injunction and/or temporary restraining order against private
respondents Republic Broadcasting Corporation 5 (hereafter RBS
), Viva Production (hereafter VIVA), and Vicente Del Rosario. The
complaint was docketed as Civil Case No. Q-92-12309.
On 27 May 1992, RTC issued a temporary restraining
order 6 enjoining private respondents from proceeding with the
airing, broadcasting, and televising of the fourteen VIVA films
subject of the controversy, starting with the film Maging Sino Ka
Man, which was scheduled to be shown on private respondents
RBS' channel 7 at seven o'clock in the evening of said date.
On 17 June 1992, after appropriate proceedings, the RTC issued
an
order 7 directing the issuance of a writ of preliminary injunction
upon ABS-CBN's posting of P35 million bond. ABS-CBN moved
for the reduction of the bond, 8 while private respondents moved
for reconsideration of the order and offered to put up a
counterbound. 9
In the meantime, private respondents filed separate answers with
counterclaim. 10 RBS also set up a cross-claim against VIVA..
On 3 August 1992, the RTC issued an order 11 dissolving the writ
of preliminary injunction upon the posting by RBS of a P30 million
counterbond to answer for whatever damages ABS-CBN might
suffer by virtue of such dissolution. However, it reduced petitioner's
injunction bond to P15 million as a condition precedent for the
reinstatement of the writ of preliminary injunction should private
respondents be unable to post a counterbond.
At the pre-trial 12 on 6 August 1992, the parties, upon suggestion of
the court, agreed to explore the possibility of an amicable
settlement. In the meantime, RBS prayed for and was granted
reasonable time within which to put up a P30 million counterbond
in the event that no settlement would be reached.
As the parties failed to enter into an amicable settlement RBS
posted on 1 October 1992 a counterbond, which the RTC
approved in its Order of 15 October 1992.13
On 19 October 1992, ABS-CBN filed a motion for
reconsideration 14 of the 3 August and 15 October 1992 Orders,
which RBS opposed. 15
On 29 October 1992, the RTC conducted a pre-trial. 16
Pending resolution of its motion for reconsideration, ABS-CBN filed
with the Court of Appeals a petition17challenging the RTC's Orders
of 3 August and 15 October 1992 and praying for the issuance of a
writ of preliminary injunction to enjoin the RTC from enforcing said
orders. The case was docketed as CA-G.R. SP No. 29300.
On 3 November 1992, the Court of Appeals issued a temporary
restraining order18 to enjoin the airing, broadcasting, and televising
of any or all of the films involved in the controversy.
On 18 December 1992, the Court of Appeals promulgated a
decision 19 dismissing the petition in CA -G.R. No. 29300 for being
premature. ABS-CBN challenged the dismissal in a petition for
review filed with this Court on 19 January 1993, which was
docketed as G.R. No. 108363.
In the meantime the RTC received the evidence for the parties in
Civil Case No. Q-192-1209. Thereafter, on 28 April 1993, it
rendered a decision 20 in favor of RBS and VIVA and against ABS-
CBN disposing as follows:
WHEREFORE, under cool reflection and
prescinding from the foregoing, judgments is
rendered in favor of defendants and against the
plaintiff.
 (1) The complaint is hereby
dismissed;
(2) Plaintiff ABS-CBN is
ordered to pay defendant
RBS the following:
a) P107,727.00,
the amount of
premium paid by
RBS to the surety
which issued
defendant RBS's
bond to lift the
injunction;
b) P191,843.00 for
the amount of print
advertisement for
"Maging Sino Ka
Man" in various
newspapers;
c) Attorney's fees
in the amount of
P1 million;
d) P5 million as
and by way of
moral damages;
e) P5 million as
and by way of
exemplary
damages;
(3) For defendant VIVA,
plaintiff ABS-CBN is ordered
to pay P212,000.00 by way
of reasonable attorney's
fees.
(4) The cross-claim of
defendant RBS against
defendant VIVA is
dismissed.
(5) Plaintiff to pay the costs.
According to the RTC, there was no meeting of minds on the price
and terms of the offer. The alleged agreement between Lopez III
and Del Rosario was subject to the approval of the VIVA Board of
Directors, and said agreement was disapproved during the
meeting of the Board on 7 April 1992. Hence, there was no basis
for ABS-CBN's demand that VIVA signed the 1992 Film Exhibition
Agreement. Furthermore, the right of first refusal under the 1990
Film Exhibition Agreement had previously been exercised per Ms.
Concio's letter to Del Rosario ticking off ten titles acceptable to
them, which would have made the 1992 agreement an entirely
new contract.
On 21 June 1993, this Court denied21 ABS-CBN's petition for
review in G.R. No. 108363, as no reversible error was committed
by the Court of Appeals in its challenged decision and the case
had "become moot and academic in view of the dismissal of the
main action by the court a quo in its decision" of 28 April 1993.
Aggrieved by the RTC's decision, ABS-CBN appealed to the Court
of Appeals claiming that there was a perfected contract between
ABS-CBN and VIVA granting ABS-CBN the exclusive right to
exhibit the subject films. Private respondents VIVA and Del
Rosario also appealed seeking moral and exemplary damages and
additional attorney's fees.
In its decision of 31 October 1996, the Court of Appeals agreed
with the RTC that the contract between ABS-CBN and VIVA had
not been perfected, absent the approval by the VIVA Board of
Directors of whatever Del Rosario, it's agent, might have agreed
with Lopez III. The appellate court did not even believe ABS-CBN's
evidence that Lopez III actually wrote down such an agreement on
a "napkin," as the same was never produced in court. It likewise
rejected ABS-CBN's insistence on its right of first refusal and
ratiocinated as follows:
As regards the matter of right of first refusal, it
may be true that a Film Exhibition Agreement
was entered into between Appellant ABS-CBN
and appellant VIVA under Exhibit "A" in 1990,
and that parag. 1.4 thereof provides:
1.4 ABS-CBN shall have the
right of first refusal to the
next twenty-four (24) VIVA
films for TV telecast under
such terms as may be
agreed upon by the parties
hereto, provided, however,
that such right shall be
exercised by ABS-CBN
within a period of fifteen (15)
days from the actual offer in
writing (Records, p. 14).
[H]owever, it is very clear that said right of first
refusal in favor of ABS-CBN shall still be
subject to such terms as may be agreed upon
by the parties thereto, and that the said right
shall be exercised by ABS-CBN within fifteen
(15) days from the actual offer in writing.
Said parag. 1.4 of the agreement Exhibit "A" on
the right of first refusal did not fix the price of
the film right to the twenty-four (24) films, nor
did it specify the terms thereof. The same are
still left to be agreed upon by the parties.
In the instant case, ABS-CBN's letter of
rejection Exhibit 3 (Records, p. 89) stated that it
can only tick off ten (10) films, and the draft
contract Exhibit "C" accepted only fourteen (14)
films, while parag. 1.4 of Exhibit "A'' speaks of
the next twenty-four (24) films.
The offer of V1VA was sometime in December
1991 (Exhibits 2, 2-A. 2-B; Records, pp. 86-88;
Decision, p. 11, Records, p. 1150), when the
first list of VIVA films was sent by Mr. Del
Rosario to ABS-CBN. The Vice President of
ABS-CBN, Ms. Charo Santos-Concio, sent a
letter dated January 6, 1992 (Exhibit 3,
Records, p. 89) where ABS-CBN exercised its
right of refusal by rejecting the offer of VIVA..
As aptly observed by the trial court, with the
said letter of Mrs. Concio of January 6, 1992,
ABS-CBN had lost its right of first refusal. And
even if We reckon the fifteen (15) day period
from February 27, 1992 (Exhibit 4 to 4-C) when
 another list was sent to ABS-CBN after the
letter of Mrs. Concio, still the fifteen (15) day
period within which ABS-CBN shall exercise its
right of first refusal has already expired. 22
Accordingly, respondent court sustained the award of actual
damages consisting in the cost of print advertisements and the
premium payments for the counterbond, there being adequate
proof of the pecuniary loss which RBS had suffered as a result of
the filing of the complaint by ABS-CBN. As to the award of moral
damages, the Court of Appeals found reasonable basis therefor,
holding that RBS's reputation was debased by the filing of the
complaint in Civil Case No. Q-92-12309 and by the non-showing of
the film "Maging Sino Ka Man." Respondent court also held that
exemplary damages were correctly imposed by way of example or
correction for the public good in view of the filing of the complaint
despite petitioner's knowledge that the contract with VIVA had not
been perfected, It also upheld the award of attorney's fees,
reasoning that with ABS-CBN's act of instituting Civil Case No, Q-
92-1209, RBS was "unnecessarily forced to litigate." The appellate
court, however, reduced the awards of moral damages to P2
million, exemplary damages to P2 million, and attorney's fees to
P500, 000.00.
On the other hand, respondent Court of Appeals denied VIVA and
Del Rosario's appeal because it was "RBS and not VIVA which
was actually prejudiced when the complaint was filed by ABS-
CBN."
Its motion for reconsideration having been denied, ABS-CBN filed
the petition in this case, contending that the Court of Appeals
gravely erred in
I wanton, fraudulent, or reckless; they arose by virtue only of the
. . . RULING THAT THERE WAS NO
PERFECTED CONTRACT BETWEEN
PETITIONER AND PRIVATE RESPONDENT
VIVA NOTWITHSTANDING
PREPONDERANCE OF EVIDENCE
ADDUCED BY PETITIONER TO THE
CONTRARY.
II
. . . IN AWARDING ACTUAL AND
COMPENSATORY DAMAGES IN FAVOR OF
PRIVATE RESPONDENT RBS.
III
. . . IN AWARDING MORAL AND EXEMPLARY
DAMAGES IN FAVOR OF PRIVATE
RESPONDENT RBS.
IV
. . . IN AWARDING ATTORNEY'S FEES IN
FAVOR OF RBS.
ABS-CBN claims that it had yet to fully exercise its right of first
refusal over twenty-four titles under the 1990 Film Exhibition
Agreement, as it had chosen only ten titles from the first list. It
insists that we give credence to Lopez's testimony that he and Del
Rosario met at the Tamarind Grill Restaurant, discussed the terms
and conditions of the second list (the 1992 Film Exhibition
Agreement) and upon agreement thereon, wrote the same on a
paper napkin. It also asserts that the contract has already been
effective, as the elements thereof, namely, consent, object, and
consideration were established. It then concludes that the Court of
Appeals' pronouncements were not supported by law and
jurisprudence, as per our decision of 1 December 1995
in Limketkai Sons Milling, Inc. v. Court of Appeals, 23 which
cited Toyota Shaw, Inc. v. Court of Appeals, 24 Ang Yu Asuncion v.
Court of Appeals, 25 and Villonco Realty Company v. Bormaheco.
Inc.26
Anent the actual damages awarded to RBS, ABS-CBN disavows
liability therefor. RBS spent for the premium on the counterbond of
its own volition in order to negate the injunction issued by the trial
court after the parties had ventilated their respective positions
during the hearings for the purpose. The filing of the counterbond
was an option available to RBS, but it can hardly be argued that
ABS-CBN compelled RBS to incur such expense. Besides, RBS
had another available option, i.e., move for the dissolution or the
injunction; or if it was determined to put up a counterbond, it could
have presented a cash bond. Furthermore under Article 2203 of
the Civil Code, the party suffering loss or injury is also required to
exercise the diligence of a good father of a family to minimize the
damages resulting from the act or omission. As regards the cost of
print advertisements, RBS had not convincingly established that
this was a loss attributable to the non showing "Maging Sino Ka
Man"; on the contrary, it was brought out during trial that with or
without the case or the injunction, RBS would have spent such an
amount to generate interest in the film.
ABS-CBN further contends that there was no clear basis for the
awards of moral and exemplary damages. The controversy
involving ABS-CBN and RBS did not in any way originate from
business transaction between them. The claims for such damages
did not arise from any contractual dealings or from specific acts
committed by ABS-CBN against RBS that may be characterized as
filing of the complaint, An award of moral and exemplary damages
is not warranted where the record is bereft of any proof that a party
acted maliciously or in bad faith in filing an action. 27 In any case,
free resort to courts for redress of wrongs is a matter of public
policy. The law recognizes the right of every one to sue for that
which he honestly believes to be his right without fear of standing
trial for damages where by lack of sufficient evidence, legal
technicalities, or a different interpretation of the laws on the matter,
the case would lose ground. 28 One who makes use of his own
legal right does no injury. 29 If damage results front the filing of the
complaint, it is damnum absque injuria. 30 Besides, moral damages
are generally not awarded in favor of a juridical person, unless it
enjoys a good reputation that was debased by the offending party
resulting in social humiliation.31
As regards the award of attorney's fees, ABS-CBN maintains that
the same had no factual, legal, or equitable justification. In
sustaining the trial court's award, the Court of Appeals acted in
clear disregard of the doctrines laid down in Buan
v. Camaganacan 32 that the text of the decision should state the
reason why attorney's fees are being awarded; otherwise, the
award should be disallowed. Besides, no bad faith has been
imputed on, much less proved as having been committed by, ABS-
CBN. It has been held that "where no sufficient showing of bad
faith would be reflected in a party' s persistence in a case other
than an erroneous conviction of the righteousness of his cause,
attorney's fees shall not be recovered as cost." 33
On the other hand, RBS asserts that there was no perfected
contract between ABS-CBN and VIVA absent any meeting of
minds between them regarding the object and consideration of the
alleged contract. It affirms that the ABS-CBN's claim of a right of
first refusal was correctly rejected by the trial court. RBS insist the
premium it had paid for the counterbond constituted a pecuniary
loss upon which it may recover. It was obliged to put up the
counterbound due to the injunction procured by ABS-CBN. Since
the trial court found that ABS-CBN had no cause of action or valid
claim against RBS and, therefore not entitled to the writ of
injunction, RBS could recover from ABS-CBN the premium paid on
the counterbond. Contrary to the claim of ABS-CBN, the cash
bond would prove to be more expensive, as the loss would be
equivalent to the cost of money RBS would forego in case the P30
million came from its funds or was borrowed from banks.
RBS likewise asserts that it was entitled to the cost of
advertisements for the cancelled showing of the film "Maging Sino
Ka Man" because the print advertisements were put out to
announce the showing on a particular day and hour on Channel
7, i.e., in its entirety at one time, not a series to be shown on a
periodic basis. Hence, the print advertisement were good and
relevant for the particular date showing, and since the film could
not be shown on that particular date and hour because of the
injunction, the expenses for the advertisements had gone to waste.
As regards moral and exemplary damages, RBS asserts that ABS-
CBN filed the case and secured injunctions purely for the purpose
of harassing and prejudicing RBS. Pursuant then to Article 19 and
21 of the Civil Code, ABS-CBN must be held liable for such
damages. Citing Tolentino,34 damages may be awarded in cases
of abuse of rights even if the act done is not illicit and there is
abuse of rights were plaintiff institutes and action purely for the
purpose of harassing or prejudicing the defendant.
In support of its stand that a juridical entity can recover moral and
exemplary damages, private respondents RBS cited People
v. Manero,35 where it was stated that such entity may recover
moral and exemplary damages if it has a good reputation that is
debased resulting in social humiliation. it then ratiocinates; thus:
There can be no doubt that RBS' reputation has
been debased by ABS-CBN's acts in this case.
When RBS was not able to fulfill its
commitment to the viewing public to show the
film "Maging Sino Ka Man" on the scheduled
dates and times (and on two occasions that
RBS advertised), it suffered serious
embarrassment and social humiliation. When
the showing was canceled, late viewers called
up RBS' offices and subjected RBS to verbal
abuse ("Announce kayo nang announce, hindi
ninyo naman ilalabas," "nanloloko yata kayo")
(Exh. 3-RBS, par. 3). This alone was not
something RBS brought upon itself. it was
exactly what ABS-CBN had planned to happen.
The amount of moral and exemplary damages
cannot be said to be excessive. Two reasons
justify the amount of the award.
The first is that the humiliation suffered by RBS
is national extent. RBS operations as a
broadcasting company is [sic] nationwide. Its
clientele, like that of ABS-CBN, consists of
those who own and watch television. It is not an
exaggeration to state, and it is a matter of
judicial notice that almost every other person in
the country watches television. The humiliation
suffered by RBS is multiplied by the number of
televiewers who had anticipated the showing of
the film "Maging Sino Ka Man" on May 28 and
November 3, 1992 but did not see it owing to
the cancellation. Added to this are the
advertisers who had placed commercial spots
for the telecast and to whom RBS had a
commitment in consideration of the placement
to show the film in the dates and times
specified.
The second is that it is a competitor that
caused RBS to suffer the humiliation. The
humiliation and injury are far greater in degree
when caused by an entity whose ultimate
business objective is to lure customers (viewers
in this case) away from the competition. 36
For their part, VIVA and Vicente del Rosario contend that the
findings of fact of the trial court and the Court of Appeals do not
support ABS-CBN's claim that there was a perfected contract.
Such factual findings can no longer be disturbed in this petition for
review under Rule 45, as only questions of law can be raised, not
questions of fact. On the issue of damages and attorneys fees,
they adopted the arguments of RBS.
The key issues for our consideration are (1) whether there was a
perfected contract between VIVA and ABS-CBN, and (2) whether
RBS is entitled to damages and attorney's fees. It may be noted
that the award of attorney's fees of P212,000 in favor of VIVA is
not assigned as another error.
I.
The first issue should be resolved against ABS-CBN. A contract is
a meeting of minds between two persons whereby one binds
himself to give something or to render some service to
another 37 for a consideration. there is no contract unless the
following requisites concur: (1) consent of the contracting parties;
(2) object certain which is the subject of the contract; and (3)
cause of the obligation, which is established.38 A contract
undergoes three stages:
(a) preparation, conception, or generation,
which is the period of negotiation and
bargaining, ending at the moment of agreement
of the parties;
(b) perfection or birth of the contract, which is
the moment when the parties come to agree on
the terms of the contract; and
(c) consummation or death, which is the
fulfillment or performance of the terms agreed
upon in the contract. 39
Contracts that are consensual in nature are perfected upon mere
meeting of the minds, Once there is concurrence between the offer
and the acceptance upon the subject matter, consideration, and
terms of payment a contract is produced. The offer must be
certain. To convert the offer into a contract, the acceptance must
be absolute and must not qualify the terms of the offer; it must be
plain, unequivocal, unconditional, and without variance of any sort
from the proposal. A qualified acceptance, or one that involves a
new proposal, constitutes a counter-offer and is a rejection of the
original offer. Consequently, when something is desired which is
not exactly what is proposed in the offer, such acceptance is not
sufficient to generate consent because any modification or
variation from the terms of the offer annuls the offer. 40
When Mr. Del Rosario of VIVA met with Mr. Lopez of ABS-CBN at
the Tamarind Grill on 2 April 1992 to discuss the package of films,
said package of 104 VIVA films was VIVA's offer to ABS-CBN to
enter into a new Film Exhibition Agreement. But ABS-CBN, sent,
through Ms. Concio, a counter-proposal in the form of a draft
contract proposing exhibition of 53 films for a consideration of P35
million. This counter-proposal could be nothing less than the
counter-offer of Mr. Lopez during his conference with Del Rosario
at Tamarind Grill Restaurant. Clearly, there was no acceptance of
VIVA's offer, for it was met by a counter-offer which substantially provisions thereof were not previously agreed
varied the terms of the offer. upon?

ABS-CBN's reliance in Limketkai Sons Milling, Inc. v. Court of SECOND, Mr. Lopez claimed that what was
Appeals 41 and Villonco Realty Company v. Bormaheco, Inc., 42 is agreed upon as the subject matter of the
misplaced. In these cases, it was held that an acceptance may contract was 14 films. The complaint in fact
contain a request for certain changes in the terms of the offer and prays for delivery of 14 films. But Exhibit "C"
yet be a binding acceptance as long as "it is clear that the meaning mentions 53 films as its subject matter. Which
of the acceptance is positively and unequivocally to accept the is which If Exhibits "C" reflected the true intent
offer, whether such request is granted or not." This ruling was, of the parties, then ABS-CBN's claim for 14
however, reversed in the resolution of 29 March 1996, 43 which films in its complaint is false or if what it alleged
ruled that the acceptance of all offer must be unqualified and in the complaint is true, then Exhibit "C" did not
absolute, i.e., it "must be identical in all respects with that of the reflect what was agreed upon by the parties.
offer so as to produce consent or meeting of the minds." This underscores the fact that there was no
meeting of the minds as to the subject matter of
On the other hand, in Villonco, cited in Limketkai, the alleged the contracts, so as to preclude perfection
thereof. For settled is the rule that there can be
changes in the revised counter-offer were not material but merely
clarificatory of what had previously been agreed upon. It cited the no contract where there is no object which is its
subject matter (Art. 1318, NCC).
statement in Stuart v. Franklin Life Insurance Co.44 that "a vendor's
change in a phrase of the offer to purchase, which change does
not essentially change the terms of the offer, does not amount to a THIRD, Mr. Lopez [sic] answer to question 29
rejection of the offer and the tender of a counter-offer." 45However, of his affidavit testimony (Exh. "D") states:
when any of the elements of the contract is modified upon
acceptance, such alteration amounts to a counter-offer. We were able to reach an
agreement. VIVA gave us
In the case at bar, ABS-CBN made no unqualified acceptance of the exclusive license to
VIVA's offer. Hence, they underwent a period of bargaining. ABS- show these fourteen (14)
CBN then formalized its counter-proposals or counter-offer in a films, and we agreed to pay
draft contract, VIVA through its Board of Directors, rejected such Viva the amount of
counter-offer, Even if it be conceded arguendo that Del Rosario P16,050,000.00 as well as
had accepted the counter-offer, the acceptance did not bind VIVA, grant Viva commercial slots
as there was no proof whatsoever that Del Rosario had the worth P19,950,000.00. We
specific authority to do so. had already earmarked this
P16, 050,000.00.
Under Corporation Code,46 unless otherwise provided by said
Code, corporate powers, such as the power; to enter into which gives a total consideration of P36 million
contracts; are exercised by the Board of Directors. However, the (P19,950,000.00 plus P16,050,000.00. equals
Board may delegate such powers to either an executive committee P36,000,000.00).
or officials or contracted managers. The delegation, except for the
executive committee, must be for specific purposes, 47 Delegation
On cross-examination Mr. Lopez testified:
to officers makes the latter agents of the corporation; accordingly,
the general rules of agency as to the bindings effects of their acts
would Q. What was written in this
apply. 48 For such officers to be deemed fully clothed by the napkin?
corporation to exercise a power of the Board, the latter must
specially authorize them to do so. That Del Rosario did not have A. The total price, the
the authority to accept ABS-CBN's counter-offer was best breakdown the known Viva
evidenced by his submission of the draft contract to VIVA's Board movies, the 7 blockbuster
of Directors for the latter's approval. In any event, there was movies and the other 7 Viva
between Del Rosario and Lopez III no meeting of minds. The movies because the price
following findings of the trial court are instructive: was broken down
accordingly. The none [sic]
A number of considerations militate against Viva and the seven other
ABS-CBN's claim that a contract was perfected Viva movies and the sharing
at that lunch meeting on April 02, 1992 at the between the cash portion
Tamarind Grill. and the concerned spot
portion in the total amount of
P35 million pesos.
FIRST, Mr. Lopez claimed that what was
agreed upon at the Tamarind Grill referred to
the price and the number of films, which he Now, which is which? P36 million or P35
wrote on a napkin. However, Exhibit "C" million? This weakens ABS-CBN's claim.
contains numerous provisions which, were not
discussed at the Tamarind Grill, if Lopez FOURTH. Mrs. Concio, testifying for ABS-CBN
testimony was to be believed nor could they stated that she transmitted Exhibit "C" to Mr.
have been physically written on a napkin. There Del Rosario with a handwritten note, describing
was even doubt as to whether it was a paper said Exhibit "C" as a "draft." (Exh. "5" - Viva; tsn
napkin or a cloth napkin. In short what were pp. 23-24 June 08, 1992). The said draft has a
written in Exhibit "C'' were not discussed, and well defined meaning.
therefore could not have been agreed upon, by
the parties. How then could this court compel
the parties to sign Exhibit "C" when the
Since Exhibit "C" is only a draft, or a tentative,
provisional or preparatory writing prepared for
discussion, the terms and conditions thereof
could not have been previously agreed upon by
ABS-CBN and Viva Exhibit "C'' could not
therefore legally bind Viva, not having agreed
thereto. In fact, Ms. Concio admitted that the
terms and conditions embodied in Exhibit "C"
were prepared by ABS-CBN's lawyers and
there was no discussion on said terms and
conditions. . . .
As the parties had not yet discussed the
proposed terms and conditions in Exhibit "C,"
and there was no evidence whatsoever that
Viva agreed to the terms and conditions
thereof, said document cannot be a binding
contract. The fact that Viva refused to sign
Exhibit "C" reveals only two [sic] well that it did
not agree on its terms and conditions, and this
court has no authority to compel Viva to agree
thereto.
FIFTH. Mr. Lopez understand [sic] that what he
and Mr. Del Rosario agreed upon at the
Tamarind Grill was only provisional, in the
sense that it was subject to approval by the
Board of Directors of Viva. He testified:
Q. Now, Mr. Witness, and
after that Tamarind meeting
... the second meeting
wherein you claimed that
you have the meeting of the
minds between you and Mr.
Vic del Rosario, what
happened?
A. Vic Del Rosario was
supposed to call us up and
tell us specifically the result
of the discussion with the
Board of Directors.
Q. And you are referring to
the so-called agreement
which you wrote in [sic] a
piece of paper?
A. Yes, sir.
Q. So, he was going to
forward that to the board of
Directors for approval?
A. Yes, sir. (Tsn, pp. 42-43,
June 8, 1992)
Q. Did Mr. Del Rosario tell
you that he will submit it to
his Board for approval?
A. Yes, sir. (Tsn, p. 69, June
8, 1992).
The above testimony of Mr. Lopez shows
beyond doubt that he knew Mr. Del Rosario
had no authority to bind Viva to a contract with
ABS-CBN until and unless its Board of
Directors approved it. The complaint, in fact,
alleges that Mr. Del Rosario "is the Executive
Producer of defendant Viva" which "is a
corporation." (par. 2, complaint). As a mere
agent of Viva, Del Rosario could not bind Viva
unless what he did is ratified by its Board of
Directors. (Vicente vs. Geraldez, 52 SCRA
210; Arnold vs. Willetsand Paterson, 44 Phil.
634). As a mere agent, recognized as such by
plaintiff, Del Rosario could not be held liable
jointly and severally with Viva and his inclusion
as party defendant has no legal basis. (Salonga
vs. Warner Barner [sic] , COLTA , 88 Phil. 125;
Salmon vs. Tan, 36 Phil. 556).
The testimony of Mr. Lopez and the allegations
in the complaint are clear admissions that what
was supposed to have been agreed upon at the
Tamarind Grill between Mr. Lopez and Del
Rosario was not a binding agreement. It is as it
should be because corporate power to enter
into a contract is lodged in the Board of
Directors. (Sec. 23, Corporation Code). Without
such board approval by the Viva board,
whatever agreement Lopez and Del Rosario
arrived at could not ripen into a valid contract
binding upon Viva (Yao Ka Sin Trading
vs. Court of Appeals, 209 SCRA 763). The
evidence adduced shows that the Board of
Directors of Viva rejected Exhibit "C" and
insisted that the film package for 140 films be
maintained (Exh. "7-1" - Viva ). 49
The contention that ABS-CBN had yet to fully exercise its right of
first refusal over twenty-four films under the 1990 Film Exhibition
Agreement and that the meeting between Lopez and Del Rosario
was a continuation of said previous contract is untenable. As
observed by the trial court, ABS-CBN right of first refusal had
already been exercised when Ms. Concio wrote to VIVA ticking off
ten films, Thus:
[T]he subsequent negotiation with ABS-CBN
two (2) months after this letter was sent, was
for an entirely different package. Ms. Concio
herself admitted on cross-examination to
having used or exercised the right of first
refusal. She stated that the list was not
acceptable and was indeed not accepted by
ABS-CBN, (TSN, June 8, 1992, pp. 8-10). Even
Mr. Lopez himself admitted that the right of the
first refusal may have been already exercised
by Ms. Concio (as she had). (TSN, June 8,
1992, pp. 71-75). Del Rosario himself knew and
understand [sic] that ABS-CBN has lost its
rights of the first refusal when his list of 36 titles
were rejected (Tsn, June 9, 1992, pp. 10-11) 50
II
However, we find for ABS-CBN on the issue of damages. We shall
first take up actual damages. Chapter 2, Title XVIII, Book IV of the
Civil Code is the specific law on actual or compensatory damages.
Except as provided by law or by stipulation, one is entitled to
compensation for actual damages only for such pecuniary loss
suffered by him as he has duly proved. 51 The indemnification shall
comprehend not only the value of the loss suffered, but also that of
the profits that the obligee failed to obtain. 52 In contracts and
quasi-contracts the damages which may be awarded are
dependent on whether the obligor acted with good faith or
otherwise, It case of good faith, the damages recoverable are
those which are the natural and probable consequences of the
breach of the obligation and which the parties have foreseen or
could have reasonably foreseen at the time of the constitution of
the obligation. If the obligor acted with fraud, bad faith, malice, or
wanton attitude, he shall be responsible for all damages which
may be reasonably attributed to the non-performance of the
obligation. 53 In crimes and quasi-delicts, the defendant shall be
liable for all damages which are the natural and probable
consequences of the act or omission complained of, whether or
not such damages has been foreseen or could have reasonably
been foreseen by the defendant.54
Actual damages may likewise be recovered for loss or impairment
of earning capacity in cases of temporary or permanent personal
injury, or for injury to the plaintiff's business standing or
commercial credit.55
The claim of RBS for actual damages did not arise from contract,
quasi-contract, delict, or quasi-delict. It arose from the fact of filing
of the complaint despite ABS-CBN's alleged knowledge of lack of
cause of action. Thus paragraph 12 of RBS's Answer with
Counterclaim and Cross-claim under the heading
COUNTERCLAIM specifically alleges:
12. ABS-CBN filed the complaint knowing fully
well that it has no cause of action RBS. As a
result thereof, RBS suffered actual damages in
the amount of P6,621,195.32. 56
Needless to state the award of actual damages cannot be
comprehended under the above law on actual damages. RBS
could only probably take refuge under Articles 19, 20, and 21 of
the Civil Code, which read as follows:
Art. 19. Every person must, in the exercise of
his rights and in the performance of his duties,
act with justice, give everyone his due, and
observe honesty and good faith.
Art. 20. Every person who, contrary to law,
wilfully or negligently causes damage to
another, shall indemnify the latter for tile same.
Art. 21. Any person who wilfully causes loss or
injury to another in a manner that is contrary to
morals, good customs or public policy shall
compensate the latter for the damage.
It may further be observed that in cases where a writ of preliminary
injunction is issued, the damages which the defendant may suffer
by reason of the writ are recoverable from the injunctive bond. 57 In
this case, ABS-CBN had not yet filed the required bond; as a
matter of fact, it asked for reduction of the bond and even went to
the Court of Appeals to challenge the order on the matter, Clearly
then, it was not necessary for RBS to file a counterbond. Hence,
ABS-CBN cannot be held responsible for the premium RBS paid
for the counterbond.
Neither could ABS-CBN be liable for the print advertisements for
"Maging Sino Ka Man" for lack of sufficient legal basis. The RTC
issued a temporary restraining order and later, a writ of preliminary
injunction on the basis of its determination that there existed
sufficient ground for the issuance thereof. Notably, the RTC did not
dissolve the injunction on the ground of lack of legal and factual
basis, but because of the plea of RBS that it be allowed to put up a
counterbond.
As regards attorney's fees, the law is clear that in the absence of
stipulation, attorney's fees may be recovered as actual or
compensatory damages under any of the circumstances provided
for in Article 2208 of the Civil Code. 58
The general rule is that attorney's fees cannot be recovered as
part of damages because of the policy that no premium should be
placed on the right to litigate.59 They are not to be awarded every
time a party wins a suit. The power of the court to award attorney's
fees under Article 2208 demands factual, legal, and equitable
justification.60Even when claimant is compelled to litigate with third
persons or to incur expenses to protect his rights, still attorney's
fees may not be awarded where no sufficient showing of bad faith
could be reflected in a party's persistence in a case other than
erroneous conviction of the righteousness of his cause. 61
As to moral damages the law is Section 1, Chapter 3, Title XVIII,
Book IV of the Civil Code. Article 2217 thereof defines what are
included in moral damages, while Article 2219 enumerates the
cases where they may be recovered, Article 2220 provides that
moral damages may be recovered in breaches of contract where
the defendant acted fraudulently or in bad faith. RBS's claim for
moral damages could possibly fall only under item (10) of Article
2219, thereof which reads:
(10) Acts and actions referred to in Articles 21,
26, 27, 28, 29, 30, 32, 34, and 35.
Moral damages are in the category of an award designed to
compensate the claimant for actual injury suffered. and not to
impose a penalty on the wrongdoer. 62 The award is not meant to
enrich the complainant at the expense of the defendant, but to
enable the injured party to obtain means, diversion, or
amusements that will serve to obviate then moral suffering he has
undergone. It is aimed at the restoration, within the limits of the
possible, of the spiritual status quo ante, and should be
proportionate to the suffering inflicted. 63 Trial courts must then
guard against the award of exorbitant damages; they should
exercise balanced restrained and measured objectivity to avoid
suspicion that it was due to passion, prejudice, or corruption on the
part of the trial court. 64
The award of moral damages cannot be granted in favor of a
corporation because, being an artificial person and having
existence only in legal contemplation, it has no feelings, no
emotions, no senses, It cannot, therefore, experience physical
suffering and mental anguish, which call be experienced only by
one having a nervous system. 65 The statement in People
v. Manero 66 and Mambulao Lumber Co. v. PNB 67 that a
corporation may recover moral damages if it "has a good
reputation that is debased, resulting in social humiliation" is
an obiter dictum. On this score alone the award for damages must
be set aside, since RBS is a corporation.
The basic law on exemplary damages is Section 5, Chapter 3, Title
XVIII, Book IV of the Civil Code. These are imposed by way of
example or correction for the public good, in addition to moral,
temperate, liquidated or compensatory damages. 68 They are
recoverable in criminal cases as part of the civil liability when the
crime was committed with one or more aggravating
circumstances; 69 in quasi-contracts, if the defendant acted with
gross negligence; 70 and in contracts and quasi-contracts, if the
defendant acted in a wanton, fraudulent, reckless, oppressive, or
malevolent manner.71
It may be reiterated that the claim of RBS against ABS-CBN is not
based on contract, quasi-contract, delict, or quasi-delict, Hence,
the claims for moral and exemplary damages can only be based
on Articles 19, 20, and 21 of the Civil Code.
The elements of abuse of right under Article 19 are the following:
(1) the existence of a legal right or duty, (2) which is exercised in
bad faith, and (3) for the sole intent of prejudicing or injuring
another. Article 20 speaks of the general sanction for all other
provisions of law which do not especially provide for their own
sanction; while Article 21 deals with acts contra bonus mores, and
has the following elements; (1) there is an act which is legal, (2)
but which is contrary to morals, good custom, public order, or
public policy, and (3) and it is done with intent to injure. 72

Verily then, malice or bad faith is at the core of Articles 19, 20, and
21. Malice or bad faith implies a conscious and intentional design
to do a wrongful act for a dishonest purpose or moral
obliquity. 73 Such must be substantiated by evidence. 74

There is no adequate proof that ABS-CBN was inspired by malice

or bad faith. It was honestly convinced of the merits of its cause
after it had undergone serious negotiations culminating in its
formal submission of a draft contract. Settled is the rule that the
adverse result of an action does not per se make the action
wrongful and subject the actor to damages, for the law could not
have meant to impose a penalty on the right to litigate. If damages
result from a person's exercise of a right, it is damnum absque
injuria.75

WHEREFORE, the instant petition is GRANTED. The challenged

decision of the Court of Appeals in CA-G.R. CV No, 44125 is
hereby REVERSED except as to unappealed award of attorney's
fees in favor of VIVA Productions, Inc.1âwphi1.nêt

No pronouncement as to costs.

SO ORDERED.

Melo, Kapunan, Martinez and Pardo JJ., concur.

 FIRST DIVISION
G.R. No. 141994 January 17, 2005
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 review1 assails the 4 January 1999 Decision2 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 Decision3 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, attorney’s fees and costs of suit.
The Antecedents
"Exposé" is a radio documentary4 program hosted by Carmelo
‘Mel’ Rima ("Rima") and Hermogenes ‘Jun’ Alegre
("Alegre").5 Exposé is aired every morning over DZRC-AM which is
owned by Filipinas Broadcasting Network, Inc. ("FBNI"). "Exposé"
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 Center-Bicol
Christian College of Medicine ("AMEC") and its administrators.
Claiming that the broadcasts were defamatory, AMEC and
Angelita Ago ("Ago"), as Dean of AMEC’s College of Medicine,
filed a complaint for damages7 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 AMEC-BCCM, 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 AMEC’s 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 you’ll
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,
isn’t 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 latter’s 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 I’m 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. Don’t 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 – that’s 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. xxx9 (Emphasis supplied)
The complaint further alleged that AMEC is a reputable learning
institution. With the supposed exposés, 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 Answer10 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 Dismiss11 on FBNI’s 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 Rima’s
only participation was when he agreed with Alegre’s exposé. The
trial court found Rima’s 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 ₱300,000.00 moral damages, plus
₱30,000.00 reimbursement of attorney’s 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 court’s
judgment with modification. The appellate court made Rima
solidarily liable with FBNI and Alegre. The appellate court denied
Ago’s claim for damages and attorney’s 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 court’s 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 Alegre’s 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 AMEC’s
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 Ago’s
claim for damages and attorney’s 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, attorney’s fees and costs of
suit.1awphi1.nét
Issues
FBNI raises the following issues for resolution:
I. WHETHER THE BROADCASTS ARE LIBELOUS;
II. WHETHER AMEC IS ENTITLED TO MORAL
DAMAGES;
 III. WHETHER THE AWARD OF ATTORNEY’S FEES IS
PROPER; and
IV. WHETHER FBNI IS SOLIDARILY LIABLE WITH
RIMA AND ALEGRE FOR PAYMENT OF MORAL
DAMAGES, ATTORNEY’S FEES AND COSTS OF SUIT.
The Court’s 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 AMEC’s cause of action is
based on Articles 30 and 33 of the Civil Code. Article
3018 authorizes a separate civil action to recover civil liability
arising from a criminal offense. On the other hand, Article
3319 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 1920 of the Civil
Code to justify its claim for damages. AMEC cites Articles
217621 and 218022 of the Civil Code to hold FBNI solidarily liable
with Rima and Alegre.
I.
Whether the broadcasts are libelous
A libel23 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 Alegre’s remarks such
as "greed for money on the part of AMEC’s 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 AMEC’s side and gave Ago the
opportunity to defend AMEC and its administrators. FBNI
concludes that since there is no malice, there is no libel.
FBNI’s 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 exposé,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 Alegre’s reckless
disregard of whether their report was true or not.
Contrary to FBNI’s 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 republisher’s 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.
FBNI’s 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 AMEC’s 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.l^vvphi1.net 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 Code35 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. x x x
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 1937 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 2138 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 Court’s 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, AMEC’s claim for moral damages falls under item 7
of Article 221943 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 ₱300,000 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 ₱300,000 to ₱150,000.
III.
Whether the award of attorney’s fees is proper
FBNI contends that since AMEC is not entitled to moral damages,
there is no basis for the award of attorney’s fees. FBNI adds that
the instant case does not fall under the enumeration in Article
220848 of the Civil Code.
The award of attorney’s fees is not proper because AMEC failed to
justify satisfactorily its claim for attorney’s fees. AMEC did not
adduce evidence to warrant the award of attorney’s fees.
Moreover, both the trial and appellate courts failed to explicitly
state in their respective decisions the rationale for the award of
attorney’s 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 counsel’s fees
are not to be awarded every time a party wins a suit. The power
of the court to award attorney’s 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 attorney’s fees.51 (Emphasis supplied)
While it mentioned about the award of attorney’s 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, attorney’s fees and costs of suit
FBNI contends that it is not solidarily liable with Rima and Alegre
for the payment of damages and attorney’s 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 Alegre’s 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." Rima’s accreditation lapsed due to his non-payment of the
KBP annual fees while Alegre’s 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.
FBNI’s 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.53Thus, AMEC correctly anchored its cause of
action against FBNI on Articles 2176 and 2180 of the Civil
Code.1a\^/phi1.net
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 FBNI’s radio program
Exposé 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 andsupervision 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. FBNI’s 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 industry’s 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 FBNI’s "regimented process" of
application. Furthermore, FBNI admits that Rima and Alegre had
deficiencies in their KBP accreditation, 56 which is one of FBNI’s
requirements before it hires a broadcaster. Significantly,
membership in the KBP, while voluntary, indicates the
broadcaster’s strong commitment to observe the broadcast
industry’s rules and regulations. Clearly, these circumstances
show FBNI’s lack of diligence in selecting andsupervising 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
₱300,000 to ₱150,000 and the award of attorney’s fees is deleted.
Costs against petitioner.
SO ORDERED.
Davide, Jr., C.J., (Chairman), Quisumbing, Ynares-Santiago, and
Azcuna, JJ., concur.
 SECOND DIVISION
G.R. No. 148246 February 16, 2007
REPUBLIC OF THE PHILIPPINES, Petitioner,
vs.
JUAN C. TUVERA, VICTOR P. TUVERA and TWIN PEAKS
DEVELOPMENT CORPORATION, Respondents.
DECISION
TINGA, J.:
The long-term campaign for the recovery of ill-gotten wealth of
former President Ferdinand E. Marcos, his wife Imelda, and their
associates, has been met with many impediments, some of which
are featured in this case, that have led to doubts whether there is
still promise in that enterprise. Yet even as the prosecution of
those cases have drudged on and on, the era of their final
reckoning is just beginning before this Court. The heavy hammer
of the law is just starting to fall.
The instant action originated from a civil complaint for restitution
and damages filed by the Republic of the Philippines against
Marcos and his longtime aide Juan Tuvera, as well as Tuvera's
son Victor and a corporation the younger Tuvera had controlled.
Trial on the case against the Tuveras proceeded separately before
the Sandiganbayan. After the Republic had presented its evidence,
the Tuveras successfully moved for the dismissal of the case on
demurrer to evidence. The demurrer was sustained, and it falls
upon this Court to ascertain the absence or existence of sufficient
proof to support the relief sought by the Republic against the
Tuveras.
I.
We begin with the facts.
Twin Peaks Development Corporation (Twin Peaks) was
organized on 5 March 1984 as a corporation with a principal
purpose of engaging in the real estate business. There were five
incorporating stockholders, including respondent Victor Tuvera
(Victor)1 who owned 48% of the shares of the fledgling corporation.
Victor was the son of respondent Juan Tuvera, who was then
Presidential Executive Assistant of President Marcos.
Acting on a letter dated 31 May 1984 of Twin Peaks’ Vice-
President and Treasurer Evelyn Fontanilla in behalf of the
corporation, President Marcos granted the award of a Timber
License Agreement (TLA), more specifically TLA No. 356, in favor
of Twin Peaks to operate on 26,000 hectares of forest land with an
annual allowable cut of 60,000 cubic meters of timber and to
export 10,000 cubic meters of mahogany of the narra species.2 As
a result, Twin Peaks was able to engage in logging operations.
On 25 February 1986, President Marcos was ousted, and Corazon
C. Aquino assumed the presidency. Among her first acts as
President was to establish the Philippine Commission on Good
Government (PCGG), tasked with tracking down the ill-gotten
wealth procured by Marcos, his family, and associates during his
20-year rule. Among the powers granted to the PCGG was the
power to issue writs of sequestration.3 On 13 June 1988, the
PCGG issued a Writ of Sequestration on all assets, properties,
records, documents, and shares of stock of Twin Peaks on the
ground that all the assets of the corporation are ill-gotten wealth for
having been acquired directly or indirectly through fraudulent and
illegal means.4 This was followed
two days later by Mission Order No. MER-88 (Mission Order), also
issued by the PCGG, implementing the aforementioned Writ of
Sequestration.5
On 9 December 1988, the PCGG, in behalf of the Republic, filed
the Complaint now subject of this Petition. 6Impleaded as
defendants in the Complaint7 were Juan and Victor Tuvera, as well
as the then-exiled President Marcos. Through the Complaint, the
Republic sought to recover funds allegedly acquired by said
parties in flagrant breach of trust and fiduciary obligations with
grave abuse of right and power in violation of the Constitution and
the laws of the Republic of the Philippines. 8
In particular, the Complaint alleged that Juan Tuvera, as
Presidential Executive Assistant of President Marcos, took
advantage of his relationship to influence upon and connection
with the President by engaging in a scheme to unjustly enrich
himself at the expense of the Republic and of the Filipino people.
This was allegedly accomplished on his part by securing TLA No.
356 on behalf of Twin Peaks despite existing laws expressly
prohibiting the exportation of mahogany of the narra species 9 and
Twin Peaks’ lack of qualification to be a grantee thereof for lack of
sufficient logging equipment to engage in the logging
business.10 The Complaint further alleged that Twin Peaks
exploited the country’s natural resources by engaging in large-
scale logging and the export of its produce through its Chinese
operators whereby respondents obtained a revenue of
approximately ₱45 million.
The Complaint prayed that (1) TLA No. 356 be reverted to the
State or cancelled; (2) respondents be jointly and severally
ordered to pay ₱48 million11 as actual damages; and (3)
respondents pay moral, temperate and exemplary damages,
litigation expenses, and treble judicial costs.12 It cited as grounds
for relief, gross abuse of official position and authority, breach of
public trust and fiduciary obligations, brazen abuse of right and
power, unjust enrichment, and violation of the Constitution. 13
In their Answer,14 respondents Victor Tuvera and Twin Peaks
claimed that Twin Peaks was awarded TLA No. 356 only after its
articles of incorporation had been amended enabling it to engage
in logging operations,15 that the Republic’s reference to Chinese
operations and revenue of approximately ₱45 million were merely
imagined,16 and that the PCGG has no statutory authority to
institute the action.17 By way of counterclaim, respondents asked
that the Republic be ordered to pay Victor Tuvera moral damages
and to pay both Victor Tuvera and Twin Peaks exemplary
damages, and to reimburse their attorney’s fees. 18
Anent the allegation that Twin Peaks sold about ₱3 million worth of
lumber despite the Writ of Sequestration issued by the PCGG,
respondents stressed that the Director of Forest Development
acted within the scope of his authority and the courts have no
supervising power over the actions of the Director of Forest
Development and the Secretary of the Department of Environment
and Natural Resources (DENR) in the performance of their official
duties.19
As an affirmative and special defense, respondents Victor Tuvera
and Twin Peaks alleged that after Twin Peaks was granted TLA
No. 356 in 24 August 1984, Felipe Ysmael, Jr. and Co., Inc. had
filed a motion for the cancellation of the same with the DENR
Secretary. When respondents submitted their Answer, the denial
by the DENR of the Ysmael motion was under review before the
Court.20
Juan Tuvera, who was abroad when the case was filed on 9
December 1988, later submitted his own Answer on 6 December
1989.21 He also denied the allegations of the Republic and alleged
that as Presidential Executive Assistant of then President Marcos,
he acted within the confines of his duties and had perpetrated no
unlawful acts. He merely transmitted communications of approval
in the course of his duties and had nothing to do with the decisions
of then President Marcos.22 He denied having anything to do with
Twin Peaks.
Juan Tuvera filed a compulsory counterclaim on the ground that
the instant action had besmirched his reputation and caused
serious anxiety and mental anguish thus entitling him to moral and
exemplary damages and litigation expenses. 23
On 3 May 1989, respondents filed an Omnibus Motion to Nullify
Writ of Sequestration and/or the Mission Order. 24The
Sandiganbayan issued a Temporary Restraining Order against the
PCGG requiring it to cease, refrain and desist from further
implementing the Writ of Sequestration and the Mission
Order.25 Subsequently, on motion of respondents, the
Sandiganbayan granted a Writ of Preliminary Injunction covering
the Mission Order. The Sandiganbayan deferred its resolution on
the Motion to Lift the Writ of Sequestration. 26
From 1988 to 1993, the proceedings before the Sandiganbayan
were delayed owing to the difficulty of acquiring jurisdiction over
the person of President Marcos, who was by then already in exile.
Thus, upon motion by respondents, the Sandiganbayan granted
them a separate pre-trial/trial from President Marcos.27
Respondents submitted their documentary evidence in the Pre-
Trial Conference while the Republic reserved to present the same
during trial. After the pre-trial conference, the Sandiganbayan
issued a Pre-Trial Order28 dated 3 November 1993, which
presented the issues for litigation as follows:
Whether or not defendant Juan C. Tuvera who was a Presidential
Executive Assistant at the time material to this case, by himself
and in concert with his co-defendants Ferdinand E. Marcos and
Victor Tuvera, took advantage of his relation and connection with
the late Marcos, secure (sic) a timber concession for Twin Peaks
Development Corporation and, engage (sic) in a scheme to
unjustly enrich himself at the expense of the Republic and the
Filipino People.29
The Pre-Trial Order also indicated that the Republic admitted the
exhibits by respondents, subject to the presentation of certified
true copies thereof. Respondents’ exhibits were as follows:30
Exhibit Description
Nos.
1 Amended Articles of Incorporation dated 31 July 1984
2 TLA No. 356
3 Order, Minister Ernesto M. Maceda, 22 July 1986
3-A Order, Minister Ernesto M. Maceda, 10 October 1986
3-B Order, Minister Ernesto M. Maceda, 26 November
1986, O.P. Case No. 3521
3-C Resolution, Office of the President, 6 July 1987, O.P.
Case No. 3521
3-D Order, Office of the President, 14 August 1987, I.S.
No. 66
3-E Complaint, PCGG, dated 20 July 1988
3-E-1, I.S. No. 66 Affidavit, PCGG, Almario F. Mendoza, Ltv.
3-E-2, Ramon F. Mendoza and Affidavit, Isidro Santiago
3-E-3
3-F Counter-Affidavit, Juan C. Tuvera, 17 August 1989
3-F-1 PCGG, Motion to Withdraw, Jose Restituto F.
Mendoza, 10 May 1989
3-F-2 Decision, Supreme Court, 18 October 1990
3-G Resolution, Supreme Court, 5 June 1991
4 Complaint, DENR, Almario F, Mendoza, 9 March 1990
4-A Answer/Comment, DENR, Almario F. Mendoza, dated
20 April 1990
4-B Decision, DENR, dated 28 August 1990
5 Complaint, Ombudsman, etc., Case No. 0-90-0708, 9
March 1990
6, 6-A Answer/Counter-Affidavit, etc.
6-B Decision, Ombudsman Case No. 0-90-0708, dated 8
August 1990
The Republic presented three (3) witnesses during the trial. The
first witness was Joveniana M. Galicia, Chief of the National Forest
Management Division of the Forest Management Bureau. She
identified TLA No. 356 of Twin Peaks dated 20 August 1984 and a
Memorandum dated 18 July 1984. She testified that TLA No. 356
covers 26,000 hectares of forest land located in the Municipality of
Isabela, Province of Quirino.31 The Memorandum dated 18 July
1984 addressed to Director Edmundo Cortez recited then
President Marcos’ grant of the timber concession to Twin Peaks.
Identified and marked in the same memorandum were the name
and signature of Juan Tuvera.32 Upon cross-examination, Galicia
stated that she was not yet the chief of the Division when the
documents she identified were submitted to the Bureau. She
further stated it was her first time to see the aforementioned
documents when she was asked to bring the same before the trial
court.33
The next witness was Fortunato S. Arcangel, Regional Technical
Director III of the DENR. He testified that he is a Technical Director
under the Forest Management Services of the DENR. 34 He
identified Forestry Administration Order (FAO) No. 11 dated 1
September 1970. He said he was aware of TLA No. 356 of Twin
Peaks35 because at the time it was issued, he was the chief of the
E Income Tax To prove that Evelyn Fontanilla was
Forestry Second Division and his duties included the evaluation
Return of not a legitimate stockholder of Twin
and processing of applications for licenses and permits for the
Evelyn Peaks Realty Development Corp.
disposition and distribution of timber and other forest
Fontanilla
products.36 Consequently,

he was aware of the process by which TLA No. 356 was issued to F Income Tax To prove that Feliciano Salvana was
Twin Peaks.37 According to him, they processed the application Return of not a legitimate stockholder of Twin
insofar as they evaluated the location of the area concerned and Feliciano Peaks Realty Development Corp.
its present vegetative state, examined the records, and determined Salvana
the annual allowable land. After the examination, the license
agreement was prepared and submitted for approval.38 He
continued that under FAO No. 11, a public bidding is required G Articles of To prove that Twin Peaks Realty
before any license agreement or permit for the utilization of timber Incorporation Development Corp. was organized to
within the forestry land is issued39 but no public bidding was of Twin Peaks engage in the real estate business
conducted for TLA No. 356.40 He explained that no such bidding Realty and not in the logging industry.
was conducted because of a Presidential Instruction not to accept Development
any application for timber licensing as a consequence of which Corp.
bidding procedures were stopped.41 Upon cross-examination, (original)
Arcangel said that at the time TLA No. 356 was issued, the
Revised Forestry Code of the Philippines 42 was already in effect
but there were still provisions in FAO No. 11 that remained H Timber To show that Twin Peaks Realty
applicable such as the terms and conditions of granting a license. Manifestation Development Corp. lacks equipment
He also stated that the issuance of the license to Twin Peaks Report of to process logs.
emanated from the President of the Philippines. 43 [Twin Peaks
Realty
Development
The Republic’s third and last witness was Teresita M. Zuñiga, Corp.]
employee of the Bureau of Internal Revenue. She identified the consigned to
1986 Income Tax Returns of Victor P. Tuvera, Evelyn Fontanilla Scala
and Feliciano O. Salvana, stockholders of Twin Peaks. 44 Sawmill46

On 24 June 1994, the Republic rested its case after its formal offer
of evidence, as follows:45 I Timber To show that Twin Peaks Realty
Manifestation Development Corp. lacks equipment
Report of to process logs.
Exhibits Documents Purpose Twin Peaks
consigned to
La Peña
A Timber To prove that the Timber License
Sawmill47
License Agreement was executed prior to the
Agreement amendment of the Articles of
No. 356 of Incorporation of Twin Peaks Realty
Twin Peaks Development Corp. Respondents subsequently submitted certified true copies of the
Realty exhibits they had presented during the pre-trial conference.48
Development
Corp. dated
20 August With leave of court, respondents filed a Demurrer to Evidence.
1984 Respondents argued that the Republic failed to present sufficient
legal affirmative evidence to prove its claim. In particular,
respondents’ demurrer contends that the memorandum (Exh. B)
B Memorandum To prove the participation of Juan C. and TLA No. 356 are not "legal evidence" because "legal
dated 18 July Tuvera in the grant of the timber evidence" is not meant to raise a mere suspicion or doubt.
1984 of Juan concession of Twin Peaks Realty Respondents also claim that income tax returns are not sufficient
C. Tuvera, Development Corp. to show one’s holding in a corporation. Respondents also cited the
Presidential factual antecedents culminating with the Court’s decision in Felipe
Executive Ysmael, Jr. & Corp., Inc. v. Sec. of Environment and Natural
Secretary Resources.49

The Republic filed a Manifestation, contending that the demurrer is

C Forestry To prove that Twin Peaks Realty
Administrative Development Corp. was granted a
Order No. 11 timber license agreement without
(Revised) following the procedure outlined in
the forestry rules and regulation and
in violation of law.
D Income Tax To prove that Victor Tuvera was not
Return of a legitimate stockholder of Twin
Victor Tuvera Peaks Realty Development Corp.
not based on the insufficiency of its evidence but on the strength of
the evidence of respondents as shown by their own exhibits. The
Republic claimed that the Revised Forestry Code of the Philippines
does not dispense with the requirement of public bidding. The
Republic added that Sec. 5 of said law clearly provides that all
applications for a timber license agreement must be filed before
the Bureau of Forest Development and that respondents still have
to prove compliance with the requirements for service contracts. 50
Respondents opposed the Manifestation, maintaining that since
the Republic admitted the exhibits of respondents during the pre-
trial, it is bound by its own admission. Further, these same exhibits
contain uncontroverted facts and laws that only magnify the
conclusion that the Republic has no right to relief.51
In its Resolution dated 23 May 2001, 52 the Sandiganbayan
sustained the demurrer to evidence and referred to the decision of
this Court in Ysmael in holding that res judicata applies. The Anti-
Graft Court also did not give credence to the Republic’s allegations
concerning respondents’ abuse of power and/or public trust and
consequent liability for damages in view of its failure to establish
any violation of Arts. 19, 20 and 21 of the Civil Code.
In essence, the Sandiganbayan held that the validity of TLA No.
356 was already fully adjudicated in a Resolution/Order issued by
the Office of the President on 14 August 1987, which had become
final and executory with the failure of the aggrieved party to seek a
review thereof. The Sandiganbayan continued that the above
pronouncement is supported by this Court in Ysmael.
Consequently, the Sandiganbayan concluded, the Republic is
barred from questioning the validity of TLA No. 356 in consonance
with the principle of res judicata.
The Republic now questions the correctness of the
Sandiganbayan’s decision to grant the demurrer to evidence
because it was not based solely on the insufficiency of its evidence
but also on the evidence of respondent mentioned during the pre-
trial conference. The Republic also challenges the applicability
of res judicata.
II.
Preliminarily, we observe that respondents had filed before the
Sandiganbayan a pleading captioned Motion to
Dismiss or Demurrer to Evidence, thus evincing that they were
seeking the alternative reliefs of either a motion to dismiss or a
demurrer to evidence. However, the Sandiganbayan, in resolving
this motion, referred to it as Motion to Dismiss on Demurrer to
Evidence, a pleading of markedly different character from a Motion
to Dismiss or Demurrer to Evidence. Still, a close reading of the
Sandiganbayan Resolution reveals clearly that the Sandiganbayan
was treating the motion as a demurrer, following Rule 33, Section
1 of the Rules of Court, rather than a motion to dismiss under Rule
16, Section 1.
This notwithstanding, the Sandiganbayan justified the grant of
demurrer with res judicata as rationale. Res judicata is an
inappropriate ground for sustaining a demurrer to evidence, even
as it stands as a proper ground for a motion to dismiss. A demurrer
may be granted if, after the presentation of plaintiff’s evidence, it
appears upon the facts and the law that the plaintiff has shown no
right to relief. In contrast, the grounds for res judicata present
themselves even before the presentation of evidence, and it
should be at that stage that the defense of res judicata should be
invoked as a ground for dismissal. Properly speaking, the movants
for demurral who wish to rely on a controlling value of a settled
case as a ground for demurrer should invoke the ground of stare
decisis in lieu of res judicata.
In Domondon v. Lopez,53 we distinguished a motion to dismiss for
failure of the complainant to state a cause of action from a motion
to dismiss based on lack of cause of action. The first is governed
by Rule 16, Section 1(g),54while the second by Rule 3355 of the
Rules of Court, to wit:
x x x The first [situation where the complaint does not alleged
cause of action] is raised in a motion to dismiss under Rule 16
before a responsive pleading is filed and can be determined only
from the allegations in the initiatory pleading and not from
evidentiary or other matter aliunde. The second [situation where
the evidence does not sustain the cause of
action alleged] is raised in a demurrer to evidence under Rule 33
after the plaintiff has rested his case and can be resolved only on
the basis of the evidence he has presented in support of his claim.
The first does not concern itself with the truth and falsity of the
allegations while the second arises precisely because the judge
has determined the truth and falsity of the allegations and has
found the evidence wanting.
Hence, a motion to dismiss based on lack of cause of action is
filed by the defendant after the plaintiff has presented his evidence
on the ground that the latter has shown no right to the relief
sought. While a motion to dismiss under Rule 16 is based on
preliminary objections which can be ventilated before the
beginning of the trial, a motion to dismiss under Rule 33 is in the
nature of a demurrer to evidence on the ground of insufficiency of
evidence and is presented only after the plaintiff has rested his
case.56 [Emphasis supplied]
III.
We shall first discuss the question of whether or not a demurrer to
evidence may be granted based on the evidence presented by the
opposing parties.
An examination of the Sandiganbayan’s Resolution shows that
dismissal of the case on demurrer to evidence was principally
anchored on the Republic’s failure to show its right to relief
because of the existence of a prior judgment which consequently
barred the relitigation of the same issue. In other words, the
Sandiganbayan did
not dismiss the case on the insufficiency of the Republic’s
evidence nor on the strength of respondents’ evidence. Rather, it
based its dismissal on the existence of the Ysmael case which,
according to it, would render the case barred by res judicata.
Prescinding from this procedural miscue, was the Sandiganbayan
correct in applying res judicata to the case at bar? To determine
whether or not res judicata indeed applies in the instant case, a
review of Ysmael is proper.
In brief, Felipe Ysmael, Jr. & Co., Inc. was a grantee of a timber
license agreement, TLA No. 87. Sometime in August 1983, the
Bureau of Forest Development cancelled TLA No. 87 despite the
company’s letter for the reconsideration of the revocation. Barely
one year thereafter, one-half (or 26,000 hectares) of the area
formerly covered by TLA No. 87 was re-awarded to Twin Peaks
under TLA No. 356.
In 1986, Felipe Ysmael, Jr. & Co., Inc. sent separate letters to the
Office of the President and the Ministry of Natural Resources
primarily seeking the reinstatement of TLA No. 87 and the
revocation of TLA No. 356. Both offices denied the relief prayed
for. Consequently, Felipe Ysmael, Jr. & Co., Inc. filed a petition for
review before this Court.
The Court, through the late Justice Irene Cortes, held that
Ysmael’s letters to the Office of the President and to the Ministry of
Natural Resources in 1986 sought the reconsideration of a
memorandum order by the Bureau of Forest Development
canceling their timber license agreement in 1983 and the
revocation of TLA No. 356 subsequently issued by the Bureau in
1984. Ysmael did not attack the administrative actions until after
1986. Since the decision of the Bureau has become final, it has the
force and effect of a final judgment within the purview of the
doctrine of res judicata. These decisions and orders, therefore, are
conclusive upon the rights of the affected parties as though the
same had been rendered by a court of general jurisdiction. The
Court also denied the petition of Ysmael because it failed to file the
special civil action for certiorari under Rule 65 within a reasonable
time, as well as in due regard for public policy considerations and
the principle of non-interference by the courts in matters which are
addressed to the sound discretion of government agencies
entrusted with the regulation of activities coming under the special
technical knowledge and training of such agencies.
In Sarabia and Leido v. Secretary of Agriculture and Natural
Resources, et al.,57 the Court discussed the underlying principle
for res judicata, to wit:
The fundamental principle upon which the doctrine of res
judicata rests is that parties ought not to be permitted to litigate the
same issue more than once; that, when a right or fact has been
judicially tried and determined by a court of competent jurisdiction,
or an opportunity for such trial has been given, the judgment of the
court, so long as it remains unreversed, should be conclusive upon
the parties and those in privity with them in law or estate.
For res judicata to serve as an absolute bar to a subsequent
action, the following requisites must concur: (1) the former
judgment or order must be final; (2) the judgment or order must be
on the merits; (3) it must have been rendered by a court having
jurisdiction over the subject matter and parties; and (4) there must
be between the first and second actions, identity of parties, of
subject matter, and of causes of action. 58 When there is only
identity of issues with no identity of causes of action, there
exists res judicata in the concept of conclusiveness of judgment. 59
In Ysmael, the case was between Felipe Ysmael Jr. & Co., Inc.
and the Deputy Executive Secretary, the Secretary of Environment
and Natural Resources, the Director of the Bureau of Forest
Development and Twin Peaks Development and Realty
Corporation. The present case, on the other hand, was initiated by
the Republic of
the Philippines represented by the Office of the Solicitor General.
No amount of imagination could let us believe that there was an
identity of parties between this case and the one formerly filed by
Felipe Ysmael Jr. & Co., Inc.
The Sandiganbayan held that despite the difference of parties, res
judicata nevertheless applies on the basis of the supposed
sufficiency of the "substantial identity" between the Republic of the
Philippines and Felipe Ysmael, Jr. Co., Inc. We disagree. The
Court in a number of cases considered the substantial identity of
parties in the application of res judicata in instances where there is
privity between the two parties, as between their successors in
interest by title60 or where an additional party was simply included
in the subsequent case61 or where one of the parties to a previous
case was not impleaded in the succeeding case.62
The Court finds no basis to declare the Republic as having
substantial interest as that of Felipe Ysmael, Jr. & Co., Inc. In the
first place, the Republic’s cause of action lies in the alleged abuse
of
power on respondents’ part in violation of R.A. No. 3019 63 and
breach of public trust, which in turn warrants its claim for restitution
and damages. Ysmael, on the other hand, sought the revocation of
TLA No. 356 and the reinstatement of its own timber license
agreement. Indeed, there is no identity of parties and no identity of
causes of action between the two cases.
IV.
What now is the course of action to take since we cannot affirm the
Sandiganbayan’s grant of the demurrer to evidence? Rule 33, Sec.
1 reads:
Sec. 1. Effect of judgment on demurrer to evidence. – After the
plaintiff has completed the presentation of his evidence, the
defendant may move for dismissal on the ground that upon the
facts and the law the plaintiff has shown no right to relief. If his
motion is denied, he shall have the right to present evidence. If the
motion is granted but on appeal the order of dismissal is reversed
he shall have be deemed to have waived the right to present
evidence.
The general rule is that upon the dismissal of the demurrer in the
appellate court, the defendant loses the right to present his
evidence and the appellate court shall then proceed to render
judgment on the
merits on the basis of plaintiff’s evidence. As the Court explained
in Generoso Villanueva Transit Co., Inc. v. Javellana: 64
The rationale behind the rule and doctrine is simple and logical.
The defendant is permitted, without waiving his right to offer
evidence in the event that his motion is not granted, to move for a
dismissal (i.e., demur to the plaintiff’s evidence) on the ground that
upon the facts as thus established and the applicable law, the
plaintiff has shown no right to relief. If the trial court denies the
dismissal motion, i.e., finds that plaintiff’s evidence is sufficient for
an award of judgment in the absence of contrary evidence, the
case still remains before the trial court which should then proceed
to hear and receive the defendant’s evidence so that all the facts
and evidence of the contending parties may be properly placed
before it for adjudication as well as before the appellate courts, in
case of appeal. Nothing is lost. The doctrine is but in line with the
established procedural precepts in the conduct of trials that the
trial court liberally receive all proffered evidence at the trial to
enable it to render its decision with all possibly relevant proofs in
the record, thus assuring that the appellate courts upon appeal
have all the material before them necessary to make a correct
judgment, and avoiding the need of remanding the case for retrial
or reception of improperly excluded evidence, with the possibility
thereafter of still another appeal, with all the concomitant delays.
The rule, however, imposes the condition by the same token that if
his demurrer is granted by the trial court, and the order of
dismissal is reversed on appeal, the movant loses his right to
present evidence in his behalf and he shall have been deemed to
have elected to stand on the insufficiency of plaintiff’s case and
evidence. In such event, the appellate court which reverses the
order of dismissal shall proceed to render judgment on the merits
on the basis of plaintiff’s evidence.65
It thus becomes the Court's duty to rule on the merits of the
complaint, duly taking into account the evidence presented by the
Republic, and without need to consider whatever evidence the
Tuveras have, they having waived their right to present evidence in
their behalf.
V.
Executive Order No. 14-A66 establishes that the degree of proof
required in cases such as this instant case is preponderance of
evidence. Section 3 thereof reads:
SEC. 3. The civil suits to recover unlawfully acquired property
under Republic Act No. 1379 or for restitution, reparation of
damages, or indemnification for consequential and other damages
or any other civil actions under the Civil Code or other existing
laws filed with the Sandiganbayan against Ferdinand E. Marcos,
Imelda R. Marcos, members of their immediate family, close
relatives, subordinates, close and/or business associates,
dummies, agents and nominees, may proceed independently of
any criminal proceedings and may be proved by a
preponderance of evidence. [Emphasis supplied.]
Thus, the Court recently held in Yuchengco v.
Sandiganbayan,67 that in establishing the quantum of evidence
required for civil cases involving the Marcos wealth held by their
immediate family, close relatives, subordinates, close and/or
business associates, dummies,
agents and nominees filed before the Sandiganbayan, that "the
Sandiganbayan, x x x was not to look for proof beyond reasonable
doubt, but to determine, based on the evidence presented, in light
of common human experience, which of the theories proffered by
the parties is more worthy of credence."
In order that restitution may be proper in this case, it must be first
established that the grant of the TLA to Twin Peaks was illegal.
With the illegality of the grant established as fact, finding Victor
Tuvera, the major stockholder of Twin Peaks, liable in this case
should be the ineluctable course. In order that Juan Tuvera may
be held answerable as well, his own participation in the illegal
grant should also be substantiated.
Regarding the first line of inquiry, the Complaint adverted to
several provisions of law which ostensibly were violated by the
grant of the TLA in favor of Twin Peaks. These include R.A. No.
3019, otherwise known as the Anti-Graft and Corrupt Practices
Act, and Articles 19, 20 and 21 of the Civil Code.
Still, the most organic laws that determine the validity or invalidity
of the TLA are those that governed the issuance of timber license
agreements in 1984. In that regard, the Republic argues that the
absence of a bidding process is patent proof of the irregularity of
the issuance of the TLA in favor of Twin Peaks.
A timber license agreement authorizes a person to utilize forest
resources within any forest land with the right of possession and
exclusion of others.68 The Forestry Reform Code prohibits any
person from utilizing, exploiting, occupying, possessing or
conducting any activity within any forest land unless he had been
authorized to do so under a license agreement, lease, license or
permit.69 The Code also mandates that no timber license
agreement shall be issued unless the applicant satisfactorily
proves that he has the financial resources and technical capability
not only to minimize utilization, but also to practice forest
protection, conservation and development measures to insure the
perpetuation of said forest in productive condition. 70 However, the
Code is silent as to the procedure in the acquisition of such timber
license agreement. Such procedure is more particularly defined
under FAO No. 11, dated 1 September 1970, which provides for
the "revised forestry license regulations."
FAO No. 11 establishes that it is the Director of Forestry who has
the power "to grant timber licenses and permits."71It also provides
as a general policy that timber license agreements shall be
granted through no other mode than public bidding. 72 However,
Section 24 of FAO No. 11 does admit that a timber license
agreement may be granted through "negotiation," as well as
through "public bidding."
26. When license may be issued.–A license under this Regulations
may be issued or granted only after an application and an award
either through bidding or by negotiation has been made and the
Director of Forestry is satisfied that the issuance of such license
shall not be inconsistent with existing laws and regulations or
prejudicial to public interest, and that the necessary license fee,
bond deposit and other requirements of the Bureau of Forestry
have been paid and complied with.73 [Emphasis supplied.]
However, even a person who is granted a TLA through
"negotiation" is still required to submit the same requirements and
supporting papers as required for public bidding. The pertinent
provisions of FAO No. 11 state:
18. Requirements and supporting papers to be submitted.—The
following requirements with accompanying supporting papers or
documents shall be submitted in addition to the requirements of
Section 12:
a. With bid application:
The applicant shall support his bid application with the required
application fee duly paid and proofs of the following:
(1) Capitalization.—Cash deposits and established credit line by
applicant in domestic bank certified to by the bank President or
any of its authorized officials, duly attested by depositor as his own
to be used exclusively in logging and wood processing operations
if awarded the area. The bank certificate shall be accompanied by
a written consent by the applicant-depositor for the Director of
Forestry or his authorized representative to verify such cash
deposit with bank authorities.
Capitalization and financial statements.— A minimum
capitalization of ₱20.00 per cubit meter in cash and an established
credit line of ₱150.00 per cubic meter based on the allowable
annual cut are required. Financial statements certified by the
independent and reputable certified public accountants must
accompany the application as proof of the necessary
capitalization.
Additional capitalization, Real Estate.— In the event that the
capitalization of the applicant is less than the minimum or less than
that set by the Director of Forestry for the area, the applicant
bidder may be asked to submit an affidavit signifying his readiness,
should the area be awarded to him, to convert within a specified
time any specified unencumbered and titled real estate into cash
for use in operating and developing the area. Presentation of real
estate should show location by municipality and province,
hectarage, title number, latest land tax declaration, assessed value
of land and improvements (stating kind of improvements), and
encumbrances if any.
(2) Logging machinery and equipment.—Evidence of ownership or
capacity to acquire the requisite machinery or equipment shall
accompany the bid application. The capacity or ability to acquire
machineries and equipments shall be determined by the
committee on award. Leased equipment or machineries may be
considered in the determination by the Committee if expressly
authorized in writing by the Director of Forestry.
(3) Technical know-how.—To assure efficient operation of the area
or concession, the applicant shall submit proof of technical
competence and know-how and/or his ability to provide hired
services of competent personnel.
(4) Operation or development plan.— An appropriate plan of
operation and development of the forest area applied for shall be
submitted, including phasing plans and the fund requirements
therefor, consistent with selective logging methods and the
sustained yield policy of the Bureau of Forestry. This plan must be
in general agreement with the working unit plan for the area as
contained in Chapter III, Section 6(a) hereinabove.
(5) Processing plant.—The bidder or applicant shall show evidence
of ownership of, or negotiation to acquire, a wood processing
plant. The kind and type of plant, such as plywood, veneer,
bandmill, etc. shall be specified. The plant should be capable of
processing at least 60% of the allowable annual cut.
(6) Forestry Department.—The applicant shall submit assurance
under oath that he shall put a forestry department composed of
trained or experienced foresters to carry out forest management
activities such as selective logging, planting of denuded or logged-
over areas within the concessions as specified by the Director of
Forestry and establish a forest nursery for the purpose.
(7) Statement on sustained yield operations, reforestation, and
protection under management plans.— The bidder or applicant
shall submit a sworn statement of his agreement and willingness to
operate the area under sustained yield to reforest cleared areas
and protect the concession or licensed area and under the
approved management plan, and to abide with all existing forestry
laws, rules and regulations and those that may hereafter be
promulgated; and of his agreement that any violation of these
conditions shall be sufficient cause for the cancellation of the
licenses.
(8) Organization plan.–Other important statement connected with
sound management and operation of the area, such as the
submission among others, of the organizational plan and
employment of concession guards, shall be submitted. In this
connection, the applicant shall submit a sworn statement to the
effect no alien shall be employed without prior approval of proper
authorities.
(9) Unauthorized use of heave equipment.—The applicant shall
give his assurance that he shall not introduce into his area
additional heave equipment and machinery without approval of the
Director of Forestry.
(10) Such other inducements or considerations to the award as will
serve public interest may also be required from time to time.
xxxx
d) With applications for areas to be negotiated.—All the foregoing
requirements and supporting papers required for bidding under
Section 18(a) hereinabove and of Section 20(b) hereinbelow shall
also apply to all areas that may be granted through negotiation. In
no case shall an area exceeding 100,000 hectares be granted thru
negotiation.74
The rationale underlying the very elaborate procedure that entails
prior to the grant of a timber license agreement is to avert the
haphazard exploitation of the State's forest resources as it
provides that only the most qualified applicants will be allowed to
engage in timber activities within the strict limitations of the grant
and that cleared forest areas will have to be renewed through
reforestation. Since timber is not a readily renewable natural
resource, it is essential and appropriate that the State serve and
act as a jealous and zealous guardian of our forest lands, with the
layers of bureaucracy that encumber the grant of timber license
agreements effectively serving as a defensive wall against the
thoughtless ravage of our forest resources.
There is no doubt that no public bidding occurred in this case.
Certainly, respondents did not raise the defense in their respective
answers. The absence of such bidding was testified on by
prosecution witness Arcangel. Yet even if we consider that Twin
Peaks could have acquired the TLA through "negotiation," the
prescribed requirements for "negotiation" under the law were still
not complied with.
It is evident that Twin Peaks was of the frame of mind that it could
simply walk up to President Marcos and ask for a timber license
agreement without having to comply with the elaborate application
procedure under the law. This is indicated by the letter dated 31
May 198475 signed by Twin Peaks’ Vice President and Treasurer
Evelyn Fontanilla, addressed directly to then President Marcos,
wherein Twin Peaks expressed that "we would like to request a
permit to export 20,000 cubic meters of logs and to cut and
process 10,000 cubic meters of the narra species in the same
area."76 A marginal note therein signed by Marcos indicates an
approval thereof. Neither the Forestry Reform Code nor FAO No.
11 provide for the submission of
an application directly to the Office of the President as a proper
mode for the issuance of a TLA. Without discounting the breadth
and scope of the President’s powers as Chief Executive, the
authority of the President with respect to timber licenses is, by the
express terms of the Revised Forestry Code, limited to the
amendment, modification, replacement or rescission of any
contract, concession, permit, license or any other form of privilege
granted by said Code.77
There are several factors that taint this backdoor application for a
timber license agreement by Twin Peaks. The forest area covered
by the TLA was already the subject of a pre-existing TLA in favor
of Ysmael. The Articles of Incorporation of Twin Peaks does not
even stipulate that logging was either a principal or secondary
purpose of the corporation. Respondents do allege that the Articles
was amended prior to the grant in order to accommodate logging
as a corporate purpose, yet since respondents have waived their
right to present evidence by reason of their resort to demurrer, we
cannot consider such allegation as proven.
Sec. 18(a)(1) of FAO No. 11 requires that an applicant must have
a minimum capitalization of ₱20.00 per cubic meter in cash and an
established credit line of ₱150.00 per cubic meter based on the
allowable annual cut. TLA No. 356 allowed Twin Peaks to operate
on 26,000 hectares of forest land with an annual allowable cut of
60,000 cubic meters of timber. With such annual allowable cut,
Twin
Peaks, therefore, must have at least ₱1,200,000.00 in cash as its
minimum capitalization, following FAO No. 11. An examination of
Twin Peaks’ Articles of Incorporation shows that its paid-up capital
was only ₱312,500.00.78 Clearly, Twin Peaks’ paid-up capital is
way below the minimum capitalization requirement.
Moreover, Sec. 18(5) provides that the bidder or applicant shall
show evidence of ownership of, or negotiation to acquire, a wood
processing plant. However, although TLA No. 356 was issued to
Twin Peaks in 1984, it continued to engage the services of at least
two sawmills79 as late as 1988. Four (4) years from the issuance of
the license, Twin Peaks remained incapable of processing logs.
What could have made Twin Peaks feel emboldened to directly
request President Marcos for the grant of Timber License
Agreement despite the obvious problems relating to its capacity to
engage in timber activities? The reasonable assumption is that the
official and personal proximity of Juan Tuvera to President Marcos
was a key factor, considering that he was the father of Twin Peaks'
most substantial stockholder.
The causes of action against respondents allegedly arose from
Juan Tuvera’s abuse of his relationship, influence and connection
as Presidential Executive Assistant of then President Marcos.
Through Juan Tuvera’s position, the Republic claims that Twin
Peaks was able to secure a Timber License Agreement despite its
lack of qualification and the absence of a public bidding. On
account of the unlawful issuance of a timber license agreement,
the natural resources of the country were unlawfully exploited at
the expense of the Filipino people. Victor Tuvera, as son of Juan
Tuvera and a major stockholder of Twin Peaks, was included as
respondent for having substantially benefited from this breach of
trust. The circumstance of kinship alone may not be enough to
disqualify Victor Tuvera from seeking a timber license agreement.
Yet the basic ethical principle of delicadeza should have dissuaded
Juan Tuvera from any official or unofficial participation or
intervention in behalf of the "request" of Twin Peaks for a timber
license.
Did Juan Tuvera do the honorable thing and keep his distance
from Twin Peaks' "request"? Apparently not. Instead, he penned a
Memorandum dated 18 July 1984 in his capacity as Presidential
Executive Assistant, directed at the Director of Forestry, the official
who, under the law, possessed the legal authority to decide
whether to grant the timber license agreements after deliberating
on the application and its supporting documents. The
Memorandum reads in full:
Office of the President of the Philippines
Malacanang
18 July 1984
74-84
MEMORANDUM to
Director Edmundo Cortes
Bureau of Forest Development
I wish to inform you that the President has granted the award to
the Twin Peaks Realty Development Corporation, of the
concession to manage, operate and develop in accordance with
existing policies and regulations half of the timber area in the
Province of Quirino covered by TLA No. 87, formerly belonging to
the Felipe Ysmael, Jr. & Company and comprising 54,920
hectares, and to export half of the requested 20,000 cubic meters
of logs to be gathered from the area.
Herewith is a copy of the letter concering (sic) this matter of Ms.
Evelyn F. Fontanilla, Vice-President and Treasurer of the Twin
Peaks Realty Development Corporation, on which the President
indicated such approval in his own hand, which I am furnishing you
for your information and appropriate action.
(signed)
JUAN C. TUVERA
Presidential Executive Assistant80
The Memorandum establishes at the very least that Tuvera knew
about the Twin Peaks "request," and of President Marcos's
favorable action on such "request." The Memorandum also
indicates that Tuvera was willing to convey those facts to the
Director of Forestry, the ostensible authority in deciding whether
the Twin Peaks "request" should have been granted. If Juan
Tuvera were truly interested in preventing any misconception that
his own position had nothing to do with the favorable action on the
"request" lodged by the company controlled by his son, he would
not have prepared or signed the Memorandum at all. Certainly,
there were other officials in Malacañang who could have
performed that role had the intent of the Memorandum been
merely to inform the Director of Forestry of such Presidential
action.
Delicadeza is not merely a stentorian term evincing a bygone
ethic. It is a legal principle as embodied by certain provisions of the
Anti-Graft and Corrupt Practices Act. Section 3 of R.A. No. 3019
states in part:
Sec. 3. Corrupt practices of public officers.—In addition to acts or
omissions of public officers already penalized by existing law, the
following shall constitute corrupt practices of any public officer and
are hereby declared to be unlawful:
(a) Persuading, inducing or influencing another public officer to
perform an act constituting a violation of rules and regulations duly
promulgated by competent authority or an offense in connection
with the official duties of the latter, or allowing himself to be
persuaded, induced or influenced to commit such violation or
offense.
xxxx
(h) Directly or indirectly having financial or pecuniary interest in
any business, contract or transaction in connection with which he
intervenes or takes part in his official capacity, or in which he is
prohibited by the Constitution or by any law from having any
interest.
The Memorandum signed by Juan Tuvera can be taken as proof
that he "persuaded, induced or influenced" the Director of Forestry
to accommodate a timber license agreement in favor of Twin
Peaks, despite the failure to undergo public bidding, or to comply
with the requisites for the grant of such agreement by negotiation,
and in favor of a corporation that did not appear legally capacitated
to be granted such agreement. The fact that the principal
stockholder of Twin Peaks was his own son establishes his indirect
pecuniary interest in the transaction he appears to have intervened
in. It may have been possible on the part of Juan Tuvera to prove
that he did not persuade, induce or influence the Director of
Forestry or any other official in behalf of the timber license
agreement of Twin Peaks, but then again, he waived his right to
present evidence to acquit himself of such suspicion. Certainly, the
circumstances presented by the evidence of the prosecution are
sufficient to shift the burden of evidence to Tuvera in establishing
that he did not violate the provisions of the Anti-Graft and Corrupt
Practices Act in relation to the Twin Peaks "request."
Unfortunately, having waived his right to present evidence, Juan
Tuvera failed to disprove that he failed to act in consonance with
his obligations under the Anti-Graft and Corrupt Practices Act.
In sum, the backdoor recourse for a hugely priced favor from the
government by itself, and more in tandem with other brazen
relevant damning circumstances, indicates the impudent abuse of
power and the detestable misuse of influence that homologously
made the acquisition of ill-gotten wealth a reality. Upon the facts
borne out by the evidence for the Republic and guideposts
supplied by the governing laws, the Republic has a clear right to
the reliefs it seeks.
VI.
If only the Court's outrage were quantifiable in sums of money,
respondents are due for significant pecuniary hurt. Instead, the
Court is forced to explain in the next few paragraphs why
respondents could not be forced to recompensate the Filipino
people in appropriate financial terms. The fault lies with those
engaged by the government to litigate this case in behalf of the
State.
It bears to the most primitive of reasons that an action for recovery
of sum of money must prove the amount sought to be recovered.
In the case at bar, the Republic rested its case without presenting
any evidence, documentary or testimonial, to establish the amount
that should be restituted to the State by reason of the illegal acts
committed by the respondents. There is the bare allegation in the
complaint that the State is entitled to ₱48 million by way of actual
damages, but no single proof presented as to why the State is
entitled to such amount.
Actual damages must be proven, not presumed. 81 The Republic
failed to prove damages. It is not enough for the Republic to have
established, as it did, the legal travesty that led to the wrongful
obtention by Twin Peaks of the TLA. It should have established the
degree of injury sustained by the State by reason of such wrongful
act.
We fail to comprehend why the Republic failed to present any
proof of actual damages. Was it the inability to obtain the
necessary financial documents that would establish the income
earned by Twin Peaks during the period it utilized the TLA, despite
the presence of the discovery processes? Was it mere indolence
or sheer incompetence? Whatever the reason, the lapse is
inexcusable, and the injury ultimately conduces to the pain of the
Filipino people. If the litigation of this case is indicative of the
mindset in the prosecution of ill-gotten wealth cases, it is
guaranteed to ensure that those who stole from the people will be
laughing on their way to the bank.
The claim for moral damages deserves short shrift. The claimant in
this case is the Republic of the Philippines, a juridical person. We
explained in Filipinas Broadcasting v. Ago Medical & Educational
Center-Bicol Christian College of Medicine (AMEC-BCCM):82
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. The Court of Appeals cites
Mambulao Lumber Co. v. PNB, et al. to justify the award of moral
damages. However, the Court's 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.
Nevertheless, AMEC's claim for moral damages falls under item 7
of Article 2219 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. 83
As explained, a juridical person is not entitled to moral damages
under Article 2217 of the Civil Code. It may avail of moral damages
under the analogous cases listed in Article 2219, such as for libel,
slander or any other form of defamation. Suffice it to say that the
action at bar does not involve any of the analogous cases under
Article 2219, and indeed upon an intelligent reading of Article
2219, it is difficult to see how the Republic could sustain any of the
injuries contemplated therein. Any lawyer for the Republic who
poses a claim for moral damages in behalf of the State stands in
risk of serious ridicule.
However, there is sufficient basis for an award of temperate
damages, also sought by the Republic notwithstanding the fact
that a claim for both actual and temperate damages is internally
inconsistent. Temperate or moderate damages avail when "the
court finds that some pecuniary loss has been suffered but its
amount can not from the nature of the case, be proved with
certainty."84 The textual language might betray an intent that
temperate damages do not avail when the case, by its nature, is
susceptible to proof of pecuniary loss; and certainly the Republic
could have proved pecuniary loss herein. 85 Still, jurisprudence
applying Article 2224 is clear that temperate damages may be
awarded even in instances where pecuniary loss could
theoretically have been proved with certainty.1awphi1.net
In a host of criminal cases, the Court has awarded temperate
damages to the heirs of the victim in cases where the amount of
actual damages was not proven due to the inadequacy of the
evidence presented by the prosecution. These cases
include People v. Oliano,86 People v. Suplito,87 People v. De la
Tongga,[88] People v. Briones,89 and People v. Plazo.90 In Viron
Transportation Co., Inc. v. Delos Santos,91 a civil action for
damages involving a vehicular collision, temperate damages were
awarded for the resulting damage sustained by a cargo truck, after
the plaintiff had failed to submit competent proof of actual
damages.
We cannot discount the heavy influence of common law, and its
reliance on judicial precedents, in our law on tort and damages.
Notwithstanding the language of Article 2224, a line of
jurisprudence has emerged authorizing the award of temperate
damages even in cases where the amount of pecuniary loss could
have been proven with certainty, if no such adequate proof was
presented. The allowance of temperate damages when actual
damages were not adequately proven is ultimately a rule drawn
from equity, the principle affording relief to those definitely injured
who are unable to prove how definite the injury. There is no
impediment to apply this doctrine to the case at bar, which involves
one of the most daunting and noble undertakings of our young
democracy–the recovery of ill-gotten wealth salted away during the
Marcos years. If the doctrine can be justified to answer for the
unlawful damage to a cargo truck, it is a
compounded wrath if it cannot answer for the unlawful exploitation
of our forests, to the injury of the Filipino people. The amount of
₱1,000,000.00 as temperate damages is proper.
The allowance of temperate damages also paves the way for the
award of exemplary damages. Under Article 2234 of the Civil
Code, a showing that the plaintiff is entitled to temperate damages
allows for the award of exemplary damages. Even as exemplary
damages cannot be recovered as a matter of right, the courts are
empowered to decide whether or not they should be adjudicated.
Ill-gotten wealth cases are hornbook demonstrations where
damages by way of example or correction for the public good
should be awarded. Fewer causes of action deserve the stigma left
by exemplary damages, which "serve as a deterrent against or as
a negative incentive to curb socially deleterious actions." 92 The
obtention of the timber license agreement by Twin Peaks through
fraudulent and illegal means was highlighted by Juan Tuvera’s
abuse of his position as Presidential Executive Assistant. The
consequent exploitation of 26 hectares of forest land benefiting all
respondents is a grave case of unjust enrichment at the expense
of the Filipino people and of the environment which should never
be countenanced. Considering the expanse of forest land exploited
by respondents, the volume of timber that was necessarily cut by
virtue of their abuse and the estimated wealth acquired by
respondents through grave abuse of trust and public office, it is
only reasonable that petitioner be granted the amount of
₱1,000,000.00 as exemplary damages.
The imposition of exemplary damages is a means by which the
State, through its judicial arm, can send the clear and unequivocal
signal best expressed in the pithy but immutable phrase, "never
again." It is severely unfortunate that the Republic did not exert its
best efforts in the full recovery of the actual damages caused by
the illegal grant of the Twin Peaks TLA. To the best of our ability,
through the appropriate vehicle of exemplary damages, the Court
will try to fill in that deficiency. For if there is a lesson that should
be
learned from the national trauma of the rule of Marcos, it is that
kleptocracy cannot pay. As those dark years fade into the
backburner of the collective memory, and a new generation
emerges without proximate knowledge of how bad it was then, it is
useful that the Court serves a reminder here and now.
WHEREFORE, the petition is GRANTED. The Resolution of the
Sandiganbayan dated 23 May 2001 is REVERSED. Respondents
Juan C. Tuvera, Victor P. Tuvera and Twin Peaks Development
Corporation are hereby ordered to jointly and severally pay to the
Republic of the Philippines One Million (₱1,000,000.00) Pesos, as
and for temperate damages, and One Million (₱1,000,000.00)
Pesos, as and for exemplary damages, plus costs of suit.

SO ORDERED.

DANTE O. TINGA
Associate Justice
 THIRD DIVISION
G.R. No. 178008 October 9, 2013
SAN FERNANDO REGALA TRADING, INC., Petitioner,
vs.
CARGILL PHILIPPINES, INC., Respondent.
x-----------------------x
G.R. No. 178042
CARGILL PHILIPPINES, INC., Petitioner,
vs.
SAN FERNANDO REGALA TRADING, INC., Respondent.
DECISION
ABAD, J.:
These cases pertain to the reciprocal obligations of the parties in a
contract of sale to deliver the goods, receive them, and pay the
price as stipulated and the consequent effects of breach of such
obligations.
The facts and the Case
Cargill Philippines, Inc. (Cargill) and San Fernando Regala
Trading, Inc. (San Fernando) were cane molasses traders that did
business with each other for sometime. The present controversy
arose when San Fernando claimed that Cargill reneged on its
contractual obligations to deliver certain quantities of molasses.
Cargill denied this, insisting that San Fernando actually refused to
accept the delivery of the goods. This enmity resulted in Cargill’s
filing on March 2, 1998 a complaint for sum of money and
damages against San Fernando before the Regional Trial Court
(RTC) of Makati City in Civil Case 98-493.
Cargill alleged that on July 15, 1996 it entered into Contract
50261 covering its sale to San Fernando of 4,000 metric tons (mt)
of molasses at the price of ₱3,950.00 per mt. Cargill agreed to
deliver the molasses within the months of "April to May 1997" at
the wharf of Union Ajinomoto, Inc.(Ajinomoto) along the Pasig
River, Metro Manila. This was a risk-taking forward sale in that its
execution was to take place about 10 months later when the
parties did not yet know what the trading price of molasses would
be.
Shortly after, Cargill also entered into Contract 50472 covering
another sale to San Fernando of 5,000 mt of molasses at
₱2,750.00 per mt. The delivery period under this contract was
within "October-November-December 1996," sooner than the
delivery period under Contract 5026. Apparently, San Fernando
had a deal with Ajinomoto for the supply of these molasses.
Cargill further alleged that it offered to deliver the 4,000 mt of
molasses as required by Contract 5026 within the months of April
and May1997 but San Fernando accepted only 951 mt, refusing to
accept the rest. On April 2, 1997 Dolman V, the barge carrying
Cargill’s 1,174 mt of molasses, arrived at the Ajinomoto wharf but
San Fernando refused to accept the same. The barge stayed at
the wharf for 71 days, waiting for San Fernando’s unloading order.
Because of the delay, the owner of the barges lapped Cargill with
demurrage amounting to ₱920,000.00. Cargill also suffered
₱3,480,000.00 in damages by way of unrealized profits because it
had to sell the cargo to another buyer at a loss.
Cargill further alleged that it earlier sought to deliver the molasses
covered by Contract 5047 at the Ajinomoto wharf in the months of
October, November, and December 1996, but San Fernando failed
or refused for unjustified reasons to accept the delivery.
Consequently, Cargill suffered damages by way of unrealized
profits of ₱360,000.00 from this contract. Apart from asking the
RTC for awards of unrealized profits, Cargill also asked for a return
of the demurrage it paid, attorney’s fees, and cost of litigation.
To substantiate its claim, Cargill presented David Mozo of Dolman
Transport Corp. who testified that Cargill chartered its Dolman V
barge to carry molasses from Pasacao to the Ajinomoto wharf in
Pasig. But the barge was unable to unload its cargo and was
placed on stand-by for around 70days, awaiting orders to unload
its molasses. Consequently, Dolman Transport charged Cargill for
demurrage.
Cargill also presented Arthur Gunlao, an employee, who testified
that his company was unable to unload the molasses covered by
Contracts 5026and 5047 because San Fernando’s President,
Quirino Kehyeng, advised them to wait because Ajinomoto’s
storage tanks were still full and could not receive the molasses.
Because of the prolonged delay in the unloading of the goods,
Cargill had no choice but to sell the molasses to another buyer. At
the prodding of Kehyeng, Cargill wrote San Fernando on May 14,
1997 proposing changes in the delivery periods of Contract 5026
and 5047,respectively from "April to May 1997" to "May to June
1997" and from" October-November-December 1996" to "May-
June-July 1997."3 The amendments were needed to keep the
contracts valid and maintain the good business relations between
the two companies.
In its Answer with counterclaim, San Fernando pointed out that,
except for the 951 mt of molasses that Cargill delivered in March
1997, the latter made no further deliveries for Contract 5026.
Indeed, Cargill sent San Fernando a letter dated May 14, 1997
proposing a change in the delivery period for that contract from
"April to May 1997" to "May to June 1997."But San Fernando
rejected the change since it had a contract to sell the molasses to
Ajinomoto for ₱5,300.00 per mt.4 San Fernando expected to earn
a ₱5,400,000.00 profit out of Contract 5026.
As for Contract 5047, San Fernando maintained that Cargill
delivered no amount of molasses in connection with the same.
Cargill admitted its inability to deliver the goods when it wrote San
Fernando a letter on May 14,1997, proposing to move the delivery
period from "October-November-December 1996" to "May-June-
July 1997." But San Fernando also rejected the change since it
had already contracted to sell the subject molasses to Ajinomoto
for ₱4,950.00 per mt.5 San Fernando expected a profit of
₱11,000,000.00 under this contract.
To prove its claims, San Fernando presented its President,
Kehyeng, who testified that apart from the March 1997 delivery of
951 mt of molasses under Contract 5026, Cargill made no further
deliveries. He called Dennis Seah of Cargill several times
demanding delivery but nothing came of it. Subsequently, Cargill
wrote San Fernando, proposing the extension of the delivery
periods provided in their two contracts. But Kehyeng rejected the
proposal and refused to sign his conformity at the appropriate
spaces on Cargill’s letter.
Kehyeng denied that San Fernando had refused to receive
deliveries because it bought molasses from Cargill at prices higher
than what Ajinomoto was willing to pay. Kehyeng insisted that San
Fernando had always received Cargill’s deliveries even on
occasions when the prices fluctuated resulting in losses to his
company. He claimed that, as a result of Cargill’s violation of
Contracts 5026 and 5047, San Fernando was entitled to rescission
and awards for unrealized profits of ₱4,115,329.20 and
₱11,000,000.00, respectively, moral and exemplary damages each
in the amount of ₱500,000.00, attorney’s fees of ₱1,000,000.00,
and litigation expenses.
On December 23, 2003 the RTC dismissed Cargill’s complaint for
lack of merit and granted San Fernando’s counterclaims. The RTC
did not give credence to Cargill’s claim that San Fernando refused
to accept the deliveries of molasses because Ajinomoto’s tanks
were full. San Fernando sufficiently proved that Ajinomoto
continued receiving molasses from other suppliers during the
entire time that Cargill’s chartered barge was put on stand-by at
the wharf, supposedly waiting for San Fernando’s unloading
orders.
It was incomprehensible, said the RTC, for San Fernando to refuse
Cargill’s deliveries, considering that Ajinomoto had already agreed
to buy the molasses from it. Cargill’s failure to make the required
deliveries resulted in San Fernando’s default on its obligations to
Ajinomoto, prompting the latter to cancel its orders. As a result,
San Fernando lost expected profits of ₱4,115,329.20 representing
the remaining undelivered molasses under Contract 5026 and
₱11,000,000.00 under Contract 5047.The RTC awarded San
Fernando its claims for unrealized profits,₱500,000.00 in moral
damages, another ₱500,000.00 in exemplary damages, attorney’s
fees of ₱1,000,000.00, and ₱500,000.00 as cost of litigation.
The Court of Appeals (CA) ruled on appeal, however, that Cargill
was not entirely in breach of Contract 5026. Cargill made an
advance delivery of 951 mt in March 1997. It then actually sent a
barge containing 1,174 mt of molasses on April 2, 1997 for delivery
at Ajinomoto’s wharf but San Fernando refused to have the cargo
unloaded. Consequently, the trial court erred in awarding San
Fernando unrealized profits of ₱4,115,329.20 under Contract
5026. The CA also ruled that since San Fernando unjustifiably
refused to accept the April 2, 1997 delivery, it should reimburse
Cargill the₱892,732.50 demurrage that it paid the owner of the
barge.
The CA, however, found Cargill guilty of breach of Contract
5047which called for delivery of the molasses in "October-
November-December 1996." Since San Fernando did not accede
to Cargill’s request to move the delivery period back, Cargill
violated the contract when it did not deliver the goods during the
previously agreed period. Cargill was liable to San Fernando for
unrealized profits of ₱11,000,000.00 that it would have made if it
had sold them to Ajinomoto. The CA deleted the award of moral
and exemplary damages in favor of San Fernando for its failure to
sufficiently establish Cargill’s bad faith in complying with its
obligations. The CA also deleted the awards of attorney’s fees and
cost of litigation.
The CA thus ordered: 1) San Fernando to reimburse Cargill the
demurrage of ₱892,732.50 that it paid, subject to 6% interest per
annum computed from the date of the filing of the complaint until
the finality of the decision; and 2) Cargill to pay San Fernando
₱11,000,000.00 in unrealized profits under Contract 5047. The CA
deleted the award of moral and exemplary damages, attorney’s
fees, and cost of litigation. This prompted both Cargill and San
Fernando to appeal to this Court.
Issues for Resolution
These cases present the following issues:
1. Whether or not the CA erred in ruling that Cargill was
not guilty of breach of obligation to deliver the 4,000 mt of
molasses covered by Contract 5026 during the period
April and May 1997;
2. Whether or not the CA erred in ruling that Cargill was
guilty of breach of obligation to deliver the 5,000 mt of
molasses covered by Contract5047 during the period
October, November, and December 1996; and
3. Whether or not the CA erred in deleting the award of
moral and exemplary damages, attorney’s fees, and cost
of suit in favor of San Fernando.
The Rulings of the Court
One. The CA held that Cargill committed no breach of Contract
5026 because it had earlier delivered 951 mt of molasses in March
19976 and sent a barge containing 1,174 mt of the goods on April
2, 1997 at the Ajinomoto’s wharf. It was actually San Fernando
that refused to accept this delivery on April 2.
But Contract 5026 required Cargill to deliver 4,000 mt of molasses
during the period "April to May 1997." Thus, anything less than that
quantity constitutes breach of the agreement. And since Cargill
only delivered a total of 2,125 mt of molasses during the agreed
period, Cargill should be regarded as having violated Contract
5026 with respect to the undelivered balance of 1,875 mt of
molasses.
Notably, Chargill’s chartered barge showed up with 1,174 mt of
molasses at the Ajinomoto wharf on April 27, 1997. The barge
stayed therefor around 70 days, awaiting orders to unload the
cargo. David Mozo of Dolman Transport Corp. attested to this.
Dolman V was put on stand-by at the wharf while other barges
queued to unload their molasses into Ajinomoto’s storage tanks.7
In failing to accept delivery of Cargill’s 1,174molasses, San
Fernando should reimburse Cargill the ₱892,732.50 demurrage
that it paid.
Ultimately, what are the liabilities of the parties under Contract
5026?Had San Fernando accepted the delivery of 1,174 mt of
molasses on April27, 1997 Cargill would have been entitled to
payment of their price of ₱4,637,300.00 at ₱3,950.00 per mt. But,
since Cargill succeeded in selling that 1,174 mt of molasses to
Schuurmans & Van Ginneken for ₱1,861.92 per mt. 8 Cargill’s
unrealized profit then amounted to only ₱2,451,405.59. Thus:
₱3,950 per mt – ₱1,861.92 per mt = ₱2,088.09 x 1,174
mt = ₱2,451,405.59
Since Cargill failed, however, to deliver the balance of 1,875 mt of
molasses under Contract 5026, it must pay San Fernando the
₱2,531,250.00, representing the latter’s unrealized profits had it
been able to sell that 1,875mt of molasses to Ajinomoto. Thus:
₱5,300 per mt selling price at Ajinomoto – ₱3,950acquisition cost
= ₱1,350 profit per mt ₱1,350.00 profit margin per mt x 1,875 mt =
₱2,531,250.00
Cargill, of course, claimed that it had sufficient inventories of
molasses to complete its deliveries, implying that had San
Fernando accepted its initial delivery of 1,174 mt it would have
continued delivering the rest. But it is not enough for a seller to
show that he is capable of delivering the goods on the date he
agreed to make the delivery. He has to bring his goods and deliver
them at the place their agreement called for, i.e., at the Ajinomoto
Pasig River wharf.
A stipulation designating the place and manner of delivery is
controlling on the contracting parties.9 The thing sold can only be
understood as delivered to the buyer when it is placed in the
buyer’s control and possession at the agreed place of
delivery.10 Cargill presented no evidence that it attempted to make
other deliveries to complete the balance of Contract 5026.
Two. The CA correctly ruled that Cargill was in breach of Contract
5047 which provided for delivery of the molasses within the
months of October, November, and December 1996. Thus, when
Cargill wrote San Fernando on May 14, 1997 proposing to move
the delivery dates of this contract to May, June, and July, 1997, it
was already in default. San Fernando’s refusal to signify its
conformity at the proper space on Cargill’s letter-proposal
regarding Contract 5047 signifies that it was not amenable to the
change.
San Fernando had good reason for this: it had already agreed to
supply Ajinomoto the molasses covered by Contract 5047 at the
rate of ₱4,950.00 per mt.11 Consequently, Cargill’s failure to deliver
the 5,000 mt of molasses on "October-November-December 1996"
makes it liable to San Fernando for ₱11,000,000.00 in unrealized
profits. Thus:
₱4,950 per mt selling price to Ajinomoto – ₱2,750acquisition cost
= ₱2,200 profit per mt
₱2,200 per mt x 5,000 mt = ₱11,000,000.00
In failing to make any delivery under Contract 5047, Cargill should
pay San Fernando the profit that it lost because of such breach.
Cargill of course points out that San Fernando never wrote a
demand letter respecting its failure to make any delivery under that
contract. But demand was not necessary since Cargill’s obligation
under the contract specified the date and place of delivery, i.e.,
"October-November-December 1996," at the Ajinomoto wharf in
Pasig.12
WHEREFORE, the Court PARTIALLY GRANTS the petitions and
MODIFIES the Court of Appeals Decision on January 19, 2007 in
CA-G.R.CV 81993 as follows:
1. San Fernando Regala Trading, Inc. is ORDERED to
pay Cargill Philippines, Inc. (a) ₱892,732.50 representing
the demurrage that the latter incurred and (b)
₱2,451,405.59 representing its unrealized profit on the
rejected delivery of 1,174 mt of molasses, both under
Contract 5026, for a total of ₱3,344,138.09, with interest
at 6% per annum computed from the date of the filing of
the complaint until the same is fully paid; and
2. Cargill Philippines, Inc. is ORDERED to pay San
Fernando Regala Trading, Inc. the latter’s unrealized
profits of ₱2,531,250.00 for the breach of Contract 5026
and ₱11,000,000.00 for the breach of Contract 5047, for
a total of P 13,531,250.00, with interest at 6% per annum
computed from the date of the tiling of the answer with
counterclaim until the same is fully paid.
The Court of Appeals' deletion of the awards of moral and
exemplary damages, attorney's fees, and costs of litigation stands.
SO ORDERED.
ROBERTO A. ABAD
Associate Justice

Three. The Court concurs with the CA’s deletion of the RTC’s
award of moral damages to San Fernando.1âwphi1 As a rule,
moral damages are not awarded to a corporation unless it enjoyed
good reputation that the offender debased and besmirched by his
actuations.13 San Fernando failed to prove by sufficient evidence
that it fell within this exception. Besides, moral damages are, as a
rule, also not recoverable in culpa contractual except when bad
faith had been proved.14

San Fernando failed to show that Cargill was motivated by bad

faith or ill will when it failed to deliver the molasses as agreed.

The Court rules that the CA correctly deleted the award of

exemplary damages to San Fernando. In breach of contract, the
court may only award exemplary damages if the defendant acted
in a wanton, fraudulent, reckless, oppressive, or malevolent
manner.15 The evidence has not sufficiently established that
Cargill’s failure to deliver the molasses on time was attended by
such wickedness.

Lastly, the CA correctly deleted the award of attorney’s fees and

cost of litigation to San Fernando. Attorney’s fees and expenses of
litigation under Article 2208 of the Civil Code are proper only when
exemplary damages are awarded. Here, the Court has ruled that
San Fernando is not entitled to an award of exemplary damages.
Both parties actually committed shortcomings in complying with
their contractual obligations. San Fernando failed in Contract 5026
to accept Cargill’s delivery of 1,174 mt of molasses; Cargill only
complied partially with its undertakings under Contract 5026and
altogether breached its obligations under Contract 5047. For
these, they must bear their own expenses of litigation.
 EN BANC
G.R. No. L-22415 March 30, 1966
FERNANDO LOPEZ, ET AL., plaintiffs-appellants,
vs.
PAN AMERICAN WORLD AIRWAYS, defendant-appellant.
Ross, Selph and Carrascoso for the defendant-appellant.
Vicente J. Francisco for the plaintiffs-appellants.
BENGZON, J.P., J.:
Plaintiffs and defendant appeal from a decision of the Court of First
Instance of Rizal. Since the value in controversy exceeds
P200,000 the appeals were taken directly to this Court upon all
questions involved (Sec. 17, par. 3[5], Judiciary Act).
Stated briefly the facts not in dispute are as follows: Reservations
for first class accommodations in Flight No. 2 of Pan American
World Airways — hereinafter otherwise called PAN-AM — from
Tokyo to San Francisco on May 24, 1960 were made with
PAN-AM on March 29, 1960, by "Your Travel Guide" agency,
specifically, by Delfin Faustino, for then Senator Fernando Lopez,
his wife Maria J. Lopez, his son-in-law Alfredo Montelibano, Jr.,
and his daughter, Mrs. Alfredo Montelibano, Jr., (Milagros Lopez
Montelibano). PAN-AM's San Francisco head office confirmed the
reservations on March 31, 1960.
First class tickets for the abovementioned flight were subsequently
issued by
PAN-AM on May 21 and 23, 1960, in favor of Senator Lopez and
his party. The total fare of P9,444 for all of them was fully paid
before the tickets were issued.
As scheduled Senator Lopez and party left Manila by Northwest
Airlines on May 24, 1960, arriving in Tokyo at 5:30 P.M. of that
day. As soon as they arrived Senator Lopez requested Minister
Busuego of the Philippine Embassy to contact PAN-AM's Tokyo
office regarding their first class accommodations for that evening's
flight. For the given reason that the first class seats therein were all
booked up, however, PAN-AM's Tokyo office informed Minister
Busuego that PAN-AM could not accommodate Senator Lopez
and party in that trip as first class passengers. Senator Lopez
thereupon gave their first class tickets to Minister Busuego for him
to show the same to PAN-AM's Tokyo office, but the latter firmly
reiterated that there was no accommodation for them in the first
class, stating that they could not go in that flight unless they took
the tourist class therein.
Due to pressing engagements awaiting Senator Lopez and his
wife, in the United States — he had to attend a business
conference in San Francisco the next day and she had to undergo
a medical check-up in Mayo Clinic, Rochester, Minnesota, on May
28, 1960 and needed three days rest before that in San Francisco
— Senator Lopez and party were constrained to take PAN-AM's
flight from Tokyo to San Francisco as tourist passengers. Senator
Lopez however made it clear, as indicated in his letter to PAN-
AM's Tokyo office on that date (Exh. A), that they did so "under
protest" and without prejudice to further action against the
airline.1äwphï1.ñët
Suit for damages was thereafter filed by Senator Lopez and party
against PAN-AM on June 2, 1960 in the Court of First Instance of
Rizal. Alleging breach of contracts in bad faith by defendant,
plaintiffs asked for P500,000 actual and moral damages, P100,000
exemplary damages, P25,000 attorney's fees plus costs. PAN-AM
filed its answer on June 22, 1960, asserting that its failure to
provide first class accommodations to plaintiffs was due to honest
error of its employees. It also interposed a counterclaim for
attorney's fees of P25,000.
Subsequently, further pleadings were filed, thus: plaintiffs' answer
to the counterclaim, on July 25, 1960; plaintiffs' reply attached to
motion for its admittance, on December 2, 1961; defendant's
supplemental answer, on March 8, 1962; plaintiffs' reply to
supplemental answer, on March 10, 1962; and defendant's
amended supplemental answer, on July 10, 1962.
After trial — which took twenty-two (22) days ranging from
November 25, 1960 to January 5, 1963 — the Court of First
Instance rendered its decision on November 13, 1963, the
dispositive portion stating:
In view of the foregoing considerations, judgment is
hereby rendered in favor of the plaintiffs and against the
defendant, which is accordingly ordered to pay the
plaintiffs the following: (a) P100,000.00 as moral
damages; (b) P20,000.00 as exemplary damages; (c)
P25,000.00 as attorney's fees, and the costs of this
action.
So ordered.
Plaintiffs, however, on November 21, 1963, moved for
reconsideration of said judgment, asking that moral damages be
increased to P400,000 and that six per cent (6%) interest per
annum on the amount of the award be granted. And defendant
opposed the same. Acting thereon the trial court issued an order
on December 14, 1963, reconsidering the dispositive part of its
decision to read as follows:
In view of the foregoing considerations, judgment is
hereby rendered in favor of the plaintiffs and against the
defendant, which is accordingly ordered to pay the
plaintiffs the following: (a) P150,000.00 as moral
damages; (b) P25,000.00 as exemplary damages; with
legal interest on both from the date of the filing of the
complaint until paid; and (c) P25,000.00 as attorney's
fees; and the costs of this action.
So ordered.
It is from said judgment, as thus reconsidered, that both parties
have appealed.
Defendant, as stated, has from the start admitted that it breached
its contracts with plaintiffs to provide them with first class
accommodations in its Tokyo-San Francisco flight of May 24,
1960. In its appeal, however, it takes issue with the finding of the
court a quo that it acted in bad faith in the branch of said contracts.
Plaintiffs, on the other hand, raise questions on the amount of
damages awarded in their favor, seeking that the same be
increased to a total of P650,000.
Anent the issue of bad faith the records show the respective
contentions of the parties as follows.
According to plaintiffs, defendant acted in bad faith because it
deliberately refused to comply with its contract to provide first class
accommodations to plaintiffs, out of racial prejudice against
Orientals. And in support of its contention that what was done to
plaintiffs is an oftrepeated practice of defendant, evidence was
adduced relating to two previous instances of alleged racial
discrimination by defendant against Filipinos in favor of "white"
passengers. Said previous occasions are what allegedly happened
to (1) Benito Jalbuena and (2) Cenon S. Cervantes and his wife.
And from plaintiffs' evidence this is what allegedly happened;
Jalbuena bought a first class ticket from PAN-AM on April 13,
1960; he confirmed it on April 15, 1960 as to the Tokyo-Hongkong
flight of April 20, 1960; PAN-AM similarly confirmed it on April 20,
1960. At the airport he and another Oriental — Mr. Tung — were
asked to step aside while other passengers - including "white"
passengers — boarded PAN-AM's plane. Then PAN-AM officials
told them that one of them had to stay behind. Since Mr. Tung was
going all the way to London, Jalbuena was chosen to be left
behind. PAN-AM's officials could only explain by saying there was
"some mistake". Jalbuena thereafter wrote PAN-AM to protest the
incident (Exh. B).
As to Cenon S. Cervantes it would appear that in Flight No. 6 of
PAN-AM on September 29, 1958 from Bangkok to Hongkong, he
and his wife had to take tourist class, although they had first class
tickets, which they had previously confirmed, because their seats
in first class were given to "passengers from London."
Against the foregoing, however, defendant's evidence would seek
to establish its theory of honest mistake, thus:
The first class reservations of Senator Lopez and party were made
on March 29, 1960 together with those of four members of the
Rufino family, for a total of eight (8) seats, as shown in their joint
reservation card (Exh. 1). Subsequently on March 30, 1960, two
other Rufinos secured reservations and were given a separate
reservation card (Exh. 2). A new reservation card consisting of two
pages (Exhs. 3 and 4) was then made for the original of eight
passengers, namely, Senator Lopez and party and four members
of the Rufino family, the first page (Exh. 3) referring to 2 Lopezes,
2 Montelibanos and 1 Rufino and the second page (Exh. 4)
referring to 3 Rufinos. On April 18, 1960 "Your Travel Guide"
agency cancelled the reservations of the Rufinos. A telex message
was thereupon sent on that date to PAN-AM's head office at San
Francisco by Mariano Herranz, PAN-AM's reservations employee
at its office in Escolta, Manila. (Annex A-Acker's to Exh. 6.) In said
message, however, Herranz mistakenly cancelled all the seats that
had been reserved, that is, including those of Senator Lopez and
party.
The next day — April 1960 — Herranz discovered his mistake,
upon seeing the reservation card newly prepared by his co-
employee Pedro Asensi for Sen. Lopez and party to the exclusion
of the Rufinos (Exh. 5). It was then that Herranz sent another telex
wire to the San Francisco head office, stating his error and asking
for the reinstatement of the four (4) first class seats reserved for
Senator Lopez and party (Annex A-Velasco's to Exh. 6). San
Francisco head office replied on April 22, 1960 that Senator Lopez
and party are waitlisted and that said office is unable to reinstate
them (Annex B-Velasco's to Exh. 6).
Since the flight involved was still more than a month away and
confident that reinstatement would be made, Herranz forgot the
matter and told no one about it except his co-employee, either
Armando Davila or Pedro Asensi or both of them (Tsn., 123-124,
127, Nov. 17, 1961).
Subsequently, on April 27, 1960, Armando Davila, PAN-AM's
reservations employee working in the same Escolta office as
Herranz, phoned PAN-AM's ticket sellers at its other office in the
Manila Hotel, and confirmed the reservations of Senator Lopez
and party.
PAN-AM's reservations supervisor Alberto Jose, discovered
Herranz's mistake after "Your Travel Guide" phone on May 18,
1960 to state that Senator Lopez and party were going to depart
as scheduled. Accordingly, Jose sent a telex wire on that date to
PAN-AM's head office at San Francisco to report the error and
asked said office to continue holding the reservations of Senator
Lopez and party (Annex B-Acker's to Exh. 6). Said message was
reiterated by Jose in his telex wire of May 19, 1960 (Annex C-
Acker's to Exh. 6). San Francisco head office replied on May 19,
1960 that it regrets being unable to confirm Senator Lopez and
party for the reason that the flight was solidly booked (Exh. 7).
Jose sent a third telex wire on May 20, 1960 addressed to PAN-
AM's offices at San Francisco, New York (Idlewild Airport), Tokyo
and Hongkong, asking all-out assistance towards restoring the
cancelled spaces and for report of cancellations at their end
(Annex D-Acker's to Exh. 6). San Francisco head office reiterated
on May 20, 1960 that it could not reinstate the spaces and referred
Jose to the Tokyo and Hongkong offices (Exh. 8). Also on May 20,
the Tokyo office of PAN-AM wired Jose stating it will do everything
possible (Exh. 9).
Expecting that some cancellations of bookings would be made
before the flight time, Jose decided to withhold from Senator Lopez
and party, or their agent, the information that their reservations had
been cancelled.
Armando Davila having previously confirmed Senator Lopez and
party's first class reservations to PAN-AM's ticket sellers at its
Manila Hotel office, the latter sold and issued in their favor the
corresponding first class tickets on the 21st and 23rd of May,
1960.
From the foregoing evidence of defendant it is in effect admitted
that defendant — through its agents — first cancelled plaintiffs,
reservations by mistake and thereafter deliberately and
intentionally withheld from plaintiffs or their travel agent the fact of
said cancellation, letting them go on believing that their first class
reservations stood valid and confirmed. In so misleading plaintiffs
into purchasing first class tickets in the conviction that they had
confirmed reservations for the same, when in fact they had none,
defendant wilfully and knowingly placed itself into the position of
having to breach its a foresaid contracts with plaintiffs should there
be no last-minute cancellation by other passengers before flight
time, as it turned out in this case. Such actuation of defendant may
indeed have been prompted by nothing more than the promotion of
its self-interest in holding on to Senator Lopez and party as
passengers in its flight and foreclosing on their chances to seek
the services of other airlines that may have been able to afford
them first class accommodations. All the time, in legal
contemplation such conduct already amounts to action in bad faith.
For bad faith means a breach of a known duty through some
motive of interest or ill-will (Spiegel vs. Beacon Participations, 8
NE 2d 895, 907). As stated in Kamm v. Flink, 113 N.J.L. 582, 175
A. 62, 99 A.L.R. 1, 7: "Self-enrichment or fraternal interest, and not
personal ill-will, may well have been the motive; but it is malice
nevertheless."
As of May 18, 1960 defendant's reservations supervisor, Alberto
Jose knew that plaintiffs' reservations had been cancelled. As of
May 20 he knew that the San Francisco head office stated with
finality that it could not reinstate plaintiffs' cancelled reservations.
And yet said reservations supervisor made the "decision" — to use
his own, word — to withhold the information from the plaintiffs.
Said Alberto Jose in his testimony:
Q Why did you not notify them?
A Well, you see, sir, in my fifteen (15) years of service
with the air lines business my experience is that even if
the flights are solidly booked months in advance, usually
the flight departs with plenty of empty seats both on the
first class and tourist class. This is due to late
cancellation of passengers, or because passengers do
not show up in the airport, and it was our hope others
come in from another flight and, therefore, are delayed
and, therefore, missed their connections. This experience
of mine, coupled with that wire from Tokyo that they
 would do everything possible prompted me to withhold
the information, but unfortunately, instead of the first
class seat that I was hoping for and which I anticipated
only the tourists class was open on which Senator and
Mrs. Lopez, Mr. and Mrs. Montelibano were
accommodated. Well, I fully realize now the gravity of my
decision in not advising Senator and Mrs. Lopez, Mr. and
Mrs. Montelibano nor their agents about the erroneous
cancellation and for which I would like them to know that
I am very sorry.
xxx xxx xxx
Q So it was not your duty to notify Sen. Lopez and
parties that their reservations had been cancelled since
May 18, 1960?
A As I said before it was my duty. It was my duty but as I
said again with respect to that duty I have the power to
make a decision or use my discretion and judgment
whether I should go ahead and tell the passenger about
the cancellation. (Tsn., pp. 17-19, 28-29, March 15,
1962.)
At the time plaintiffs bought their tickets, defendant, therefore, in
breach of its known duty, made plaintiffs believe that their
reservation had not been cancelled. An additional indication of this
is the fact that upon the face of the two tickets of record, namely,
the ticket issued to Alfredo Montelibano, Jr. on May 21, 1960 (Exh.
22) and that issued to Mrs. Alfredo Montelibano, Jr., on May 23,
1960 (Exh. 23), the reservation status is stated as "OK". Such
willful-non-disclosure of the cancellation or pretense that the
reservations for plaintiffs stood — and not simply the erroneous
cancellation itself — is the factor to which is attributable the breach
of the resulting contracts. And, as above-stated, in this respect
defendant clearly acted in bad faith.
As if to further emphasize its bad faith on the matter, defendant
subsequently promoted the employee who cancelled plaintiffs'
reservations and told them nothing about it. The record shows that
said employee — Mariano Herranz — was not subjected to
investigation and suspension by defendant but instead was given a
reward in the form of an increase of salary in June of the following
year (Tsn., 86-88, Nov. 20, 1961).
At any rate, granting all the mistakes advanced by the defendant,
there would at least be negligence so gross and reckless as to
amount to malice or bad faith (Fores vs. Miranda, L-12163, March
4, 1959; Necesito v. Paras, L-10605-06, June 30, 1958). Firstly,
notwithstanding the entries in the reservation cards (Exhs. 1 & 3)
that the reservations cancelled are those of the Rufinos only,
Herranz made the mistake, after reading said entries, of sending a
wire cancelling all the reservations, including those of Senator
Lopez and party (Tsn., pp. 108-109, Nov. 17, 1961). Secondly,
after sending a wire to San Francisco head office on April 19, 1960
stating his error and asking for reinstatement, Herranz simply
forgot about the matter. Notwithstanding the reply of San
Francisco head Office on April 22, 1960 that it cannot reinstate
Senator Lopez and party (Annex B-Velasco's to Exh. 6), it was
assumed and taken for granted that reinstatement would be made.
Thirdly, Armando Davila confirmed plaintiff's reservations in a
phone call on April 27, 1960 to defendant's ticket sellers, when at
the time it appeared in plaintiffs' reservation card (Exh. 5) that they
were only waitlisted passengers. Fourthly, defendant's ticket
sellers issued plaintiffs' tickets on May 21 and 23, 1960, without
first checking their reservations just before issuing said tickets.
And, finally, no one among defendant's agents notified Senator
Lopez and party that their reservations had been cancelled, a
precaution that could have averted their entering with defendant
into contracts that the latter had already placed beyond its power
to perform.
Accordingly, there being a clear admission in defendant's evidence
of facts amounting to a bad faith on its part in regard to the breach
of its contracts with plaintiffs, it becomes unnecessary to further
discuss the evidence adduced by plaintiffs to establish defendant's
bad faith. For what is admitted in the course of the trial does not
need to be proved (Sec. 2, Rule 129, Rules of Court).
Addressing ourselves now to the question of damages, it is well to
state at the outset those rules and principles. First, moral damages
are recoverable in breach of contracts where the defendant acted
fraudulently or in bad faith (Art. 2220, New Civil Code). Second, in
addition to moral damages, exemplary or corrective damages may
be imposed by way of example or correction for the public good, in
breach of contract where the defendant acted in a wanton,
fraudulent, reckless, oppressive or malevolent manner (Articles
2229, 2232, New Civil Code). And, third, a written contract for an
attorney's services shall control the amount to be paid therefor
unless found by the court to be unconscionable or unreasonable
(Sec. 24, Rule 138, Rules of Court).
First, then, as to moral damages. As a proximate result of
defendant's breach in bad faith of its contracts with plaintiffs, the
latter suffered social humiliation, wounded feelings, serious anxiety
and mental anguish. For plaintiffs were travelling with first class
tickets issued by defendant and yet they were given only the
tourist class. At stop-overs, they were expected to be among the
first-class passengers by those awaiting to welcome them, only to
be found among the tourist passengers. It may not be humiliating
to travel as tourist passengers; it is humiliating to be compelled to
travel as such, contrary to what is rightfully to be expected from the
contractual undertaking.
Senator Lopez was then Senate President Pro Tempore.
International carriers like defendant know the prestige of such an
office. For the Senate is not only the Upper Chamber of the
Philippine Congress, but the nation's treaty-ratifying body. It may
also be mentioned that in his aforesaid office Senator Lopez was
in a position to preside in impeachment cases should the Senate
sit as Impeachment Tribunal. And he was former Vice-President of
the Philippines. Senator Lopez was going to the United States to
attend a private business conference of the Binalbagan-Isabela
Sugar Company; but his aforesaid rank and position were by no
means left behind, and in fact he had a second engagement
awaiting him in the United States: a banquet tendered by Filipino
friends in his honor as Senate President Pro Tempore (Tsn., pp.
14-15, Nov. 25, 1960). For the moral damages sustained by him,
therefore, an award of P100,000.00 is appropriate.
Mrs. Maria J. Lopez, as wife of Senator Lopez, shared his prestige
and therefore his humiliation. In addition she suffered physical
discomfort during the 13-hour trip,(5 hours from Tokyo to Honolulu
and 8 hours from Honolulu to San Francisco). Although Senator
Lopez stated that "she was quite well" (Tsn., p. 22, Nov. 25, 1960)
— he obviously meant relatively well, since the rest of his
statement is that two months before, she was attackedby severe
flu and lost 10 pounds of weight and that she was advised by Dr.
Sison to go to the United States as soon as possible for medical
check-up and relaxation, (Ibid). In fact, Senator Lopez stated, as
shown a few pages after in the transcript of his testimony, that Mrs.
Lopez was sick when she left the Philippines:
A. Well, my wife really felt very bad during the entire trip
from Tokyo to San Francisco. In the first place, she was
sick when we left the Philippines, and then with that
discomfort which she [experienced] or suffered during
that evening, it was her worst experience. I myself, who
was not sick, could not sleep because of the discomfort.
(Tsn., pp. 27-28, Nov. 25, 1960).
It is not hard to see that in her condition then a physical discomfort
sustained for thirteen hours may well be considered a physical
suffering. And even without regard to the noise and trepidation
inside the plane — which defendant contends, upon the strengh of
expert testimony, to be practically the same in first class and
tourist class — the fact that the seating spaces in the tourist class
are quite narrower than in first class, there beingsix seats to a row
in the former as against four to a row in the latter, and that in
tourist class there is very little space for reclining in view of the
closer distance between rows (Tsn., p. 24, Nov. 25, 1960), will
suffice to show that the aforesaid passenger indeed experienced
physical suffering during the trip. Added to this, of course, was the
painfull thought that she was deprived by defendant — after having
paid for and expected the same — of the most suitable, place for
her, the first class, where evidently the best of everything would
have been given her, the best seat, service, food and treatment.
Such difference in comfort between first class and tourist class is
too obvious to be recounted, is in fact the reason for the former's
existence, and is recognized by the airline in charging a higher fare
for it and by the passengers in paying said higher rate Accordingly,
considering the totality of her suffering and humiliation, an award
to Mrs. Maria J. Lopez of P50,000.00 for moral damages will be
reasonable.
Mr. and Mrs. Alfredo Montelibano, Jr., were travelling as
immediate members of the family of Senator Lopez. They formed
part of the Senator's party as shown also by the reservation cards
of PAN-AM. As such they likewise shared his prestige and
humiliation. Although defendant contends that a few weeks before
the flight they had asked their reservations to be charged from first
class to tourist class — which did not materialize due to alleged full
booking in the tourist class — the same does not mean they
suffered no shared in having to take tourist class during the flight.
For by that time they had already been made to pay for first class
seats and therefore to expect first class accommodations. As
stated, it is one thing to take the tourist class by free choice; a far
different thing to be compelled to take it notwithstanding having
paid for first class seats. Plaintiffs-appellants now ask P37,500.00
each for the two but we note that in their motion for reconsideration
filed in the court a quo, they were satisfied with P25,000.00 each
for said persons. (Record on Appeal, p. 102). For their social
humiliation, therefore, the award to them of P25,000.00 each is
reasonable.
interrogatories for deposition taking, prepared several memoranda
and the motion for reconsideration, filed a joint record on appeal
with defendant, filed a brief for plaintiffs as appellants consisting of
45 printed pages and a brief for plaintiffs as appellees consisting of
265 printed pages. And we are further convinced of its
reasonableness because defendant's counsel likewise valued at
P50,000.00 the proper compensation for his services rendered to
defendant in the trial court and on appeal.
In concluding, let it be stressed that the amount of damages
awarded in this appeal has been determined by adequately
considering the official, political, social, and financial standing of
the offended parties on one hand, and the business and financial
position of the offender on the other (Domingding v. Ng, 55 O.G.
10). And further considering the present rate of exchange and the
terms at which the amount of damages awarded would
approximately be in U.S. dollars, this Court is all the more of the
view that said award is proper and reasonable.
Wherefore, the judgment appealed from is hereby modified so as
to award in favor of plaintiffs and against defendant, the following:
(1) P200,000.00 as moral damages, divided among plaintiffs, thus:
P100,000.00 for Senate President Pro Tempore Fernando Lopez;
P50,000.00 for his wife Maria J. Lopez; P25,000.00 for his son-in-
law Alfredo Montelibano, Jr.; and P25,000.00 for his daughter Mrs.
Alfredo Montelibano, Jr.; (2) P75,000.00 as exemplary or
corrective damages; (3) interest at the legal rate of 6% per annum
on the moral and exemplary damages aforestated, from December
14, 1963, the date of the amended decision of the court a quo,
until said damages are fully paid; (4) P50,000.00 as attorney's
fees; and (5) the costs. Counterclaim dismissed.So ordered.
Bengzon, C.J., Bautista Angelo, Concepcion, Reyes, J.B.L.,
Barrera, Regala, Makalintal, Zaldivar and Sanchez, JJ., concur.
Dizon, J., is on leave.

The rationale behind exemplary or corrective damages is, as the

name implies, to provide an example or correction for public good.
Defendant having breached its contracts in bad faith, the court, as
stated earlier, may award exemplary damages in addition to moral
damages (Articles 2229, 2232, New Civil Code).

In view of its nature, it should be imposed in such an amount as to

sufficiently and effectively deter similar breach of contracts in the
future by defendant or other airlines. In this light, we find it just to
award P75,000.00 as exemplary or corrective damages.

Now, as to attorney's fees, the record shows a written contract of

services executed on June 1, 1960 (Exh. F) whereunder plaintiffs-
appellants engaged the services of their counsel — Atty. Vicente J.
Francisco — and agreedto pay the sum of P25,000.00 as
attorney's fees upon the termination of the case in the Court of
First Instance, and an additional sum of P25,000.00 in the event
the case is appealed to the Supreme Court. As said earlier, a
written contract for attorney's services shall control the amount to
be paid therefor unless found by the court to be unconscionable or
unreasonable. A consideration of the subject matter of the present
controversy, of the professional standing of the attorney for
plaintiffs-appellants, and of the extent of the service rendered by
him, shows that said amount provided for in the written agreement
is reasonable. Said lawyer — whose prominence in the legal
profession is well known — studied the case, prepared and filed
the complaint, conferred with witnesses, analyzed documentary
evidence, personally appeared at the trial of the case in twenty-two
days, during a period of three years, prepared four sets of cross-