D.

DAMAGES
HEIRS OF BOLADO vs. VDA. DE BULAN

HEIRS OF SIMEON BORLADO, namely, ADELAIDA BORLADO, LORETO BORLADO,

REYNALDO BORLADO, RICARDO BORLADO, FRANCISCO BORLADO and ALADINO
DORADO, petitioners, vs. COURT OF APPEALS, and SALVACION VDA. DE BULAN,
BIENVENIDO BULAN, JR., NORMA B. CLARITO and THE PROVINCIAL SHERIFF OF
CAPIZ, respondents.

FACTS:
The records show that plaintiffs-appellants (petitioners) are the heirs of Simeon Borlado whose
parents were Serapio Borlado and Balbina Bulan. The original owner of the lot in question, Lot No.
2097 of the Pontevedra Cadastre, Maayon, Capiz, was Serapio Borlado, grandfather of petitioners.

On 15 April 1942, Serapio sold the lot to Francisco Bacero for Three Hundred Pesos (P300.00).
After the death of Francsico on 26 February 1948, his widow Amparo Dionisio Vda. de Bacero, in
her capacity as legal guardian of her minor children, namely: Nicolas, Valentin and Luzviminda, all
surnamed Bacero and forced heirs of Francisco Bacero sold it (the lot) to the Spouses Bienvenido
Bulan and Salvacion Borbon, through a Deed of Absolute Sale dated 27 August 1954.

Upon the execution of the Deed of Sale and even prior thereto, actual possession of Lot No. 2057
was with the vendees-spouses Bulans in view of a loan obtained by Francisco Bacero from them in
December 1947. Exercising their right of ownership under the Deed of Sale, Salvacion Borbon Vda.
de Bulan declared the lot in her name in 1900 for taxation purposes under Tax Declaration No.
2232. She paid the corresponding taxes as evidenced by the Tax Receipts, and her co-defendants-
appellees possession of the lot was continuous, peaceful, uninterrupted, adverse and exclusive until
November 4, 1972, when petitioners forcibly entered and wrested physical possession thereof from
them.

On 23 November 1972, respondents filed with the Municipal Court of Maayon, Capiz a complaint
for ejectment. The ejectment case was decided in favor of the respondents whereby the petitioners,
their agents, tenants, privies and members of their families were ordered to vacate Lot No. 2079 and
deliver possession to the respondents together with all improvements and standing crops; to pay
said respondents One Hundred (100) cavans of palay annually from 1972 to the present or in
the total amount of One Thousand One Hundred (1,100) cavans of palay; and to pay the sum
of Five Thousand (P5,000.00) Pesos as reimbursement for the amount respondents had paid their
lawyer to protect their rights; and, the costs of suit. Instead of appealing the adverse decision to the
Court of First Instance (now RTC), on 8 November 1983, petitioners filed the present case with the
Regional Trial Court, Branch 18, Roxas City, docketed as Civil Case No. V-4887. This case was
dismissed for lack of cause of action in a decision, the decretal portion of which was quoted earlier.

On 24 November 1993, the Court of Appeals promulgated its decision affirming in toto the
appealed decision.

Hence, the appeal.

ISSUE: W/N the 100 cavans of palay is an acceptable form of damages

RULING: NO. Affirm with modification. The one hundred cavans of palay was awarded as a form
of damages. We cannot sustain the award. Palay is not legal tender currency in the Philippines.
(LOL)

CHIANG YIA MIN vs. RCBC

CHIANG YIA MIN VS.

COURT OF APPEALS, RIZAL COMMERCIAL BANKING CORPORATION,
PAPERCON (PHILIPPINES), INC. and TOM PEK

 Petitioner, a Chinese national based in Taiwan, alleges that US$100,000 was sent by Hang Lung
Bank Ltd. of Hong Kong in 1979 through the Pacific Banking Corporation to RCBC’s head
office for his own account intended to qualify him as a foreign investor under Philippine
laws. In mid-1985, he found out that that the dollar deposit was transferred to the Shaw
Boulevard branch of RCBC and converted to a peso account, which had a balance of only
P1,362.10 as of October 29, 1979.
 A letter of RCBC stated that a total of P728,390.00 was withdrawn by way of five checks
apparently issued by petitioner in favor of Papercon one of the herein private respondents and a
business venture of Tom Pek.
 Petitioner insisted that he did not cause the transfer of his money to the Shaw Boulevard
branch of RCBC, nor its conversion to pesos and the subsequent withdrawals.
 RCBC filed a third-party complaint against Papercon and Tom Pek and said that plaintiff issued
Check No. 492327 to third-party defendant Papercon (Phils.), Inc. for the amount of
P700,000.00 and Check No. 492328 to third-party defendant Tom Pek for the amount of
P12,700.00.
 The trial court determined that the withdrawals were not made by petitioner nor authorized by
him, and held respondent bank liable for the US$100,000.00 (and the interest thereon from date
of filing of the complaint), damages, attorneys fees, and costs. It further concluded that the
withdrawals from petitioners account could not have been made possible without the collusion
of the officers and employees of respondent bank. In its decision, it held respondent bank solely
culpable and fully exonerated the other private respondents. It also upheld petitioner’s claims for
moral damages, for the mental anguish that he suffered, and exemplary damages, to remind
respondent bank "that it should always act with care and caution in handling the money of its
depositors in order to uphold the faith and confidence of its depositors to banking institutions
xxx". P30,000.00 was awarded as moral damages and P20,000.00 as exemplary damages, among
others.
 On MR, Judge Migrio amended his decision to hold Papercon and Tom Pek solidarily liable with
respondent bank.
 The Court of Appeals found that the opening of the current account and the withdrawals
therefrom were authorized by petitioner; accordingly, it reversed the decision of the RTC and
absolved private respondents of liability.

ISSUE:

Whether or not petitioner has proved that RCBC connived with private respondents and third party
defendants Papercon and Tom Pek
HELD:

No.

Under either theory of fraud or negligence, it is incumbent upon petitioner to show that the
withdrawals were not authorized by him.

Petitioners allegation that he did not authorize the opening of the current account and the issuance
of the checks was countered by private respondents by presenting Catalino Reyes as a
witness. Reyes, the accountant of Pioneer Business Forms, Inc., another business venture of Tom
Pek, testified that the opening of Current Account No. 12-2009 and the issuance of the questioned
checks were all upon the instructions of petitioner.

Reyes describes the opening of the current account as having been done in haste, since petitioner
was in a hurry to have the proceeds of the remittance credited to his checking account. Because
Reyes was well-known to the officers and employees of RCBC-Shaw Boulevard, he was allowed to
bring out of the bank the application form, depositors card, and other forms which required
petitioners signature as depositor. The documentary evidence accurately supports Reyess
statements.

Confronted with such direct and positive evidence that he authorized the opening of the account
and signed the questioned checks, it is curious that petitioner did not take the witness stand to refute
Reyess testimony. He did present as his rebuttal witness a teller of Metrobank to show that he
prepared his own checks as a matter of practice. However, we note that the Metrobank teller
testified to checks issued on December 1989, or long after the herein questioned checks were
issued. It would neither be fair nor accurate to compare the practice of petitioner in issuing checks
in 1979.

Petitioner’s signatures on the questioned checks amount to prima facie evidence that he issued those
checks. No shred of evidence was presented by petitioner to show that the signatures were not his.

Also, from the Court’s examination of the records, there is no finding as to the significant disparity
between the signatures on the checks and those on the abovesaid documents.

Petitioner insists that respondent bank acted with negligence in opening Current Account without
properly verifying the identity of the depositor and in contravention of sound and well-recognized
banking procedures. The arguments are unmeritorious for failure to show that such irregularities
attending the opening of the account resulted in the unauthorized withdrawal of petitioners
money. The evidence stands unrebutted that petitioner instructed the opening of the said account
and signed the pertinent application forms.

The person who alleges fraud or negligence must prove it, because the general presumption is that
men act with care and prudence. Good faith is always presumed and it is the burden of the party
claiming otherwise to adduce clear and convincing evidence to the contrary. No judgment for
damages could arise where the source of injury, be it fraud, fault, or negligence, was not affirmatively
established by competent evidence.
2. KINDS OF DAMAGES
2.1 ACTUAL OR COMPENSATORY
AS TO ACTUAL LOSS SUFFERED

PRODUCERS BANK vs. CHUA

PRODUCERS BANK V CHUA

Lessons Applicable: Factors in determining amount (Torts and Damages)

Laws Applicable: ART. 2208, Article 2232 of the Civil Code

FACTS:

April, 1982: Salvador Chua was offered by Mr. Jimmy Rojas, manager of Producers Bank of the
Philippines to transfer his account from Pacific Banking Corporation to Producers Bank.
Chua did and was able to obtain a loan for P2,000,000 which was secured by a real estate mortgage
and payable within a period of 3 years or from 1982 to 1985.

January 20, 1984: Chua deposited with Producers Bank P960,000 which was entered into their
savings account passbook but failed to credit it because Sixto Castillo, absconded with the money.
Producers Bank dishonored the checks drawn by Chua in favor of various creditors. Although his
balance was P1,051,051.19. Despite their request for copies of the bank's ledgers, it refused so Chua
filed an action for damages.

October 15, 1984: Producer's Bank filed a petition for extrajudicial foreclosure of the real estate
mortgage

RTC: favored Chua ordering Producers to pay P2,000,000 moral damages, with legal rate of interest;
P90,000/month and P18,000/month unrealized profits from his cement and gasoline station
business, to commence from October 16, 1984, with legal rate of interest until fully paid; P250,000
exemplary damages. Offset the P960,000 with his agricultural loan of P1,300,000 with 14% interest,
to commence from January 4, 1984, covered by a real estate mortgage, both of which shall have a
cut-off time frame on the date of this decision. Loan of P175,000 and the clean loan of P400,000
without interest shall be off-settled by the moral, actual and compensatory damages. 15% of moral,
actual and compensatory damages as attorney's fees. Cost of suit.

CA: modified moral damages to P500,000. P100,000.00 attorney's fees

ISSUE: W/N the award for damages is reasonable.

HELD: YES. affirmed with MODIFICATION. P300,000 moral damages. P150,000 exemplary
damages. P100,000 attorney's fees and litigation expenses.

Obviously, petitioner bank's wrongful act caused serious anxiety, embarrassment, and humiliation to
private respondents for which they are entitled to recover moral damages in the amount of
P300,000.00 which we deem to be reasonable.
Producer's bank failure to credit the deposit constituted gross negligence in the performance of its
contractual obligation which amounts to evident bad faith. Verily, all these acts of petitioner were
accompanied by bad faith and done in wanton, fraudulent and malevolent manner warranting the
award of exemplary damages in favor of private respondents, in accordance with Article 2232 of the
Civil Code need not prove the actual extent of exemplary damages, for its determination is
addressed to the sound discretion of the court upon proof of the plaintiff's entitlement to moral,
temperate, or compensatory damages (Article 2234, Civil Code)

There are two kinds of actual or compensatory damages: loss of what a person already possesses
and failure to receive as a benefit that which would have pertained to him.

Damages consisting of unrealized profits, frequently referred as "ganacias frustradas" or "lucrum

cessans," are not to be granted on the basis of mere speculation, conjecture, or surmise, but rather
by reference to some reasonably definite standard such as market value, established experienced, or
direct inference from known circumstances.

When the existence of a loss is established, absolute certainty as to its amount is not required. The
benefit to be derived from a contract which one of the parties has absolutely failed to perform is of
necessity to some extent, a matter of speculation, but the injured party is not to be denied for that
reason alone. He must produce the best evidence of which his case is susceptible and if that
evidence warrants the inference that he has been damaged by the loss of profits which he might with
reasonable certainty have anticipated but for the defendant's wrongful act, he is entitled to recover
evidence of private respondents insufficient to be considered within the purview of "best evidence."

The bare assertion of private respondent Salvador Chua that he lost an average of P18,000/month is
inadequate if not speculative and should be admitted with extreme caution especially because it is
not supported by independent evidence.

Could have presented such evidence as reports on the average actual profits earned by their gasoline
business, their financial statements, and other evidence of profitability which could aid the court in
arriving with reasonable certainty at the amount of profits which private respondents failed to earn.
Did not even present any instrument or deed evidencing their claim that they have transferred their
right to operate their gasoline station to their relatives.

Extrajudicial foreclosure is clearly unfounded, this does not necessarily mean, in the absence of
specific facts proving damages, that actual damage has been sustained. It must depend on actual
proof of the damages alleged to have been suffered.

Attorney's fees may be awarded when a party is compelled to litigate or to incur expenses to protect
his interest by reason of an unjustified act of the other party
act of not crediting private respondents' deposit of P960,000.00, as well as the premature filing of
the extrajudicial foreclosure, have compelled private respondents to institute an action for injunction
and damages primarily in order to protect their rights and interests.
DE VERA vs. SAN DIEGO CORP.

GREGORIO DE VERA, JR.

vs.
COURT OF APPEALS, Q. P. SAN DIEGO CONSTRUCTION, INC., ASIATRUST
DEVELOPMENT BANK, SECOND LAGUNA DEVELOPMENT BANK, CAPITOL
CITY DEVELOPMENT BANK, EX-OFFICIO SHERIFF OF QUEZON CITY and/or
HIS DEPUTY

FACTS:
Q. P. San Diego Construction, Inc. (QPSDCI), owned a parcel of land in Panay Ave. and entered
into a Syndicate Loan Agreement with respondents Asiatrust Development Bank, and Second
Laguna Development Bank and Capitol City Development Bank to finance its construction and
development. QPSDCI mortgaged to the creditor banks as security the herein mentioned Panay
Avenue property and the condominium constructed thereon.

Petitioner Gregorio de Vera Jr. and QPSDCI entered into a Condominium Reservation
Agreement where petitioner undertook to buy Unit 211-2C of the condominium for P325,000.00
under the following agreed terms of payment: (a) an option money of P5,000.00 payable upon
signing of the agreement to form part of the purchase price; (b) a full downpayment of P175,675.00
broken down into the reservation fee of P5,000.00 and three (3) equal monthly installments payable
beginning the month after the signing of the contract; and, (c) the remaining balance of P160,000.00
to be secured through petitioner's Pag-IBIG and Open-Housing Loan.

Pending release of the loan, petitioner was to avail of a bridge financing loan with ASIATRUST or
any accredited originating bank of the Pag-IBIG program. The condominium project was
substantially completed in June 1984 and the unit was turned over to De Vera Jr. the following
month. Accordingly, petitioner paid QPSDCI the P23,916.67 shortfall between the balance and the
granted loan.

Petitioner’s loan was disapproved. After learning of the disapproval of his loan, petitioner wrote the
president of QPSDCI to make arrangements to settle his balance. Since petitioner had already
invested a substantial amount in remodelling and improving his unit, he asked the president of
QPSDCI for some assurance that the title would be turned over to him upon full payment.

As petitioner failed to obtain the housing loan, he was not able to pay the balance of the purchase
price. QPSDCI likewise failed to pay its obligations its creditors. Consequently, ASIATRUST
extrajudicially foreclosed the mortgage on twenty-seven (27) condominium units, including that of
petitioner De Vera Jr. The units were sold at public auction, with the FUNDERS as the highest
bidder. Thereafter, certificate of sale was issued and annotated on the CCTs.

Petitioner filed a complaint against respondents for damages and injunction with urgent prayer for
issuance of a writ of preliminary injunction, annulment of mortgage based on fraud, with urgent
prayer for the issuance of a writ of preliminary attachment and specific performance.

TC found QPSDCI liable for damages, the trial court held QPSDCI has not exerted any reasonable
diligence or effort to procure the issuance of the title to the plaintiff. All that it did was to refer the
plaintiff to the Funder(s), alleging that he (plaintiff) should transact business with them as the matter
of loan is between the plaintiff and the Funders, and they had nothing to do with it. However, it
collected the additional equity and never forwarded the same to the Funder(s) nor informed the
latter of plaintiff's payment thereof. Thus, to the mind of Asiatrust, plaintiff never paid the
additional equity, although per records of the Seller, he already had.
As to respondent ASIATRUST, the trial court held that its failure to notify petitioner of the required
steps to be taken after the approval of the loan, of the requirement that additional equity be paid
directly to the bank and other important aspects of the bridging loan, made it liable for damages
under the general provisions on torts under Art. 2176 of the Civil Code, in relation to Art. 2202.

CA affirmed TC with the modification that respondents were ordered solidarily to pay petitioner
P50,000.00 as nominal damages, but the award for actual and exemplary damages was deleted.
QPSDCI failed to comply with its warranties as seller. Unfortunately, plaintiff-appellee posits the
propriety of the award of actual damages only in the probable sense: that such award is to the
amount of interests, penalties and other charges as plaintiff may stand liable for by reason of the
non-payment of the purchase price. In other words, plaintiff-appellee admits not having suffered
damages in consequence of non-compliance of seller's warranties. Since actual damages are
predicated on such pecuniary loss as duly proved, the award of the lower court therefor is plainly not
in order.

ISSUE: Won petitioner suffered any damage as a result of the breach of seller’s warranty.

RULING:
We agree with the respondent Court of Appeals on this point. Petitioner did not present any proof
that he suffered any damage as a result of the breach of seller's warranty. He did not lose possession
of his condominium unit, although the same had not yet been registered in his name.
.
Article 2199 of the Civil Code provides that one is entitled to adequate compensation only for such
pecuniary loss suffered by him as is "duly proved."20 This provision denies the grant of speculative
damages, or such damage not actually proved to have existed and to have been caused to the party
claiming the same.21 Actual damages, to be recoverable, must not only be capable of proof, but
must actually be proved with reasonable degree of certainty. Courts cannot simply rely on
speculation, conjecture or guesswork in determining the fact and amount of damages.

This does not mean however that petitioner is liable to private respondents for penalties, interests
and other charges that accrued by reason of non-payment of the balance of the purchase price.
Respondent ASIATRUST had made several representations to petitioner that his loan had been
approved. The tenor of the letters sent by ASIATRUST would lead a reasonable man to believe that
there was nothing left to do but await the release of the loan. ASIATRUST cannot hide behind the
pithy excuse that the grant of the bridge financing loan was subject to the release of the Pag-IBIG
loan. The essence of bridge financing loans is to obtain funds through an interim loan while the Pag-
IBIG funds are not yet available. To await the release of the Pag-IBIG loan would render any bridge
financing nugatory. Thus, we agree with the trial court when it said that "the conclusion is inevitable
that although the plaintiff was not able to pay, he was a victim of circumstances and his failure was
not due to his own fault."

Furthermore, Sec. 25 of PD 957 provides that upon full payment, the seller is duty-bound to deliver
the title of the unit to the buyer. Even with a valid mortgage over the lot, the seller is still bound to
redeem said mortgage without any cost to the buyer apart from the balance of the purchase price
and registration fees. It has been established that respondent QPSDCI had been negligent in failing
to remit petitioner's payments to ASIATRUST. If QPSDCI had not been negligent, then even the
possibility of charges, liens or penalties would not have arisen. Therefore, as between QPSDCI and
petitioner, the former should be held liable for any charge, lien or penalty that may arise.

MERALCO vs. TEAM Electronics

MERALCO VS. TEC

 T.E.A.M. Electronics Corporation (TEC) was formerly known as NS Electronics (Philippines),

Inc. before 1982 and National Semi-Conductors (Phils.) before 1988. TEC is wholly owned by
respondent Technology Electronics Assembly and Management Pacific Corporation (TPC).
 Petitioner and NS Electronics (Philippines), Inc., the predecessor-in-interest of respondent TEC,
entered into contract whereby petitioner undertook to supply TECs building known as Dyna
Craft International Manila (DCIM) with electric power.
 In September 1986, TEC, under its former name National Semi-Conductors (Phils.) leased with
respondent Ultra Electronics Industries, Inc. (Ultra) for the use of the DCIM building until
1991. Ultra was ejected from the premises in 1988 by virtue of a court order, for repeated
violation of the terms and conditions of the lease contract.
 In 1987, after a surprise inspection, the electric meters installed at the DCIM were found to be
tampered with and did not register the actual power consumption.
 Petitioner demanded payment for the unregistered consumption from February 10,
1986 until September 28, 1987. Since Ultra was in possession of the subject building during the
covered period, TEC referred the demand letter to Ultra. For failure of TEC to pay, petitioner
disconnected the electricity supply on April 29, 1988.
 TEC demanded from petitioner the reconnection of electrical service, claiming that it had
nothing to do with the alleged tampering but the latter refused to heed the demand. Hence, TEC
filed a complaint on May 27, 1988 before the Energy Regulatory Board (ERB) praying that
electric power be restored to the DCIM building. The ERB immediately ordered the
reconnection of the service but petitioner complied with it only on October 12, 1988 after TEC
paid P1,000,000.00, under protest.
 On June 7, 1988, petitioner conducted a scheduled inspection of the questioned meters and
found them to have been tampered anew.
 On April 25, 1988, petitioner conducted another inspection, this time, in TECs NS Building,
which revealed that the electric meters were not registering the correct power
consumption. Petitioner demanded payment for the differential billing. TEC paid the above
amount, under protest.
 TEC and TPC filed a complaint for damages against petitioner and Ultra. The trial court
rendered a Decision in favor of respondents TEC and TPC, and against respondent Ultra and
petitioner. The pertinent portion of the decision reads: “Condemning defendant Meralco to pay
both plaintiffs moral damages in the amount of P500,000.00…”
 CA affirmed the RTC decision, with a modification of the amount of actual damages and
interest thereon.
ISSUE:

Whether or not TEC tampered with the electric meters installed at its DCIM and NS buildings

HELD:

No.
The Court noted that petitioner claims to have discovered three incidences of meter-tampering. The
first instance was supposedly discovered on September 28, 1987. The inspector allegedly found the
presence of a short circuiting device and saw that the meter seal was deformed. Contrary to
petitioner’s claim that there was a drastic and unexplainable drop in TECs electric consumption
during the affected period, the Pattern of TECs Electrical Consumption shows that the sudden drop
is not peculiar to the said period.

Petitioner likewise claimed that when the subject meters were again inspected on June 7, 1988, they
were found to have been tampered anew. The Court notes that prior to the inspection, TEC was
informed about it; and months before the inspection, there was an unsettled controversy between
TEC and petitioner, brought about by the disconnection of electric power and the non-payment of
differential billing. We are more disposed to accept the trial courts conclusion that it is hard to
believe that a customer previously apprehended for tampered meters and assessed P7 million would
further jeopardize itself in the eyes of petitioner. If it is true that there was evidence of tampering
found onSeptember 28, 1987 and again on June 7, 1988, the better view would be that the defective
meters were not actually corrected after the first inspection.

As to the alleged tampering of the electric meter in TECs NS building, suffice it to state that the
allegation was not proven, considering that the meters therein were enclosed in a metal cabinet the
metal seal of which was unbroken, with petitioner having sole access to the said meters.

In view of the negative finding on the alleged tampering of electric meters on TECs DCIM and NS
buildings, petitioners claim of differential billing was correctly denied by the trial and appellate
courts. With greater reason, therefore, could petitioner not exercise the right of immediate
disconnection.

As to the damages awarded by the CA, we deem it proper to modify the same. Actual damages are
compensation for an injury that will put the injured party in the position where it was before the
injury. They pertain to such injuries or losses that are actually sustained and susceptible of
measurement. Except as provided by law or by stipulation, a party is entitled to adequate
compensation only for such pecuniary loss as is duly proven. Basic is the rule that to recover actual
damages, not only must the amount of loss be capable of proof; it must also be actually proven with
a reasonable degree of certainty, premised upon competent proof or the best evidence obtainable.

Respondent TEC sufficiently established, and petitioner in fact admitted, that the former
paid P1,000,000.00 and P280,813.72 under protest, the amounts representing a portion of the latters
claim of differential billing. With the finding that no tampering was committed and, thus, no
differential billing due, the aforesaid amounts should be returned by petitioner, with interest, as
ordered by the Court of Appeals and pursuant to the guidelines set forth by the Court.[46]
As to the payment of exemplary damages and attorneys fees, we find no cogent reason to disturb the
same. Exemplary damages are imposed by way of example or correction for the public good in
addition to moral, temperate, liquidated, or compensatory damages. In this case, to serve as an
example that before a disconnection of electrical supply can be effected by a public utility, the
requisites of law must be complied with we affirm the award of P200,000.00 as exemplary damages.
With the award of exemplary damages, the award of attorneys fees is likewise proper, pursuant to
Article 2208of the Civil Code. It is obvious that TEC needed the services of a lawyer to argue its
cause through three levels of the judicial hierarchy. Thus, the award of P200,000.00 is in order.

We, however, deem it proper to delete the award of moral damages. TECs claim was premised
allegedly on the damage to its goodwill and reputation.[50] As a rule, a corporation is not entitled to
moral damages because, not being a natural person, it cannot experience physical suffering or
sentiments like wounded feelings, serious anxiety, mental anguish and moral shock. The only
exception to this rule is when the corporation has a reputation that is debased, resulting in its
humiliation in the business realm.[51] But in such a case, it is imperative for the claimant to present
proof to justify the award. It is essential to prove the existence of the factual basis of the damage and
its causal relation to petitioners acts.[52] In the present case, the records are bereft of any evidence
that the name or reputation of TEC/TPC has been debased as a result of petitioners acts. Besides,
the trial court simply awarded moral damages in the dispositive portion of its decision without
stating the basis thereof.

WHEREFORE, the petition is DENIED. The Decision of the Court of Appeals in CA-
G.R. CV No. 40282 dated June 18, 1997 and its Resolution dated December 3, 1997
are AFFIRMED with the following MODIFICATIONS: (1) the award of P150,000.00 per month
for five months as reimbursement for the rentals of the generator set isREDUCED to P150,000.00;
and (2) the award of P500,000.00 as moral damages is hereby DELETED.
SO ORDERED.

AS TO EARNINGS

PLEYTO vs. LOMBOY

PLEYTO VS. LOMBOY

FACTS:

A bus driven by petitioner Pleyto, was traveling along MacArthur Highway in Gerona, Tarlac bound
for Vigan, Ilocos Sur. It was drizzling that morning and the macadam road was wet. Right in front
of the bus, headed north, was the tricycle owned and driven by one Rodolfo Esguerra. According to
Rolly Orpilla, a witness and one of the bus passengers, Pleyto tried to overtake Esguerra’s tricycle
but hit it instead. Pleyto then swerved into the left opposite lane. Coming down the lane, some fifty
meters away, was a southbound Mitsubishi Lancer car, driven by Arnulfo Asuncion. The car was
headed for Manila with some passengers. Seated beside Arnulfo was his brother-in-law, Ricardo
Lomboy, while in the back seat were Ricardo’s 18-year old daughter Carmela and her friend, one
Rhino Daba. The bus smashed head-on the car, killing Arnulfo and Ricardo instantly. Carmela and
Rhino suffered injuries, but only Carmela required hospitalization. The RTC found Pleyto negligent
and lacking in precaution when he overtook the tricycle with complete disregard of the approaching
car in the other lane. The Court of Appeals affirmed the findings of the RTC with respect to
Pleyto’s fault and negligence.

ISSUE:

Whether or not the plaintiffs are entitled to damages.

HELD:

YES. The negligence and fault of appellant driver is manifest. He overtook the tricycle despite the
oncoming car only fifty (50) meters away from him. It was established that Ricardo Lomboy was 44
years old at the time of his death and is earning a monthly income of P8,000 or a gross annual
income (GAI) of P96,000. Using the cited formula (NET = LIFE EXPECTANCY x GROSS –
LIVING), the Court of Appeals correctly computed the Loss of Net Earning Capacity as
P1,152,000, net of and after considering a reasonable and necessary living expenses of 50% of the
gross annual income or P48,000.

Decision Affirmed.

NELEN vs. LAMBERT(MISSING – CAMAYMAYAN)

AS TO REQUISITES FOR EXTRAORDINARY INFLATION

EQUITABLE PCI BANK vs. NG SHEUNG NGOR (MISSING- DE GUZMAN)

ATTORNEY’S FEES

LAGON vs. HOOVEN COMALCO (MISSING- DIZON)

SCC CHEMICALS vs. STATE INVESTMENT (MISSING- HERNANDEZ)

AS TO LEGAL INTEREST

ADVOCATES FOR TRUTH IN LENDING vs. BANGKO SENTRAL

[G.R. No. 192986, January 15, 2013]

ADVOCATES FOR TRUTH IN LENDING, INC. AND EDUARDO B.
OLAGUER, Petitioners, v. BANGKO SENTRAL MONETARY BOARD, REPRESENTED
BY ITS CHAIRMAN, GOVERNOR ARMANDO M. TETANGCO, JR., AND ITS
INCUMBENT MEMBERS: JUANITA D. AMATONG, ALFREDO C. ANTONIO,
PETER FAVILA, NELLY F. VILLAFUERTE, IGNACIO R. BUNYE AND CESAR V.
PURISIMA, Respondents.

FACTS:
"Advocates for Truth in Lending, Inc." (AFTIL) is a non-profit, non-stock corporation organized to
engage in pro bono concerns and activities relating to money lending issues. It was incorporated on
July 9, 2010,and a month later, it filed this petition, joined by its founder and president, Eduardo B.
Olaguer, suing as a taxpayer and a citizen.
HISTORY OF CENTRAL BANK’S POWER TO FIX MAX INTEREST RATES
1. R.A. No. 265, which created the Central Bank on June 15, 1948, empowered the CB-MB
toset the maximum interest rates which banks may charge for all types of loans and other credit
operations.
2. The Usury Law was amended by P.D.1684, giving the CB-MB authority to prescribe different
maximum rates of interest which may be imposed for a loan or renewal thereof or the forbearance
of any money, goods or credits, provided that the changes are effected gradually and announced in
advance. Section 1-a of Act No. 2655 now reads:
3. In its Resolution No. 2224 dated December 3, 1982, the CB-MB issued CB Circular No. 905,
Series of 1982, effective on January 1, 1983. It removed the ceilings on interest rates on loans or
forbearance of any money, goods or credits:
Sec. 1. The rate of interest, including commissions, premiums, fees and other charges, on a loan or
forbearance of any money, goods, or credits, regardless of maturity and whether secured or
unsecured, that may be charged or collected by any person, whether natural or juridical, shall not be
subject to any ceiling prescribed under or pursuant to the Usury Law, as amended.
4. R.A. No. 7653 establishing the BSP replaced the CB:
Sec. 135. Repealing Clause. — Except as may be provided for in Sections 46 and 132 of this Act,
Republic Act No. 265, as amended, the provisions of any other law, special charters, rule or
regulation issued pursuant to said Republic Act No. 265, as amended, or parts thereof, which may be
inconsistent with the provisions of this Act are hereby repealed. Presidential Decree No. 1792 is
likewise repealed.
Note: R.A. 7653 – the law that created BSP to replace CB – Note: this law did not retain the same
provision as that of Section 109 in RA 265.
ISSUES:
To justify their skipping the hierarchy of courts petitioners contend the transcendental
importance of their Petition:
a) CB-MB statutory or constitutional authority to prescribe the maximum rates of interest for all
kinds of credit transactions and forbearance of money, goods or credit beyond the limits prescribed
in the Usury Law;
b) If so, whether the CB-MB exceeded its authority when it issued CB Circular No. 905, which
removed all interest ceilings and thus suspended Act No. 2655 as regards usurious interest rates;
c) Whether under R.A. No. 7653, the new BSP-MB may continue to enforce CB Circular No.
905.
Petitioners contend that under Section 1-a of Act No. 2655, as amended by P.D. No. 1684, the CB-
MB was authorized only to prescribe or set the maximum rates of interest for a loan or renewal
thereof or for the forbearance of any money, goods or credits, and to change such rates whenever
warranted by prevailing economic and social conditions, the changes to be effected gradually and on
scheduled dates; that nothing in P.D. No. 1684 authorized the CB-MB to lift or suspend the limits
of interest on all credit transactions, when it issued CB Circular No. 905. They further insist that
under Section 109 of R.A. No. 265, the authority of the CB-MB was clearlyonly to fix the banks’
maximum rates of interest, but always within the limits prescribed by the Usury Law.
CB Circular No. 905, which was promulgated without the benefit of any prior public hearing, is void
because it violated NCC 5 which provides that "Acts executed against the provisions of mandatory
or prohibitory laws shall be void, except when the law itself authorizes their validity." weeks after
the issuance of CB Circular No. 905, the benchmark 91-day Treasury bills shot up to 40% PA, as a
result. The banks followed suit and re-priced their loans to rates which were even higher than those
of the "Jobo" bills. CB Circular No. 905 is also unconstitutional in light of the Bill of Rights, which
commands that "no person shall be deprived of life, liberty or property without due process of law,
nor shall any person be denied the equal protection of the laws." R.A. No. 7653 did not re-enact a
provision similar to Section 109 of RA 265, and therefore, in view of the repealing clause in Section
135 of R.A. No. 7653, the BSP-MB has been stripped of the power either to prescribe the maximum
rates of interest which banks may charge for different kinds of loans and credit transactions, or to
suspend Act No. 2655 and continue enforcing CB Circular No. 905.
HELD:
CB-MB merely suspended the effectivity of the Usury Law when it issued CB Circular No.
905.
In Medel v. CA, it was said that the circular did not repeal nor amend the Usury Law but simply
suspended its effectivity; that a Circular cannot repeal a low; that by virtue of CB the Usury Law has
been rendered ineffective; that the Usury has been legally non-existent in our jurisdiction and
interest can now be charged as lender and borrow may agree upon.
Circular upheld the parties’ freedom of contract to agree freely on the rate of interest citing Art.
1306 under which the contracting parties may establish such stipulations, clauses terms and
conditions as they may deem convenient provided they are not contrary to law, morals, good
customs, public order or public policy.
BSP-MB has authority to enforce CB Circular No. 905.
RA 265 covered only banks while Section 1-a of the Usury Law, empowers the Monetary Board,
BSP for that matter, to prescribe the maximum rate or rates of interest for all loans or renewals
thereof or the forbearance of any money, good or credits …
The Usury Law is broader in scope than RA 265, now RA 7653, the later merely supplemented the
former as it provided regulation for loans by banks and other financial institutions. RA 7653 was not
unequivocally repealed by RA 765.
CB Circular 905 is essentially based on Section 1-a of the Usury Law and the Usury Law being
broader in scope than the law that created the Central Bank was not deemed repealed when the law
replacing CB with the Bangko Sentral was enacted despite the non-reenactment in the BSP Law of a
provision in the CB Law which the petitioners purports to be the basis of Circular 905. Magulo ba?
Hahaha. Basta the present set up is: The power of the BSP Monetary Board to determine interest
rates emanates from the Usury Law [which was further specified by Circular 905].
Granting that the CB had power to "suspend" the Usury Law, the new BSP-MB did not retain this
power of its predecessor, in view of Section 135 of R.A. No. 7653, which expressly repealed R.A.
No. 265. The petitioners point out that R.A. No. 7653 did not reenact a provision similar to Section
109 of R.A. No. 265.
A closer perusal shows that Section 109 of R.A. No. 265 covered only loans extended by banks,
whereas under Section 1-a of the Usury Law, as amended, the BSP-MB may prescribe the maximum
rate or rates of interest for all loans or renewals thereof or the forbearance of any money, goods or
credits, including those for loans of low priority such as consumer loans, as well as such loans made
by pawnshops, finance companies and similar credit institutions. It even authorizes the BSP-MB to
prescribe different maximum rate or rates for different types of borrowings, including deposits and
deposit substitutes, or loans of financial intermediaries.
Act No. 2655, an earlier law, is much broader in scope, whereas R.A. No. 265, now R.A. No. 7653,
merely supplemented it as it concerns loans by banks and other financial institutions. Had R.A. No.
7653 been intended to repeal Section 1-a of Act No. 2655, it would have so stated in unequivocal
terms.
Moreover, the rule is settled that repeals by implication are not favored, because laws are presumed
to be passed with deliberation and full knowledge of all laws existing pertaining to the subject.An
implied repeal is predicated upon the condition that a substantial conflict or repugnancy is found
between the new and prior laws. Thus, in the absence of an express repeal, a subsequent law cannot
be construed as repealing a prior law unless an irreconcilable inconsistency and repugnancy exists in
the terms of the new and old laws. We find no such conflict between the provisions of Act 2655 and
R.A. No. 7653.
The lifting of the ceilings for interest rates does not authorize stipulations charging excessive,
unconscionable, and iniquitous interest.
In Castro v. Tan, the Court held that the imposition of unconscionable interest is immoral and
unjust. It is tantamount to a repugnant spoliation and an iniquitous deprivation of property repulsive
to the common sense of man.
They are struck down for being contrary to morals, if not against the law, therefore deemed
inexistent and void ab initio. However this nullity does not affect the lender’s right to recover the
principal of the loan nor affect the other terms thereof.
PROCEDURAL MATTERS
The Petition is procedurally infirm.
The CB-MB was created to perform executive functions with respect to the establishment, operation
or liquidation of banking and credit institutions. It does not perform judicial or quasi-judicial
functions. Certainly, the issuance of CB Circular No. 905 was done in the exercise of an executive
function. Certiorari will not lie in the instant case.
Petitioners have no locus standi to file the Petition
Locus standi is defined as "a right of appearance in a court of justice on a given question." In private
suits, Section 2, Rule 3 of the 1997 Rules of Civil Procedure provides that "every action must be
prosecuted or defended in the name of the real party in interest," who is "the party who stands to be
benefited or injured by the judgment in the suit or the party entitled to the avails of the suit."
Succinctly put, a party’s standing is based on his own right to the relief sought.
Even in public interest cases such as this petition, the Court has generally adopted the "direct injury"
test that the person who impugns the validity of a statute must have "a personal and substantial
interest in the case such that he has sustained, or will sustain direct injury as a result." while
petitioners assert a public right it is nonetheless required of them to make out a sufficient interest in
the vindication of the public order and the securing of relief.
Petitioners also do not claim that public funds were being misused in the enforcement of CB
Circular No. 905 which would have made the action a public one, "and justify relaxation of the
requirement that an action must be prosecuted in the name of the real party-in-interest."
The Petition raises no issues of transcendental importance.
In Prof. David v. Pres. Macapagal-Arroyo, the Court summarized the requirements before taxpayers,
voters, concerned citizens, and legislators can be accorded a standing to sue, viz:
(1) the cases involve constitutional issues;
(2) for taxpayers, there must be a claim of illegal disbursement of public funds or that the tax
measure is unconstitutional;
(3) for voters, there must be a showing of obvious interest in the validity of the election law in
question;
(4) for concerned citizens, there must be a showing that the issues raised are of transcendental
importance which must be settled early; and
(5) for legislators, there must be a claim that the official action complained of infringes upon their
prerogatives as legislators.
In CREBA v. ERC, guidelines as determinants on whether a matter is of transcendental importance,
namely:
1. the character of the funds or other assets involved in the case;
2. the presence of a clear case of disregard of a constitutional or statutory prohibition by the
public respondent agency or instrumentality of the government; and
3. the lack of any other party with a more direct and specific interest in the questions being
raised.

SPS. MALLARI vs. PRUDENTIAL BANK

[G.R. No. 197861. June 5, 2013. 697 SCRA 555]

DOCTRINE:

Unconscionable interest rates – The SC has ruled in the following cases that the interest is
unconscionable: 3% and 3.81% per month on a P10 Million loan (Toring vs. Sps. Ganzon-Olan,
2008); 66% per annum or 5.5% per month on a P500 thousand loan (Medel vs. Court of Appeals,
1998) and; 7% and 5% or 84% and 60% per annum (Chua vs. Timan, 2008). The Court has also
ruled affirmed in a plethora of cases that stipulated interest rates of 3% per month and higher are
excessive, unconscionable and exorbitant.

Conscionable interest rates – In this case 23% per annum or 2% per month as agreed upon by
petitioner and respondent bank is NOT unconscionable. It is much lower than the above
mentioned unconscionable interest rates and there is no similarity of factual milieu.

FACTS:

[Decided 2013] In 1984, Petitioner Florentino Mallari obtained a loan from respondent Prudential
Bank in the amount of P300,000.00. It was subject to an interest rate of 21% per annum and, in case
of default, a penalty of 12% per annum of the total amount due and attorneys fees equivalent of
15% of the total amount due. This was secured by a Deed of Assignment (DOA) over petitioner's
time deposit account. In 1989, Spouses Florentino and Aurea Mallari obtained another loan from
respondent for P1.7 million, stipulating interest of 23% per annum with the same penalties in case of
default. This was secured by Real Estate Mortgage (REM).

Petitioners defaulted. When computed in 1992, the total debt was P571,218.54 and P2,991,294.82
for the first and second loans respectively.
Respondent tried to extrajudicially foreclose the mortgage. Petitioners on the other hand tried to
nullify the mortgage claiming that the Bank imposed onerous terms and conditions and that the
bank was unilaterally increasing its charges and interest over and above those stipulated. The Bank
claimed that the basis for its computation was all written in the Promissory Notes.

The RTC ruled in favor of respondent bank. CA affirmed.

ISSUE: Whether or not an interest rate of 23% per annum and 12% per annum penalty is
unconscionable.

HELD:

No. The Court has also ruled affirmed in a plethora of cases that stipulated interest rates of 3% per
month and higher are excessive, unconscionable and exorbitant. thus, the 23% per annum interest
rate imposed on petitioners’ loan in this case can by no means be considered excessive or
unconscionable. And neither is the 12% per annum penalty charge unconscionable as the counrt
found in DBP vs. Family Foods (2009) and Ruiz vs. Court of Appeals (2003).

DARIO NACAR vs GALLERY FRAMES/FELIPE BORDEY JR.

GR 189871 , August 13, 2013

FACTS:
 Dario Nacar filed a labor case against Gallery Frames and its owner Felipe Bordey
 Jr. Nacar alleged that he was dismissed without cause by Gallery Frames on January 24,
1997.
 On October 15, 1998, the Labor Arbiter (LA) found Gallery Frames guilty of illegal
dismissal; hence, the Arbiter awarded Nacar P158,919.92 in damages consisting of
backwages and separation pay.
 Gallery Frames appealed all the way to the Supreme Court (SC). The Supreme Court
affirmed the decision of the Labor Arbiter and the decision became final on May 27, 2002.
 After the finality of the SC decision, Nacar filed a motion before the LA for recomputation
as he alleged that his backwages should be computed from the time of his illegal dismissal
(January 24, 1997) until the finality of the SC decision (May 27, 2002). Further, petitioner
posits that he is also entitled to the payment of interest from the finality of the decision
until full payment of the respondents.

ISSUE:
 The applicable rate in the computation of interest in the form of actual or compensatory
damages.

HELD:
 The Supreme Court ruled that the old case of Eastern Shipping Lines vs CA is already
modified by the promulgation of the Bangko Sentral ng Pilipinas Monetary Board
Resolution No. 796 which lowered the legal rate of interest from 12% to 6%. This
Circular shall take effect on 1 July 2013.

 To recapitulate and for future guidance, the guidelines laid down in the case of Eastern
Shipping Lines42 are accordingly modified to embody BSP-MB Circular No. 799, as follows:

I. When an obligation, regardless of its source, i.e., law, contracts, quasi-contracts, delicts or
quasi-delicts is breached, the contravenor can be held liable for damages. The provisions
under Title XVIII on “Damages” of the Civil Code govern in determining the measure of
recoverable damages.

II. With regard particularly to an award of interest in the concept of actual and
compensatory damages, the rate of interest, as well as the accrual thereof, is imposed, as
follows:

1. When the obligation is breached, and it consists in the payment of a sum of money,
i.e., a loan or forbearance of money, the interest due should be that which may have
been stipulated in writing. Furthermore, the interest due shall itself earn legal interest
from the time it is judicially demanded. In the absence of stipulation, the rate of
interest shall be 6% per annum to be computed from default, i.e., from judicial or
extrajudicial demand under and subject to the provisions of Article 1169 of the Civil
Code.

2. When an obligation, not constituting a loan or forbearance of money, is breached, an

interest on the amount of damages awarded may be imposed at the discretion of the
court at the rate of 6% per annum. No interest, however, shall be adjudged on
unliquidated claims or damages, except when or until the demand can be established
with reasonable certainty. Accordingly, where the demand is established with
reasonable certainty, the interest shall begin to run from the time the claim is made
judicially or extrajudicially (Art. 1169, Civil Code), but when such certainty cannot be
so reasonably established at the time the demand is made, the interest shall begin to
run only from the date the judgment of the court is made (at which time the
quantification of damages may be deemed to have been reasonably ascertained). The
actual base for the computation of legal interest shall, in any case, be on the amount
finally adjudged.

3. When the judgment of the court awarding a sum of money becomes final and
executory, the rate of legal interest, whether the case falls under paragraph 1 or
paragraph 2, above, shall be 6% per annum from such finality until its satisfaction,
this interim period being deemed to be by then an equivalent to a forbearance of
credit.

And, in addition to the above, judgments that have become final and executory prior to July
1, 2013, shall not be disturbed and shall continue to be implemented applying the rate of
interest fixed therein.
 WHEREFORE, premises considered, the Decision dated September 23, 2008 of the Court
of Appeals in CA-G.R. SP No. 98591, and the Resolution dated October 9, 2009 are
REVERSED and SET ASIDE. Respondents are Ordered to Pay petitioner:

(1) backwages computed from the time petitioner was illegally dismissed on January 24, 1997
up to May 27, 2002, when the Resolution of this Court in G.R. No. 151332 became final and
executory;

(2) separation pay computed from August 1990 up to May 27, 2002 at the rate of one month
pay per year of service; and

(3) interest of twelve percent (12%) per annum of the total monetary awards,
computed from May 27, 2002 to June 30, 2013 and six percent (6%) per annum from
July 1, 2013 until their full satisfaction.

TEMPERATE DAMAGES

BPI INVESTMENT vs. DG CARREON COMML. (MISSING- NAGUIT)

2.2. MORAL DAMAGES

IRINGAN vs. PALAO

IRINGAN VS PALAO
under moral damages

FACTS:
Palao owned a lot in Tuguegarao. He sold the same to Iringan for 295,000, with terms as follows:
 10,000 – downpayment which is paid upon signing of the contract.
 140,000 – on or before April 30, 1985.
 145,000 – on or before December 31, 1985.
Iringan was aware during negotiations that Palao needed money to pay off his SSS obligations,
which is why he is selling his land.

Iringan paid the first 10,000, and then paid only 40,000 on the due date of the 140,000 payment.
Thus, on July 18, 1985, Palao sent a letter informing Iringan that he considered the contract
rescinded and would not accept any more payments. Iringan agreed, but demanded reimbursement
of the amounts already paid. Palao disagreed with the amount demanded by Iringan.
Palao now files the case for Judicial Confirmation of Rescission of the Contract. In their Answer,
Iringan claims the contract was already consummated, that rescission was not available to Palao and
that he could only file for collection of the balance, and that they had always been ready to comply with the
payment of the remaining balance. [notably there was no proof other than their allegation that they were
ready to pay.]

RTC ruled for Palao, and awarded moral damages. CA affirmed.

ISSUE:
Whether Iringan is liable for moral damages.

HELD:
On the issue of moral and exemplary damages, petitioner claims that the Court of Appeals erred in
finding bad faith on his part when he resisted the rescission and claimed he was ready to pay but
never actually paid respondent, notwithstanding that he knew that appellee's principal motivation for
selling the lot was to raise money to pay his SSS loan.

The records do not support petitioner's claims. First, per the records, petitioner knew respondent's
reason for selling his property. As testified to by petitioner and in the deposition of respondent, such
fact was made known to petitioner during their negotiations as well as in the letters sent to petitioner
by Palao.
Second, petitioner adamantly refused to formally execute an instrument showing their mutual
agreement to rescind the contract of sale, notwithstanding that it was petitioner who plainly
breached the terms of their contract when he did not pay the stipulated price on time, leaving
private respondent desperate to find other sources of funds to payoff his loan.
Lastly, petitioner did not substantiate by clear and convincing proof, his allegation that he was ready
and willing to pay respondent. We are more inclined to believe his claim of readiness to pay was an
afterthought intended to evade the consequence of his breach. There is no record to show the
existence of such amount, which could have been reflected, at the very least, in a bank account in his
name, if indeed one existed; or, alternatively, the proper deposit made in court which could serve as
a formal tender of payment. Thus, we find the award of moral and exemplary damages proper.

CITY TRUST vs. VILLANUEVA

CITY TRUST vs VILLANUEVA

FACTS:

Sometime in February 1984, Isagani C. Villanueva opened a savings account and a current
account with City trust Banking Corporation, which were assigned account numbers with an
automatic transfer arrangement. On 21 May 1986, VILLANUEVA deposited some money in his
savings account with the BANK. Realizing that he had run out of blank checks, VILLANUEVA
requested a new checkbook from one of the BANKs customer service representatives. He then
filled up a checkbook requisition slip with the obligatory particulars, except for his current account
number which he could not remember. He expressed his predicament to a lady customer service
representative of the BANK, who in turn assured him that she could supply the information from
the BANKs account records. After signing the requisition slip, he gave it to her. Pia Rempillo,
another customer service representative of the Bank, saw Villanueva’s checkbook requisition
slip. She took it and proceeded to check the Bank’s checkbook register which contained all the
names and account numbers of the Bank’s clients who were issued checkbooks. Upon seeing the
name Isagani Villanueva -- Account No. 33-00446-3 in the checkbook register, Rempillo copied the
aforesaid account number on the space intended for it in Villanueva’s requisition slip. Villanueva
received from the Bank his requested checkbook. On the same day, he immediately signed the
Check bearing the amount of P50,000 payable to the order of Kingly Commodities Traders and
Multi Resources, Inc. Villanueva thereafter delivered the check to Helen Chu, his investment
consultant at Kingly Commodities, with his express instruction to use said check in placing a trading
order at Kingly Commodities future trading business as soon as a favorable opportunity presented
itself.
Two days later Villanueva received a call from Helen Chu, informing him that she had already
placed a trading order in his behalf and delivered the check to Kingly Commodities. The check was
deposited with the China Banking Corporation. The next day, he deposited P31,600 in cash to his
savings account to cover the full amount of the check he issued.
Thereafter, Villanueva’s Check was dishonored due to insufficiency of funds and disparity in
the signature. On the same day, Villanueva called up the Bank’s Legaspi Village Branch Operations
Manager, Maritess Gamboa, and inquired about the dishonor of his well-funded check. On 26 June
1986,Villanueva learned that his check was again dishonored due to insufficiency of funds and a
stop- payment order he allegedly issued. Villanueva then requested Lawrence Chin of Kingly
Commodities to give him until 5:30 p.m. that same day to make good his P50,000 check. He then
proceeded to the Bank’s Legaspi Village Branch Office, together with his investment consultant and
his trading partner, to personally inquire into the matter. They were met by Marilou Genuino, the
BANKs Branch Manager. There he complained that his trading order was rejected because of the
dishonor of the check and that Kingly Commodities threatened to close his trading account unless
his check payment would be made good before 5:30 p.m. that day. After making the necessary
investigation, Genuino related to VILLANUEVA that the reason for the dishonor of the check was
that the account number assigned to his new checkbook was the account number of another
depositor also named Isagani Villanueva but with a different middle initial.[7]
On 30 June 1986, VILLANUEVA sent a letter to the BANK addressed to the President, Jose
Facundo, demanding indemnification for alleged losses and damages suffered by him as a result of
the dishonor of his well-funded check. On 10 July 1986, in answer to VILLANUEVAs letter,
Gregorio Anonas III, the BANKs Senior Vice-President, apologized for the unfortunate oversight,
but reminded VILLANUEVA that the dishonor of his check was due to his failure to state his
current account number in his requisition slip.
Failing to obtain from the BANK a favorable action on his demand for indemnification,
VILLANUEVA filed on 27 August 1986 a complaint for damages based on breach of contract
and/or quasi-delict before the Regional Trial Court of Makati City.
 ISSUE:
Whether or not Villanueva should be awarded of Moral damages and Attorneys fees
HELD:
Moral damages include physical suffering, mental anguish, fright, serious anxiety, besmirched
reputation, wounded feelings, moral shock, social humiliation, and similar injury. Although incapable
of pecuniary computation, moral damages may be recovered if they are the proximate result of the
defendants wrongful act or omission.Thus, case law establishes the requisites for the award of moral
damages, viz: (1) there must be an injury, whether physical, mental or psychological, clearly sustained
by the claimant; (2) there must be a culpable act or omission factually established; (3) the wrongful
act or omission of the defendant is the proximate cause of the injury sustained by the claimant; and
(4) the award of damages is predicated on any of the cases stated in Article 2219 of the Civil Code.
It is beyond cavil that VILLANUEVA had sufficient funds for the check. Had his account
number been correct, the check would not have been dishonored. Hence, we can say that
VILLANUEVAs injury arose from the dishonor of his well-funded check. We have already ruled
that the dishonor of the check does not entitle him to compensatory damages. But, could the
dishonor result in his alleged intolerable physical inconvenience and discomfort, extreme
humiliation, indignities, etc, which he had borne before his peers, trading partners and officers of
Kingly Commodities? True, we find that under the circumstances of this case, VILLANUEVA
might have suffered some form of inconvenience and discomfort as a result of the dishonor of his
check.However, the same could not have been so grave or intolerable as he attempts to portray or
impress upon us.
Further, it is clear from the records that the BANK was able to remedy the caveat of Kingly
Commodities to VILLANUEVA that his trading account would be closed at 5:30 p.m. on 26 June
1986. The BANK was able to issue a managers check in favor of Kingly Commodities before the
deadline. It was able to likewise explain to Kingly Commodities the circumstances surrounding the
unfortunate situation. Verily, the alleged embarrassment or inconvenience caused to
VILLANUEVA as a result of the incident was timely and adequately contained, corrected, mitigated,
if not entirely eradicated. VILLANUEVA, thus, failed to support his claim for moral damages. In
short, none of the circumstances mentioned in Article 2219 of the Civil Code exists to sanction the
award for moral damages.
The award of attorneys fees should likewise be deleted. The general rule is that attorneys fees
cannot be recovered as part of damages because of the policy that no premium should be placed on
the right to litigate. They are not to be awarded every time a party wins a suit. The power of the
court to award attorneys fees under Article 2208 of the Civil Code demands factual, legal and
equitable justification. Even when a claimant is compelled to litigate with third persons or to incur
expenses to protect his rights, still attorneys fees may not be awarded where there is no sufficient
showing of bad faith in the parties persistence of a case other than an erroneous conviction of the
righteousness of his cause.

FILIPINAS BROADCASTING NETWORK vs. AGO MEDICAL

FILIPINAS BROADCASTING NETWORK, INC., petitioner, vs. AGO MEDICAL AND
EDUCATIONAL CENTER-BICOL CHRISTIAN COLLEGE OF MEDICINE, (AMEC-
BCCM) and ANGELITA F. AGO, respondents.
FACTS:

Expos is a radio documentary program hosted by Carmelo Mel Rima (Rima) and Hermogenes
Jun Alegre (Alegre). Expos is aired every morning over DZRC-AM which is owned by Filipinas
Broadcasting Network, Inc. (FBNI). Expos is heard over Legazpi City, the Albay municipalities and
other Bicol areas.
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 AMECs College of Medicine, filed a
complaint for damages against FBNI, Rima and Alegre on 27 February 1990.
The complaint further alleged that AMEC is a reputable learning institution. With the supposed
expose, 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 14 December 1992, the trial court rendered a Decision] finding FBNI and Alegre liable for
libel except Rima. In holding FBNI liable for libel, the trial court found that FBNI failed to exercise
diligence in the selection and supervision of its employees.
The Court of Appeals affirmed the trial courts judgment with modification. The appellate court
made Rima solidarily liable with FBNI and Alegre.

ISSUES:

1. Whether or not the broadcasts are libelous.

2. Whether or not AMEC is entitled to moral damages.

3. Whether or not the award of attorneys fees is proper.

RULING:

1. A libel 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.

Every defamatory imputation is presumed malicious. 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. Hearing the students alleged complaints a month
before the expos, 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. This plainly shows Rima and Alegres reckless disregard of whether their report was true or not.

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. However, the comments of Rima and Alegre were not backed up by facts. Therefore, the
broadcasts are not privileged and remain libelous per se.
The broadcasts also violate the Radio Code 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]
The broadcasts fail to meet the standards prescribed in the Radio Code, which lays down the
code of ethical conduct governing practitioners in the radio broadcast industry. The Radio Code is a
voluntary code of conduct imposed by the radio broadcast industry on its own members. The Radio
Code is a public warranty by the radio broadcast industry that radio broadcast practitioners are
subject to a code by which their conduct are measured for lapses, liability and sanctions.
The public has a right to expect and demand that radio broadcast practitioners live up to the
code of conduct of their profession, just like other professionals. A professional code of conduct
provides the standards for determining whether a person has acted justly, honestly and with good
faith in the exercise of his rights and performance of his duties as required by Article 19 of the Civil
Code. A professional code of conduct also provides the standards for determining whether a person
who willfully causes loss or injury to another has acted in a manner contrary to morals or good
customs under Article 21 of the Civil Code.
 2. FBNI contends that AMEC is not entitled to moral damages because it is a corporation.
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 Courts statement in Mambulao that a corporation may have a
good reputation which, if besmirched, may also be a ground for the award of moral damages is
an obiter dictum.
Nevertheless, AMECs 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.
Moreover, where the broadcast is libelous per se, the law implies damages. 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. In this case, the
broadcasts are libelousper se. Thus, AMEC is entitled to moral damages.
However, we find the award of P300,000 moral damages unreasonable. The record shows that
even though the broadcasts were libelous per se, AMEC has not suffered any substantial or material
damage to its reputation. Therefore, we reduce the award of moral damages from P300,000
to P150,000.
3. The award of attorney’s fees is not proper.
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.
In Inter-Asia Investment Industries, Inc. v. Court of Appeals, we held that:
[I]t is an accepted doctrine that the award thereof as an item of damages is the exception rather than
the rule, and counsels fees are not to be awarded every time a party wins a suit. The power of the
court to award attorneys fees under Article 2208 of the Civil Code demands factual, legal and
equitable justification, without which the award is a conclusion without a premise, its basis being
improperly left to speculation and conjecture. In all events, the court must explicitly state in the text
of the decision, and not only in the decretal portion thereof, the legal reason for the award of
attorney’s fees.[51] (Emphasis supplied)
Petition denied.
MERALCO vs. TEAM ELECTRONICS, supra

MERALCO, petitioner,
vs.
TEAM ELECTRONICS, ET AL., respondents.
GR 131723 (2007)

FACTS:
 TEC owns two buildings in the Food Terminal Complex, Taguig City, the DCIM Bldg. and
the NS Bldg. For the supply of electricity in its buildings TEC entered into three separate
contracts with Meralco denominated as Agreement for the Sale of Electric Energy; two for
DCIM and one for NS.
 On September 28, 1987, a team of Meralco inspectors conducted a surprise inspection of the
two electric meters installed at DCIM building which was then being leased by an electronics
company (Ultra) and found them to be allegedly tampered and did not register the actual
power consumption in the building. The inspection was witnessed by an Ultra representative
and the results were reflected in the Service Inspection Report prepared by the team.
 Thus on November 25, 1987 Meralco informed TEC of the results of said inspection and
demanded the payment of P7,040,401.01 representing its unregistered consumption from
February 10, 1986 until September 28, 1987 as a result of the alleged tampering of the
meters. TEC referred the letter to Ultra which intimated that even if there was tampering of
the meters, Meralco’s assessment was excessive. For TEC’s failure to pay the differential
billing, Meralco disconnected the electricity supply to the DCIM Bldg on April 29, 1988.
 When Meralco refused to reconnect upon demand by TEC, the latter filed a complaint with
the Energy Regulatory Board (ERB). While ERB ordered the immediate reconnection,
Meralco complied with it only on October 12, 1988 after conducting another inspection and
finding that the meters have been tampered anew and after TEC paid P1,000,000 under
protest. The ERB case was later withdrawn after the parties deemed it best to have the issues
threshed out by the regular courts.
 The NS Bldg. of TEC was likewise subjected to inspection which also revealed that the
electric meters were not registering the correct power consumption. Thus Meralco also sent
a letter demanding payment of P280,813.72 representing differential billing. When TEC
denied said tampering, Meralco sent another letter demanding payment of said amount with
a warning of disconnection. To avert disconnection, TEC was again forced to pay the
amount under protest.
 Then TEC sued Meralco for damages. After trial, the RTC ruled in favor of TEC and
ordered Meralco to reimburse the amount it has paid under protest, actual damages of
P150,000 representing the rental payment of the power generator it rented, P500,000 moral
damages, P200,000 exemplary damages and P200,000 attorney’s fees. The RTC found that the
sudden and unexplainable drop in electrical consumption, the deformed condition of the meter seal and the
existence of an opening in the wire duct leading to the transformer vault do not in themselves prove the alleged
tampering especially since access to the transformer was given only to Meralco employees. The RTC also said
that Meralco’s act of disconnecting the DCIM building’s electric supply constituted bad faith that makes it
liable for damages. It further denied Meralco’s claim for differential billing on the ground of equitable
negligence.
 CA agreed with the RTC’s decision.
ISSUE:
Whether respondent is entitled to actual or compensatory damages

HELD:
Yes.

SC deem it proper to modify the CA’s award. Respondent TEC sufficiently established, and
petitioner in fact admitted, that the former paid P1,000,000.00 and P280,813.72 under protest, the
amounts representing a portion of the latters claim of differential billing. With the finding that no
tampering was committed and, thus, no differential billing due, the aforesaid amounts should be
returned by petitioner, with interest, as ordered by CA and pursuant to the guidelines set forth by
the Court.

TEC also sufficiently established its claim for the reimbursement of the amount paid as rentals for
the generator set it was constrained to rent by reason of the illegal disconnection of electrical service.
The official receipts and purchase orders submitted by TEC as evidence sufficiently show that such
rentals were indeed made. However, the amount of P150,000.00 per month for five months,
awarded by the CA, is excessive. Instead, a total sum of P150,000.00, as found by the RTC, is
proper.

NOTE:
However, despite the appellate courts conclusion that no tampering was committed, it held Ultra solidarily liable with
petitioner for P1,000,000.00, only because the former, as occupant of the building, promised to settle the claims of the
latter. This ruling is erroneous. Ultras promise was conditioned upon the finding of defect or tampering of the meters. It
did not acknowledge any culpability and liability, and absent any tampered meter, it is absurd to make the lawful
occupant liable. It was petitioner who received the P1 million; thus, it alone should be held liable for the return of the
amount.

Actual damages are compensation for an injury that will put the injured party in the position where it was before the
injury. They pertain to such injuries or losses that are actually sustained and susceptible of measurement. Except as
provided by law or by stipulation, a party is entitled to adequate compensation only for such pecuniary loss as is duly
proven. Basic is the rule that to recover actual damages, not only must the amount of loss be capable of proof; it must
also be actually proven with a reasonable degree of certainty, premised upon competent proof or the best evidence
obtainable

If it is true that there was evidence of tampering found on September 28, 1987 inspection and again on June 7, 1988,
then the defective meters were not actually corrected after the first inspection. A situation wherein the defects in the
electric meter are allowed to continue indefinitely until suddenly, the public utilities company demand payment for the
unrecorded electricity utilized when it could have remedied the situation immediately cannot be sanctioned. Meralco’s
failure to do so may encourage neglect of public utilities to the detriment of the consuming public. Meralco has the
imperative duty to make a reasonable and proper inspection of its apparatus and equipment to ensure that they do not
malfunction, and the due diligence to discover and repair defects therein. Failure to perform such duties constitutes
negligence. By reason of such nxegligence, public utilities run the risk of forfeiting amounts originally due from
customers.

Hence Meralco’s claim for differential billing was correctly denied. And with greater reason, Meralco could not exercise
the right of immediate disconnection. P.D. 401, the law in force at that time, granted electric companies the right to
conduct inspections of electric meters and the criminal prosecution of erring consumers found tampering electric meters. It
did not expressly provide for more expedient remedies such as charging of differential billing and immediate
disconnection against erring consumers. Recourse to such remedies is subject to the prior requirement of a 48-hour
written notice of disconnection. In this case Meralco resorted to the remedy of disconnection of TEC’s DCIM Building
without prior notice. It abused the remedies granted to it by P.D. 401.

PEOPLE vs. NURFRASHR HASIM Y SARAAN vs. PANSCALA

PEOPLE V NURFRASHR HASHIM Y SARAAN V BERNADETTE PANSCALA (Trafficking

of Persons as Prostitutes)

Facts: The accused were charged as having been engaged in the recruitment and deployment of
workers without having previously obtained from the POEA a license or authority to do so. They
promised employment abroad particularly in Brunei and Malaysia, thus causing and prompting the
persons of BBB and AAA to apply which employment however did not materialize because in truth
and in fact, the promised employment is non-existent, in flagrant violation of the above-mentioned
law and causing damage and prejudice to said complainants. Instead of getting decent jobs, they
were forced to become sex workers to earn money and became prostitutes. The lower court found
the accused guilty of illegal recruitment defined under Section 6 and penalized under Section 7(b) of
Republic Act No. 8042 otherwise known as the ―Migrant Workers and Overseas Filipinos Act of
1995‖, as principals by direct participation, committed by a syndicate, against BBB and AAA, and
SENTENCES each of said accused to suffer the penalty of life imprisonment and to pay a fine of
P1,000,000.00 each; to pay each of the above victims P50,000.00 as moral damages; P300,000.00 as
exemplary damages, and to pay the costs.

The Court of Appeals affirmed with modification that the amount of exemplary damages in favor of
the victims (private complainants) to be reduced to P25,000.00 each.

Issue: Whether or not the award of damages was proper.

Ruling: No. The Supreme Court modified the ruling of the Court of Appeals. It held that Congress
passed R.A. 9208 or the Anti-Trafficking in Persons Act. Such law was approved on 26 May 2003.
Ironically, only a few days after, victims found themselves in a situation that the law had sought to
prevent.

In Lalli, the Supreme Court increased the amount of moral and exemplary damages from P50,000 to
P500,000 and from P50,000 to P100,000, respectively, having convicted the accused therein of the
crime of trafficking in persons. The payment of P500,000 as moral damages and P100,000 as
exemplary damages for the crime of Trafficking in Persons as a Prostitute finds basis in Article 2219
of the Civil Code, which states:

Art. 2219. Moral damages may be recovered in the following and analogous cases: (1) A criminal
offense resulting in physical injuries;
(2) Quasi-delicts causing physical injuries;
(3) Seduction, abduction, rape, or other lascivious acts;
xxx xxx xxx.

The criminal case of Trafficking in Persons as a Prostitute is an analogous case to the crimes of
seduction, abduction, rape, or other lascivious acts. In fact, it is worse. To be trafficked as a
prostitute without one‘s consent and to be sexually violated four to five times a day by different
strangers is horrendous and atrocious. There is no doubt that Lolita experienced physical suffering,
mental anguish, fright, serious anxiety, besmirched reputation, wounded feelings, moral shock, and
social humiliation when she was trafficked as a prostitute in Malaysia. Since the crime of Trafficking
in Persons was aggravated, being committed by a syndicate, the award of exemplary damages is
likewise justified.

The Supreme Court found no legal impediment to increasing the award of moral and exemplary
damages in the case at bar. Neither is there any logical reason why we should differentiate between
the victims herein and those in that case, when the circumstances are frighteningly similar. To do so
would be to say that we discriminate one from the other, when all of these women have been the
victims of unscrupulous people who capitalized on the poverty of others. While it is true that
accused-appellant was not tried and convicted of the crime of trafficking in persons, this Court
based its award of damages on the Civil Code, and not on the Anti-Trafficking in Persons Act, as
clearly explained in Lalli.

Hence the Decision of the Court of Appeals in is affirmed with modifications. Accused-appellant
Bernadette Pansacala a.k.a. ―Neneng Awid‖ is ordered to pay AAA and BBB the sum of P500,000
each as moral damages and P100,000 each as exemplary damages and to pay the costs.

2.3. EXEMPLARY DAMAGES

BPI INVESTMENT vs. DG CARREON COMML (supra) (MISSING-

NAGUIT/ABERGOS)

PRODUCERS BANK vs. CHUA (supra) (MISSING- ALMARIO)

2.4. NOMINAL DAMAGES

PEDROSA vs. RODRIGUEZ (MISSING- ANGELES)