Torts Midterms To Finals Cases

IV.
VICARIOUS LIABILITY
- Civil Code
o Articles 2180 to 2182 (Memorize)
A. Parents and Guardians
- Family Code (as amended by RA

6809) o Articles 219, 221, 236
2.Exconde v. Capuno, 101 Phil. 843 (1957)

Facts: Dante Capuno, 15 yrs old, was a member of the Boy Scouts and a student of the Balintawak Elementary School. He
attended a parade in honor of Dr . José Rizal in said city upon instruction of the city school's supervisor. From the school
Dante, with other students, boarded a jeep and when the same started to run, he took hold of the wheel and drove it
while the driver sat on his left side. The jeep turned turtle and two of its passengers , Amado Ticzon and Isidoro
Caperiña, died as a consequence.
It appears that Delfin Capuno, father of Dante, was not with his son at the time of the accident, nor did he know that
his son was going to attend a parade. He only came to know it when his son told him after the accident that he attended
the parade upon instruction of his teacher.
Dante Capuno was found guilty of double homicide through reckless imprudence for the death of Isidoro Caperiña and
Amado Ticzon. Sabina Exconde (mother of Isidro) filed the present action against Delfin Capuno and his son Dante
Capuno asking for damages in the aggregate amount of P2,959.00 for the death of her son. --she reserved her right to
bring separate civil action
Exconde contends that Delfin Capuno (father) is liable for the damages in question jointly and severally with his son
Dante because at the time the latter committed the negligent act which resulted in the death of the victim, he was a minor
and was then living with his father, and inasmuch as these facts are not disputed, the civil liability of the father is evident.
Capuno set up the defense that if any one should be held liable for the death of Isidoro Caperiña , it should be Dante
Capuno and not his father Delfin because at the time of the accident, the former was not under the control, supervision and
custody of the latter. Lower court sustained the defense and only Dante Capuno was required to pay the damages.
Plaintiff appealed to CA but the case was certified to SC (only involves questions of law).
Issue: Whether Delfin Capuno (father) can be held civilly liable, jointly and severally with his son Dante, for damages
resulting from the death of Isidoro Caperiña caused by the negligent act of minor Dante Capuno .
Held: YES. Father is held vicariously liable. Delfin Capuno and Dante Capuno are jointly and severally liable for the
damages.
Head of school/school not liable

It is true that under the law, "teachers or directors of arts and trades are liable for any damages caused by their pupils or
apprentices while they are under their custody", but this provision only applies to an institution of arts and trades and
not to any academic educational institution.
Dante Capuno was then a student of the Balintawak Elementary School and as part of his extra-curricular activity, he
attended the parade in honor of Dr . José Rizal upon instruction of the city school 's supervisor. And it was in connection
with that parade that Dante boarded a jeep with some companions and while driving it, the accident occurred. In the
circumstances, it is clear that neither the head of that school, nor the city school's supervisor, could be held liable for the
negligent act of Dante because he was not then a student of an institution of arts and trades as provided for by law.
Father liable
The civil liability which the law impose upon the father, and, in case of his death or incapacity, the mother, for any
damages that may be caused by the minor children who live with them, is obvious. It is a necessary consequence of the
parental authority they exercise over them which imposes upon the parents the "duty of supporting them, keeping
them in their company, educating them and instructing them in proportion to their means", while, on the other hand,
gives them the "right to correct and punish them in moderation". The only way by which they can relieve themselves of
this liability is if they prove that they exercised all the diligence of a good father of a family to prevent the damage . The
defendants failed to prove this.
135 Agas, Anzures, Buan, Cusi, Navarrete, Ongchuan, Reposo, & Roco 3B
Torts & Damages 2013 Atty. Jess Lopez
REYES, J. B. L., J., dissenting:
There is no sound reason for limiting Art. 1903 to teachers of arts and trades and not to academic ones. What substantial
difference is there between them in so far as concerns the proper supervision and vigilance over their pupils? The words
"arts and trades" in Art. 1903 does not qualify "teachers" but only "heads of establishments".
It would seem clear that where the parent places the child under the effective authority of the teacher, the latter, and
not the parent, should be the one answerable for the torts committed while under his custody, for the very reason
that the parent is not supposed to interfere with the discipline of the school nor with the authority and supervision of the
teacher while the child is under instruction. And if there is no authority, there can be no responsibility.
There is no question that the pupil, Dante Capuno, was instructed by the City School Supervisor to attend the Rizal parade.
The father had every reason to assume that in ordering a minor to attend a parade with other children, the school
authorities would provide adequate supervision over them. If a teacher or scout master was present, then he should be
the one responsible for allowing the minor to drive the jeep without being qualified to do so. If no teacher or master was at
hand to watch over the pupils, the school authorities are the ones answerable for that negligence, and not the father.
Having proved that he entrusted his child to the custody of school authorities that were competent to exercise vigilance
over him, the father has rebutted the presumption of Art. 1903 and the burden of proof shifted to the claimant to show
actual negligence on the part of the parent in order to render him liable.
2.Tamargo v. Court of Appeals, 209 SCRA 518 (1992)

Facts: Adelberto Bundoc, a minor of 10 years of age shot Jennifer Tamargo with an air rifle killing her. The adoptive
parent and natural parents of Tamargo filed a complaint for damages against the parents of Bundoc.
Prior to the incident, the spouses Rapisura filed a petition to adopt Adelberto Bundoc. The same was granted after the
incident.
Respondents Bundoc alleged that because of the adoption proceedings, they were not indispensable parties to the case,
and that the adopting parents (Sps. Rapisura) were indispensable parties to the action since parental authority had
shifted to the adopting parents from the moment the successful petition for adoption was filed.
Tamargo meanwhile countered that since Adelberto Bundoc was then actually living with his natural parents, parental
authority had not ceased nor been relinquished by the mere filing and granting of a petition for adoption.
Issue: Whether Sps. Bundoc are indispensible parties to the case.
Held: YES. Adelberto Bundoc's voluntary act of shooting Jennifer Tamargo with an air rifle gave rise to a cause of action
on quasi-delict against him under Art. 2176.
Upon the other hand, the law imposes civil liability upon the father and, in case of his death or incapacity, the
mother, for any damages that may be caused by a minor child who lives with them. Article 2180 of the Civil Code
reads:
This principle of parental liability is a species of what is frequently designated as vicarious liability, or the doctrine
of "imputed negligence" under Anglo-American tort law, where a person is not only liable for torts committed by
himself, but also for torts committed by others with whom he has a certain relationship and for whom he is responsible.
Thus, parental liability is made a natural or logical consequence of the duties and responsibilities of parents — their
parental authority — which includes the instructing, controlling and disciplining of the child.
The civil liability imposed upon parents for the torts of their minor children living with them, may be seen to be
based upon the parental authority vested by the Civil Code upon such parents. The civil law assumes that when an
unemancipated child living with its parents commits a tortious acts, the parents were negligent in the performance
of their legal and natural duty closely to supervise the child who is in their custody and control. Parental liability is, in
other words, anchored upon parental authority coupled with presumed parental dereliction in the discharge of the
duties accompanying such authority. The parental dereliction is, of course, only presumed and the presumption can
be overturned under Article 2180 of the Civil Code by proof that the parents had exercised all the diligence of a good
father of a family to prevent the damage.
The respondent‘s argument that the decree of adoption that was issued in favor of the Rapisura spouses vested parental
authority to them as of the time of the filing of the petition for adoption (before Bundoc shot Tamargo) is unavailing.
Under the Civil Code, the basis of parental liability for the torts of a minor child is the relationship existing between
the parents and the minor child living with them and over whom, the law presumes, the parents exercise supervision
and control. Article 58 of the Child and Youth Welfare Code, re-enacted this rule:
Article 58 Torts — Parents and guardians are responsible for the damage caused by the child under their parental
authority in accordance with the civil Code.
Article 221 of the Family Code has similarly insisted upon the requisite that the child, doer of the tortious act, shall have
beer in the actual custody of the parents sought to be held liable for the ensuing damage:
Art. 221. Parents and other persons exercising parental authority shall be civilly liable for the injuries and damages
caused by the acts or omissions of their unemancipated children living in their company and under their parental authority
subject to the appropriate defenses provided by law. (Emphasis supplied)
The court do not believe that parental authority is properly regarded as having been retroactively transferred to and vested
in the adopting parents, the Rapisura spouses, at the time the air rifle shooting happened. The court does not consider
that retroactive effect may be given to the decree of adoption so as to impose a liability upon the adopting parents
accruing at a time when adopting parents had no actual or physically custody over the adopted child. Retroactive affect
may perhaps be given to the granting of the petition for adoption where such is essential to permit the accrual of some
benefit or advantage in favor of the adopted child. In the instant case, however, to hold that parental authority had been
retroactively lodged in the Rapisura spouses so as to burden them with liability for a tortious act that they could not have
foreseen and which they could not have prevented (since they were at the time in the United States and had no physical
custody over the child Adelberto) would be unfair and unconscionable. Such a result, moreover, would be inconsistent
with the philosophical and policy basis underlying the doctrine of vicarious liability. Put a little differently, no
presumption of parental dereliction on the part of the adopting parents, the Rapisura spouses, could have arisen since
Adelberto was not in fact subject to their control at the time the tort was committed.
3.Libi v. Intermediate Appellate Court, 214 SCRA 16 (1992)

Facts: Two years before their deaths, Julie Gotiong & Wendel Libi were sweethearts. On December 1978, Julie broke up
with Wendell (ganun talaga eh) after she supposedly found him to be sadistic and irresponsible. During the first 2 weeks
of January 1979 (still within the 3 Month Rule), Wendel kept pestering Julie with demands for reconciliation but the latter
persisted in her refusal. This prompted Wendel to resort to threats against her. To avoid him, Julie stayed with her best
friend from Jan 7-13.
On Jan 14, the lovers were found dead inside the Gotiong residence in Cebu. Each died from a single gunshot wound from
the same firearm, a Smith and Wesson revolver licensed under Cresencio Libi‘s (father) name, which was also recovered
in the crime scene.
No witnesses to the incident. Sps Gotiong alleged that Wendel killed Julie and then shot himself. Sps. Libi rejected this
and claimed that an unknown party whom Wendel may have displeased or antagonized by reason of his work as a
narcotics informer of the Constabulary Anti-Narcotics Unit (CANU) killed the two.
Sps. Gotiong, as Julie‘s parents, filed a Civil Case against Wendel‘s parents to recover damages arising from the
latter‘s vicarious liability under Art. 2180.
Trial court dismissed. On appeal, IAC reversed and adjudged Sps. Lubi subsidiarily liable.
Issue: Whether Art. 2180 was correctly interpreted to make Sps. Libi liable for vicarious liability.
Held: Conclusion was correct but the liability imposed was wrong.
(Not really important but in case he asks: Libi‘s contention that an unknown party killed them both was found to be
unavailing. FIRST, the fact that they could not find gun powder residue (as seen in the negative paraffin test) in the
Wendel‘s wound does not automatically rule out suicide. This is because, within 8 hours after the killing, the bodies were
already brought to the Cosmopolitan Funeral Homes and dried. Also, there was a possibility that smokeless powder was
used which would thus not produce any gunpowder when subjected to a paraffin test. SECOND, the testimony of Libi‘s
witnesses that they saw a ―shadow‖ of the supposed killer a few moments after the incident was rebutted by the
testimony of one Manolo Alfonso. Manolo and his sister Malou were waiting for Julie when they heard her scream. Thus,
Manolo climbed the fence to see what happened. When he heard the first gunshot, another one rang out 5 seconds later.
Manolo explains that the ―shadow‖ the other witnesses saw was actually him and not the unknown killer.)
As a defense, Sps Libi claimed they execised the diligence of a good father of a family. The diligence of a good father of a
family required by law in a parent and child relationship consists, to a large extent, of the instruction and supervision of
the child.
However, it was established that Cresencio owned the gun in question which he kept in a locked safety deposit box in a
drawer inside their room. Each spouse had a key and the wife‘s key was always in her bag. All these were known to
Wendel. While it was never seen that Wendel ever used the gun, his mother admitted that on the night of the incident,
Petitioners were gravely remiss in their duties as parents in not diligently supervising the activities of their son ,
despite his minority and immaturity, so much so that it was only at the time of Wendell‘s death that they allegedly
discovered that he was a CANU agent and that Cresencio‘s gun was missing from the safety deposit box. Both
parents were sadly wanting in their duty and responsibility in monitoring and knowing the activities of their children who,
for all they know, may be engaged in dangerous work such as being drug informers, or even drug users. Neither was a
plausible explanation given for the photograph of Wendell, with a handwritten dedication to Julie Ann at the back thereof,
holding upright what clearly appears as a revolver and on how or why he was in possession of that firearm.
Petitioners should be held liable for the civil liability based on what appears from all indications was a crime
committed by their minor son.
Now, we do not have any objection to the doctrinal rule holding the parents liable, but the categorization of their liability
as being subsidiary, and not primary, in nature requires a hard second look considering previous decisions of this court
on the matter which warrant comparative analyses.
If the liability of the parents for crimes or quasi-delicts of their minor children is subsidiary, then the parents can neither
invoke nor be absolved of civil liability on the defense that they acted with the diligence of a good father of a family to
prevent damages. On the other hand, if such liability imputed to the parents is considered direct and primary, that
diligence would constitute a valid and substantial defense.
We believe that the civil liability of parents for quasi delicts of their minor children, as contemplated in Article 2180,
is primary and not subsidiary. In fact, if we apply Article 2194 of said code which provides for solidary liability of joint
tortfeasors, the persons responsible for the act or omission, in this case the minor and the father and, in case of his death or
incapacity, the mother, are solidarily liable. Accordingly, such parental liability is primary and not subsidiary, hence the
last paragraph of Article 2180 provides that ―(t)he responsibility treated of in this article shall cease when the persons
herein mentioned prove that they observed all the diligence of a good father of a family to prevent damage.‖
We are also persuaded that the liability of the parents for felonies committed by their minor children is likewise
primary, not subsidiary. Just like the rule in Article 2180, the civil liability of the parents for crimes committed by their
minor children is likewise direct and primary, and also subject to the defense of lack of fault or negligence on their part,
that is, the exercise of the diligence of a good father of a family.
To hold that the civil liability under Article 2180 would apply only to quasi-delicts and not to criminal offenses would
result in the absurdity that in an act involving mere negligence the parents would be liable but not where the damage is
caused with criminal intent
In Exconde, where the 15-year old minor was convicted of double homicide through reckless imprudence, in a separate
civil action arising from the crime the minor and his father were held jointly and severally liable for failure of the latter to
prove the diligence of a good father of a family. The same liability in solidum and, therefore, primary liability was
imposed in a separate civil action in Araneta on the parents and their 14-year old son who was found guilty of frustrated
homicide, but on the authority of Article 2194. However, in Salen, the father was declared subsidiarily liable for damages
arising from the conviction of his son, who was over 15 but less than 18 years of age, by applying Article 2180 but, this
time, disregarding Article 2194 of the Civil Code.
Under Article 2180, the enforcement of such liability shall be effected against the father and, in case of his death or
incapacity, the mother. This was amplified by the Child and Youth Welfare Code which provides that the same shall
devolve upon the father and, in case of his death or incapacity, upon the mother or, in case of her death or incapacity,
upon the guardian, but the liability may also be voluntarily assumed by a relative or family friend of the youthful offender.
However, under the Family Code, this civil liability is now, without such alternative qualification, the responsibility of the
parents and those who exercise parental authority over the minor offender.
For civil liability arising from quasi-delicts committed by minors, the same rules shall apply in accordance with Articles
2180 and 2182 of the Civil Code, as so modified. In the case at bar, whether the death of the hapless Julie Ann Gotiong
was caused by a felony or a quasi-delict committed by Wendell Libi, respondent court did not err in holding petitioners
liable for damages arising therefrom.
B.Owners and Managers of Enterprises/Employers
1.Bahia v. Litonjua, 30 Phil. 624 (1915)

Facts: This is an action to recover damages from the defendants for the death of plaintiff‘s daughter alleged to have been
caused by the negligence of defendant‘s servant in driving an automobile over the child and causing her death.
Ramon Ramirez was the owner and manager of a garage in the city of Manila known as the International Garage. His
mother, the Fausta Litonjua, sometime before the accident from which this action springs, purchased an automobile and
turned it over to the garage to assist her son in the business in which he was engaged. On the 14th of May, 1911, Ramirez
rented the said automobile to the defendant Mariano Leynes, together with a chauffeur and a machinist, to be used by
him for a short time to carry persons living in Balayan to and from the fiesta which was about to take place in Tuy.
According to the arrangement between them, Ramires was to furnish the automobile, chauffeur, and machinist, and the
defendant Leynes was to pay him therefor P20 a day.
On the 16th of May, 1911, while passing from Balayan to Tuy, the automobile, by reason of a defect in the steering gear,
refused to obey the direction of the driver in turning a corner in the streets of Balayan , and, as a consequence, ran
across the street and into the wall of a house against which the daughter of plaintiff was leaning at the time. The font of
the machine struck the child in the center of the body and crushed her to death.
The action was brought against the mother of Ramirez, who bought the automobile, and Leynes, under whose direction
and control the automobile was being operated at the time of the accident. Ramirez was not made a party. LC held:
Litonjua is not liable, Leynes is liable.
Issue: Whether or not Leynes, the lessee of the vehicle, is liable under Art. 2180.
Held: NO. While it may be said that, at the time of the accident, the chauffeur who was driving the machine was a servant
of Leynes, in as much as the profits derived from the trips of the automobile belonged to him and the automobile was
operated under his direction, nevertheless, this fact is not conclusive in making him responsible for the negligence of
the chauffeur or for defects in the automobile itself. Article 1903 of the Civil Code not only establishes liability in
cases of negligence, but also provides when that liability shall cease. It says:
The liability referred to in this article shall cease when the persons mentioned therein prove that they employed all the
diligence of a good father of a family to avoid the damages.
From this article two things are apparent: (1) That when an injury is caused by the negligence of a servant or employee
there instantly arises a presumption of a law that there was negligence on the part of the master or employer either in
the selection of the servant or employee, or in supervision over him after the selection, or both; and (2) that presumption
is juris tantum and not juris et de jure, and consequently, may be rebutted. It follows necessarily that if the employees
shows to the satisfaction of the court that in selection and supervision he has exercised the care and diligence of a good
father of a family, the presumption is overcome and he is relieved from liability.
This theory bases the responsibility of the master ultimately on his own negligence and not on that of his servant. This is
the notable peculiarly of the Spanish law negligence. It is, of course, in striking contrast to the American doctrine that,
in relations with strangers, the negligence of the servant is conclusively the negligence of the master.
In the case before us the death of the child caused by a defect in the steering gear of the automobile immediately raised
the presumption that Leynes was negligent in selecting a defective automobile or in his failure to maintain it in
good condition after selection, and the burden of proof was on him to show that he had exercised the care of a good
father of a family.
As to SELECTION, Leynes has clearly shown that he exercised the care and diligence of a good father of a family. He
obtained the machine from a reputable garage and it was, so far as appeared, in good condition. The workmen were
likewise selected from a standard garage, were duly licensed by the Government in their particular calling, and
apparently thoroughly competent. The machine had been used but a few hours when the accident occurred and it is clear
from the evidence that the defendant had no notice, either actual or constructive, of the defective condition of the
steering gear. From the commencement of the use of the machine until the accident occurred sufficient time had not
elapsed to require an examination of the machine by the defendant as a part of his duty of inspection and supervision.
While it does not appear that Leynes formulated rules and regulations for the guidance of the drivers and gave them
proper instructions, designed for the protection of the public and the passengers, the evidence shows, as we have seen,
that the death of the child was not caused by a failure to promulgate rules and regulations . It was caused by a defect in
the machine as to which Leynes has shown himself free from responsibility.
Leynes having shown to the satisfaction of the court that he exercised the care and diligence of a good father of a family
is relieved of responsibility with respect to the death of plaintiff‘s child.
2.Philippine Rabbit Bus Lines, Inc., v. Phil-American Forwarders, Inc., G.R. No. L-25142, March 25, 1975
Facts: Philippine Rabbit Bus Lines (PRBL) and Pangalangan filed a complaint for damages against Phil-American
Forwarders (―PAF‖), Balingit, and Pineda. They alleged that on November 24, 1962, Pineda recklessly drove a PAF
freight truck along the national highway at Pampanga. It bumped PRBL‘s bus, driven by Pangalangan, and he suffered
injuries. The bus was disabled for 79 days. Balingit was PAF‟s manager.
Balingit filed a motion to dismiss the complaint against him for lack of cause of action, as he was not Pineda‘s employer.
The CFI granted dismissal; hence, this appeal.
Issue: Whether or not the terms ―employers‖ and ―owners and managers of an establishment or enterprises‖ in Article
2180 include the manager of a corporation.
Held: NO. We are of the opinion that those terms do not include the manager of a corporation. It may be gathered from
the context of article 2180 that the term "manager" ("director" in the Spanish version) is used in the sense of
"employer".
Hence, under the allegations of the complaint, no tortious or quasi-delictual liability can be fastened on Balingit as
manager of Phil-American Forwarders, Inc., in connection with the vehicular accident already mentioned because
he himself may be regarded as an employee or dependiente of his employer, Phil-American Forwarders, Inc.
(Side Issue) The bus company and its driver, in their appellants' brief, injected a new factual issue which was not alleged
in their complaint. They argue that Phil- American Forwarders, Inc. is merely a business conduit of Balingit because out
of its capital stock with a par value of P41,200, Balingit and his wife had subscribed P40,000 and they paid P10,000 on
their subscription, while the other incorporators, namely, Rodolfo Limjuco, Ponciano Caparas and Rafael Suntay paid
P250.25 and P25, respectively.
That argument implies that the veil of corporate fiction should be pierced and that Phil-American Forwarders, Inc. and
Balingit and his wife should be treated as one and the same civil personality.
We cannot countenance that argument in this appeal. It was not raised in the lower court. Affirmed.
3.Martin v. Court of Appeals, 205 SCRA 591 (1992)

Facts: At around 2AM in the morning, a private car owned by Ernesto Martin, while being driven by Nestor Martin, it
crashed into a Meralco electric post. The car was wrecked and the pole severely damaged. Meralco sued Ernesto for
damages in the RTC of Pasig, as the employer of Nestor Martin. The RTC decision held in favor of the plaintiff, which
was affirmed by the CA.
Issue: Whether the employer of the driver is liable.
Held: The complaint for damages was filed by MERALCO against only Ernesto Martin as alleged employer of Nestor
Martin, the driver of the car at the time of the accident. Nestor Martin (driver) was not impleaded.
The action was based on tort under Article 2180, providing in part that: ―Employers shall be liable for the damages
caused by their employees and household helpers acting within the scope of their assigned tasks, even though the former
are not engaged in any business or industry.‖ The above rule is applicable only if there is an employer-employee
relationship although it is not necessary that the employer be engaged in any business or industry.
It differs in this sense from Article 103 of the RPC, which requires that the employer be engaged in an industry to be
subsidiarily liable for the felony committed by his employee in the course of his employment.
Whether or not engaged in any business or industry, the employer under Article 2180 is liable for the torts
committed by his employees within the scope of their assigned task. But it is necessary first to establish the
employment relationship. Once this is done, the plaintiff must show, to hold the employer liable, that the employee was
acting within the scope of his assigned task when the tort complained of was committed. It is only then that the
defendant, as employer, may find it necessary to interpose the defense of due diligence in the selection and supervision of
the employee as allowed in that article.
In the case at bar, no evidence whatsoever was adduced by the MERALCO to show that the Ernesto was the employer of
Nestor Martin at the time of the accident. The trial court merely presumed the existence of the employer-employee
relationship and held that the MERALCO had not refuted that presumption. It noted that although the defendant alleged
that he was not Nestor Martin's employer, "he did not present any proof to substantiate his allegation."
A presumption is defined as an inference as to the existence of a fact not actually known, arising from its usual connection
with another which is known, or a conjecture based on past experience as to what course human affairs ordinarily take. It
is either a presumption juris, or of law, or a presumption hominis, or of fact.
There is no law directing the deduction made by the courts below from the particular facts presented to them by the parties. Such
deduction is not among the conclusive presumptions under Section 2 or the disputable presumptions under Section 3 of Rule 131
of the Rules of Court. In other words, it is not a presumption juris. Neither is it a presumption hominis, which is a reasonable
deduction from the facts proved without an express direction of law to that effect. The facts proved, or not denied, viz., the
ownership of the car and the circumstances of the accident, are not enough bases for the inference that the
petitioner is the employer of Nestor Martin. Most male persons know how to drive and do not have to employ others to
drive for them unless this is needed for business reasons. Many cannot afford this luxury, and even if they could, may
consider it an unnecessary expense and inconvenience.
In the present case, the more plausible assumption is that Nestor Martin is a close relative of Ernesto Martin and on
the date in question borrowed the car for some private purpose. Nestor would probably not have been accommodated if he
were a mere employee for employees do not usually enjoy the use of their employer's car at 2AM.
As the employment relationship between Ernesto Martin and Nestor Martin could not be presumed, it was
necessary for the MERALCO to establish it by evidence. It was enough for the Martin to deny the alleged employment
relationship, without more, for he was not under obligation to prove this negative averment. The above observations make
it unnecessary to examine the question of the driver's alleged negligence or the lack of diligence on the part of the Martin
in the selection and supervision of his employee.
4.St. Francis High School v. Court of Appeals, G.R. No. 82465, February 25, 1991
Facts: Ferdinand Castillo, 13, a freshman student of Section 1-C at St. Francis wanted to join a school picnic by 1-B and
1-C at Talaan Beach, Quezon. His parents did not allow him to join due to short notice. However, they did allow him
to bring food to the teachers with the directive that he should go back home after so doing. The teachers, however,
persuaded him to go to the beach.
While they were in the water, one of the female teachers was apparently drowning. Ferdinand attempted to come to her
rescue, but he drowned. He could not be resuscitated. His parents then filed a complaint against the school and the
teachers, alleging their failure to exercise the proper diligence of a good father of a family in preventing Ferdie‘s
drowning.
The RTC held the teachers solidarily liable, but absolved the school of liability for lack of evidence to show that the
picnic was school-sanctioned. The verbal precautions were insufficient; they did not even test the depth of the water;
two other persons drowned; the male supervisors were somewhere ―having a drinking spree‖. It also held liable two
teachers who arrived after the drowning.
The CA, however, found the school liable, since ―it cannot be gainsaid that the same was held under the supervision of
the teachers employed by the said school‖. It absolved the two latecomers since they were attending to an entrance exam
as part of their duties and had no participation in the negligence of the others. It also held that the matter of permission on
the part of the parents is irrelevant to the determination of negligent behavior.
Issue: Whether or not there was negligence attributable to the defendant pursuant to Art. 2180 in relation to Art 2176.
Held: NOT LIABLE. If at all petitioners are liable for SFHS, this is because of their own negligence or the negligence of
people under them. In the instant case however, as will be shown hereunder, SFHS are neither guilty of their own
negligence nor guilty of the negligence of those under them.
At the outset, it should be noted that parents of the victim Ferdinand allowed their son to join the excursion.
Testimony of Dr. Castillo on cross exam. by Atty. Flores

Q Now, when your son asked you for money to buy food, did you not ask him where he
will bring this?
A I asked him where he was going, he answered, I am going to the picnic, and when I
asked him where, he did not answer, sir.
Q And after giving the money, you did not tell him anything more?
A No more, sir.
Q And after that you just learned that your son join the picnic?
A Yes, sir.
Q And you came to know of it after the news that your son was drowned in the picnic
came to you, is that correct?
A Yes, sir.
Q From 8:00 o'clock in the morning up to 12:00 o'clock noon of March 20, 1982, you did
not know that your son join the picnic?
A No, sir, I did not know.
Q Did you not look for your son during that time?
A I am too busy with my profession, that is why I was not able, sir.
Q You did not ask your wife?
A I did not, sir.
Q And neither did your wife tell you that your son join the picnic?
A Later on after 12:00, sir.
Q And during that time you were too busy that you did not inquire whether your son have
joined that picnic?
A Yes, sir.
(TSN, pp. 16-17, hearing of April 2, 1984 witness Romulo Castillo)
The fact that he gave money to his son to buy food for the picnic even without knowing where it will be held, is a
sign of consent for his son to join the same. Furthermore.
Testimony of Dr. Lazaro on cross examination:

Q How did you conduct this mental and physical examination?
A I have interviewed several persons and the patient herself She even felt guilty about the
death of her son because she cooked adobo for him so he could join the excursion where
her son died of drowning.
Q Why were you able to say she was feeling guilty because she was the one who
personally cooked the adobo for her son?
A It was during the interview that I had gathered it from the patient herself. She was very
sorry had she not allowed her son to join the excursion her son would have not
drowned. I don't know if she actually permitted her son although she said she cooked
adobo so he could join. (Emphasis Supplied) (TSN, p. 19, hearing of April 30, 1984, Dr.
Lazaro — witness).
CA committed an error in applying Article 2180 of the Civil Code in rendering SFHS liable for the death of
respondent's son.
Article 2180, par. 4 states that: The obligation imposed by article 2176 is demandable not only for one's own acts or
omissions, but also for those of persons for whom one is responsible. Employers shall be liable for the damages caused
by their employees and household helpers acting within the scope of their assigned tasks, even though the former are
not engaged in any business or industry.
Under this paragraph, it is clear that before an employer may be held liable for the negligence of his employee, the act or
omission which caused damage or prejudice must have occurred while an employee was in the performance of his
assigned tasks.
In the case at bar, the teachers were not in the actual performance of their assigned tasks. The incident happened not
within the school premises, not on a school day and most importantly while the teachers and students were holding a
purely private affair, a picnic. It is clear from the beginning that the incident happened while some members of the I-C
class of St. Francis High School were having a picnic at Talaan Beach. This picnic had no permit from the school head
or its principal, Benjamin Illumin because this picnic is not a school sanctioned activity neither is it considered as an
extra-curricular activity.
As earlier pointed out by the trial court, mere knowledge by petitioner/principal Illumin of the planning of the picnic
by the students and their teachers does not in any way or in any manner show acquiescence or consent to the
holding of the same. The application therefore of Article 2180 has no basis in law and neither is it supported by any
jurisprudence. If we were to affirm the findings of CAt on this score, employers would forever be exposed to the risk and
danger of being hailed to Court to answer for the misdeeds or omissions of the employees even if such act or omission he
committed while they are not in the performance of their duties.
Finally, no negligence could be attributable to the teachers to warrant the award of damages to the respondents -spouses.
Petitioners Connie Arquio the class adviser of I-C, the section where Ferdinand belonged, did her best and exercised
diligence of a good father of a family to prevent any untoward incident or damages to all the students who joined the
picnic.
In fact, Connie invited co-petitioners Tirso de Chavez and Luisito Vinas who are both P.E. instructors and scout masters
who have knowledge in First Aid application and swimming.
Moreover, even respondents' witness, Segundo Vinas, testified that "the defendants (petitioners herein) had life savers
especially brought by the defendants in case of emergency." (p. 85, Rollo) The records also show that both petitioners
Chavez and Vinas did all what is humanly possible to save the child.
Testimony of Luisito Vinas on cross examination,

Q And when you saw the boy, Ferdinand Castillo, you approached the boy and claim also
having applied first aid on him?
A Yes, sir.
Q And while you were applying the so called first aid, the children were covering you up
or were surrounding you?
A Yes, sir.
Q You were rattled at that time, is it not?
A No, sir.
Q You mean you were in calm and peaceful condition?
A Yes, sir.
Q Despite the fact that the boy was no longer responding to your application of first aid?
A Yes, sir.
Q You have never been disturbed, "nababahala" in the process of your application of the
first aid on the body of Ferdinand Castillo?
A No, sir, because we were attending to the application of first aid that we were doing,
sir. Q After you have applied back to back pressure and which you claimed the boy did
not respond, were you not disturb anyway?
A I was disturbed during that time, sir.
Q For how many minutes have you applied the back to back pressure?
A From 9 to 11 times, sir.
Q You mean 9 to 11 times of having applied the pressure of your body on the body of
Ferdinand Castillo?
A Yes, sir.
Q Will you please describe how you applied a single act of back to back pressure?
A This has been done by placing the boy lay first downwards, then the face was a little
bit facing right and doing it by massaging the back of the child, sir." (TSN, pp. 32-35,
hearing of July 30, 1984)
Testimony of Tirso de Chavez on direct examination

ATTY. FLORES:
Q Who actually applied the first aid or artificial respiration to the child?
A Myself, sir.
Q How did you apply the first aid to the guy?
A The first step that I took, with the help of Mr. Luisito Vinas, was I applied back to back
pressure and took notice of the condition of the child. We placed the feet in a higher
position, that of the head of the child, sir.
Q After you have placed the boy in that particular position, where the feet were on a
higher level than that of the head, what did you do next?
A The first thing that we did, particularly myself, was that after putting the child in that
position, I applied the back to back pressure and started to massage from the waistline up,
but I noticed that the boy was not responding, sir.
Q For how long did you apply this back to back pressure on the boy?
A About 10 seconds, sir.
Q What about Mr. Vinas?
A Almost the same a little longer, for 15 seconds, sir.
Q After you noticed that the boy was not responding, what did you do?
A When we noticed that the boy was not responding, we changed the position of the boy
by placing the child facing upwards laying on the sand then we applied the mouth to
mouth resuscitation, sir. (pp. 92-93, Rollo)
With these facts in mind, no moral nor exemplary damages may be awarded in favor of respondents-
spouses. The case at bar does not fall under any of the grounds to grant moral damages.
DISSENT, Padilla, J.
In my opinion, the record clearly shows negligence on the part of the teachers, with the exception of Aragones and Jaro. I
may concede, albeit with reservation, that the aforementioned petitioners may not have been negligent in finding ways
and means to revive the young Castillo AFTER the drowning incident. Their application of first-aid measures may
have failed to revive him but the petitioners had fully exhausted their efforts to save the deceased. This concession,
however, is given with hesitation, for there is indication in the record that peti tioners may have tarried too long in
securing immediate medical attention for the deceased.
All this aside, I am really disturbed about, and would like to emphasize the demonstrated lack of diligence on the part of
the petitioners-teachers BEFORE the unfortunate incident took place. Despite awareness that the waters in the area
were deep, petitioners-teachers did not take concrete steps to make sure their wards did not stray too far and too deeply.
Even if they were not actually informed of the possible dangers which the area posed, petitioners-teachers should have
first “tested the waters”, so to speak, to ensure which parts thereof were safe for swimming purposes.
However, this was not the case for as testified to by petitioner de Chavez, ―they admitted that they did not even go to the
water to check its depth although they were aware that some parts of it were deep.‖ At best, it appears that only oral safety
instructions were imparted to the young excursionists.
It thus appears that the petitioners-teachers failed to exercise the proper diligence or what I may refer to as DILIGENCE
BEFORE THE FACT. As earlier mentioned, the steps taken to revive the deceased may be considered adequate, despite
my reservations, but the over-all lack of diligence on the part of petitioners-teachers suffices to put them within the
standards set by this Court in determining the existence of negligence.

5.Castilex Industrial Corporation v. Vasquez, 321 SCRA 393 (1999) Supra
Doctrine: The negligence of ABAD is not an issue at this instance. CASTILEX presumes said negligence but claims that
it is not vicariously liable for the injuries and subsequent death caused by ABAD. CASTILEX contends that the 5th
paragraph of Article 2180 should only apply to instances where the employer is not engaged in business or industry. Since
it is engaged in the business of manufacturing and selling furniture it is therefore not covered by said provision. Instead,
the 4th paragraph should apply.
CASTILEX‘s interpretation of the 5th paragraph is not accurate. The phrase ―even though the former are not engaged in
any business or industry‖ found in the 5th paragraph should be interpreted to mean that it is not necessary for the
employer to be engaged in any business or industry to be liable for the negligence of his employee who is acting
within the scope of his assigned task.
A distinction must be made between the 2 provisions to determine what is applicable. Both provisions apply to
employers: the 4th PAR, to owners and managers of an establishment or enterprise; and the 5th PAR, to employers
in general, whether or not engaged in any business or industry. The 4th PAR. covers negligent acts of employees
committed either in the service of the branches or on the occasion of their functions, while the 5th PAR encompasses
negligent acts of employees acting within the scope of their assigned task. The latter is an expansion of the former in
both employer coverage and acts included. Negligent acts of employees, whether or not the employer is engaged in a
business or industry, are covered so long as they were acting within the scope of their assigned task, even though
committed neither in the service of the branches nor on the occasion of their functions. For, admittedly, employees
oftentimes wear different hats. They perform functions which are beyond their office, title or designation but which,
nevertheless, are still within the call of duty. This court has applied the 5th par. to cases where the employer was
engaged in a business or industry such as truck operators and banks. The CA cannot, therefore, be faulted in
applying the said paragraph of Article 2180 to this case.
It is undisputed that ABAD was a Production Manager of CASTILEX at the time of the tort occurrence. As to whether
he was acting within the scope of his assigned task is a question of fact, which the court a quo and the CA resolved in the
affirmative. It was enough for CASTILEX to deny that ABAD was acting within the scope of his duties; it was not under
obligation to prove this negative averment.
ABAD, who was presented as a hostile witness, testified that at the time of the incident, he was driving a company-
issued vehicle, registered under the name of CASTILEX. He was then leaving the restaurant where he had some
snacks and had a chat with his friends after having done overtime work for the petitioner. However, the mere fact that
ABAD was using a service vehicle at the time of the injurious incident is not of itself sufficient to charge
CASTILEX with liability for the negligent operation of said vehicle unless it appears that he was operating the
vehicle within the course or scope of his employment.
The following are principles in American Jurisprudence on the employer‘s liability for the injuries inflicted by
the negligence of an employee in the use of an employer‘s motor vehicle:
USE OF VEHICLE GOING TO or FROM MEALS: It has been held that an employee who uses his employer‘s
vehicle in going from his work to a place where he intends to eat or in returning to work from a meal is not
ordinarily acting within the scope of his employment in the absence of evidence of some special business benefit to the
employer. Evidence that by using the employer‘s vehicle to go to and from meals, an employee is enabled to reduce his
time-off and so devote more time to the performance of his duties supports the finding that an employee is acting within
the scope of his employment while so driving the vehicle.
USE OF VEHICLE GOING TO or FROM WORK: In the same vein, traveling to and from the place of work is
ordinarily a personal problem or concern of the employee, and not a part of his services to his employer. Hence, in the
absence of some special benefit to the employer other than the mere performance of the services available at the place
where he is needed, the employee is not acting within the scope of his employment even though he uses his employer‘s
motor vehicle.
The employer may, however, be liable where he derives some special benefit from having the employee drive home in the
employer‘s vehicle as when the employer benefits from having the employee at work earlier and, presumably,
spending more time at his actual duties. Where the employee‘s duties require him to circulate in a general area with no
fixed place or hours of work, or to go to and from his home to various outside places of work, and his employer furnishes
him with a vehicle to use in his work, the courts have frequently applied what has been called the ―special errand‖ or
―roving commission‖ rule, under which it can be found that the employee continues in the service of his employer until
he actually reaches home. However, even if the employee be deemed to be acting within the scope of his employment in
going to or from work in his employer‘s vehicle, the employer is not liable for his negligence where at the time of the
accident, the employee has left the direct route to his work or back home and is pursuing a personal errand of his own.
USE OF VEHICLE OUTSIDE REGULAR WORKING HOURS: An employer who loans his motor vehicle to an
employee for the latter‘s personal use outside of regular working hours is generally not liable for the employee‘s
negligent operation of the vehicle during the period of permissive use, even where the employer contemplates that a
regularly assigned motor vehicle will be used by the employee for personal as well as business purposes and there is some
incidental benefit to the employer. Even where the employee‘s personal purpose in using the vehicle has been
accomplished and he has started the return trip to his house where the vehicle is normally kept, it has been held that he has
not resumed his employment, and the employer is not liable for the employee‘s negligent operation of the vehicle during
the return trip.
The foregoing principles and jurisprudence are applicable in our jurisdiction albeit based on the doctrine of
respondeat superior, not on the principle of bonus pater familias as in ours. Whether the fault or negligence of the
employee is conclusive on his employer as in American law or jurisprudence, or merely gives rise to the presumption
juris tantum of negligence on the part of the employer as in ours, it is indispensable that the employee was acting in his
employer‘s business or within the scope of his assigned task.
In the case at bar, it is undisputed that ABAD did some overtime work at the CASTILEX‘s office, which was located in
Mandaue City. Thereafter, he went to Goldie‘s Restaurant in Fuente Osmeña, Cebu City, which is about 7 km away from
his place of business. A witness for the Vasquez, a sidewalk vendor, testified that Fuente Osmeña is a ―lively place‖
even at dawn because Goldie‘s Restaurant and Back Street were still open and people were drinking thereat. Moreover,
prostitutes, pimps, and drug addicts littered the place.
At the Goldie‘s Restaurant, ABAD took some snacks and had a chat with friends. It was when ABAD was leaving the
restaurant that the incident in question occurred. That same witness for the respondents testified that at the time of the
vehicular accident, ABAD was with a woman in his car, who then shouted: ―Daddy, Daddy!‖ This woman could not
have been ABAD‘s daughter, for ABAD was only 29 years old at the time.
To the mind of this Court, ABAD was engaged in affairs of his own or was carrying out a personal purpose line
with his duties at the time he figured in a vehicular accident. It was then about 2:00 a.m. of 28 August 1988, way beyond
the normal working hours. ABAD‘s working day had ended; his overtime work had already been completed. His
being at a place which, as petitioner put it, was known as a ―haven for prostitutes, pimps, and drug pushers and addicts,‖
had no connection to CASTILEX‘s business; neither had it any relation to his duties as a manager. Rather, using his
service vehicle even for personal purposes was a form of a fringe benefit or one of the perks attached to his position. Since
there is paucity of evidence that ABAD was acting within the scope of the functions entrusted to him, CASTILEX had no
duty to show that it exercised the diligence of a good father of a family in providing ABAD with a service vehicle.
Thus, justice and equity require that petitioner be relieved of vicarious liability for the consequences of the
negligence of ABAD in driving its vehicle.
6.Mercury Drug Corporation v. Huang, G.R. No. 172122, June 22, 2007
Facts: Mercury Drug is the registered owner of a 6-wheeler 1990 Mitsubishi Truck. It has in its employ petitioner Rolando
J. del Rosario as driver. Spouses Richard and Carmen Huang are the parents of respondent Stephen Huang and own the
red 1991 Toyota Corolla GLI Sedan. Both vehicles figured in an accident in Taguig.
Stephen Huang was driving the car, weighing 1,450 kg., while Del Rosario was driving the truck, weighing 14,058 kg.
Both were traversing the C-5 Highway, north bound, coming from the general direction of Alabang going to Pasig. The
car was on the left innermost lane while the truck was on the next lane to its right, when the truck suddenly swerved to
its left and slammed into the front right side of the car. The collision hurled the car over the island where it hit a
lamppost, spun around and landed on the opposite lane. The truck also hit a lamppost, ran over the car and zigzagged
towards, and finally stopped in front of Buellah Land Church. At the time of the accident, Del Rosario only had a Traffic
Violation Receipt (TVR). His driver‘s license had been confiscated because he had been previously apprehended for
reckless driving.
Stephen Huang was paralyzed for life from his chest down and requires continuous medical and rehabilitation
treatment. Respondents fault petitioner Del Rosario for committing gross negligence and reckless imprudence while
driving, and Mercury Drug for failing to exercise the diligence of a good father of a family in the selection and
supervision of its driver.
Mercury Drug claims that it exercised due diligence of a good father of a family in the selection and supervision of all its
employees.
Trial court found Mercury Drug and Del Rosario jointly and severally liable. CA affirmed.
Issue: Whether Mercury & Del Rosario are solidarily liable.
Held: YES.
Driver‘s negligence
Evidence does not support petitioners‘ claim that at the time of the accident, the truck was at the left inner lane and that it
was Stephen Huang‘s car, at its right, which bumped the right front side of the truck. The court took note of the testimony
of Dr. Marlon Rosendo H. Daza, an expert in the field of physics.
Given that 1. Two vehicles collided; 2. One vehicle is ten times heavier, more massive than the other; 3. Both vehicles
were moving in the same direction and at the same speed of about 85 to 90 kilometers per hour; 4. The heavier vehicle
was driving at the innermost left lane, while the lighter vehicle was at its right, Dr. Daza testified that if the lighter
vehicle hits the right front portion of the heavier vehicle, the general direction of the light vehicle after the impact
would be to the right side of the heavy vehicle, not the other way around. The truck, he opined, is more difficult to
move as it is heavier. It is the car, the lighter vehicle, which would move to the right of, and away from the truck.
Dr. Daza also gave a further study on the basis of the same assumptions except that the car is on the left side of the truck,
in accordance with the testimony of Stephen Huang. Dr. Daza concluded that the general direction of the car after
impact would be to the left of the truck. In this situation, the middle island against which the car was pinned would
slow down the car, and enable the truck to catch up and hit the car again, before running over it.
Petitioners tried to show the damages that the truck sustained at its front right side. The attempt does not impress. The
photographs presented were taken a month after the accident, and Rogelio Pantua, the automechanic who repaired the
truck and authenticated the photographs, admitted that there were damages also on the left side of the truck.
Considering that the car was smaller and lighter than the six-wheeler truck, the impact allegedly caused by the car when it
hit the truck could not possibly be so great to cause petitioner to lose all control that he failed to even step on the brakes.
The evidence proves petitioner Del Rosario‘s negligence as the direct and proximate cause of the injuries suffered by
respondent Stephen Huang.
Mercury Drug‘s liability

The liability of the employer under Art. 2180 is direct or immediate. It is not conditioned on a prior recourse against the
negligent employee, or a prior showing of insolvency of such employee. It is also joint and solidary with the employee.
To be relieved of liability, Mercury Drug should show that it exercised the diligence of a good father of a family, both
in the selection of the employee and in the supervision of the performance of his duties.
Thus, in the SELECTION of its prospective employees, the employer is required to examine them as to their
qualifications, experience, and service records. With respect to the SUPERVISION of its employees, the employer
should formulate standard operating procedures, monitor their implementation, and impose disciplinary measures
for their breach. To establish compliance with these requirements, employers must submit concrete proof, including
documentary evidence.
Mercury Drug presented testimonial evidence on its hiring procedure. According to the Recruitment and Training
Manager of Mercury Drug, applicants are required to take theoretical and actual driving tests, and psychological
examination
In the case of Del Rosario, however, it was admitted that he took the driving tests and psychological examination when he
applied for the position of Delivery Man, but not when he applied for the position of Truck Man. It was also admitted
that Del Rosario used a Galant which is a light vehicle, instead of a truck during the driving tests . No tests were
conducted on the motor skills development, perceptual speed, visual attention, depth visualization, eye and hand
coordination and steadiness of petitioner Del Rosario.
No NBI and police clearances were also presented. Lastly, petitioner Del Rosario attended only three driving seminars
and the only seminar he attended before the accident, which occurred in 1996, was held twelve years ago in 1984.
Mercury Drug does not provide for a back-up driver for long trips. At the time of the accident, Del Rosario has been out
on the road for more than 13 hours, without any alternate. Mercury Drug likewise failed to show that it exercised due
diligence on the supervision and discipline over its employees. In fact, on the day of the accident, Del Rosario was
driving without a license. He was holding a TVR for reckless driving. He testified that he reported the incident to his
superior, but nothing was done about it. He was not suspended or reprimanded. No disciplinary action whatsoever was
taken against petitioner Del Rosario.
In awarding damages, the court took into consideration the ff:
―He was only 17 years old, nearly 6 feet tall and weighed 175 pounds. He was in 4th year high school, and a member of
the school varsity basketball team. He was also class president and editor- in chief of the school annual. He had shown
very good leadership qualities. He was looking forward to his college life, having just passed the entrance examinations of
the University of the Philippines, De La Salle University, and the University of Asia and the Pacific. The University of
Sto. Tomas even offered him a chance to obtain an athletic scholarship, but the accident prevented him from attending the
basketball tryouts. Without doubt, he was an exceptional student. He excelled both in his academics and extracurricular
undertakings. He is intelligent and motivated, a go-getter, as testified by Francisco Lopez, respondent Stephen Huang‘s
godfather and a bank executive. Had the accident not happened, he had a rosy future ahead of him. He wanted to embark
on a banking career, get married and raise children.‖
The mother was talking about the irony of it all: Mercury Drug caused the injury and yet they have no choice but to buy
the medicines for the injury from Mercury Drug.

7.Sanitary Steam Laundry v. Court of Appeals, 300 SCRA 20 (1998) Supra
Facts: A collision occurred between a Mercedes Benz panel truck and a Cadillac Cimarron which caused the death of 3
persons and injuries of others. At around 8PM, while the Cimarron was traveling along Aguinaldo Highway in Imus,
Cavite on its way back to Manila, the Cimarron was hit on its front portion by petitioner‘s panel truck.
The driver of the truck claimed that a jeepney in front of him suddenly stopped. In order to avoid hitting the jeepney, the
driver stepped on the brakes which caused the vehicle to swerve to the left and encroach on a portion of the opposite lane.
This eventually caused the collision.
Private respondents filed a civil case for damages against herein petitioner. Petitioner raises the defense that the driver of
the Cimarron was negligent and was guilty of violation of traffic rules and regulations at the time of the mishap
(overloaded car, the front seat was occupied by 4 (wth) persons, and the car only had one headlight functioning). They
also invoke the last clear chance doctrine, stating that the driver of the Cimarron had the last clear chance when the truck
driver braked and swerved as a consequence.
Issue: Whether or not Sanitary Steam Laundry is liable as an employer of the negligent truck driver.
Held: YES. It has not been shown how the alleged negligence of the Cimarron driver contributed to the collision between
the vehicles. Indeed, petitioner has the burden of showing a causal connection between the injury received and the
violation of the Land Transportation and Traffic Code. He must show that the violation of the statute was the proximate
or legal cause of the injury or that it substantially contributed thereto. Negligence, consisting in whole or in part, of
violation of law, like any other negligence, is without legal consequence unless it is a contributing cause of the injury.
Also according to the testimonies given, it was shown that the driver of the panel truck lost control of his vehicle and
bumped the Cimarron. Hence, even if both headlights of the Cimarron were lighted, it would have been bumped just the
same because the driver of the panel truck could not stop despite the fact that he applied the brakes . Petitioner‘s
contention that because of ―decreased visibility,‖ caused by the fact that the Cimarron allegedly had only one headlight
on, its driver failed to see the Cimarron is without any basis in fact. Only its driver claimed that the Cimarron had only one
headlight on. The police investigator did not state in his report or in his testimony that the Cimarron had only one
headlight on.
There is also no connection as to the overloading or the number of persons sitting in the front seat. It cannot be said
that these circumstances affected the maneuverability of the Cimarron. It was shown that because of the swerving of the
truck, no maneuvering could have avoided the outcome. Additionally it was found that the truck was at a speed above the
acceptable limit. It was traversing at what appears to be 60 (mph or km/h, the court was unsure) wherein the speed limit
was only 50 km/h.
Employer‘s Liability
Petitioner contends that the non-submission of the NBI clearance and police clearance of its driver does not mean that it
failed to exercise the diligence of a good father of the family in the selection and supervision of its employees. It argues
that there is no law requiring employees to submit NBI and police clearance prior to their employment. Hence,
petitioner‘s failure to require submission of these documents does not mean that it did not exercise due diligence in the
selection and supervision of its employees. On the other hand, it asserts that its employment of Herman Hernandez as a
driver means that he had passed the screening tests of the company, including submission of the aforementioned
documents. Petitioner maintains that the presumption is that the said driver submitted NBI and police clearance. He also
contends that there was no need to conduct a psychological and physical test on its employees since there is no
requirement under the law to do such.
The court disagrees with the petitioner. It agrees with the CA in ruling that that petitioner‘s policy of requiring
prospective employees to submit NBI and police clearance and to have at least 2 years experience as driver prior to
employment was not enough to prove the exercise of due diligence and that even this policy petitioner failed to prove by
its failure to present the driver‘s NBI and police records during the trial.
With respect to the requirement of passing psychological and physical tests prior to his employment, although no
law requires it, such circumstance would certainly be a reliable indicator of the exercise of due diligence. According to
the trial court:
―No tests of skill, physical as well as mental and emotional, were conducted on their would-be employees. No
on-the-job training and seminars reminding employees, especially drivers, of road courtesies and road rules
and regulations were done. There were no instructions given to defendant‘s drivers as to how to react in cases of
emergency nor what to do after an emergency occurs. There was even failure on the part of defendant to present
its concerned employee‘s 204 file. All these could only mean failure on the part of defendant to exercise the
diligence required of it of a good father of a family in the selection and supervision of its employees.‖
Indeed, driving exacts a more than usual toll on the senses. Accordingly, it behooves employers to exert extra care in
the selection and supervision of their employees. They must go BEYOND the minimum requirements fixed by law.
8. Carticiano v. Nuval, G.R. No. 138054, September 28, 2000

Facts: Zach Carticiano was on his way home to Imus Cavite while driving father‘s car — a Ford Laser. On the opposite
side of the road and on the way to Paranaque, Darwin was driving an owner type Jeep owned by Nuval. As the 2 cars
were about to pass each other, Darwin veered his vehicle to the left and thus occupied a portion of the other lane. As such,
a head on collision between the 2 vehicles occurred. Consequently, Darwin immediately fled from the scene.
Nearby residents pulled Zac out of the car and was brought to a hospital by a government agent who happened to be
passing by. Zac suffered multiple fractures on his left leg and other injuries in his body.
Nuval offered 100k as compensation for the injuries caused by but was refused. Thereafter, Zac initiated a criminal
complaint against Darwin. Also, a civil suit was filed against Nuval as owner.
Zac claims that Darwin‘s recklessness was the proximate cause for the injury he sustained and, as the Nuval‘s employee,
the latter was liable for not execising due diligence in the selection and supervision of his employee. On the other hand,
Nuval argues that Darwin was not an employee but only a casual who had worked with Nuval for only 5 days but was
thereafter terminated. Furthermore, he claims that Darwin was not authorized to drive the vehicle.
CA exonerated Nuval on the ground that Zac did not present evidence showing that the driver was actually an employee
of Nuvali at the time of the accident. Moreover, assuming that he was, it was not shown that he was acting within the
scope of his assigned task when the incident happened.
Issue: Whether Nuval can be held liable for the negligence of Darwin.
Held. YES. The only proof proferred by Nuval to show that Darwin was no longer his employee was the payroll in which
the latter‘s name was not included. However, as revealed by the testimonies of the witnesses presented during trial, Nuval
had other employees working for him who were not listed in the payroll either.
The rather easy access which Darwin had to the keys to the vehicle of Nuval further weakened the latter‘s cause. First,
nobody questioned the fact that the former had freely entered Nuval‟s house where the keys to the vehicle were kept. The
theory of Nuval that Darwin must have stolen the keys as well as the vehicle is rather farfetched and not supported by any
proof whatsoever. It is obviously an afterthought concocted to present some semblance of a defense. Second, both Nuval
and his employees who testified did not act as if the vehicle had been stolen. He had not reported the alleged theft of his
vehicle. Neither did he search nor ask his employees to search for the supposedly stolen vehicle. In fact, he testified that
his employees had told him that the keys and the vehicle had merely ―probably‖ been stolen by Darwin.
Moreover, facts established in the case show that Darwin was acting within the scope of the authority given him when
the collision occurred. That he had been hired only to bring Nuval‘s children to and from school must be rejected.
While this may be one of the assigned tasks given him, no convincing proof was presented showing that it was his only
task. His authority was to drive Nuval‘s vehicle. Third parties are not bound by the allegation that the driver was
authorized to operate the jeep only when the employer‘s children were on board the vehicle. Giving credence to this
outlandish theory would enable employers to escape their legal liabilities with impunity. Such loophole is easy to concoct
and is simply unacceptable.
Nuvali‘s defense that, at the time of the accident, Darwin was no longer his employee, having been merely hired for a few
days, is inconsistent with his other argument of due diligence in the selection of an employee
Once a driver is proven negligent in causing damages, the law presumes the vehicle owner equally negligent and
imposes upon the latter the burden of proving proper selection of employee as a defense.
The allegation of contributory negligence is also unavailing because the accident was caused by the fact that Darwin‘s
jeep suddenly veered towards Zacarias‘ lane when the vehicles were about to pass each other. This made it difficult for
Zac to avoid the impending injury. Also, no evidence was presented that Zac could have evaded the jeep had he been
more diligent under the circumstances.
9.Universal Aquarius, Inc., v. Q.C. Human Resources Management Corporation, G.R.. 155990, Sep. 12, 2007
Facts: Universal Aquarius, Inc. (Universal) is engaged in the manufacture and distribution of chemical products in Metro
Manila. It operates a chemical plant in Antipolo City. Conchita Tan (Tan), as a proprietor under the name and style of
Marman Trading (Marman), is engaged in the trading, delivery and distribution of chemical products in Metro Manila,
with a depot in Antipolo City adjoining Universal's chemical plant.
Q.C. Human Resources Management Corporation (Resources) is engaged in supplying manpower to various
establishments. It supplied Universal with about 74 temporary workers to assist Universal in the operation of its chemical
plant in Antipolo City.
On December 19, 2000, Capocyon and 36 other union officers and members of Obrero Pilipino, (labor union) picketed,
barricaded and obstructed the entry and exit of Universal's Antipolo City chemical plant and intercepted
Universal's delivery trucks thereby disrupting its business operations. Marman's depot, which adjoined Universal's plant,
suffered a similar fate.
On December 27, 2000, Universal and Tan filed a Complaint against the strikers and Resources before the RTC for
breach of contract and damages suffered due to the disruption of their respective business operations.
On January 3, 2001, Universal forged an Agreement (To End Labor Dispute) with Obrero Pilipino. Thus, the strike
which affected the business operations of Universal and Marman ended. Universal and Tan then filed a Notice of
Dismissal as against the strikers. On January 8, 2001, Resources filed a Motion to Dismiss on the grounds that the
complaint stated no cause of action against it; that, assuming the existence of such cause of action, the same was lost upon
dismissal of the case against the individual defendants; and lack of jurisdiction.
Issue: Whether the complaint states a cause of action.
Held: The Rules of Court makes it clear that failure to make a sufficient allegation of a cause of action in the complaint
warrants the dismissal thereof. Section 2, Rule 2 defines a cause of action as the act or omission by which a party violates
the right of another. It is the delict or the wrongful act or omission committed by the defendant in violation of the primary
right of the plaintiff. Its essential elements are as follows:
1. A right in favor of the plaintiff by whatever means and under whatever law it arises or is created;
2. An obligation on the part of the named defendant to respect or not to violate such right; and
3. Act or omission on the part of such defendant in violation of the right of the plaintiff or constituting a breach of
the obligation of the defendant to the plaintiff for which the latter may maintain an action for recovery of
damages or other appropriate relief.
It is only upon the occurrence of the last element that a cause of action arises, giving the plaintiff the right to maintain
an action in court for recovery of damages or other appropriate relief.
Anent UNIVERSAL'S claim for breach for contract and damages, the Court is convinced that the Complaint sufficiently
states a cause of action against Resources. The Complaint alleged that Universal had a contract of employment of
temporary workers with Resources; and that Resources violated said contract by supplying it with unfit, maladjusted
individuals who staged a strike and disrupted its business operations.
However, with regard to TAN'S CLAIM for damages, the Court finds that she has no cause of action against Resources. A
thorough reading of the allegations of the Complaint reveals that Tan's claim for damages clearly springs from the strike
effected by the employees of Resources.
It is settled that an employer's liability for acts of its employees attaches only when the tortious conduct of the
employee relates to, or is in the course of, his employment. The question then is whether, at the time of the damage or
injury, the employee is engaged in the affairs or concerns of the employer or, independently, in that of his own. An
employer incurs no liability when an employee‘s conduct, act or omission is beyond the range of employment.
Unquestionably, when Resources' employees staged a strike, they were acting on their own, beyond the range of their
employment. Thus, Resources cannot be held liable for damages caused by the strike staged by its employees.
10. Filamer Christian Institute v. Court of Appeals, G.R. No. 75112, October 16, 1990
Facts: Private respondent Potenciano Kapunan, Sr., is an 82 year old retired schoolteacher (now deceased) who was hit by
a Pinoy jeep while he was walking along Roxas Ave., Roxas City, at 6:30 p.m. The jeep was owned by Filamer Christian
Institute (FCI), and driven by its alleged employee, Funtecha. Funtecha was a student at the school who was assigned
work in exchange for free education. He was accompanied by Allan Masa; they both fled the scene. Kapunan was
brought by a tricycle driver to the hospital, where he stayed for 20 days.
Evidence establishes that only one headlight was functioning at the time. Funtecha only had a student permit, but he
convinced Allan Masa – the authorized driver – to allow him to drive.
Kapunan filed a criminal case against Funtecha alone for physical injuries through reckless imprudence; he reserved
the right to file an independent civil action. Funtecha was found guilty.
Kapunan also filed a civil action for damages before the RTC against FCI, Funtecha, and Masa – Allan was not
included. Agustin Masa – the president and director - was being sued in his personal capacity for allegedly allowing
Funtecha – his houseboy - to drive despite not having a license. The RTC found Filamer, Funtecha, and Allan Masa (a
non-party) solidarily liable. Zenith Insurance Corp. was likewise ordered to pay FCI.
FCI and Zenith appealed, but the latter‘s appeal was dismissed for non-payment of docket fees.
Issue: Whether or not employer in Art. 2180 applies to FCI as regards Funtecha.
Held: NO. In disclaiming liability, Filamer has invoked the provisions of the Labor Code, 7 specifically Section 14, Rule
X of Book III which reads:
Sec. 14. Working scholars. — There is no employer-employee relationship between

students on the one hand, and schools, colleges or universities on the other, where
students work for the latter in exchange for the privilege to study free of charge ;
provided the students are given real opportunity, including such facilities as may be
reasonable, necessary to finish their chosen court under such arrangement.
It is manifest that under the just-quoted provision of law, Filamer cannot be considered as Funtecha's employer. Funtecha
belongs to that special category of students who render service to the school in exchange for free tuition. Funtecha
worked for FCI for 2 hours daily for 5 days a week. He was assigned to clean the school passageways from 4:00
a.m. to 6:00 a.m. with sufficient time to prepare for his 7:30 a.m. classes. As admitted by Agustin Masa in open court,
Funtecha was not included in the company payroll.
The wording of Section 14 is clear and explicit and leaves no room for equivocation. To dismiss the implementing
rule as one which governs only the "personal relationship" between the school and its students and not where there is
already a third person involved, as espoused by private respondents, is to read into the law something that was not
legislated there in the first place. The provision of Section 14 is obviously intended to eliminate an erstwhile gray area in
labor relations and seeks to define in categorical terms the precise status of working scholars in relation to the learning
institutions in which they work for the privilege of a free education.
But even if we were to concede the status of an employee on Funtecha, still the primary responsibility for his
wrongdoing cannot be imputed to FCI for the plain reason that at the time of the accident, it has been satisfactorily
shown that Funtecha was not acting within the scope of his supposed employment.
His duty was to sweep the school passages for 2 hours every morning before his regular classes. Taking the wheels of
the Pinoy jeep from the authorized driver at 6:30 in the evening and then driving the vehicle in a reckless manner resulting
in multiple injuries to a third person were certainly not within the ambit of his assigned tasks. In other words, at the time
of the injury, Funtecha was not engaged in the execution of the janitorial services for which he was employed, but
for some purpose of his own. It is but fair therefore that Funtecha should bear the full brunt of his tortious negligence.
Filamer cannot be made liable for the damages he had caused.
Private respondents' attempt to hold petitioner Filamer directly and primarily answerable to the injured party under
Article 2180 of the Civil Code would have prospered had they proceeded against Allan Masa, the authorized driver
of the Pinoy jeep and undisputably an employee of petitioner. It was Allan's irresponsible act of entrusting the wheels
of the vehicle to the inexperienced Funtecha which set into motion the chain of events leading to the accident resulting in
injuries to Kapunan, Sr. But under the present set of circumstances, even if the trial court did find Allan guilty of
negligence, such conclusion would not be binding on Allan. It must be recalled that Allan was never impleaded in the
complaint for damages and should be considered as a stranger as far as the trial court's judgment is concerned. It
is axiomatic that no man shall be affected by a proceeding to which he is a stranger.
11. Filamer Christian Institute v. Court of Appeals, G.R. No. 75112, August 17, 1992
RESOLUTION: In the 1990 decision, the SC ruled that the FCI is not liable for the injuries caused by Funtecha on the
grounds that the latter was not an authorized driver for whose acts the petitioner shall be directly and primarily answerable,
and that Funtecha was merely a working scholar who, under Section 14, Rule X, Book III of the Rules and Regulations
Implementing the Labor Code is not considered an employee of the petitioner.
Funtecha was a working student, being a part-time janitor and a scholar of Filamer. He was, in relation to the school,
an employee even if he was assigned to clean the school premises for only 2 hours in the morning of each school day.
Having a student driver‘s license, Funtecha requested the driver, Allan Masa, and was allowed, to take over the vehicle
while the latter was on his way home one late afternoon. The place where Allan lives is also the house of his father, the
school president, Agustin Masa. Moreover, it is also the house where Funtecha was allowed free board while he was a
student of Filamer Christian Institute. Allan Masa turned over the vehicle to Funtecha only after driving down a road,
negotiating a sharp dangerous curb, and viewing that the road was clear.
According to Allan‘s testimony, a fast moving truck with glaring lights nearly hit them so that they had to swerve to the
right to avoid a collision. Upon swerving, they heard a sound as if something had bumped against the vehicle, but they did
not stop to check. Actually, the Pinoy jeep swerved towards the pedestrian, Potenciano Kapunan who was walking in his
lane in the direction against vehicular traffic, and hit him. Allan affirmed that Funtecha followed his advise to swerve to
the right. At the time of the incident (6:30 P.M.) in Roxas City, the jeep had only one functioning headlight. Allan
testified that he was the driver and at the same time a security guard of the FCI . He further said that there was no
specific time for him to be off-duty and that after driving the students home at 5:00 in the afternoon, he still had to go
back to school and then drive home using the same vehicle.
Driving the vehicle to and from the house of the school president where both Allan and Funtecha reside is an act in
furtherance of the interest of the FCI. Allan‘s job demands that he drive home the school jeep so he can use it to fetch
students in the morning of the next school day. The school president had knowledge that the jeep was routinely driven
home for the said purpose. The school president also had knowledge of Funtecha‘s possession of a student driver‘s license
and his desire to undergo driving lessons during the time that he was not in his classrooms.
In learning how to drive while taking the vehicle home in the direction of Allan‘s house, Funtecha was not driving for
the purpose of his enjoyment or for a ―frolic of his own‖ but ultimately, for the service for which the jeep was
intended by the petitioner school.
The Court is constrained to conclude that the act of Funtecha in taking over the steering wheel was one done for and in
behalf of his employer for which act FCI cannot deny any responsibility by arguing that it was done beyond the
scope of his janitorial duties. The clause ―within the scope of their assigned tasks‖ for purposes of raising the
presumption of liability of an employer, includes any act done by an employee, in furtherance of the interests of the
employer or for the account of the employer at the time of the infliction of the injury or damage. Even if somehow, the
employee driving the vehicle derived some benefit from the act, the existence of a presumptive liability of the employer is
determined by answering the question of whether or not the servant was at the time of the accident performing any act in
furtherance of his master‘s business.
Section 14, Rule X, Book III of the Rules implementing the Labor Code, on which the petitioner anchors its defense,
was promulgated by the SOLE only for the purpose of administering and enforcing the provisions of the Labor
Code on conditions of employment. Rule X is merely a guide to the enforcement of the substantive law on labor. The
Court, thus, makes the distinction and so holds that Section 14, Rule X, Book III of the Rules is not the decisive law in a
civil suit for damages instituted by an injured person during a vehicular accident against a working student of a school
and against the school itself.
There exists in the present case an extra-contractual obligation arising from the negligence or reckless imprudence of a
person ―whose acts or omissions are imputable, by a legal fiction, to other(s) who are in a position to exercise an
absolute or limited control over (him).‖
Funtecha is an employee of Filamer. He need not have an official appointment for a driver‘s position in order that the
petitioner may be held responsible for his grossly negligent act, it being sufficient that the act of driving at the time of
the incident was for the benefit of the petitioner. The fact that Funtecha was not the school driver or was not acting
within the scope of his janitorial duties does not relieve the FCI of the burden of rebutting the presumption juris
tantum that there was negligence on its part either in the selection of a servant or employee, or in the supervision over
him.
The petitioner has failed to show proof of its having exercised the required diligence of a good father of a family over
its employees Funtecha and Allan. Supervision includes the formulation of suitable rules and regulations for the
guidance of its employees and the issuance of proper instructions intended for the protection of the public and persons
with whom the employer has relations through his employees. An employer is expected to impose upon its employees he
necessary discipline called for in the performance of any act indispensable to the business and beneficial to their employer.
In the present case, FCI has not shown that it has set forth such rules and guidelines as would prohibit any one of its
employees from taking control over its vehicles if one is not the official driver or prohibiting the driver and son of
the Filamer president from authorizing another employee to drive the school vehicle. Furthermore, the FCI has failed
to prove that it had imposed sanctions or warned its employees against the use of its vehicles by persons other than the
driver.
In the absence of evidence that the FCI had exercised the diligence of a good father of a family in the supervision of
its employees, the law imposes upon it the vicarious liability for acts or omissions of its employees. The liability of the
employer is, under Article 2180, primary and solidary. However, the employer shall have recourse against the negligent
employee for whatever damages are paid to the heirs of the plaintiff.
The actual driver of the school jeep, Allan Masa, was not made a party defendant in the civil case for damages. This is
quite understandable considering that as far as the injured pedestrian, Potenciano Kapunan, was concerned, it was
Funtecha who was the one driving the vehicle and presumably was one authorized by the school to drive . The
plaintiff and his heirs should not now be left to suffer without simultaneous recourse against the petitioner for the
consequent injury caused by a janitor doing a driving chore for the petitioner even for a short while. For the purpose of
recovering damages under the prevailing circumstances, it is enough that the plaintiff and the private respondent heirs
were able to establish the existence of employer-employee relationship between Funtecha and petitioner Filamer and the
fact that Funtecha was engaged in an act not for an independent purpose of his own but in furtherance of the business of
his employer.

12. Metro Manila Transit Corporation v. Court of Appeals, 223 SCRA 521 (1993) See p. 791 of textbook
Facts: 28 August, 1979, 6 a.m. – Nenita Custodio was a machine operator working for Dynetics Inc. in Taguig. She
boarded a Jeep driven by Agudo Calebag and owned by Victorin Lamayo to go to work. While it was traveling at a
fast pace along DBP Ave., a Metro Manila Transit Corp. (―MMTC‖) bus driven by Godofredo Leonardo was also
traveling quickly along Honeydew Road. As both approached the intersection of both roads, they failed to slow down
nor blow their horns. (Typical Filipino driving.) They thus collided, the jeep ramming the left portion of the bus.
Custodio was thrown onto the pavement, unconscious with serious physical injuries. She was brought to the Medical
City Hospital where she regained consciousness one week later, and was confined for 24 days thereon.
Custodio then filed a complaint for damages against everyone with the assistance of her parents, being a minor. They
denied all allegations and pointed fingers at each other. MMTC averred that its bus was driven prudently and carefully,
and that since the jeep hit the bus, it was the jeep that was driven recklessly. Lamayo alleged that MMTC and its driver
should be liable, being the sole cause of the accident. Calebag the jeepney driver was declared in default.
MMTC presented Garbo, a Training Officer, to present the requirements for its divers, i.e. NBI clearance, diploma, birth
certificate, license, work certification, interview, checks with other companies, final interview, psycho-physical tests, x-
rays, and a Constabulary Highway Patrol Group seminar.
Its Transport Supervisor, Bautista, also testified as to his duty of monitoring the daily operations and to enforce
compliance with its guidelines concerning uniform, traffic rules, and fitness.
The RTC found both drivers and the jeep owner solidarily liable, but absolved MMTC for showing diligence in the
selection and supervision of its employees. The CA modified this by holding MMTC likewise liable.
Issue: (1) Whether or not documentary evidence is needed to support the positive testimonies above.
(2) Whether or not their testimonies may be disturbed on appeal
(3) Whether or not the evidence presented re: diligence of MMTC in the selection and supervision of its employees
is sufficient
Held: NO.
1. The first two issues raised by petitioner shall be correlatively discussed in view of their interrelation.
In its present petition, MMTC insists that the oral testimonies of its employees were presented as witnesses in its behalf
sufficiently prove, even without the presentation documentary evidence, that driver Leonardo had complied with
all the hiring and clearance requirements and had undergone all trainings, tests and examinations preparatory to
actual employment, and that said positive testimonies spell out the rigid procedure for screening of job applicants
and the supervision of its employees in the field. It underscored the fact that it had indeed complied with the measure of
diligence in the selection and supervision of its employees as enunciated in Campo, et al. vs. Camarote, et al. requiring an
employer, in the exercise of the diligence of a good father of a family, to carefully examine the applicant for employment
as to his qualifications, experience and record service, and not merely be satisfied with the possession of a professional
driver's license.
When as in this case, the findings of the CA and the trial court are contrary to each other, this court may scrutinize the
evidence on record, in order to arrive at a correct finding based thereon.
A perusal of the same shows that since there is no dispute as to the finding of concurrent negligence on the part of the
defendant Calebag, the driver of the passenger jeepney, and co-defendant Leonardo, the bus driver of petitioner
MMTC, both of whom were solidarily held liable with defendant Lamayo, the owner of the jeepney, we are spared the
necessity of determining the sufficiency of evidence establishing the fact of negligence. The contrariety is in the findings
of the two lower courts, and which is the subject of this present controversy, with regard to the liability of MMTC as
employer of one the erring drivers.
The trial court, in absolving MMTC from liability ruled that — On the question as to whether defendant MMTC was
successful in proving its defense that indeed it had exercised the due diligence of a good father of a family in the selection
and supervision of defendant Leonardo, this Court finds that based on the evidence presented during the trial, defendant
MMTC was able to prove that it was not only careful and diligent in choosing and screening applicants for job openings
but also strict (and) diligent in supervising its employees by seeing to it that its employees were in proper uniforms,
briefed in traffic rules and regulations before the start of duty, checked employees to determine whether they were
positive for alcohol and followed other rules and regulations and guidelines of the Bureau of Land Transportation as well
as its company. Having successfully proven such defense, defendant MMTC therefore, cannot be held liable for the
accident.
Having reached this conclusion, the Court now, holds that defendant MMTC be totally absolved from liability and that the
complaint against it be dismissed whereas respondent court was of the opinion that — It is surprising though that
witness Milagros Garbo did not testify nor present any evidence that defendant-appellee's driver, defendant
Godofredo Leonardo has complied with or has undergone all clearances and trainings she referred to . The
clearances, result of seminars and tests which Godofredo Leonardo submitted and complied with, if any, were not
presented in court despite the fact that they are obviously in the possession and control of defendant-appellee. Instead, it
resorted to generalities. The Court has ruled that due diligence in (the) selection and supervision of employee(s) are not
proved by mere testimonies to the effect that its applicant has complied with all the company requirements before one is
admitted as an employee but without proof thereof.
On the part of Christian Bautista, the transport supervisor of defendant-appellee, he testified that it is his duty to monitor
the operation of buses in the field; to countercheck the dispatchers' duty prior to the operation of the buses in the morning;
to see to it that bus crew follows written guidelines of the company (t.s.n., April 29, 1988, pp. 4-5), but when asked to
present in court the alleged written guidelines of the company he merely stated that he brought with him a "wrong
document" and defendant-appellee's counsel asked for reservation to present such written guidelines in the next hearing
but the same was (sic) never presented in court.
A thorough and scrupulous review of the records of this case reveals that the conclusion of CA is more firmly grounded
on jurisprudence and amply supported by the evidence of record than that of the court below. It is procedurally required
for each party in a case to prove his own affirmative assertion by the degree of evidence required by law.
Coming now to the case at bar, while there is no rule which requires that testimonial evidence, to hold sway, must be
corroborated by documentary evidence, or even subject evidence for that matter, inasmuch as the witnesses' testimonies
dwelt on mere generalities, we cannot consider the same as sufficiently persuasive proof that there was observance
of due diligence in the selection and supervision of employees. Petitioner's attempt to prove its diligentissimi patris
familias in the selection and supervision of employees through oral evidence must fail as it was unable to buttress the
same with any other evidence, object or documentary, which might obviate the apparent biased nature of the testimony.
Our view that the evidence for petitioner MMTC falls short of the required evidentiary quantum as would convincingly
and undoubtedly prove its observance of the diligence of a good father of a family has its precursor in the underlying
rationale pronounced in the earlier case of Central Taxicab Corp. vs. Ex-Meralco Employees Transportation Co., et al.,
set amidst an almost identical factual setting, where we held that:
This witness spoke of an "affidavit of experience" which a driver-applicant must accomplish before he is employed by
the company, a written "time schedule" for each bus, and a record of the inspections and thorough checks pertaining to
each bus before it leaves the car barn; yet no attempt was ever made to present in evidence any of these documents,
despite the fact that they were obviously in the possession and control of the defendant company.
Albert also testified that he kept records of the preliminary and final tests given him as well as a record of the
qualifications and experience of each of the drivers of the company. It is rather strange, therefore, that he failed to produce
in court the all important record of Roberto, the driver involved in this case.
The failure of the defendant company to produce in court any "record" or other documentary proof tending to
establish that it had exercised all the diligence of a good father of a family in the selection and supervision of its drivers
and buses, notwithstanding the calls therefor by both the trial court and the opposing counsel, argues strongly against its
pretensions.
We are fully aware that there is no hard-and-fast rule on the quantum of evidence needed to prove due observance of
all the diligence of a good father of a family as would constitute a valid defense to the legal presumption of
negligence on the part of an employer or master whose employee has by his negligence, caused damage to another..
(R)educing the testimony of Albert to its proper proportions, we do not have enough trustworthy evidence left to go by.
We are of the considered opinion, therefore, that the believable evidence on the degree of care and diligence that has been
exercised in the selection and supervision of Roberto Leon y Salazar, is not legally sufficient to overcome the presumption
of negligence against the defendant company.
Whether or not the diligence of a good father of a family has been observed by petitioner is a matter of proof which
under the circumstances in the case at bar has not been clearly established. It is not felt by the Court that there is enough
evidence on record as would overturn the presumption of negligence, and for failure to submit all evidence within its
control, assuming the putative existence thereof, petitioner MMTC must suffer the consequences of its own inaction and
indifference.
In any event, we do not find the evidence presented by petitioner sufficiently convincing to prove the diligence of a
good father of a family, which for an employer doctrinally translates into its observance of due diligence in the selection
and supervision of its employees but which mandate, to use an oft-quoted phrase, is more often honored in the breach than
in the observance.
Petitioner attempted to essay in detail the company's procedure for screening job applicants and
supervising its employees in the field, through the testimonies of Milagros Garbo, as its training officer, and Christian
Bautista, as its transport supervisor, both of whom naturally and expectedly testified for MMTC. It then concluded with its
sweeping pontifications that "thus, there is no doubt that considering the nature of the business of petitioner, it would not
let any applicant-drivers to be (sic) admitted without undergoing the rigid selection and training process with the end (in)
view of protecting the public in general and its passengers in particular; . . . thus, there is no doubt that applicant had fully
complied with the said requirements otherwise Garbo should not have allowed him to undertake the next set of
requirements . . . and the training conducted consisting of seminars and actual driving tests were satisfactory otherwise he
should have not been allowed to drive the subject vehicle.
These statements strike us as both presumptuous and in the nature of petitio principii, couched in generalities and shorn of
any supporting evidence to boost their verity. As earlier observed, respondent court could not but express surprise, and
thereby its incredulity, that witness Garbo neither testified nor presented any evidence that driver Leonardo had
complied with or had undergone all the clearances and trainings she took pains to recite and enumerate. The supposed
clearances, results of seminars and tests which Leonardo allegedly submitted and complied with were never presented in
court despite the fact that, if true, then they were obviously in the possession and control of petitioner.
The case at bar is clearly within the coverage of Article 2176 and 2177, in relation to Article 2180 provisions on
quasi-delicts as all the elements thereof are present, to wit: (1) damages suffered by the plaintiff, (2) fault or negligence of
the defendant or some other person for whose act he must respond, and (3) the connection of cause and effect between
fault or negligence of the defendant and the damages incurred by plaintiff. It is to be noted that petitioner was originally
sued as employer of driver Leonardo under Article 2180, the pertinent parts of which provides that:
The basis of the employer's vicarious liability has been explained under this ratiocination: ―The responsibility imposed
by this article arises by virtue of a presumption juris tantum of negligence on the part of the persons made responsible
under the article, derived from their failure to exercise due care and vigilance over the acts of subordinates to prevent
them from causing damage. Negligence is imputed to them by law, unless they prove the contrary. Thus, the last
paragraph of the article says that such responsibility ceases if is proved that the persons who might be held responsible
under it exercised the diligence of a good father of a family (diligentissimi patris familias) to prevent damage. It is clear,
therefore, that it is not representation, nor interest, nor even the necessity of having somebody else answer for the
damages caused by the persons devoid of personality, but it is the non-performance of certain duties of precaution
and prudence imposed upon the persons who become responsible by civil bond uniting the actor to them, which
forms the foundation of such responsibility.
The above rule is, of course, applicable only where there is an employer-employee relationship, although it is not
necessary that the employer be engaged in business or industry. Whether or not engaged in any business or industry,
the employer under Article 2180 is liable for torts committed by his employees within the scope of their assigned tasks.
But, it is necessary first to establish the employment relationship. Once this is done, the plaintiff must show, to hold the
employer liable, that the employee was acting within the scope of his assigned task when the tort complained of was
committed. It is only then that the defendant, as employer, may find it necessary to interpose the defense of due diligence
in the selection and supervision of employees. The diligence of a good father of a family required to be observed by
employers to prevent damages under Article 2180 refers to due diligence in the selection and supervision of employees in
order to protect the public.
With the allegation and subsequent proof of negligence against the defendant driver and of an employer-employee relation
between him and his co-defendant MMTC in this instance, the case in undoubtedly based on a quasi-delict under
Article 2180 When the employee causes damage due to his own negligence while performing his own duties, there
arises the juris tantum presumption that the employer is negligent, rebuttable only by proof of observance of the
diligence of a good father of a family. For failure to rebut such legal presumption of negligence in the selection and
supervision of employees, the employer is likewise responsible for damages, the basis of the liability being the
relationship of pater familias or on the employer's own negligence.
As early as the case of Gutierrez vs. Gutierrez, and thereafter, we have consistently held that where the injury is due to
the concurrent negligence of the drivers of the colliding vehicles, the drivers and owners of the said vehicles shall be
primarily, directly and solidarily liable for damages and it is immaterial that one action is based on quasi-delict and the
other on culpa contractual, as the solidarily of the obligation is justified by the very nature thereof. .
It should be borne in mind that the legal obligation of employers to observe due diligence in the selection and
supervision of employees is not to be considered as an empty play of words or a mere formalism, as appears to be the
fashion of the times, since the non-observance thereof actually becomes the basis of their vicarious liability under
Article 2180.
On the matter of selection of employees, Campo vs. Camarote, supra, lays down this admonition: ―In order that the
owner of a vehicle may be considered as having exercised all diligence of a good father of a family, he should not have
been satisfied with the mere possession of a professional driver's license; he should have carefully examined the applicant
for employment as to his qualifications, his experience and record of service. These steps appellant failed to observe; he
has therefore, failed to exercise all due diligence required of a good father of a family in the choice or selection of driver.‖
Due diligence in the supervision of employees, on the other hand, includes the formulation of suitable rules and
regulations for the guidance of employees and the issuance of proper instructions intended for the protection of the public
and persons with whom the employer has relations through his or its employees and the imposition of necessary
disciplinary measures upon employees in case of breach or as may be warranted to ensure the performance of acts
indispensable to the business of and beneficial to their employer. To this, we add that actual implementation and
monitoring of consistent compliance with said rules should be the constant concern of the employer, acting through
dependable supervisors who should regularly report on their supervisory functions.
In order that the defense of due diligence in the selection and supervision of employees may be deemed sufficient and
plausible, it is not enough to emptily invoke the existence of said company guidelines and policies on hiring and
supervision. As the negligence of the employee gives rise to the presumption of negligence on the part of the employer,
the latter has the burden of proving that it has been diligent not only in the selection of employees but also in the
actual supervision of their work. The mere allegation of the existence of hiring procedures and supervisory policies,
without anything more, is decidedly not sufficient to overcome presumption.
We emphatically reiterate our holding, as a warning to all employers, that (t)he mere formulation of various company
policies on safety without showing that they were being complied with is not sufficient to exempt petitioner from
liability arising from negligence of its employees. It is incumbent upon petitioner to show that in recruiting and
employing the erring driver the recruitment procedures and company policies on efficiency and safety were
followed. Paying lip-service to these injunctions or merely going through the motions of compliance therewith will
warrant stern sanctions from the Court.
In requiring the highest possible degree of diligence from common carriers and creating a presumption of negligence
against them, the law compels them to curb the recklessness of their drivers. While the immediate beneficiaries of the
standard of extraordinary diligence are, of course, the passengers and owners of the cargo carried by a common carrier,
they are not the only persons that the law seeks to benefit. For if common carriers carefully observe the statutory
standard of extraordinary diligence in respect of their own passengers, they cannot help but simultaneously benefit
pedestrians and the owners and passengers of other vehicles who are equally entitled to the safe and convenient use
of our roads and highways. The law seeks to stop and prevent the slaughter and maiming of people (whether passengers
or not) and the destruction of property (whether freight or not) on our highways by buses, the very size and power of
which seem often to inflame the minds of their drivers.
13. Filipinas Broadcasting Network, Inc., v. AGO Medical and Educational Center, G.R. 141994, Jan. 17, 2005
Facts: ―Exposé‖ is a radio documentary program hosted by Carmelo Mel Rim a and June Alegre. It‘s is aired every
morning over DZRC-AM which is owned by Filipinas Broadcasting Network, Inc. (FBNI). 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 damages against FBNI, Rima,
and Alegre. 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.
Alegre allegedly said: ―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. xxx Second: Earlier AMEC students in Physical Therapy had
complained that the course is not recognized by DECS. 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.
It is a public knowledge that the AMEC 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. That is a very concrete and undeniable
evidence that the support of foreign foundations for AMEC is substantial, isn‘t it?
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‖.
(Former teachers of Aquinas University but were removed because of immorality) 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?‖
While Rima allegedly said: ―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 you are no longer fit to teach. You are too old. As an aviation, your case is zero
visibility. Don‘t insist. 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. 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.‖
Rima and Alegre, through Atty. Rozil Lozares, filed an Answer 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. Trial court rendered a Decision finding FBNI and Alegre liable for libel except Rima. In
absolving Rima from the charge , the trial court ruled that Rima‘s only participation was when he agreed with Alegre‘s
exposé. It found Rima‘s statement within the ―bounds of freedom of speech, expression, and of the press.‖ CA affirmed
the trial court‘s judgment with modification. CA made Rima solidarily liable with FBNI and Alegre.
CA 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.
Finding no factual basis for the imputations against AMEC‘s administrators, the CA ruled that the broadcasts were made
with reckless disregard as to whether they were true or false as it 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 CA, 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.‖ CA 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.
Issue: Whether FBNI is solidarily liable with its broadcasters Allegre and Rima
Held: YES. 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.
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 x x x 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.
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 exposé , 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 DECS. 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.‖ There was reckless disregard of whether their report was true or not.
The broadcasts were not ―the result of straight reporting.‖ Significantly, some courts in the US 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.
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.
FBNI‘s reliance on Borjal is misplaced. In Borjal, the Court elucidated on the ―doctrine of fair comment,‖ [F]air
commentaries on matters of public interest are privileged and constitute a valid defense in an action for libel or slander.
When the discreditable imputation is directed against a public person in his public capacity, it is not necessarily actionable.
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 in the present case are not based on established facts.
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. The 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.
1. 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. Defendants could have easily known this were they careful enough to verify.
2. 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.
3. 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.
4. Dr. Lola was observed by this court not to be physically decrepit yet, nor mentally infirmed, but is still
alert and docile.
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‖)
4. Public affairs program shall present public issues free from personal bias, prejudice and inaccurate and
misleading information.
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.
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.
III. Whether FBNI is solidarily liable with Rima and Alegre for moral damages, attorney‘s fees and costs of suit
(RELEVANT ISSUE)
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 tortfeasors are jointly and
severally liable for the tort which they commit. Joint tortfeasors 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. Thus, AMEC correctly anchored its cause of action against FBNI on Articles
2176 and 2180.
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 CA, ―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.‖
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. In this case , Rima
and Alegre were clearly performing their official duties as hosts of FBNI‘s radio program Exposéwhen they aired the
broadcasts. FBNI neither alleged nor proved that Rima and Alegre went beyond the scope of their work at that time.
There was likewise no showing that FBNI did not authorize and ratify the defamatory broadcasts.
Moreover, there is insufficient evidence on record that FBNI exercised due diligence in the selection and supervision of its
employees, particularly Rima and Alegre. FBNI merely showed that it exercised diligence in the selection of its
broadcasters without introducing any evidence to prove that it observed the same diligence in the supervision of
Rima and Alegre. FBNI did not show how it exercised diligence in supervising its broadcasters. 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.
The following are ways of showing diligence in the supervision of broadcasters:

(1) Adequate training of the broadcasters on the industry‘s code of conduct;
(2) Sufficient information on libel laws; and
(3) Continuous evaluation of the broadcasters‘ performance.
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, 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 and supervising Rima and Alegre. Hence, FBNI is solidarily liable to pay
damages together with Rima and Alegre.
14. Jayme v. Apostol, G.R. No. 163609, November 27, 2008

Facts: Mayor Miguel of Koronadal, South Cotabato was on board the Isuzu pick-up truck driven by Fidel Lozano, an
employee of the Municipality of Koronadal. The pick-up truck was registered under the name of Rodrigo Apostol, but it
was then in the possession of Ernesto Simbulan. Lozano borrowed the pick-up truck from Simbulan to bring Miguel to
Buayan Airport at General Santos City to catch his Manila flight. The pick-up truck accidentally hit Marvin C. Jayme,
a minor, who was then crossing the National Highway. The collision sent Marvin some 50 meters away from the point of
impact, a clear indication that Lozano was driving at a very high speed at the time of the accident. He sustained severe
head injuries with subdural hematoma and diffused cerebral contusion and had to be airlifted to Davao for more intensive
treatment. He died after 6 days.
Parents of Marvin, filed a complaint for damages with the RTC against respondents. They prayed that all respondents be
held solidarily liable for their loss.
All respondents denied liability for Marvin‘s death. Apostol and Simbulan averred that Lozano took the pick-up truck
without their consent. Likewise, Miguel and Lozano pointed out that Marvin‘s sudden sprint across the highway made it
impossible to avoid the accident. Yet, Miguel denied being on board the vehicle when it hit Marvin. Defendant
Municipality of Koronadal cannot be held liable for the damages incurred by other defendants (being an agency of the
State performing governmental functions).
Trial court held Fidel Lozano, Rodrigo Apostol, and Mayor Fernando Miguel jointly and severally liable. Mayor Miguel
interposed an appeal to the CA. Mayor Miguel contended that the RTC erred in ruling that he was Lozano‘s
employer and, hence, solidarily liable for the latter‘s negligent act. Mayor Miguel also denied that he did not exercise
due care and diligence in the supervision of Lozano.
CA held that Mayor Miguel should not be held liable for damages for the death of Marvin Jayme. CA also reiterated
the settled rule that it is the registered owner of a vehicle who is jointly and severally liable with the driver for
damages incurred by passengers or third persons as a consequence of injuries or death sustained in the operation of the
vehicle. Hence, this petition.
According to Jayme, the element of direct control is not negated by the fact that Lozano‘s employer was the Municipality
of Koronadal. Mayor Miguel, being Lozano‘s superior, still had control over the manner the vehicle was operated.
Issue: Whether the mayor should be held vicariously liable
Held: NO. Employer is the MUNICIPALITY. The doctrine of vicarious liability or imputed liability finds no application
in the present case.
To sustain claims against employers for the acts of their employees, the following requisites must be established:
(1) That the employee was chosen by the employer personally or through another;
(2) That the service to be rendered in accordance with orders which the employer has the authority to give at all
times; and
(3) That the illicit act of the employee was on the occasion or by reason of the functions entrusted to him.
To make the employee liable under paragraphs 5 and 6 of Article 2180, it must be established that the injurious or
tortuous act was committed at the time the employee was performing his functions. The employer-employee
relationship cannot be assumed. It is incumbent upon the plaintiff to prove the relationship by preponderant evidence. To
determine the existence of an employment relationship, we rely on the four-fold test: (1) the employer‘s power of
selection; (2) payment of wages or other remuneration; (3) the employer‘s right to control the method of doing the work;
and (4) the employer‘s right of suspension or dismissal.
CA correctly held that it was the Municipality which was the lawful employer of Lozano at the time of the accident.
It is uncontested that Lozano was employed as a driver by the municipality. That he was subsequently assigned to Mayor
Miguel during the time of the accident is of no moment. Municipality remains to be Lozano‘s employer notwithstanding
Lozano‘s assignment to Mayor Miguel. This Court has, on several occasions, held that an employer-employee
relationship still exists even if the employee was loaned by the employer to another person or entity because control
over the employee subsists.
Spouses Jayme argued that Mayor Miguel had at least supervision and control over Lozano and how the latter operated or
drove the Isuzu pick-up during the time of the accident. They, however, failed to buttress this claim. Even assuming
arguendo that Mayor Miguel had authority to give instructions or directions to Lozano, he still can not be held liable. In
Benson v. Sorrell, the New England Supreme Court ruled that mere giving of directions to the driver does not establish
that the passenger has control over the vehicle. Neither does it render one the employer of the driver. Moreover, no
negligence may be imputed against a fellow employee although the person may have the right to control the manner of the
vehicle‘s operation. In the absence of an employer-employee relationship establishing vicarious liability, the driver‘s
negligence should not be attributed to a fellow employee who only happens to be an occupant of the vehicle.
Whatever right of control the occupant may have over the driver is not sufficient by itself to justify an application
of the doctrine of vicarious liability. Handley v. Lombardi is instructive on this exception to the rule on vicarious
liability:
―In the case of actionable negligence, the rule is well-settled both in this state and elsewhere that the negligence
of a subordinate employee or subagent is not to be imputed to a superior employee or agent, but only to the
master or principal.‖
In Swanson v. McQuown, Supreme Court adhered to the general rule that a public official is not liable for the wrongful
acts of his subordinates on a vicarious basis since the relationship is not a true master-servant situation. The court
went on to rule that the only exception is when they cooperate in the act complained of, or direct or encourage it.
Mayor Miguel was neither Lozano‘s employer nor the vehicle‘s registered owner. There existed no causal
relationship between him and Lozano or the vehicle used that will make him accountable for Marvin‘s death. Ma yor
Miguel was a mere passenger at the time of the accident. The failure of a passenger to assist the driver, by providing
him warnings or by serving as lookout does not make the passenger liable for the latter‘s negligent acts. The driver‘s duty
is not one that may be delegated to others.
The true and lawful employer of Lozano is the Municipality. Unfortunately for Spouses Jayme, the municipality may not
be sued because it is an agency of the State engaged in governmental functions and, hence, immune from suit.
―It has already been remarked that municipal corporations are suable because their charters grant them the
competence to sue and be sued. Nevertheless, they are generally not liable for torts committed by them in the
discharge of governmental functions and can only be held answerable only if it can be shown that they were
acting in proprietary capacity. In permitting such entities to be sued, the State merely gives the claimant the
right to show that the defendant was not acting in governmental capacity when the injury was committed or that
the case comes under the exceptions recognized by law. Failing this, the claimant cannot recover.‖
The liability attaches to the registered owner, the negligent driver and his direct employer.
―Settled is the rule that the registered owner of a vehicle is jointly and severally liable with the driver for
damages incurred by passengers and third persons as a consequence of injuries or death sustained in the
operation of said vehicles. Regardless of who the actual owner of the vehicle is, the operator of record continues
to be the operator of the vehicle as regards the public and third persons, and as such is directly and primarily
responsible for the consequences incident (sic) to its operation‖
The law on the matter is clear: only the negligent driver, the driver‟s employer, and the registered owner of the vehicle
are liable for the death of a third person resulting from the negligent operation of the vehicle.

15. Ramos v. Court of Appeals, 321 SCRA 584 (1999)

16. Ramos v. Court of Appeals, 380 SCRA 467 (2002) Supra
Issue: (1) Was Dr. Gutierez negligent and whether it was the faulty intubation which was the proximate cause of Erlinda‘s
coma?
(2) Whether Dr. Hosaka can be held liable by virtue of the Captain of the Ship doctrine.
(3) Whether DLSMC is solidarily responsible with the doctors.
Held: (1) YES. It has been sufficiently established that she failed to exercise the standards of care in the administration of
anesthesia on a patient. She did not perform a ―preoperative evaluation‖ of the patient before administering anaesthesia.
Particularly, she did not check the patient‘s airway. As she herself admitted, she saw Erlinda for the first time on the day
of the operation itself, one hour before the scheduled operation.
The injury incurred by Erlinda does not normally happen absent any negligence in the administration of anesthesia and in
the use of an endotracheal tube. Upon these facts and under these circumstances, a layman would be able to say, as a
matter of common knowledge and observation, that the consequences of professional treatment were not as such as would
ordinarily have followed if due care had been exercised. Thus, res ipsa loquitur is applicable.
(2) YES. That there is a trend in American jurisprudence to do away with the Captain-of-the-Ship doctrine does not mean
that this Court will ipso facto follow said trend. Due regard for the peculiar factual circumstances obtaining in this case
justify the application of the Captain-of-the-Ship doctrine. From the facts on record it can be logically inferred that Dr.
Hosaka exercised a certain degree of, at the very least, supervision over the procedure then being performed on Erlinda.
(1) He recommended Gutierrez thereby representing to Ramos that she possessed the necessary competence and skills. (2)
He was the attending physician of Erlinda and gave instructions to call another anaesthesiologist to help Erlinda. (3) Drs.
Hosaka and Gutierrez worked as a team. Their work cannot be placed in separate watertight compartments because their
duties intersect with each other.
Moreover, Dr. Hosaka‘s irresponsible conduct of arriving very late for the scheduled operation of petitioner Erlinda is
violative, not only of his duty as a physician ―to serve the interest of his patients with the greatest solicitude, giving them
always his best talent and skill,‖ but also of Article 19 CC which requires a person, in the performance of his duties, to act
with justice and give everyone his due.
(3) NO. There is no employer-employee relationship (see 4 fold test in labor) between DLSMC and Drs. Gutierrez
and Hosaka which would hold DLSMC solidarity liable under Art. 2180.
First, a hospital does not hire or engage the services of a consultant, but rather, accredits the latter and grants him or her
the privilege of maintaining a clinic and/or admitting patients in the hospital upon a showing by the consultant that he or
she possesses the necessary qualifications. Second, it is not the hospital but the patient who pays the consultant‘s fee for
services rendered by the latter. Third, a hospital does not dismiss a consultant; instead, the latter may lose his or her
accreditation or privileges granted by the hospital. Fourth, when a doctor refers a patient for admission in a hospital, it is
the doctor who prescribes the treatment to be given to said patient. The hospital‘s obligation is limited to providing the
patient with the preferred room accommodation, the nutritional diet and medications prescribed by the doctor, the
equipment and facilities necessary for the treatment of the patient, as well as the services of the hospital staff who
perform the ministerial tasks of ensuring that the doctor‘s orders are carried out strictly.
As explained by DLSMC, that the admission of a physician to membership in DLSMC‘s medical staff as active or visiting
consultant is first decided upon by the Credentials Committee thereof, which is composed of the heads of the various
specialty departments such as the Department of Obstetrics and Gynecology, Pediatrics, Surgery with the department head
of the particular specialty applied for as chairman. The Credentials Committee then recommends to DLSMC's Medical
Director or Hospital Administrator the acceptance or rejection of the applicant physician, and said director or
administrator validates the committee's recommendation. Similarly, in cases where a disciplinary action is lodged against
a consultant, the same is initiated by the department to whom the consultant concerned belongs and filed with the Ethics
Committee consisting of the department specialty heads. The medical director/hospital administrator merely acts as ex-
officio member of said committee.
Neither is there any showing that it is DLSMC which pays any of its consultants for medical services rendered by the
latter to their respective patients. Moreover, the contract between the consultant in respondent hospital and his
patient is separate and distinct from the contract between respondent hospital and said patient. The FIRST has for its
object the rendition of medical services by the consultant to the patient, while the SECOND concerns the provision by the
hospital of facilities and services by its staff such as nurses and laboratory personnel necessary for the proper
treatment of the patient. Further, no evidence was adduced to show that the injury suffered by petitioner Erlinda was due
to a failure on the part of respondent DLSMC to provide for hospital facilities and staff necessary for her treatment.

17. Nogales v. Capitol Medical Center, G.R. No. 142625, December 19, 2006 Supra
Issue: Whether CMC is vicariously liable for Estrada‘s negligence.
Held: YES. CMC disclaims liability by asserting that Estrada was a mere visiting physician and that it admitted Corazon
because her physical condition then was classified an emergency obstetrics case. The employer (or the hospital) must have
the right to control both the means and the details of the process by which the employee (or the physician) is to
accomplish his task. After a thorough examination of the voluminous records of this case, no single evidence points to
CMC‘s exercise of control over Estrada‘s treatment and management of Corazon‘s condition. Throughout the
pregnancy, Corazon was under the exclusive prenatal care of Estrada. At the time of her admission at CMC and during her
delivery, it was Estrada who attended to Corazon. There was no showing that CMC had a part in diagnosing her condition.
While Estrada enjoyed staff privileges at CMC, such fact alone did not make him an employee of CMC. CMC
merely allowed Dr. Estrada to use its facilities when she was about to give birth.
The question now is whether CMC is automatically exempt from liability considering that Estrada is a mere
independent contractor-physician.
In general, a hospital is not liable for the negligence of an independent contractor-physician. There is, however, an
exception to this principle. The hospital may be liable if the physician is the ―ostensible‖ agent of the hospital. This
exception is also known as the ―doctrine of apparent authority.‖
Under said doctrine, a hospital can be held vicariously liable for the negligent acts of a physician providing care at the
hospital, regardless of whether the physician is an independent contractor, unless the patient knows, or should have
known, that the physician is an independent contractor.
For a hospital to be liable under the doctrine of apparent authority, a plaintiff must show that: (1) the hospital, or its
agent, acted in a manner that would lead a reasonable person to conclude that the individual who was alleged to be
negligent was an employee or agent of the hospital; (2) where the acts of the agent create the appearance of
authority, the plaintiff must also prove that the hospital had knowledge of and acquiesced in them; and (3) the plaintiff
acted in reliance upon the conduct of the hospital or its agent, consistent with ordinary care and prudence. Said
―Holding Out‖ does not require an express representation by the hospital that the person alleged to be negligent is the
employee.
The doctrine essentially involves two factors to determine the liability of an independent contractor physician.
HOSPITAL‘S MANIFESTATIONS
It sometimes described as an inquiry whether the hospital acted in a manner which would lead a reasonable person to
conclude that the individual who was alleged to be negligent was an employee or agent of the hospital. In this
regard, the hospital need not make express representations to the patient that the treating
physician is an employee of the hospital; rather a representation may be general and implied. Said doctrine is also a
species of the doctrine of estoppel.
In this case, CMC impliedly held out Estrada as a member of its medical staff thus clothing him with apparent
authority leading Nogales to believe that Estrada was an employee/agent. Instances: (1) CMC granted staff privileges
to Estrada; (2) Signing of Consent Forms signed did not indicate that Estrada was an independent contractor; (3) Estrada‘s
referral to the Head of OB-GYNE gave the impression that Estrada was a member the CMC staff.
PATIENT‘S RELIANCE
It is sometimes characterized as an inquiry on whether the plaintiff acted in reliance upon the conduct of the hospital
or its agent, consistent with ordinary care and prudence. The records show that the Spouses Nogales relied upon a
perceived employment relationship with CMC in accepting Estrada‘s services. Rogelio‘s consent in Corazon‘s
hysterectomy to be performed by a different physician, namely Espinola, is a clearindication of Rogelio‘s confidence in
CMC‘s surgical staff.
Likewise unconvincing is CMC‘s argument that petitioners are estopped from claiming damages based on the Consent on
Admission and Consent to Operation. The documents do not expressly release CMC from liability for injury to Corazon
due to negligence during her treatment or operation. Neither do the consent forms expressly exempt CMC from liability
for Corazon‘s death due to negligence during such treatment or operation. Such release forms, being in the nature of
contracts of adhesion, are construed strictly against hospitals. Besides, a blanket release in favor of hospitals ―from
any and all claims,‖ which includes claims due to bad faith or gross negligence, would be contrary to public policy
and thus void.
When a person needing urgent medical attention rushes to a hospital, he cannot bargain on equal footing with the hospital
on the terms of admission and operation. Such a person is literally at the mercy of the hospital

18. Professional Services, Inc., v. Agana, 513 SCRA 478 (2007) Supra

19. Professional Services, Inc., v. Agana, G.R. Nos. 126297, 126467, 127590, February 2, 2010 Supra
Issue: Whether a hospital may be held liable for the negligence of physicians-consultants allowed to practice in its
premises.
Held: YES. PSI is liable to the Aganas, not under the principle of respondeat superior for lack of evidence of an
employment relationship with Dr. Ampil but under the principle of OSTENSIBLE AGENCY for the negligence of Dr.
Ampil and, pro hac vice, under the principle of CORPORATE NEGLIGENCE for its failure to perform its duties as a
hospital.
A hospital as a juridical entity cannot practice medicine, in reality it utilizes doctors, surgeons and medical practitioners in
the conduct of its business of facilitating medical and surgical treatment. There are 3 legal relationships that crisscross:
1) hospital and the doctor; 2) hospital and the patient; 3) patient and the doctor.
The exact nature of each relationship determines the basis and extent of the liability of the hospital for the negligence of
the doctor. Where an employment relationship exists, the hospital may be held vicariously liable under Article 2176 in
relation to Article 2180 or respondeat superior. Even when no employment relationship exists but it is shown that the
hospital holds out to the patient that the doctor is its agent, the hospital may still be vicariously liable under Article
2176 in relation to Article 1431 and Article 1869 or the principle of apparent authority. Regardless of its relationship
with the doctor, the hospital may be held directly liable to the patient for its own negligence or failure to follow
established standard of conduct to which it should conform as a corporation.
There is ample evidence that the PSI held out to the patient that Dr. Ampil was its agent. There are 2 factors that
determine apparent authority: 1) hospital‘s implied manifestation to the patient which led the latter to conclude that the
doctor was the hospital‘s agent; and 2) patient‘s reliance upon the conduct of the hospital and the doctor, consistent
with ordinary care and prudence.
Enrique testified that he consulted Dr. Ampil regarding the condition of his wife and as advised by Dr. Ampil, he ―asked
[his] wife to go to Medical City to be examined by [Dr. Ampil] - indicates that it was Enrique who actually made the
decision on whom Natividad should consult and where. When asked what impelled him to choose Dr. Ampil, he said ― I
have known him to be a specialist on that part of the body; A staff member of the Medical City which is a prominent
and known hospital; because he is a neighbor, I expect more than the usual medical service.‖
The decision made by Enrique for Natividad to consult Dr. Ampil was significantly influenced by the impression
that Dr. Ampil was a staff member of Medical City. Enrique looked upon Dr. Ampil not as independent of but as
integrally related to Medical City.
In the ―Consent for Hospital Care‖ signed by Agana, PSI virtually reinforced the public impression that Dr. Ampil
was a physician of its hospital, rather than one independently practicing in it; that the medications and treatments he
prescribed were necessary and desirable; and that the hospital staff was prepared to carry them out. PSI pointed out in its
memorandum that Dr. Ampil‘s hospital affiliation was not the exclusive basis – that had Dr. Ampil been affiliated with
another hospital, he would still have been chosen by the Aganas as Natividad‘s surgeon. Court cannot speculate. Under
the circumstances at that time, Enrique decided to consult Dr. Ampil for he believed him to be a staff member of a
prominent and known hospital. PSI is vicariously liable for the negligence of Dr. Ampil as its ostensible agent.
While PSI had no power to control the means or method by which Dr. Ampil conducted the surgery, PSI had the power
to review or cause the review of what may have irregularly transpired within its walls. PSI defined the standards of
its corporate conduct – that it had a corporate duty to Natividad even after her operation to ensure her safety as a
patient. The corporate duty was not limited to having its nursing staff note or record the 2 missing gauzes but it
extended to determining Dr. Ampil‘s role in it, bringing the matter to his attention, and correcting his negligence.
Given the standard of conduct that PSI defined for itself, the inquiry is whether the hospital measured up to it. PSI excuses
itself from fulfilling its corporate duty on the ground that Dr. Ampil assumed the personal responsibility of informing
Natividad about the 2 missing gauzes. Dr. Ricardo Jocson, who was part of the group of doctors that attended to
Natividad, testified that the group talked about the missing gauzes but Dr. Ampil assured them that he would personally
notify the patient about it. PSI claimed no reason for it to act on the report on the 2 missing gauzes because Natividad
Agana showed no signs of complications. The excuses are totally unacceptable.
PSI could not simply wave off the problem and nonchalantly delegate to Dr. Ampil the duty to review what transpired
during the operation. The purpose of such review would have been to pinpoint when, how and by whom two surgical
gauzes were mislaid to avert any jeopardy to Natividad‘s recovery. PSI could not have expected that purpose to be
achieved by merely hoping that the person likely to have mislaid the gauzes might be able to retrace his own steps. By its
own standard of corporate conduct, PSI‘s duty to initiate the review was non-delegable. While Dr. Ampil may have
had the primary responsibility of notifying Natividad about the missing gauzes, PSI imposed upon itself the
separate and independent responsibility of initiating the inquiry into the missing gauzes. The purpose of the first
would have been to apprise Natividad of what transpired during her surgery, second would have been to pinpoint any
lapse in procedure to prevent a recurrence thereof and to determine corrective measures that would ensure the safety of
Natividad. That Dr. Ampil negligently failed to notify Natividad did not release PSI from its self-imposed separate
responsibility. PSI had the duty to take notice of medical records prepared by its own staff when these bear
earmarks of a surgery gone awry. The record taken during the operation of Natividad which reported a gauze count
discrepancy should have given PSI sufficient reason to initiate a review and should not have waited for Natividad to
complain.
PSI took no heed of the record of operation and consequently did not initiate a review of what transpired during
Natividad‘s operation. Rather, it shirked its responsibility and passed it on to others — to Dr. Ampil whom it expected to
inform Natividad, and to Natividad herself to complain before it took any meaningful step. By its inaction, therefore, PSI
failed its own standard of hospital care.
The corporate negligence ascribed to PSI is different from the medical negligence attributed to Dr. Ampil. The
duties of the hospital are distinct from those of the doctor-consultant. The failure of PSI to fulfill its duties as a hospital
corporation gave rise to a direct liability to the Aganas distinct from that of Dr. Ampil. PSI‘s hospital liability based
on ostensible agency and corporate negligence applies only to this case, pro hac vice and is not intended to set a
precedent and should not serve as a basis to hold hospitals liable for every form of negligence of their doctors-
consultants. The ruling is unique to this case, for the liability of PSI arose from an implied agency with Dr. Ampil
and an admitted corporate duty to Natividad.
The agony of Aganas has gone on for 26 long years with Natividad coming to the end of her days racked in pain and
agony. Such wretchedness could have been avoided had PSI simply done what was logical: heed the report of a guaze
count discrepancy, initiate a review, and take corrective measures. PSI is liable for P15 million.
C.The State
1.Merritt v. Government of the Philippine Islands, G.R. No. 11154, March 21, 1916
Facts: Merritt was riding a motorcycle going towards the western part of Calle Padre Faura at a speed on 10-12 mph.
While he was crossing the intersection, a General Hospital ambulance moving in the opposite direction turned
suddenly, unexpectedly, and without any whistle or horn, to the right, towards the wrong lane, and hitting Merrit.
He was severely injured. He was entirely unconscious, had multiple fractures, and his brain had suffered material injury.
His right leg was broken, and showed a contraction. He became slightly deaf and mentally weak, particularly when he

tried to use his money for mathematical calculations. He was one of the best constructors of wooden buildings, and
now he could not work even at half capacity. A partnership wherein he was a partner was dissolved, and a contract for
building the Uy Chaco building was given up.
Issue: Whether or not the Government is liable for the damages sustained by the Meritt as a result of the collision, even if
it be true that the collision was due to the negligence of the chauffeur.
Held: NO. The collision between the plaintiff's motorcycle and the ambulance of the General Hospital was due solely to
the negligence of the chauffeur.
The two items which constitute a part of the P14,741 and which are drawn in question by the plaintiff are (a) P5,000, the
award awarded for permanent injuries, and (b) the P2,666, the amount allowed for the loss of wages during the time the
plaintiff was incapacitated from pursuing his occupation. We find nothing in the record which would justify us in
increasing the amount of the first. As to the second, the record shows, and the trial court so found, that the plaintiff's
services as a contractor were worth P1,000 per month. The court, however, limited the time to two months and twenty-one
days, which the plaintiff was actually confined in the hospital. In this we think there was error, because it was clearly
established that the plaintiff was wholly incapacitated for a period of six months. The mere fact that he remained in the
hospital only two months and twenty-one days while the remainder of the six months was spent in his home, would not
prevent recovery for the whole time. We, therefore, find that the amount of damages sustained by the plaintiff, without
any fault on his part, is P18,075.
As the negligence which caused the collision is a tort committed by an agent or employee of the Government, the inquiry
at once arises whether the Government is legally-liable for the damages resulting therefrom.
Act No. 2457, effective February 3, 1915, reads:
An Act authorizing E. Merritt to bring suit against the Government of the

Philippine Islands and authorizing the Attorney-General of said Islands to appear in said
suit.
SECTION 1. E. Merritt is hereby authorized to bring suit in the Court of

First Instance of the city of Manila against the Government of the Philippine Islands
in order to fix the responsibility for the collision between his motorcycle and the
ambulance of the General Hospital, and to determine the amount of the damages, if any,
to which Mr. E. Merritt is entitled on account of said collision, and the Attorney-General
of the Philippine Islands is hereby authorized and directed to appear at the trial on the
behalf of the Government of said Islands, to defendant said Government at the same.
Enacted, February 3, 1915.
Did the defendant, in enacting the above quoted Act, simply waive its immunity from suit or did it also concede its
liability to the plaintiff? If only the former, then it cannot be held that the Act created any new cause of action in favor of
the plaintiff or extended the defendant's liability to any case not previously recognized.
All admit that the Insular Government cannot be sued by an individual without its consent. It is also admitted that the
instant case is one against the Government. As the consent of the Government to be sued by the plaintiff was entirely
voluntary on its part, it is our duty to look carefully into the terms of the consent, and render judgment accordingly.
The plaintiff was authorized to bring this action against the Government "in order to fix the responsibility for the collision
between his motorcycle and the ambulance of the General Hospital and to determine the amount of the damages, if any, to
which Mr. E. Merritt is entitled on account of said collision." These were the two questions submitted to the court for
determination. The Act was passed "in order that said questions may be decided." We have "decided" that the accident
was due solely to the negligence of the chauffeur, who was at the time an employee of the defendant, and we have also
fixed the amount of damages sustained by the plaintiff as a result of the collision. Does the Act authorize us to hold that
the Government is legally liable for that amount? If not, we must look elsewhere for such authority, if it exists.
The Government having been "modeled after the Federal and State Governments in the United States," we may look to the
decisions of the high courts of that country for aid in determining the purpose and scope of Act No. 2457.
In the US the rule that the state is not liable for the torts committed by its officers or agents whom it employs,
except when expressly made so by legislative enactment, is well settled. "The Government," says Justice Story, "does
not undertake to guarantee to any person the fidelity of the officers or agents whom it employs, since that would involve it
in all its operations in endless embarrassments, difficulties and losses, which would be subversive of the public interest."
In the case of Melvin vs. State, the plaintiff sought to recover damages from the state for personal injuries received on
account of the negligence of the state officers at the state fair, a state institution created by the legislature for the purpose
of improving agricultural and kindred industries; to disseminate information calculated to educate and benefit the
industrial classes; and to advance by such means the material interests of the state, being objects similar to those sought by
the public school system. In passing upon the question of the state's liability for the negligent acts of its officers or agents,
the court said: ―No claim arises against any government is favor of an individual, by reason of the misfeasance,
laches, or unauthorized exercise of powers by its officers or agents.‖
As to the scope of legislative enactments permitting individuals to sue the state where the cause of action arises out
of either fort or contract, the rule is stated in 36 Cyc., 915, thus:
By consenting to be sued a state simply waives its immunity from suit. It does not
thereby concede its liability to plaintiff, or create any cause of action in his favor, or
extend its liability to any cause not previously recognized. It merely gives a remedy to
enforce a preexisting liability and submits itself to the jurisdiction of the court, subject to
its right to interpose any lawful defense.
In Apfelbacher vs. State decided April 16, 1915, the Act of 1913, which authorized the bringing of this suit, read:
SECTION 1. Authority is hereby given to George Apfelbacher, of the town of

Summit, Waukesha County, Wisconsin, to bring suit in such court or courts and in such
form or forms as he may be advised for the purpose of settling and determining all
controversies which he may now have with the State of Wisconsin, or its duly authorized
officers and agents, relative to the mill property of said George Apfelbacher, the fish
hatchery of the State of Wisconsin on the Bark River, and the mill property of Evan
Humphrey at the lower end of Nagawicka Lake, and relative to the use of the waters of
said Bark River and Nagawicka Lake, all in the county of Waukesha, Wisconsin.
In determining the scope of this act, the court said:
Plaintiff claims that by the enactment of this law the legislature admitted liability on the
part of the state for the acts of its officers, and that the suit now stands just as it would
stand between private parties. It is difficult to see how the act does, or was intended to
do, more than remove the state's immunity from suit. It simply gives authority to
commence suit for the purpose of settling plaintiff's controversies with the estate.
Nowhere in the act is there a whisper or suggestion that the court or courts in the
disposition of the suit shall depart from well established principles of law, or that the
amount of damages is the only question to be settled. The act opened the door of the
court to the plaintiff. It did not pass upon the question of liability, but left the suit just
where it would be in the absence of the state's immunity from suit. If the Legislature
had intended to change the rule that obtained in this state so long and to declare liability
on the part of the state, it would not have left so important a matter to mere inference, but
would have done so in express terms.
A statute of Massachusetts enacted in 1887 gave to the superior court "jurisdiction of all claims against the
commonwealth, whether at law or in equity," with an exception not necessary to be here mentioned. In construing this
statute the court, in Murdock Grate Co. vs. Commonwealth (152 Mass., 28), said:
The statute we are discussing disclose no intention to create against the state a new
and heretofore unrecognized class of liabilities, but only an intention to provide a
judicial tribunal where well recognized existing liabilities can be adjudicated.
In Sipple vs. State, where the board of the canal claims had, by the terms of the statute of New York, jurisdiction of claims
for damages for injuries in the management of the canals such as the plaintiff had sustained, Chief Justice Ruger remarks:
"It must be conceded that the state can be made liable for injuries arising from the negligence of its agents or
servants, only by force of some positive statute assuming such liability."
It being quite clear that Act No. 2457 does not operate to extend the Government's liability to any cause not
previously recognized, we will now examine the substantive law touching the defendant's liability for the negligent acts
of its officers, agents, and employees. Paragraph 5 of article 1903 of the Civil Code reads:
The state is liable in this sense when it acts through a special agent, but not when the
damage should have been caused by the official to whom properly it pertained to do the
act performed, in which case the provisions of the preceding article shall be applicable.
The supreme court of Spain in defining the scope of this paragraph said:
It follows therefrom that the state, by virtue of such provisions of law, is not responsible for the damages suffered by
private individuals in consequence of acts performed by its employees in the discharge of the functions pertaining to
their office, because neither fault nor even negligence can be presumed on the part of the state in the organization
of branches of public service and in the appointment of its agents; on the contrary, we must presuppose all foresight
humanly possible on its part in order that each branch of service serves the general weal an that of private persons
interested in its operation. Between these latter and the state, therefore, no relations of a private nature governed by the
civil law can arise except in a case where the state acts as a judicial person capable of acquiring rights and contracting
obligations.
That the Civil Code in chapter 2, title 16, book 4, regulates the obligations which arise out of fault or negligence; and
whereas in the first article thereof. No. 1902, where the general principle is laid down that where a person who by an act
or omission causes damage to another through fault or negligence, shall be obliged to repair the damage so done,
reference is made to acts or omissions of the persons who directly or indirectly cause the damage, the following articles
refers to this persons and imposes an identical obligation upon those who maintain fixed relations of authority and
superiority over the authors of the damage, because the law presumes that in consequence of such relations the evil caused
by their own fault or negligence is imputable to them. This legal presumption gives way to proof, however, because, as
held in the last paragraph of article 1903, responsibility for acts of third persons ceases when the persons mentioned in
said article prove that they employed all the diligence of a good father of a family to avoid the damage, and among these
persons, called upon to answer in a direct and not a subsidiary manner, are found, in addition to the mother or the father in
a proper case, guardians and owners or directors of an establishment or enterprise, the state, but not always, except
when it acts through the agency of a special agent, doubtless because and only in this case, the fault or negligence,
which is the original basis of this kind of objections, must be presumed to lie with the state.
That although in some cases the state might by virtue of the general principle set forth in article 1902 respond for all the
damage that is occasioned to private parties by orders or resolutions which by fault or negligence are made by branches of
the central administration acting in the name and representation of the state itself and as an external expression of its
sovereignty in the exercise of its executive powers, yet said article is not applicable in the case of damages said to
have been occasioned to the petitioners by an executive official, acting in the exercise of his powers, in proceedings
to enforce the collections of certain property taxes owing by the owner of the property which they hold in sublease.
That the responsibility of the state is limited by article 1903 to the case wherein it acts through a special agent (and a
special agent, in the sense in which these words are employed, is one who receives a definite and fixed order or
commission, foreign to the exercise of the duties of his office if he is a special official) so that in representation of the
state and being bound to act as an agent thereof, he executes the trust confided to him . This concept does not apply to
any executive agent who is an employee of the acting administration and who on his own responsibility performs the
functions which are inherent in and naturally pertain to his office and which are regulated by law and the regulations."
That according to paragraph 5 of article 1903 of the Civil Code and the principle laid down in a decision, among others, of
the 18th of May, 1904, in a damage case, the responsibility of the state is limited to that which it contracts through a
SPECIAL AGENT, duly empowered by a definite order or commission to perform some act or charged with some
definite purpose which gives rise to the claim, and not where the claim is based on acts or omissions imputable to a
public official charged with some administrative or technical office who can be held to the proper responsibility in
the manner laid down by the law of civil responsibility. Consequently, the trial court in not so deciding and in
sentencing the said entity to the payment of damages, caused by an official of the second class referred to, has by
erroneous interpretation infringed the provisions of articles 1902 and 1903 of the Civil Code.
It is, therefore, evidence that the State is only liable, according to the above quoted decisions of the Supreme Court of
Spain, for the acts of its agents, officers and employees when they act as special agents within the meaning of paragraph 5
of article 1903, supra, and that the chauffeur of the ambulance of the General Hospital was not such an agent.
2. Fontanilla v. Maliaman, G.R. No. 55963, December 1, 1989

Facts: On August 21, 1976, a pickup owned and operated by respondent National Irrigation Administration then driven
officially by Hugo Garcia employee of said government agency as its regular driver, bumped a bicycle ridden by
Francisco Fontanilla, son of herein petitioners, and Restituto Deligo, at Maasin, San Jose City along the Maharlika
Highway. As a result of the impact Restituto Deligo was injured while Francisco Fontanilla died.
At the time of the accident, Garcia was a licensed professional driver and who qualified for employment as such
regular driver of NIA after having passed the written and oral examinations on traffic rules and maintenance of vehicles
given by NIA authorities.
After trial, the trial court rendered judgment which directed NIA to pay damages (death benefits) and actual expenses to
petitioners.
NIA appealed said decision to the CA. Instead of filing the required brief in the aforecited CA case, Fontanilla filed the
instant petition with this Court.
Solicitor General that contends that the filing of the instant petition is not proper in view of the appeal taken by respondent
NIA to the CA against the judgment sought to be reviewed. The focal issue raised in NIA‘s appeal to the CA involves the
question as to whether or not the driver of the vehicle that bumped the victims was negligent in his operation of said
vehicle. It thus becomes necessary that before Fontanilla‘s claim for moral and exemplary damages could be resolved,
there should first be a finding of negligence on the part of respondent‘s employee-driver. In this regard, the Solicitor
General alleges that the trial court decision does not categorically contain such finding. The fact that the parties failed to
agree on whether or not negligence caused the vehicular accident involves a question of fact which petitioners should
have brought to the Court of Appeals within the reglementary period. Hence, the decision of the trial court has become
final as to the petitioners and for this reason alone, the petition should be dismissed.
NIA however, avers that it cannot be held liable for the damages because it is an agency of the State performing
governmental functions and driver Hugo Garcia was a regular driver of the vehicle, not a special agent who was
performing a job or act foreign to his usual duties. Hence, the liability for the tortious act should not be borne by
respondent government agency but by driver Garcia who should answer for the consequences of his act.
Issue: Whether or not NIA is liable to petitioner for the acts of its driver Garcia.
Held: YES. Even as the trial court touched on the failure or laxity of NIA in exercising due diligence in the selection and
supervision of its employee, the matter of due diligence is not an issue in this case since driver Garcia was not its special
agent but a regular driver of the vehicle.
The sole legal question on whether or not Fontanilla may be entitled to an award of moral and exemplary damages and
attorney‘s fees can very well be answered with the application of Arts. 2176 and 2180 of the New Civil Code.
Paragraphs 5 and 6 of Art. 2180 read as follows:

“Employers shall be liable for the damages caused by their employees and household helpers acting
within the scope of their assigned tasks, even though the former are not engaged in any business or
industry.”
“The State is responsible in like manner when it acts through a special agent; but not when the damage
has been caused by the official to whom the task done properly pertains, in which case what is provided
in Art. 2176 shall be applicable.”
The liability of the State has two aspects, namely:

(1) Its PUBLIC or GOVERNMENTAL aspects where it is liable for the tortious acts of special agents only; and
(2) Its PRIVATE or BUSINESS aspects (as when it engages in private enterprises) where it becomes liable as an
ordinary employer.
In this jurisdiction, the State assumes a limited liability for the damage caused by the tortious acts or conduct of its special
agent. Under the aforequoted paragrah 6 of Art. 2180, the State has voluntarily assumed liability for acts done through
special agents.
The State‘s agent, if a public official, must not only be specially commissioned to do a particular task but that such task
must be foreign to said official‟s usual governmental functions. If the State‘s agent is not a public official, and is
commissioned to perform non-governmental functions, then the State assumes the role of an ordinary employer and will
be held liable as such for its agent‘s tort. Where the government commissions a private individual for a special
governmental task, it is acting through a special agent within the meaning of the provision.
Certain functions and activities, which can be performed only by the government, are more or less generally agreed
to be ―governmental‖ in character, and so the State is immune from tort liability. On the other hand, a service
which might as well be provided by a private corporation, and particularly when it collects revenues from it, the
function is considered a ―proprietary‖ one, as to which there may be liability for the torts of agents within the
scope of their employment.
The NIA is an agency of the government exercising proprietary functions (to collect fees for the continuous
operation and to transact business as may be necessary to attain objectives), by express provision of Rep. Act No.
3601.
Indubitably, the NIA is a government corporation with juridical personality and not a mere agency of the government.
Since it is a corporate body performing non-governmental functions, it now becomes liable for the damage caused by
the accident resulting from the tortious act of its driver-employee. In this particular case, the NIA assumes the
responsibility of an ordinary employer and as such, it becomes answerable for damages. This assumption of liability,
however, is predicated upon the existence of negligence on the part of NIA. The negligence referred to here is the
negligence of supervision.
At this juncture, the matter of due diligence on the part of respondent NIA becomes a crucial issue in determining its
liability since it has been established that NIA is a government agency performing proprietary functions and as such, it
assumes the posture of an ordinary employer which, under Par. 5 of Art. 2180, is responsible for the damages caused
by its employees provided that it has failed to observe or exercise due diligence in the selection and supervision of
the driver.
It should be emphasized that the accident happened along the Maharlika National Road within the city limits of San
Jose City, an urban area. Considering the fact that the victim was thrown 50 meters away from the point of impact, there
is a strong indication that driver Garcia was driving at a high speed. This is confirmed by the fact that the pick-up
suffered dents on the right side of the radiator guard, the hood, the fender and a crack on the radiator, as shown by the
investigation report, and the fact that the NIA group was then ―in a hurry to reach the campsite as early as possible‖, as
shown by their not stopping to find out what they bumped as would have been their normal and initial reaction.
Evidently, there was negligence in the supervision of the driver for the reason that they were travelling at a high speed
within the city limits and yet the supervisor of the group, Ely Salonga, failed to caution and make the driver observe the
proper and allowed speed limit within the city. Under the situation, such negligence is further aggravated by their desire
to reach their destination without even checking whether or not the vehicle suffered damage from the object it bumped,
thus showing imprudence and recklessness on the part of both the driver and the supervisor in the group.
Significantly, this Court has ruled that even if the employer can prove the diligence in the selection and supervision (the
latter aspect has not been established herein) of the employee, still if he ratifies the wrongful acts, or take no step to avert
further damage, the employer would still be liable. A driver should be especially watchful in anticipation of others who
may be using the highway, and his failure to keep a proper look out for reasons and objects in the line to be traversed
constitutes negligence.
3. Fontanilla v. Maliaman, G.R. No. 55963 & 61045, February 27, 1991
RESOLUTION: In its MR of the 1989 decision, the NIA, through the SolGen, maintains that, on the strength of PD No.
552 and the case of Angat River Irrigation System, et al. vs. Angat River Workers‟ Union, et al., ―the NIA does not
perform solely and primarily proprietary functions but is an agency of the government tasked with governmental
functions, and is therefore not liable for the tortious act of its driver Hugo Garcia, who was not its special agent.‖
Although the majority opinion in the cited case of Angat System declares that the Angat System (like the NIA) exercised a
governmental function because the nature of the powers and functions of said agency does not show that it was
intended to bring to the Government any special corporate benefit or pecuniary profit, there is a strong dissenting
opinion penned by then Associate Justice and later Chief Justice Roberto Concepcion and concurred in by then Associate
Justice J.B.L. Reyes which held the contrary view that the Angat River System is a government entity exercising
proprietary functions.
Quoting from said dissenting opinion which cited McQuillin‘s The Law of Municipal Corporations, ―In undertaking to
supply water at price, municipality is not performing governmental function but is engaged in trade, and is liable first as
private company would be for any negligence in laying out of its pipes, in keeping them in repair, or in furnishing potable
water through them.‖ ―Municipality in contracting to provide water supply acts under its proprietary power and not under
its legislative, public or governmental powers.‖
In this connection, the opinion is that irrigation districts in the US are basically identical to our irrigation systems under
Act No. 2152. Because of such similarity, it is found appropriate to consider certain doctrines from American
jurisprudence, which are as follows, to wit:
―An irrigation district is a public quasi corporation, organized, however, to conduct a business for the private
benefit of the owners of land within its limits. They are members of the corporation, control its affairs, and alone
are benefited by its operations. It is, in the administration of its business, the owner of its system in a proprietary
rather than a public capacity, and must assume and bear the burdens of proprietary ownership.‖
The court, after a careful review of the authorities defining an irrigation district, conceded that such a quasi public
corporation possessed some governmental powers and exercised some governmental functions, but held that the
construction and operation of its irrigation canals and ditches was a proprietary rather than a governmental function,
and hence the district was responsible in damages for the negligent construction or operation of its canal system.‖
Functions of government have been classified into governmental or constituent and proprietary or ministrant. The former
involves the exercise of sovereignty and considered as compulsory; the latter connotes merely the exercise of proprietary
functions and thus considered as optional.
We agree with the former Chief Justice Concepcion in saying that the same purpose such as public benefit and public
welfare may be found in the operation of certain enterprises (those engaged in the supply of electric power, or in
supplying telegraphic, telephonic, and radio communication, or in the production and distribution of prime necessities,
etc.) yet it is certain that the functions performed by such enterprises are basically PROPRIETARY IN NATURE.
Primarily, a water improvement district is in no better position than a city is when exercising its purely local powers and
duties. Its general purposes are not essentially public in their nature, but are only incidentally so; those purposes
may be likened to those of a city which is operating a waterworks system, or an irrigation system. A water improvement
district can do nothing, it has and furnishes no facilities, for the administration of the sovereign government. Its officers
have no power or authority to exercise any of the functions of the general government, or to enforce any of the laws of the
state or any of its other subdivisions, or collect taxes other than those assessed by the district. They have no more power
or authority than that of the officers of a private corporation organized for like purposes.
The primary objects and purposes of such district are of a purely local nature, for the district is created and
operated for the sole benefit of its own members, and an analysis of those objects and purposes discloses that they
directly benefit only the landowners who reside within and whose lands form a part of the district, to the exclusion
of all other residents therein.
The state and the general public are greatly benefited by the proper operation of the district, and to that extent its objects
and accomplishments are public in their nature, but this characteristic is only incidental to the primary and chief object of
the corporation, which is the irrigation of lands forming a part of the district. It is obvious, then, that the purposes and
duties of such districts do not come within the definition of public rights, purposes, and duties which would entitle the
district to the exemption raised by the common law as a protection to corporations having a purely public purpose and
performing essentially public duties.
In NAWASA vs. NWSA Consolidated Unions, which propounds the thesis that ―the NAWASA is not an agency
performing governmental functions; rather it performs proprietary functions. Providing water supply and sewerage service
are regarded as mere optional functions of government even though the service rendered caters to the community as a
whole and the goal is for the general interest of society.
Like the NAWASA, the NIA was not created for purposes of local government. While it may be true that the NIA was
essentially a service agency of the government aimed at promoting public interest and public welfare, such fact
does not make the NIA essentially and purely a ―government- function‖ corporation. NIA was created for the
purpose of ―constructing, improving, rehabilitating, and administering all national irrigation systems in the Philippines,
including all communal and pump irrigation projects.‖ These functions are only incidental to the principal aim of the
agency, which is the irrigation of lands.
NIA is a government agency invested with a corporate personality separate and distinct from the government, thus is
governed by the Corporation Law. NIA may also sue and be sued in court. It has its own assets and liabilities. It also has
corporate powers to be exercised by a Board of Directors.
It is therefore concluded that NIA is a government agency with a juridical personality separate and distinct from the
government. It is not a mere agency of the government but a corporate body performing proprietary functions.
Therefore, it may be held liable for the damages caused by the negligent act of its driver who was not its special
agent.
D. Teachers and Heads of Establishments
- Family Code
o Articles 218 and 219
- Cases
2.Mercado v. Court of Appeals, 108 Phil. 414 (1960)

Facts: Manuel Quisumbing and Augusto Mercado were classmates in the Lourdes Catholic School on Kanlaon, Quezon
City. They quarreled over a ―pitogo‖ (piggybank made from an empty nutshell) which resulted to Augusto Mercado
wounding Manuel Quisumbing on the right cheek with a piece of razor.
The story was narrated thus: ―it was Augusto Mercado who started the aggression. Undeniably, the "pitogo" belonged to
Augusto Mercado but he lent it to Benedicto P. Lim and in turn Benedicto lent it to Renato Legaspi. Renato was not aware
that the "pitogo" belonged to Augusto, because right after Benedicto gave it to him, Benedicto ran away to get a basket
ball with which they could play. Manuel Quisumbing, Jr. was likewise unaware that the "pitogo" belonged to Augusto. He
thought it was the "pitogo" of Benedicto P. Lim, so that when Augusto attempted to get the "pitogo" from Renato, Manuel,
Jr. told him not to do so because Renato was better at putting the chain into the holes of the "pitogo". However, Augusto
resented Manuel, Jr.'s remark and he aggresively pushed the latter. The fight started then. After Augusto gave successive
blows to Manuel, Jr., and the latter was clutching his stomach which bore the brunt of Augusto's anger, Augusto seeing
that Manuel, Jr. was in a helpless position, cut him on the right check with a piece of razor.‖
Quisumbing was awarded damages. Mercado challenged the award of damages. Additionally, they argue that since the
incident of the inflicting of the wound on respondent occurred in a Catholic School (during recess time), through no
fault of the father, petitioner herein, the teacher or head of the school should be held responsible instead of the latter.
Issue: Whether Lourdes Catholic School is liable.
Held: NO. The last paragraph of Article 2180 of the Civil Code, upon which petitioner rests his claim that the school
where his son was studying should be made liable, is as follows:
ART. 2180: Lastly, teachers or heads of establishments of arts and trades shall be liable for damages
caused by their pupils and students or apprentices, so long as they remain in their custody.
It would be seem that the clause "so long as they remain in their custody," contemplates a situation where the pupil
lives and boards with the teacher, such that the control, direction and influence on the pupil supersedes those of the
parents. In these circumstances the control or influence over the conduct and actions of the pupil would pass from the
father and mother to the teacher; and so would the responsibility for the torts of the pupil. Such a situation does not appear
in the case at bar; the pupils appear to go to school during school hours and go back to their homes with their parents after
school is over. The situation contemplated in the last paragraph of Article 2180 does not apply, nor does paragraph 2 of
said article, which makes father or mother responsible for the damages caused by their minor children. The claim of
petitioner that responsibility should pass to the school must, therefore, be held to be without merit.
In Exconde, it was held that: ―It is true that under the law above-quoted, ‗teachers or directors of arts and trades are
liable for any damage caused by their pupils or apprentices while they are under their custody,‘ but this provision only
applies to an institution of arts and trades and not to any academic educational institution.‖
It is possible that the CA may have considered Augusto Mercado responsible for or guilty, of a quasi-delict causing
physical injuries, within the meaning of paragraph 2 of Article 2219. Even if we assume that said court considered
Mercado guilty of a quasi-delict when it imposed the moral damages, yet the facts found by said court indicate that
Augusto's resentment, which motivated the assault, was occasioned by the fact that Manuel, Jr. had tried to intervene in or
interfere with the attempt of Mercado to get "his pitogo from Renato." This is, according to the decision appealed from,
the reason why Mercado was incensed and pushed Quisumbing who, in turn, also pushed Mercado.
It is, therefore, apparent that the proximate cause of the injury caused to Quisumbing was Quisumbing's own fault or
negligence for having interfered with Mercado while trying to get the pitogo from another boy. However, none of
the cases mentioned in Article 2219 of the Civil Code, which authorizes the grant of moral damages, was shown to have
existed.
2.Palisoc v. Brillantes, 41 SCRA 557 (1971)

Facts: Palisoc, Daffon, and Cruz were classmates at the Manila Technical Institute. They were taking up automotive
mechanics. On March 1966 at around 2-3PM, they went to the laboratory room located at the 2nd floor of the school.
During recess, Cruz and Daffon were working on a machine while Palisoc was merely looking at them. Thereafter, Daffon
remarked to the effect that Palisoc was acting like a foreman.
Offended by said remark, Palisoc slapped Daffon on the face. The latter retaliated by giving him fist blows to the face and
stomach. While exchanging blows, Palisoc stumbled on an engine block causing him to fall face downward. As a result,
he became pale and fainted. He never regained consciousness and finally died.
Cause of death was found to be hemorrhage of internal organs (pancreas, stomach, brain) due to the fistblows and the fall.
Parents of 16 year old Palisoc sued Daffon, Brillantes (members of the school‘s Board), Valenton (head of school), and
Quibule (teacher) for quasi delict.
Trial court held Daffon liable under Art. 2176 but absolved Brillantes et al. for liability under Art. 2180 because, using the
case of Mercado v. CA as basis, it claimed that what the provision contemplated was a situation wherein the pupil lives or
boards with the teacher such that control or influence on the former supersedes those of the parents‘.
Issue: Whether the school‘s Board Member, head, and teacher is liable under Art. 2180 and whether the interpration of the
court of said provision was correct.
Held: ONLY THE HEAD and TEACHER are liable. The case at bar was instituted directly against the school officials
and squarely raises the issue of liability of teachers and heads of schools under Article 2180 for damages caused by their
pupils and students against fellow students on the school premises. Here, the parents of the student at fault, Daffon, are
not involved, since Daffon was already of age at the time of the tragic incident.
There is no question, either, that the school involved is a non-academic school, the Manila Technical Institute being
admittedly a technical vocational and industrial school.
The Court holds that under Art. 2180, defendants head and teacher of the Manila Technical Institute are liable
jointly and severally for damages to Palisoc‘s parents for the death of their minor son at the hands of afellow student
within the laboratory of said school.
No liability attaches to Brillantes as a mere member of the school‘s board of directors. The school itself cannot be
held similarly liable, since it has not been properly impleaded as party defendant. While plaintiffs sought to so implead it,
by impleading improperly defendant Brillantes, its former single proprietor, the lower court found that it had been
incorporated since August 1962, and therefore the school itself, as thus incorporated, should have been brought in as party
defendant.
Plaintiffs failed to do so, notwithstanding that Brillantes and his co-defendants in their reply to plaintiffs‘ request for
admission had expressly manifested and made of record that ―defendant Antonio C. Brillantes is not the registered
owner/head of the ‗Manila Technical Institute‘ which is now a corporation and is not owned by any individual person.
The rationale of such liability of school heads and teachers for the tortious acts of their pupils and students, so long as
they remain in their custody, is that they stand, to a certain extent, as to their pupils and students, in loco parentis and are
called upon to ―exercise reasonable supervision over the conduct of the child.‖
In the law of torts, the governing principle is that the protective custody of the school heads and teachers is
mandatorily substituted for that of the parents, and hence, it becomes their obligation as well as that of the school
itself to provide proper supervision of the students‟ activities during the whole time that they are at attendance in the
school, including recess time, as well as to take the necessary precautions to protect the students in their custody from
dangers and hazards that would reasonably be anticipated, including injuries that some student themselves may inflict
willfully or through negligence on their fellow students.
As tersely summarized by Mr. Justice J.B.L. Reyes in his dissenting opinion in Exconde, ―the basis of the presumption
of negligence of Art. 1903 [now 2180] is some culpa in vigilando that the parents, teachers, etc. are supposed to have
incurred in the exercise of their authority‖ and ―where the parent places the child under the effective authority of the
teacher, the latter, and not the parent, should be the one answerable for the torts committed while under his
custody, for the very reason that the parent is not supposed to interfere with the discipline of the school nor with
the authority and supervision of the teacher while the child is under instruction.‖ The school itself, likewise, has to
respond for the fault or negligence of its school head and teachers under the same cited article.
Tolentino expresses a similar opinion: “Teachers:—In order to be within this provision, a teacher must not only be
charged with teaching but also vigilance over their students or pupils. They include teachers in educational
institutions of all kinds, whether for the intellect, the spirit, or the body; teachers who give instruction in classes or by
individuals, even in their own homes; teachers in institutions for deficient or abandoned children, and those in correctional
institutions.‖
There is nothing in the law that requires that for such liability to attach, the pupil or student who commits the
tortious act must live and board in the school, as erroneously held by the lower court, and the dicta in Mercado (as well
as in Exconde) on which it relied, must now be deemed to have been set aside by the present decision.
Valenton and Quibulue as president and teacher-in-charge of the school must therefore be held jointly and severally
liable for the quasi-delict of their co-defendant Daffon in the latter‘s having caused the death of his classmate, the
deceased Palisoc. The unfortunate death resulting from the fight between the protagonists-students could have been
avoided, had said defendants but complied with their duty of providing adequate supervision over the activities of
the students in the school premises to protect their students from harm, whether at the hands of fellow students or
other parties. At any rate, the law holds them liable unless they relieve themselves of such liability, in compliance with
the last paragraph of Article 2180 by “(proving) that they observed all the diligence of a good father of a family to
prevent damage.‖ In the light of the factual findings of the lower court‘s decision, said defendants failed to prove such
exemption from liability.
3. Amadora v. Court of Appeals, 160 SCRA 315 (1988)

Facts: On April 13, 1972, while they were in the auditorium of their school, the Colegio de San Jose-Recoletos, a
classmate, Pablito Damon, fired a gun that mortally hit Alfredo Amadora (a graduating student). Daffon was convicted
of homicide thru reckless imprudence. Additionally, the herein petitioners, as the victim's parents, filed a civil action for
damages under Article 2180 of the Civil Code against the Colegio de San Jose-Recoletos, its rector the high school
principal, the dean of boys, and the physics teacher, together with Daffon and two other students, through their respective
parents. The complaint against the students was later dropped.
Disputed facts:
(1) On the CUSTODY OF THE SCHOOL OVER THE VICTIM: The petitioners contend that their son was in the school to
show his physics experiment as a prerequisite to his graduation; hence, he was then under the custody of the
private respondents. The private respondents submit that Alfredo Amadora had gone to the school only for the
purpose of submitting his physics report and that he was no longer in their custody because the semester had
already ended.
(2) IDENTITY OF THE GUN: It is not denied by the respondents that on April 7, 1972, Sergio Damaso, Jr., the dean of
boys, confiscated from Jose Gumban an unlicensed pistol but later returned it to him without making a
report to the principal or taking any further action . As Gumban was one of the companions of Daffon when
the latter fired the gun that killed Alfredo, the petitioners contend that this was the same pistol that had been
confiscated from Gumban and that their son would not have been killed if it had not been returned by Damaso.
The respondents say, however, that there is no proof that the gun was the same firearm that killed Alfredo.
The RTC held: respondent court found that Article 2180 was not applicable because (1) Colegio de San Jose-Recoletos
was not a school of arts and trades but an academic institution of learning; (2) it also held that the students were not in
the custody of the school at the time of the incident as the semester had already ended; and (3) that there was no clear
identification of the fatal gun and (4) finally, that in any event the defendant, had exercised the necessary diligence in
preventing the injury. This decision now is being appealed in this case.
Issue: May a student be under the custody of a school even though school hasn‘t started yet/has already ended and
whether Art. 2180 is applicable.
Held: YES. Resolution of all these disagreements will depend on the interpretation of Article 2180 which, as it happens, is
invoked by both parties in support of their conflicting positions. The pertinent part of this article reads as follows:
Lastly, teachers or heads of establishments of arts and trades shall be liable for damages caused by their
pupils and students or apprentices so long as they remain in their custody.
(1) Discussion on past jurisprudence on the matter.

Three cases have so far been decided by the Court in connection with the above-quoted provision, to wit: Exconde
, Mercado , and Palisoc .
(a) Exconde case (1957)
This decision exculpated the school in an obiter dictum (as it was not a party to the case) on the ground that it was
riot a school of arts and trades. Justice JBL Reyes dissented arguing that it was the school authorities who should
be held liable Liability under this rule, he said, was imposed on (1) teachers in general; and (2) heads of schools
of arts and trades in particular. The modifying clause "of establishments of arts and trades" should apply only to
"heads" and not "teachers."
(b) Mercado case (1960)
The Court declared in another obiter (as the school itself had also not been sued that the school was not liable
because it was not an establishment of arts and trades. Moreover, the custody requirement had not been proved as
this "contemplates a situation where the student lives and boards with the teacher, such that the control, direction
and influences on the pupil supersede those of the parents."
(c) Palisoc case
Although the wrongdoer — who was already of age — was not boarding in the school, the head thereof and the
teacher in charge were held solidarily liable with him. Justice Teehankee reasoned that the phrase used in the cited
article — "so long as (the students) remain in their custody" — means the protective and supervisory custody that
the school and its heads and teachers exercise over the pupils and students for as long as they are at attendance in
the school, including recess time. There is nothing in the law that requires that for such liability to attach,
the pupil or student who commits the tortious act must live and board in the school, as erroneously held by
the lower court, and the dicta in Mercado (as well as in Exconde) on which it relied, must now be deemed to have
been set aside by the present decision.
In Palisoc, in a footnote, Justice Teehankee said he agreed with Justice Reyes' dissent in the Exconde Case but
added that "since the school involved at bar is a non-academic school, the question as to the applicability of the
cited codal provision to academic institutions will have to await another case wherein it may properly be raised."
And this is the case. Unlike in Exconde and Mercado, the Colegio de San Jose-Recoletos has been directly impleaded
and is sought to be held liable under Article 2180; and unlike in Palisoc, it is not a school of arts and trades but an
academic institution of learning. The parties herein have also directly raised the question of whether or not Article 2180
covers even establishments which are technically not schools of arts and trades, and, if so, when the offending student is
supposed to be "in its custody."
(2) Based on the foregoing, Art. 2180 applies to ALL schools.

After an exhaustive examination of the problem, the Court has come to the conclusion that the provision in question
should apply to ALL SCHOOLS, academic as well as non-academic.
Where the school is academic rather than technical or vocational in nature, responsibility for the tort committed by the
student will attach to the teacher in charge of such student, following the first part of the provision. This is the general
rule.
In the case of establishments of arts and trades, it is the head thereof, and only he, who shall be held liable as an
exception to the general rule. In other words, teachers in general shall be liable for the acts of their students except where
the school is technical in nature, in which case it is the head thereof who shall be answerable. Following the canon of
reddendo singula singulis "teachers" should apply to the words "pupils and students" and "heads of establishments of arts
and trades" to the word "apprentices."
The Court thus conforms to the dissenting opinion expressed by Justice J.B.L. Reyes in Exconde. There is really no
substantial distinction between the academic and the non-academic schools insofar as torts committed by their students
are concerned. The same vigilance is expected from the teacher over the students under his control and supervision,
whatever the nature of the school where he is teaching.
(3) The Court explained why in schools of arts and letters, only the head is held liable, while in ordinary schools,
any teacher may be held liable.
If the teacher of the academic school is to be held answerable for the torts committed by his students, why is it the head of
the school only who is held liable where the injury is caused in a school of arts and trades? And in the case of the
academic or non- technical school, why not apply the rule also to the head thereof instead of imposing the liability only on
the teacher?
The reason for the disparity can be traced to the fact that historically the head of the school of arts and trades exercised
a closer tutelage over his pupils than the head of the academic school. The old schools of arts and trades were engaged
in the training of artisans apprenticed to their master who personally and directly instructed them on the technique and
secrets of their craft. The head of the school of arts and trades was such a master and so was personally involved in the
task of teaching his students, who usually even boarded with him and so came under his constant control, supervision and
influence. By contrast, the head of the academic school was not as involved with his students and exercised only
administrative duties over the teachers who were the persons directly dealing with the students. The head of the
academic school had then (as now) only a vicarious relationship with the students. Consequently, while he could not be
directly faulted for the acts of the students, the head of the school of arts and trades, because of his closer ties with them,
could be so blamed.
It is conceded that the DISTINCTION NO LONGER OBTAINS AT PRESENT in view of the expansion of the schools of arts
and trades, the consequent increase in their enrollment, and the corresponding diminution of the direct and personal
contract of their heads with the students. Article 2180, however, remains unchanged. In its present state, the provision
must be interpreted by the Court according to its clear and original mandate until the legislature, taking into account the
charges in the situation subject to be regulated, sees fit to enact the necessary amendment.
(4) The student is under the custody of the teacher as long as the student is under the control and influence of the
school within its premises.
From a reading of the provision under examination, it is clear that while the custody requirement, does not mean that the
student must be boarding with the school authorities, it does signify that the student should be within the control and
under the influence of the school authorities at the time of the occurrence of the injury. This does not necessarily
mean that such, custody be co-terminous with the semester, beginning with the start of classes and ending upon the close
thereof, and excluding the time before or after such period, such as the period of registration, and in the case of graduating
students, the period before the commencement exercises. In the view of the Court, the student is in the custody of the
school authorities as long as he is under the control and influence of the school and within its premises, whether the
semester has not yet begun or has already ended.
As long as it can be shown that the student is in the school premises in pursuance of a legitimate student objective, in
the exercise of a legitimate student right, and even in the enjoyment of a legitimate student right, and even in the
enjoyment of a legitimate student privilege, the responsibility of the school authorities over the student continues. Indeed,
even if the student should be doing nothing more than relaxing in the campus in the company of his classmates and friends
and enjoying the ambience and atmosphere of the school, he is still within the custody and subject to the discipline of the
school authorities under the provisions of Article 2180.
(5) In any case, the defense of due diligence is available to the teacher; but the diligence they have to prove is
LESS than that of parents.
In this connection, it should be observed that the teacher will be held liable not only when he is acting in loco parentis for
the law does not require that the offending student be of minority age. Unlike the parent, who will be liable only if his
child is still a minor, the teacher is held answerable by the law for the act of the student under him regardless of the
student's age.
Thus, in the Palisoc Case, liability attached to the teacher and the head of the technical school although the
wrongdoer was already of age. In this sense, Article 2180 treats the parent more favorably than the teacher.
The Court is not unmindful of the apprehensions expressed by Justice Makalintal in his dissenting opinion in Palisoc that
the school may be unduly exposed to liability under this article in view of the increasing activism among the students that
is likely to cause violence. Nevertheless, it should be repeated that, under the present ruling, it is not the school that will
be held directly liable. Moreover, the defense of due diligence is available to it in case it is sought to be held answerable
as principal for the acts or omission of its head or the teacher in its employ.
The teacher himself may invoke this defense as it would otherwise be unfair to hold him directly answerable for the
damage caused by his students as long as they are in the school premises and presumably under his influence . In this
respect, the Court is disposed not to expect from the teacher the same measure of responsibility imposed on the
parent for their influence over the child is not equal in degree. Obviously, the parent can expect more obedience from
the child because the latter's dependence on him is greater than on the teacher. The parent can instill more discipline on
the child than the teacher and so should be held to a greater accountability than the teacher for a tort committed by the
child.
And if it is also considered that under the article in question, the teacher or the head of the school of arts and trades is
responsible for the damage caused by the student or apprentice even if he is already of age — and therefore less
tractable than the minor — then there should all the more be justification to require from the school authorities less
accountability as long as they can prove reasonable diligence in preventing the injury. After all, if the parent himself is
no longer liable for the student's acts because he has reached majority age and so is no longer under the former's control,
there is then all the more reason for leniency in assessing the teacher's responsibility for the acts of the student.
(6) Conclusions:
At the time Alfredo Amadora was fatally shot, he was still in the custody of the authorities of Colegio de San Jose-
Recoletos notwithstanding that the fourth year classes had formally ended. It was immaterial if he was in the school
auditorium to finish his physics experiment or merely to submit his physics report for what is important is that he was
there for a legitimate purpose. As previously observed, even the mere savoring of the company of his friends in the
premises of the school is a legitimate purpose that would have also brought him in the custody of the school
authorities.
The rector, the high school principal and the dean of boys cannot be held liable because none of them was the
teacher-in-charge as previously defined. Each of them was exercising only a general authority over the student body
and not the direct control and influence exerted by the teacher placed in charge of particular classes or sections and thus
immediately involved in its discipline. The mere fact that Alfredo Amadora had gone to school that day in connection
with his physics report did not necessarily make the physics teacher, Celestino Dicon, the teacher-in-charge of Alfredo's
killer.
At any rate, assuming that he was the teacher-in-charge, there is no showing that Dicon was negligent in enforcing
discipline upon Daffon or that he (a) had waived observance of the rules and regulations of the school; or (b) their
non-observance. His absence when the tragedy happened cannot be considered against him because he was not supposed
or required to report to school on that day. And while it is true that the offending student was still in the custody of the
teacher-in-charge even if the latter was physically absent when the tort was committed, it has not been established that it
was caused by his laxness in enforcing discipline upon the student. On the contrary, the private respondents have
proved that they had exercised due diligence, through the enforcement of the school regulations, in maintaining that
discipline.
In the absence of a teacher-in-charge, it is probably the dean of boys who should be held liable especially in view of
the unrefuted evidence that he had earlier confiscated an unlicensed gun from one of the students and returned the
same later to him without taking disciplinary action or reporting the matter to higher authorities. While this was clearly
negligence on his part, for which he deserves sanctions from the school, it does not necessarily link him to the shooting of
Amador as it has not been shown that he confiscated and returned pistol was the gun that killed the petitioners' son.
Finally, as previously observed, the Colegio de San Jose-Recoletos cannot be held directly liable under the article
because only the TEACHER or the HEAD OF THE SCHOOL OF ARTS AND TRADES is made responsible for the damage
caused by the student or apprentice. Neither can it be held to answer for the tort committed by any of the other private
respondents for none of them has been found to have been charged with the custody of the offending student or has been
remiss in the discharge of his duties in connection with such custody.
In sum, the Court finds under the facts as disclosed by the record and in the light of the principles herein announced that
none of the respondents is liable for the injury inflicted by Pablito Damon on Alfredo Amadora that resulted in the latter's
death at the auditorium of the Colegio de San Jose-Recoletos on April 13, 1972. While we deeply sympathize with the
petitioners over the loss of their son under the tragic circumstances here related, we nevertheless are unable to extend
them the material relief they seek, as a balm to their grief, under the law they have invoked.
4. Cuadra v. Monfort, G.R. No. L-24101, September 30, 1970

Facts: Cuadra (12 y/o) and Monfort (13 y/o) were Grade 6 classmates at the Mabini Elementary School. They were
assigned with 3 other classmates to weed out grass. While weeding, Monfort found a plastic headband. She joked aloud
that she found an earthworm, and tossed it to Cuadra. At that moment, Cuadra turned, and the object hit her right
eye. She rubbed her eye and treated it with powder; the next day, it became swollen. She underwent surgery twice,
spending 23 days in the hospital. She nevertheless lost sight in her right eye.
Cuadra‘s parents then filed suit based on quasi-delict against Monfort‘s father, which resulted in a favorable award; hence,
this appeal by Monfort.
Issue: Whether or not Mr. Monfort is liable for the act of his minor child.
Held: NO. The underlying basis of the liability imposed by Article 2176 is the fault or negligence accompanying the
act or the omission, there being no willfulness or intent to cause damage thereby. When the act or omission is that of one
person for whom another is responsible, the latter then becomes himself liable under Article 2180, in the different cases
enumerated therein, such as that of the father or the mother under the circumstances above quoted. The basis of this
vicarious, although primary, liability is, as in Article 2176, fault or negligence, which is presumed from that which
accompanied the causative act or omission. The presumption is merely prima facie and may therefore be rebutted. This
is the clear and logical inference that may be drawn from the last paragraph of Article 2180, which states "that the
responsibility treated of in this Article shall cease when the persons herein mentioned prove that they observed all the
diligence of a good father of a family to prevent damage."
Since the fact thus required to be proven is a matter of defense, the burden of proof necessarily rests on the defendant.
But what is the exact degree of diligence contemplated, and how does a parent prove it in connection with a
particular act or omission of a minor child, especially when it takes place in his absence or outside his immediate
company? Obviously there can be no meticulously calibrated measure applicable; and when the law simply refers to "all
the diligence of a good father of the family to prevent damage," it implies a consideration of the attendant
circumstances in every individual case, to determine whether or not by the exercise of such diligence the damage could
have been prevented.
In the present case there is nothing from which it may be inferred that the defendant could have prevented the
damage by the observance of due care, or that he was in any way remiss in the exercise of his parental authority in
failing to foresee such damage, or the act which caused it.
On the contrary, his child was at school, where it was his duty to send her and where she was, as he had the right to
expect her to be, under the care and supervision of the teacher. And as far as the act which caused the injury was
concerned, it was an innocent prank not unusual among children at play and which no parent, however careful, would
have any special reason to anticipate much less guard against. Nor did it reveal any mischievous propensity, or indeed
any trait in the child's character which would reflect unfavorably on her upbringing and for which the blame could be
attributed to her parents.
The victim, no doubt, deserves no little commiseration and sympathy for the tragedy that befell her. But if the defendant is
at all obligated to compensate her suffering, the obligation has no legal sanction enforceable in court, but only the moral
compulsion of good conscience.
BARREDO, J., dissenting:
I am afraid I cannot go along with my esteemed colleagues in holding that the act of appellant's daughter does not
constitute fault within the contemplation of our law or torts. She was 13 years and should have known that by jokingly
saying "aloud that she had found an earthworm and, evidently to frighten the Cuadra girl, tossed the object at her," it was
likely that something would happen to her friend, as in fact, she was hurt.
As to the liability of appellant as father, I prefer to hold that there being no evidence that he had properly advised his
daughter to behave properly and not to play dangerous jokes on her classmate and playmates, he can be liable
under Article 2180. There is nothing in the record to show that he had done anything at all to even try to minimize the
damage caused upon plaintiff child.
5. Ylarde v. Aquino, G.R. No. L-33722, July 29, 1988

Facts: Private respondent Mariano Soriano was the principal of the Gabaldon Primary School, a public educational
institution located in Tayug, Pangasinan. Private respondent Edgardo Aquino was a teacher therein.
At that time, the school was littered with several concrete blocks which were remnants of the old school shop that was
destroyed in World War II. Realizing that the huge stones were serious hazards to the schoolchildren, another teacher by
the name of Sergio Banez started burying them one by one. He was able to bury ten of these blocks all by himself.
Deciding to help his colleague, Edgardo Aquino gathered 18 of his male pupils, aged 10-11, after class dismissal. Being
their teacher-in-charge, he ordered them to dig beside a one-ton concrete block in order to make a hole wherein the
stone can be buried. The work was left unfinished. The following day, also after classes, Aquino called 4 of the original
18 pupils to continue the digging. These 4 pupils—Reynaldo Alonso, Francisco Alcantara, Ismael Abaga and Novelito
Ylarde, dug until the excavation was one meter and 40 centimeters deep. At this point, Aquino alone continued digging
while the pupils remained inside the pit throwing out the loose soil that was brought about by the digging.
When the depth was right enough to accommodate the concrete block, Aquino and his four pupils got out of the hole.
Then, said Aquino left the children to level the loose soil around the open hole while he went to the school workroom
where he could get some rope. Before leaving, Aquino allegedly told the children "not to touch the stone."
A few minutes after Aquino left, 3 of the 4 kids, Alonso, Alcantara and Ylarde, playfully jumped into the pit. Then,
without any warning at all, the remaining Abaga jumped on top of the concrete block causing it to slide down towards
the opening. Alonso and Alcantara were able to scramble out of the excavation on time but unfortunately for Ylarde, the
concrete block caught him before he could get out, pinning him to the wall in a standing position. Three days later,
Novelito Ylarde died.
Ylarde's parents, petitioners in this case, filed a suit for damages against both Aquino and Soriano. The lower court
dismissed the complaint. On appeal, the CA affirmed the Decision of the lower court.
Petitioners base their action against private respondent Aquino on Article 2176 for his alleged negligence that caused
their son's death while the complaint against respondent Soriano as the head of school is founded on Article 2180.
The applicable provision of Article 2180 states: "Art. 2180. Lastly, teachers or heads of establishments of arts and trades
shall be liable for damages caused by their pupils and students or 3 apprentices, so long as they remain in their custody."
Issue: Whether or not under the cited provisions, both private respondents can be held liable for damages.
Held: ONLY AQUINO (TEACHER) IS LIABLE. As regards the principal, he cannot be made responsible for the death
of the child Ylarde, he being the head of an academic school and not a school of arts and trades.
Teachers in general shall be liable for the acts of their students except where the school is technical in nature, in
which case it is the head thereof who shall be answerable.
Soriano, as principal, cannot be held liable for the reason that the school he heads is an academic school and not a school
of arts and trades. Also, as clearly admitted by private respondent Aquino, private respondent Soriano did not give any
instruction regarding the digging.
Aquino can be held liable under Article 2180 of the Civil Code as the teacher-in-charge of the children for being negligent
in his supervision over them and his failure to take the necessary precautions to prevent any injury on their persons.
However, Ylarde base the alleged liability of Aquino on Article 2176 which is separate and distinct from that provided
for in Article 2180.
On Art. 2176, were there acts and omissions on the part of Aquino amounting to fault or negligence which have direct
causal relation to the death of his pupil Ylarde? Yes. He is liable for damages.
Aquino acted with fault and gross negligence when he: (1) failed to avail himself of services of adult manual laborers
and instead utilized his pupils aged ten to eleven to make an excavation near the one-ton concrete stone which he knew to
be a very hazardous task; (2) required the children to remain inside the pit even after they had finished digging ,
knowing that the huge block was lying nearby and could be easily pushed or kicked aside by any pupil who by chance
may go to the perilous area; (3) ordered them to level the soil around the excavation when it was so apparent that the
huge stone was at the brink of falling; (4) went to a place where he would not be able to check on the children's
safety; and (5) left the children close to the excavation, an obviously attractive nuisance.
The negligent act of Aquino in leaving his pupils in such a dangerous site has a direct causal connection to the
death of the child Ylarde. Left by themselves, it was but natural for the children to play around. Tired from the strenuous
digging, they just had to amuse themselves with whatever they found. Driven by their playful and adventurous instincts
and not knowing the risk they were facing, 3 of them jumped into the hole while the other one jumped on the stone. Since
the stone was so heavy and the soil was loose from the digging, it was also a natural consequence that the stone would fall
into the hole beside it, causing injury on the unfortunate child caught by its heavy weight. Everything that occurred was
the natural and probable effect of the negligent acts of Aquino. The child Ylarde would not have died were it not for
the unsafe situation created by Aquino which exposed the lives of all the pupils coneerned to real danger.
We cannot agree with the finding of the lower court that the injuries which resulted in the death of the child Ylarde were
caused by his own reckless imprudence. It should be remembered that he was only 10 years old at the time of the incident.
As such, he is expected to be playful and daring. His actuations were natural to a boy his age. Going back to the facts, it
was not only him but the 3 of them who jumped into the hole while the remaining boy jumped on the block. He only did
what any other ten-year old child would do in the same situation. A minor should not be held to the same degree of
care as an adult, but his conduct should be judged according to the average conduct of persons of his age and
experience.
The court is not persuaded that the digging done by the pupils can pass as part of their Work Education. A single
glance at the picture showing the excavation and the huge concrete block would reveal a dangerous site requiring the
attendance of strong, mature laborers and not ten-year old grade-four pupils. There were no instructions from the
principal requiring what the pupils were told to do. Nor was there any showing that it was included in the lesson plan
for their Work Education.
Aquino decided all by himself to help his co-teacher Banez bury the concrete remnants of the old school shop.
Furthermore, the excavation should not be placed in the category of school gardening, planting trees, and the like as these
undertakings do not expose the children to any risk that could result in death or physical injuries.
The contention that Aquino exercised the utmost diligence of a very cautious person is certainly without cogent basis. A
reasonably prudent person would have foreseen that bringing children to an excavation site, and more so, leaving
them there all by themselves, may result in an accident. An ordinarily careful human being would not assume that a
simple warning "not to touch the stone" is sufficient to cast away all the serious danger that a huge concrete block
adjacent to an excavation would present to the children. Moreover, a teacher who stands in loco parentis to his pupils
would have made sure that the children are protected from all harm in his company.
6.Salvosa v. Intermediate Appellate Court, G.R. No. 70458, October 5, 1988

Facts: Baguio Colleges Foundation (―BCF‖) is an academic institution with aspects of arts and trade, as it has a
technical-vocational department. In its premises is the BCF ROTC unit, under the fifth control of the AFP. It has an office
and an armory at the basement of the main building. Jimmy B. Abon was the Armorer duly-appointed by the AFP. He
was not an employee of the BCF, but he was a commerce student thereat. He got his orders from Cpt. Ungos, the
Commandant of the BCF ROTC Unit, an officer of the AFP.
At 8PM., 3 March 1977, Jimmy shot Napoleon Castro, a student, at the parking space of BCF with an unlicensed
firearm taken from the armory. He died. Jimmy was convicted of Homicide by the Military Commission No. 30.
The heirs then sued for damages, impleading Jimmy, Ungos, Salvosa (EVP of BCF), Quetolio (Dean and Executive
Trustee of BCF_, and BCF. The RTC found Jimmy, Salvosa, and BCF solidarily liable for damages. The CA modified
the decision by reducing the damages.
Issue: Whether Salvosa et al can be held solidarily liable with Jimmy Abon for damages.
Held: NO. Under the penultimate paragraph of Art. 2180, teachers or heads of establishments of arts and trades are liable
for "damages caused by their pupils and students or apprentices, so long as they remain in their custody." The rationale
of such liability is that so long as the student remains in the custody of a teacher, the latter "stands, to a certain extent, in
loco parentis [as to the student] and [is] called upon to exercise reasonable supervision over the conduct of the
[student]." Likewise, "the phrase used in [Art. 2180 — 'so long as (the students) remain in their custody means the
protective and supervisory custody that the school and its heads and teachers exercise over the pupils and students
for as long as they are at attendance in the school, including recess time."
In the case at bar, in holding that Jimmy B. Abon was stin (No idea, I cannot even. Probably meant “was not in” or
something) in the protective and supervisory custody of the Baguio Colleges Foundation when he shot Napoleon Castro,
the respondent Court ruled that:
It is true that Abon was not attending any class or school function at the time of the
shooting incident, which was at about 8 o'clock in the evening; but considering that Abon
was employed as an armorer and property custodian of the BCF ROTC unit, he must
have been attending night classes and therefore that hour in the evening was just
about dismissal time for him or soon thereafter. The time interval is safely within the
"recess time" that the trial court spoke of and envisioned by the Palisoc case.
In line with the case of Palisoc, a student not "at attendance in the school" cannot be in "recess" thereat. A " RECESS," as
the concept is embraced in the phrase "at attendance in the school," contemplates a situation of temporary
adjournment of school activities where the student still remains within call of his mentor and is not permitted to leave
the school premises, or the area within which the school activity is conducted. Recess by its nature does not include
dismissal. Likewise, the mere fact of being enrolled or being in the premises of a school without more does not constitute
"attending school" or being in the "protective and supervisory custody' of the school, as contemplated in the law.
Upon the foregoing considerations, we hold that Jimmy B. Abon CANNOT be considered to have been "at attendance
in the school," or in the custody of BCF, when he shot Napoleon Castro. Logically, therefore, petitioners cannot under
Art. 2180 of the Civil Code be held solidarity liable with Jimmy B. Abon for damages resulting from his acts.
Besides, the record shows that before the shooting incident, Roberto B. Ungos ROTC Unit Commandant, AFP, had
instructed Jimmy B. Abon "not to leave the office and [to keep the armory] well guarded." Apart from negating a finding
that Jimmy B. Abon was under the custody of the school when he committed the act for which the petitioners are sought
to be held liable, this circumstance shows that Jimmy B. Abon was supposed to be working in the armory with
definite instructions from his superior, the ROTC Commandant, when he shot Napoleon Castro.
Petitioners also raise the issue that, under Art. 2180, a school which offers both academic and technical/vocational
courses cannot be held liable for a tort committed by a student enrolled only in its academic program ; however,
considering that Jimmy B. Abon was not in the custody of BCF when he shot Napoleon Castro, the Court deems it
unnecessary to pass upon such other issue.
7.Philippine School of Business Administration v. Court of Appeals, 205 SCRA 729 (1992)
Facts: A stabbing incident on 30 August 1985 which caused the death of Carlitos Bautista while on the 2nd-floor premises of the
PSBA prompted the parents of the deceased to file suit for damages against the said PSBA and its corporate officers.
At the time of his death, Carlitos was enrolled in the 3rd year commerce course at the PSBA. It was established that
his assailants were not members of the school's academic community but were elements from outside the school.
The suit impleaded the PSBA and its authorities. Substantially, the plaintiffs (now private respondents) sought to adjudge
them liable for the victim's untimely demise due to their alleged negligence, recklessness and lack of security precautions,
means and methods before, during and after the attack on the victim.
Defendants a quo (now petitioners) sought to have the suit dismissed, alleging that academic institutions, such as the
PSBA, are beyond the ambit of the rule in the aforestated article. Respondent trial court, however, overruled petitioners'
contention and denied their motion to dismiss. CA affirmed. Hence, this petition.
CA primarily anchored its decision on the law of quasi delicts, as enunciated in Articles 2176 and 2180. The CA liberally
applied 2180. Pertinent portions of the appellate court's now assailed ruling state:
Construed in the light of modern day educational systems, Article 2180 cannot be construed in its narrow
concept as held in the old case of Exconde vs. Capuno and Mercado vs. Court of Appeals; hence, the
ruling in the Palisoc case that it should apply to all kinds of educational institutions, academic or
vocational. At any rate, the law holds the teachers and heads of the school staff liable unless they
relieve themselves of such liability pursuant to the last paragraph of Article 2180 by 'proving that
they observed all the diligence to prevent damage.
Issue: Whether or not Art. 2180 applies in this case.
Held. NO. While we agree with the CA that the motion to dismiss the complaint was correctly denied and the complaint
should be tried on the merits, we do not however agree with the premises of the appellate court's ruling.
Article 2180, in conjunction with Article 2176, establishes the rule of in loco parentis. This Court discussed this
doctrine in the aforecited cases of Exconde, Mendoza, Palisoc and, more recently, in Amadora. In all such cases, it had
been stressed that the law (Article 2180) plainly provides that the damage should have been caused or inflicted by
pupils or students of the educational institution sought to be held liable for the acts of its pupils or students while in
its custody. However, this material situation does not exist in the present case for, as earlier indicated, the assailants of
Carlitos were not students of the PSBA, for whose acts the school could be made liable.
However, the CA‘s failure to consider such material facts does not mean that the petitioners are free from liability.
When an academic institution accepts students for enrollment, there is established a contract between them, resulting in
bilateral obligations which both parties are bound to comply with. For its part, the school undertakes to provide the
student with an education that would presumably suffice to equip him with the necessary tools and skills to pursue
higher education or a profession. On the other hand, the student covenants to abide by the school's academic
requirements and observe its rules and regulations. Institutions of learning must also meet the implicit or "built in"
obligation of providing their students with an atmosphere that promotes or assists in attaining its primary
undertaking of imparting knowledge. Certainly, no student can absorb the intricacies of physics or higher mathematics
or explore the realm of the arts and other sciences when bullets are flying or grenades exploding in the air or where there
looms around the school premises a constant threat to life and limb. Necessarily, the school must ensure that adequate
steps are taken to maintain peace and order within the campus premises and to prevent the breakdown thereof.
Because the circumstances of the present case evince a CONTRACTUAL relation between the PSBA and Carlitos
Bautista, the rules on quasi-delict do not really govern. A perusal of Article 2176 shows that obligations arising from
quasi-delicts or tort, also known as extra-contractual obligations, arise only between parties not otherwise bound by
contract, whether express or implied. However, this impression has not prevented this Court from determining the
existence of a tort even when there obtains a contract, as seen in the case of Air France and Cangco.
Immediately what comes to mind is the chapter of the Civil Code on Human Relations, particularly Article 21, which
provides: "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 can be concluded that should the act which
breaches a contract be done in bad faith and be violative of Article 21, then there is a cause to view the act as constituting
a quasi-delict.
In the circumstances obtaining in the case at bar, however, there is, as yet, no finding that the contract between the
school and Bautista had been breached thru the former's negligence in providing proper security measures. This
would be for the trial court to determine. And, even if there be a finding of negligence, the same could give rise generally
to a breach of contractual obligation only. Following the case of Cangco, the negligence of the school would not be
relevant absent a contract.
In fact, that negligence becomes material only because of the contractual relation between PSBA and Bautista. In other
words, a contractual relation is a condition sine qua non to the school's liability. The negligence of the school cannot
exist independently on the contract, unless the negligence occurs under the circumstances set out in Article 21.
This Court is not unmindful of the attendant difficulties posed by the obligation of schools, above-mentioned for
conceptually a school, like a common carrier, cannot be an insurer of its students against all risks. This is specially
true in the populous student communities of the so-called "university belt" in Manila where there have been reported
several incidents ranging from gang wars to other forms of hooliganism. It would not be equitable to expect of schools
to anticipate all types of violent trespass upon their premises, for notwithstanding the security measures installed,
the same may still fail against an individual or group determined to carry out a nefarious deed inside school
premises and environs. Should this be the case, the school may still avoid liability by proving that the breach of its
contractual obligation to the students was not due to its negligence, here statutorily defined to be the omission of that
degree of diligence which is required by the nature of the obligation and corresponding to the circumstances of persons,
time and place.
As the proceedings have yet to commence on the substance of the private respondents' complaint, the record is bereft of
all the material facts. Obviously, at this stage, only the trial court can make such a determination from the evidence still to
unfold. Therefore, the petition is denied and the Court of origin is ordered to continue proceedings consistent with this
ruling of the Court.
8.Saludaga v. Far Eastern University, G.R. No. 179337, April 30, 2008
Facts: Joseph Saludaga was a sophomore law student of FEU when he was shot by Alejandro Rosete (Rosete), one of
the security guards on duty at the school premises. Rosete explained at the police station that the shooting was accidental.
Saludaga thereafter filed a complaint for damages against respondents (FEU and De Jesus as President) on the ground that
they breached their obligation to provide students with a safe and secure environment and an atmosphere conducive
to learning.
Respondents filed a Third-Party Complaint against Galaxy Development and Management Corporation (Galaxy), the
agency contracted by FEU to provide security services within its premises and Mariano D. Imperial (Imperial), Galaxy‘s
President, to indemnify them for whatever would be adjudged in favor of petitioner. Galaxy and Imperial filed a Fourth-
Party Complaint against AFP General Insurance.
Trial court held FEU and de Jesus, in his capacity as president of FEU jointly and severally liable to pay damages.
Respondents appealed to CA; appeal was granted.
Petitioner is suing respondents for damages based on the alleged breach of student-school contract for a safe learning
environment.
Issue: Whether FEU is liable.
Held: FEU: LIABLE FOR BREACH OF CONTRACT. not Art. 2180; De Jesus: NOT SOLIDARILY LIABLE.
On FEU‟s liability
Petitioner was enrolled as a sophomore law student in respondent FEU. As such, there was created a contractual
obligation between the two parties. On petitioner‘s part, he was obliged to comply with the rules and regulations of the
school. On the other hand, respondent FEU, as a learning institution is mandated to impart knowledge and equip its
students with the necessary skills to pursue higher education or a profession. At the same time, it is obliged to ensure
and take adequate steps to maintain peace and order within the campus.
When petitioner was shot inside the campus by no less the security guard who was hired to maintain peace and secure
the premises, there is a prima facie showing that respondents failed to comply with its obligation to provide a safe and
secure environment to its students.
In order to avoid liability, however, respondents aver that the shooting incident was a fortuitous event because they could
not have reasonably foreseen nor avoided the accident caused by Rosete as he was not their employee; and that they
complied with their obligation to ensure a safe learning environment for their students by having exercised due diligence
in selecting the security services of Galaxy. However, respondents failed to discharge the burden of proving that they
exercised due diligence in providing a safe learning environment for their students.
They failed to prove that they ensured that the guards assigned in the campus met the requirements stipulated in
the Security Service Agreement. Certain documents about Galaxy were presented during trial; however, no evidence as
to the qualifications of Rosete as a security guard for the university was offered. They failed to show that they undertook
steps to ascertain and confirm that the security guards assigned to them actually possess the qualifications required in the
Security Service Agreement. It was not proven that they examined the clearances, psychiatric test results, files, and other
vital documents enumerated in its contract with Galaxy. Total reliance on the security agency about these matters or
failure to check the papers stating the qualifications of the guards is negligence on the part of respondents. A
learning institution should not be allowed to completely relinquish or abdicate security matters in its premises to the
security agency it hired. To do so would result to contracting away its inherent obligation to ensure a safe learning
environment for its students.
FEU‘s defense of force majeure must fail. In order for force majeure to be considered, respondents must show that no
negligence or misconduct was committed that may have occasioned the loss. One‘s negligence may have concurred with
an act of God in producing damage and injury to another; nonetheless, showing that the immediate or proximate cause of
the damage or injury was a fortuitous event would not exempt one from liability. When the effect is found to be partly the
result of a person‘s participation—whether by active intervention, neglect or failure to act—the whole occurrence is
humanized and removed from the rules applicable to acts of God. For breach of contract due to negligence in
providing a safe learning environment, respondent FEU is liable to petitioner for damages.
On the FEU president‟s liability

In Powton Conglomerate, Inc. v. Agcolicol, we held that:
―[A] corporation is invested by law with a personality separate and distinct from those of the persons composing it, such
that, save for certain exceptions, corporate officers who entered into contracts in behalf of the corporation cannot be held
personally liable for the liabilities of the latter. PERSONAL LIABILITY of a corporate director, trustee or officer along
(although not necessarily) with the corporation may so validly attach, as a rule, only when—(1) he assents to a patently
unlawful act of the corporation, or when he is guilty of bad faith or gross negligence in directing its affairs, or when
there is a conflict of interest resulting in damages to the corporation, its stockholders or other persons; (2) he consents
to the issuance of watered down stocks or who, having knowledge thereof, does not forthwith file with the corporate
secretary his written objection thereto; (3) he agrees to hold himself personally and solidarily liable with the corporation;
or (4) he is made by a specific provision of law personally answerable for his corporate action.‖
None of the foregoing exceptions was established in the instant case; hence, respondent De Jesus should not be held
solidarily liable with respondent FEU.
On the applicability of Art. 2180

Although the main cause of action in the instant case is the breach of the school-student contract, petitioner, in the
alternative, also holds respondents vicariously liable under Article 2180 of the Civil Code. However, Respondents
cannot be held liable for damages under Art. 2180 of the Civil Code because respondents are not the employers of
Rosete. Rosete was employed by Galaxy. The instructions issued by respondents‘ Security Consultant to Galaxy and its
security guards are ordinarily no more than requests commonly envisaged in the contract for services entered into by a
principal and a security agency. They cannot be construed as the element of control as to treat respondents as the
employers of Rosete.
On the liability of Galaxy and its president

It is settled in our jurisdiction that where the security agency, as here, recruits, hires and assigns the work of its watchmen
or security guards, the agency is the employer of such guards or watchmen. Liability for illegal or harmful acts
committed by the security guards attaches to the employer agency, and not to the clients or customers of such
agency.
As a general rule, a client or customer of a security agency has no hand in selecting who among the pool of security
guards or watchmen employed by the agency shall be assigned to it; the duty to observe the diligence of a good father
of a family in the selection of the guards cannot, in the ordinary course of events, be demanded from the client
whose premises or property are protected by the security guards.
The fact that a client company may give instructions or directions to the security guards assigned to it, does not, by itself,
render the client responsible as an employer of the security guards concerned and liable for their wrongful acts or
omissions.
Galaxy is negligent not only in the selection of its employees but also in their supervision. Indeed, no administrative
sanction was imposed against Rosete despite the shooting incident; moreover, he was even allowed to go on leave of
absence which led eventually to his disappearance. Moreoever, Galaxy and Imperial failed to make good their pledge
to reimburse Saludaga‘s medical expenses.
For these acts of negligence and for having supplied respondent FEU with an unqualified security guard, which resulted to
the latter‘s breach of obligation to petitioner, it is proper to hold Galaxy liable to respondent FEU for such damages
equivalent to the amounts awarded to petitioner.
Unlike De Jesus, we deem Imperial (Galaxy‘s president) to be solidarily liable with Galaxy for being grossly negligent in
directing the affairs of the security agency. It was Imperial who assured petitioner that his medical expenses will be
shouldered by Galaxy but said representations were not fulfilled because they presumed that petitioner and his family
were no longer interested in filing a formal complaint against them.
E. Right to Reimbursement
-Case
1. Philippine Rabbit Bus Lines v. Intermediate Appellate Court, G.R. No. 66102-04, August 30, 1990
Facts: Respondents boarded the jeepney owned by spouses Mangune and Carreon and driven by Manalo. The jeepney was
bound for Carmen, Rosales, Pangasinan. Upon reaching San Manuel, Tarlac, the right wheel of the jeepney was detached
so it was running in an unbalanced position. In response, Manalo stepped on the brake which caused the jeepney
(which was running on the eastern lane) to make a sudden U-turn, invading and stopping on the western lane of the
road. Basically what happened is that the jeepney blocked the western lane of the road, which is the right of way of
vehicles coming from the opposite direction, one of which was the Bus of petitioner Philippine Rabbit Bus Lines, driven
by Tomas delos Reyes. At the time the jeepney made a sudden U-turn, the bus bumped from behind the right rear
portion of the jeepney, which resulted into the death of 3 of its passengers and rendering the others injured.
Criminal complaints were filed against the driver of the jeepney and the bus driver. The bus driver (delos Reyes) was
exculpated due to insufficiency of evidence however the jeepney driver (Manalo) was convicted.
Complaints for recovery of damages were filed by the heirs of those who died against Spouses Mangune and Carreon,
Manalo, Philippine Rabbit Bus Lines Inc., and delos Reyes. They anchor their claims against Spouses Mangune and
Carreon and Manalo on contractual liability while for Philippine Rabbit Bus Lines Inc. and delos Reyes, for quasi-
delict.
The trial court held Manalo and spouses Mangune and Carreon negligent. It ruled that spouses Mangune and
Carreon are jointly and severally liable with Manalo to pay the heirs the indemnity and damages. The appellate
court however reversed, and held that Philippine Rabbit Bus Lines Inc. and delos Reyes are liable jointly and severally to
the heirs of the deceased.
Issue: Whether Sps. Mangune & Carreon can be solidarily liable with the jeep driver, Manalo
Held: YES. The Supreme Court reversed the holding of the respondent court. The respondent court, applying primarily (1)
the doctrine of last clear chance, (2) the presumption that drivers who bump the rear of another vehicle guilty and the
cause of the accident unless contradicted by other evidence, and (3) the substantial factor test, concluded that delos Reyes
was negligent.
―The principle about "the last clear" chance, would call for application in a suit between the owners and drivers of the
two colliding vehicles. It does not arise where a passenger demands responsibility from the carrier to enforce its
contractual obligations. For it would be inequitable to exempt the negligent driver of the jeepney and its owners on the
ground that the other driver was likewise guilty of negligence.
On the presumption that drivers who bump the rear of another vehicle guilty and the cause of the accident, unless
contradicted by other evidence, the same would have applied were it not for the abrupt U-turn made by the jeepney.
As for the SUBSTANTIAL FACTOR TEST, the respondent court held that it is the rule under the substantial factor test that if
the actor's conduct is a substantial factor in bringing about harm to another, the fact that the actor neither foresaw
nor should have foreseen the extent of the harm or the manner in which it occurred does not prevent him from
being liable.
It cannot be said that the bus was travelling at a fast speed when the accident occurred because the speed of 80 to 90
kilometers per hour, assuming such calculation to be correct, is yet within the speed limit allowed in highways. The court
cannot even fault delos Reyes for not having avoided the collision. As found, the jeepney left a skid mark of about 45
meters, measured from the time its right rear wheel was detached up to the point of collision. Delos Reyes must have
noticed the perilous condition of the jeepney from the time its right rear wheel was detached or some 90 meters away,
considering that the road was straight and points 200 meters north and south of the point of collision, visible and
unobstructed. Verily, he had little time to react to the situation. To require delos Reyes to avoid the collision is to ask
too much from him. Aside from the time element involved, there were no options available to him.
After considering all the evidence, the court found that the proximate cause of the accident was the negligence of
Manalo and spouses Mangune and Carreon. They all failed to exercise the precautions that are needed precisely pro
hac vice.
In culpa contractual, the moment a passenger dies or is injured, the carrier is presumed to have been at fault or to have
acted negligently, and this disputable presumption may only be overcome by evidence that he had observed extra-ordinary
diligence as prescribed in Articles 1733, 1755 and 1756 of the New Civil Code or that the death or injury of the passenger
was due to a fortuitous event.
In an action for damages against the carrier for his failure to safely carry his passenger to his destination, an accident
caused either by defects in the automobile or through the negligence of its driver, is not a caso fortuito which would avoid
the carriers liability for damages.
**Topic related to Right to Reimbursment – NO, Spouses Mangune and Carreon cannot be held jointly and
severally liable with the driver, Manalo.
Manalo‘s negligence was substantially proven by testimonies. The same can be said of the spouses Mangune and Carreon.
However, the trial court‘s ruling that spouses Mangune and Carreon are jointly and severally liable with Manalo is
erroneous. The driver cannot be held jointly and severally liable with the carrier in case of breach of the contract of
carriage. The rationale behind this is readily discernible. FIRSTLY, the contract of carriage is between the carrier and
the passenger, and in the event of contractual liability, the carrier is exclusively responsible therefore to the
passenger, even if such breach be due to the negligence of his driver. The carrier can neither shift his liability on the
contract to his driver nor share it with him, for his driver's negligence is his. SECONDLY, if the court were to make the
driver jointly and severally liable with the carrier, that would make the carrier's liability personal instead of merely
vicarious and consequently, entitled to recover only the share which corresponds to the driver, contradictory to the
explicit provision of Article 2181 of the New Civil Code. Article 2181 of the New Civil Code provides:
ART. 2181. Whoever pays for the damage caused by his dependents or employees may recover
from the latter what he has paid or delivered in satisfaction of the claim.
Therefore, the court held spouses Mangune and Carreon liable to the victims or their heirs for the amount of indemnity for
loss of life (P30,000.00).
F. Distinguished from subsidiary liability under the Revised Penal Code
- Revised Penal Code

o Articles 102 and 103
2.Carpio v. Doroja, 180 SCRA 1 (1989)

Facts: On October 23, 1985, Ramirez, while driving a passenger Fuso Jitney
owned and operated by Toribio, bumped Carpio, a pedestrian crossing the street, as a consequence of which the latter
suffered from a fractured left clavicle as reflected in the medicolegal certificate and sustained injuries which required
medical attention for a period of 3 months.
Ramirez was charged with Reckless Imprudence. During the trial, the private prosecutor presented evidence to establish
civil liability of either Ramirez or Toribio (operator). Ramirez‘s counsel then moved that the court summon Toribio to
court for the reason that, because Ramirez was an indigent, any liability that may be adjudged against him cannot be
satisfied. The private prosecutor, however, did not move to summon Toribio.
Thereafter, Ramirez was convicted for Reckless Imprudence Resulting to Less Physical Injuries. Additionally, civil
liability in the form of indemnity was awarded (i.e. P45 for the value of ½ can of tomatoes lost, P200 hospital fees; P1,500
costs). Ramirez later applied for probation.
Private prosecutor appealed to the RTC the civil indemnity and prayed to be awarded more damages (10K moral, 6K
compensatory, 5K atty‘s fees). As a result, the court rendered a decision awarding 5K moral damages and affirmed the
other civil liabilities (not quoted in the case).
Due to the insolvency of Ramirez, the writ of execution was returned unsatisfied on May 1988. Thus, Carpio moved for a
subsidiary writ of execution against the subsidiary liability of Toribio as owner-operator. Said motion was denied based
on the fact that (1) the dispositive portion of the RTC (as appellate court) did not mention any subsidiary liability of
Toribio; and (2) the nature of the accident falls under culpa contractual and not culpa aquiliana. Hence, this petition.
Carpio hinges his petition on the authority of Pajarito v. Seneris which declared that ―the subsidiary liability of the
owner-operator is fixed by the judgment, because if a case were to be filed against said operator, the court called upon to
act thereto has no other function than to render a decision based on the indemnity award in the criminal case without
power to amend or modify it even if in his opinion an error has been committed in the decision.‖
Caprio claims that the tenor of the RTC decision implies that the subsidiary of the owner-operator may be
liability enforced in the same proceeding and a separate action is no longer necessary in order to avoid undue delay,
notwithstanding the fact that said employer was not made a party in the criminal action.
On the other hand, Toribio claims that the owner-operator cannot be validly held subsidiarily liable for the following
reasons, namely: (a) the matter of subsidiary liability was not raised on appeal; (b) contrary to the case of Pajarito, the
injuries sustained by the complainant did not arise from the so-called ―culpa-contractual‖ but from ―culpaaquiliana‖; (c)
the judgments of appellate courts may not be altered, modified, or changed by the court of origin; and (d) said owner was
never made a party to the criminal proceedings.
Issue: Whether or not the subsidiary liability of Toribio may be enforced in the same criminal proceeding against the
driver where the award was given.
Held: The law involved in the instant case is Article 103 in relation to Article 100 of the RPC. The subsidiary liability in
Art. 103 should be distinguished from the primary liability of employers, which is quasi-delictual in character as provided
in Art. 2180.
Under Art. 103, the liability emanated from a delict. On the other hand, the liability under Art. 2180 is founded on culpa
aquiliana. The present case is neither an action for culpacontractual nor for culpa-aquiliana. This is basically an
action to enforce the civil liability arising from crime under Art. 100 of the RPC.
In order that an employer may be held subsidiarily liable for the employee‘s civil liability in the criminal action, it
should be shown:
(1) that the employer, etc. is engaged in any kind of industry,
(2) that the employee committed the offense in the discharge of his duties; and
(3) that he is insolvent.
The subsidiary liability of the employer, however, arises only after conviction of the employee in the criminal action.
All these requisites present, the Toribio becomes ipso facto subsidiarily liable upon the Ramirez‘s conviction and upon
proof of the latter‘s insolvency (unsatisfied writ of execution).
Moreover, we are not convinced that Toribio has been deprived of his day in court, because the case before us is NOT one
wherein the operator is sued for a primary liability under the Civil Code but one in which the subsidiary civil liability
incident to and dependent upon his employee‘s criminal negligence is sought to be enforced. Considering the subsidiary
liability imposed upon the employer by law, he is in substance and in effect a party to the criminal case. Ergo, the
employer‘s subsidiary liability may be determined and enforced in the criminal case as part of the execution
proceedings against the employee.
The argument that the owner-operator cannot be held subsidiarily liable because the matter of subsidiary liability was not
raised on appeal and in like manner, the appellate court‘s decision made no mention of such subsidiary liability is of no
moment. As already discussed, the filing of a separate complaint against the operator for recovery of subsidiary liability
is not necessary since his liability is clear from the decision against the accused. Such being the case, it is not
indispensable for the question of subsidiary liability to be passed upon by the appellate court. Such subsidiary liability is
already implied from the appellate court‘s decision.
A separate and independent action is, therefore, unnecessary and would only unduly prolong the agony of the heirs of the
victim. Also, Compelling Toribio to pay on the basis of his subsidiary liability does not constitute an amendment of the
judgment because in an action under Art. 103 of the RPC, once all the requisites are met, the employer becomes ipso
facto subsidiarily liable, without need of a separate action
Such being the case, the subsidiary liability can be enforced in the same case where the award was given, and this
does not constitute an act of amending the decision. It becomes incumbent upon the court to grant a motion for
subsidiary writ of execution (but only after the employer has been heard), upon conviction of the employee and after
execution is returned unsatisfied due to the employee‘s insolvency.

2.Bantoto v. Bobis, 18 SCRA 690 (1966) See p. 813 of textbook
Facts: Appellant Crispin Vallejo was the registered owner of a "jeepney" named "Jovil 11", with plate TPU-20948, that
was operated by him in Bacolod City through driver Salvador Bobis. On 24 October 1948, through the driver's
negligence, the "jeepney" struck a 3-year old girl, Damiana Bantoto, a daughter of appellees, inflicting serious injuries
that led to her death a few days later.
Bobis was charged with homicide through reckless imprudence, to which Bobis pleaded guilty.
Bantoto et al for themselves and their other children, instituted the present action against Salvador Bobis, Juan
Maceda (later absolved) and Crispin Vallejo in the CFI, seeking to have the 3 defendants declared solidarily
responsible for damages, consisting of the civil indemnity required of the driver Bobis in the judgment of conviction, plus
moral and exemplary damages and attorneys' fees and costs.
Vallejo moved to dismiss on the ground of failure to state a cause of action against him, for the reason that the amended
complaint did not aver that the driver, Bobis, was insolvent. The court overruled the motion to dismiss. Thus, Vallejo
filed an answer setting up as defenses that his liability was only subsidiary, and that the liability had been satisfied. Bobis
was declared in default.
At the trial, the CFI admitted the following exhibits: (1) the writ of execution against the driver, Salvador Bobis, issued in
the criminal case, and (2) the sheriff's return nulla bona.
Vallejo maintains that his liability is only subsidiary, and thus the lack of averment in the complaint that Bobis was
insolvent is fatal.
Issue: (1) Whether Bobis has to be insolvent to make Vallejo subsidiarily liable.
(2) Whether the writ of execution + sheriff‘s return are admissible.
(3) Whether the employer (based on his subsidiary liability) maybe held liable for exemplary damages despite its absence
in the original judgment.
Held: (1) NO NEED TO BE INSOLVENT. The master's liability, under the RPC, for the crimes committed by his
servants and employees in the discharge of their duties, is not predicated upon the insolvency of the latter. Article 103
of the Penal Code prescribes that:
ART. 103. Subsidiary civil liability of other persons. — The subsidiary liability established in the next preceding
article shall also apply to employees, teachers, persons, and corporations engaged in any kind of industry for
felonies committed by their servants, pupils, workmen, apprentices, or employees in the discharge of their duties.
The insolvency of the servant or employee is nowhere mentioned in said article as a condition precedent. In truth, such
insolvency is required only when the liability of the master is being made effective by execution levy, but not for the
rendition of judgment against the master.
The SUBSIDIARY CHARACTER of the employer's responsibility merely imports that the latter's property is not be
seized without first exhausting that of the servant. And by analogy to a regular guarantor (who is the prototype of
persons subsidiarily responsible), the master may not demand prior exhaustion of the servant's (principal obligor's)
properties if he cannot "point out to the creditor available property of the debtor within Philippine territory, sufficient to
cover the amount of the debt" (Civil Code). This rule is logical, for as between the offended party (as creditor) and the
culprit's master or employer, it is the latter who is in a better position to determine the resources and solvency of the
servant or employee.
(2) YES. It is well to move here that this Court has ruled that in the absence of collusion the judgment convicting and
sentencing the servant to pay indemnity is conclusive in an action to enforce the subsidiary liability of the master
or employer. Anyway, since Bobis, the driver, was also a defendant, the writ of execution issued in the criminal case to
enforce the civil indemnity, and its return without satisfaction, are not irrelevant evidence in the action against him and his
employer.
(3) NO. As the case was predicated upon the sentence of conviction in the criminal case, the award of exemplary damages
was improper. No such damages were imposed on the driver, and the master, as person subsidiarily liable, cannot
incur greater civil liability than his convicted employee, any more than a guarantor can be held responsible for
more than the principal debtor
But we do not agree that the award of attorney's fees should be disallowed. Appellant had reason to know that his driver
could not pay the P3,000.00 indemnity imposed in the criminal case, because if he could, or if he had money or leviable
property worth that much, Bobis would be operating his own jeepney instead of another's. In fact, Article 2208, paragraph
9, authorizes the award of counsel's fees "in a separate civil action to recover the civil liability arising from a crime.

3.Yonaha v. Court of Appeals, 255 SCRA 397 (1996) See p. 814
Facts: In a Criminal Case, Elmer Ouano was charged with the crime of ―Reckless Imprudence Resulting In Homicide.‖ It
was alleged that the accused, while driving a Toyota Tamaraw did then and there unlawfully and feloniously maneuver
and operate it in a negligent and reckless manner, as a result thereof the motor vehicle he was then driving bumped
and hit Hector Cañete , which caused the latter‘s instantaneous death. When arraigned, the accused pleaded ―guilty.‖
The trial court found the accused guilty beyond reasonable doubt and ordered imprisonment (1 year&1 day to 1 year&8
months) and to pay the heirs of the victim P50,000.00 for the death of the victim; P30,000.00 for actual damages and
P10,000.00 as attorney‘s 3 fees.
A WRIT OF EXECUTION was issued for the satisfaction of the monetary award. In his Return of Service, Sheriff stated
that he had served the writ on accused Elmer Ouano but that the latter had manifested his inability to pay. Private
respondents then presented a ―MOTION FOR SUBSIDIARY EXECUTION‖ with neither a notice of hearing nor notice to
petitioner (Ouano‘s employer). Acting on the motion, the trial court issued an order directing the issuance of a writ of
subsidiary execution. The sheriff went to petitioner‘s residence to enforce the writ, and it was then, allegedly for the first
time, that petitioner was informed of Ouano‘s conviction.
Petitioner filed a motion to stay and to recall the subsidiary writ of execution principally anchored on the lack of prior
notice to her and on the fact that the employer‘s liability had yet to be established.
TC denied petitioner‘s motion.

CA dismissed the petition. Hence this petition.
Respondent‘s contention:
Even assuming that issuance of writ of subsidiary execution requires notice and hearing, a hearing in the present case
would be sheer rigmarole, an unnecessary formality, because, as employer, petitioner became subsidiarily liable upon the
conviction of her accused driver, Elmer Ouano, and proof of the latter‘s insolvency. And if she had any defense to free
herself from such subsidiary liability, she could have ventilated and substantiated the same in connection with her
(petitioner‘s) motion to stay and recall the writ of subsidiary execution in question. Except for the protestation of violation
of due process, and absence of notice, petitioner intimated no defense which could absolve her of subsidiary liability
under the premises.
Issue: Whether or not Subsidiary Execution should automatically issue against the one subsidiarily liable (employer)
Held: NO. The statutory basis for an employer‘s subsidiary liability is found in Article 103 of the RPC. This Court has
since sanctioned the enforcement of this subsidiary liability in the same criminal proceedings in which the employee is
adjudged guilty, on the thesis that it really is a part of, and merely an incident in, the execution process of the judgment.
But, execution against the employer MUST NOT ISSUE as just a matter of course, and it behooves the court, as a
measure of due process to the employer, to determine and resolve a priori, in a hearing set for the purpose, the legal
applicability and propriety of the employer‟s liability. The requirement is mandatory even when it appears prima facie
that execution against the convicted employee cannot be satisfied. The court must convince itself that:
(a) the convicted employee is in truth in the employ of the employer;

(b) that the latter is engaged in an industry of some kind;
(c) that the employee has committed the crime to which civil liability attaches while in the performance of his
duties as such; and
(d) that execution against the employee is unsuccessful by reason of insolvency.
The assumption that, since petitioner in this case did not aver any exculpatory facts in her ―motion to stay and recall,‖
which could save her from liability, a hearing would be a futile and a sheer rigmarole is unacceptable. The employer
must be given his full day in court.
Subsidiary liability of an employer under Article 103 of the RPC requires:

(a) the existence of an employer-employee relationship;
(b) that the employer is engaged in some kind of industry;
(c) that the employee is adjudged guilty of the wrongful act and found to have committed the offense in the discharge
of his duties (not necessarily any offense he commits ―while‖ in the discharge of such duties); and
(d) that said employee is insolvent.
The judgment of conviction of the employee, of course, concludes the employer and the subsidiary liability may be
enforced in the same criminal case, but to afford the employer due process, the court should hear and decide that
liability on the basis of the conditions required therefor by law. Petitioner shall be given the right to a hearing on the
motion for the issuance of a writ of subsidiary execution filed by private respondents, and the case is REMANDED to the
trial court for further proceedings
V. PRIMARY LIABILITY
- Civil Code
A. Possessors/users of animals
1. Vestil v. Intermediate Appellate Court, 179 SCRA 47 (1989)

Facts: 3 year old Theness Tan Uy, was bitten by a dog while she was playing with a child of the Vestils in the house of
the late Vicente Miranda, the father of Purita Vestil, at F. Ramos Street in Cebu City. She was rushed to the Cebu General
Hospital, where she was treated for ―multiple lacerated wounds on the forehead‖ and administered an anti-rabies
vaccine by Dr. Antonio Tautjo. She was discharged after 9 days but was re-admitted one week later due to ―vomiting of
saliva.‖ The following day, the child died. The cause of death was certified as broncho-pneumonia.
7 months later, the Uys sued for damages, alleging that the Vestils were liable to them as the possessors of “Andoy,” the
dog that bit and eventually killed their daughter.
The Vestils rejected the charge, insisting that the dog belonged to the deceased Vicente Miranda, that it was a tame
animal, and that in any case no one had witnessed it bit Theness.
After trial, the CFI of Cebu sustained the Vestils and dismissed the complaint. The IAC reversed and found that the
Vestils were in possession of the house and the dog and so should be responsible under Article 2183 of the Civil Code
for the injuries caused by the dog. It also held that the child had died as a result of the dog bites and not for causes
independent thereof as submitted by the appellees. Hence, this petition.
Issue: Whether the Vestils are liable for the death of Theness Uy
Purita Vestil insists that she is not the owner of the house or of the dog left by her father as his estate has not yet been
partitioned and there are other heirs to the property. Pursuing the logic of the Uys, she claims, even her sister living in
Canada would be held responsible for the acts of the dog simply because she is one of Miranda‟s heirs.
However, that is hardly the point. What must be determined is the possession of the dog that admittedly was staying
in the house in question, regardless of the ownership of the dog or of the house. Article 2183 reads as follows:
The possessor of an animal or whoever may make use of the same is responsible for the
damage which it may cause, although it may escape or be lost. This responsibility shall
cease only in case the damage should come from force majeure or from the fault of the
person who has suffered damage.
Purita Vestil‟s testimony that she was not in possession of Miranda‟s house is hardly credible. She said that the
occupants of the house left by her father were related to him (“one way or the other”) and maintained themselves out of a
common fund or by some kind of arrangement (on which, however, she did not elaborate). She mentioned as many as 10
of such relatives who had stayed in the house at one time or another although they did not appear to be close kin. She at
least implied that they did not pay any rent, presumably because of their relation with Vicente Miranda notwithstanding
that she herself did not seem to know them very well.
There is contrary evidence that the occupants of the house were boarders who paid the Vestils for providing them with
meals and accommodations. It also appears that Purita Vestil had hired a maid, Dolores Jumaoas, who did the cooking and
cleaning in the said house for its occupants. Her mother, Pacita, who was a nursemaid of Purita herself, categorically
declared that the Vestils were maintaining boarders in the house where Theness was bitten by a dog. Another witness,
Marcial Lao, testified that he was indeed a boarder and that the Vestils were maintaining the house for business purposes.
And although Purita denied paying the water bills for the house, the Uys submitted documentary evidence of her
application for water connection with the Cebu Water District, which strongly suggested that she was administering
the house in question.
While it is true that she is not really the owner of the house, which was still part of Vicente Miranda‘s estate, there is
no doubt that she and her husband were its possessors at the time of the incident in question. She was the only heir
residing in Cebu City and the most logical person to take care of the property, which was only 6 km from her own
house. Moreover, there is evidence showing that she and her family regularly went to the house, once or twice weekly,
according to at least one witness, and used it virtually as a second house. Interestingly, her own daughter was playing in
the house with Theness when the little girl was bitten by the dog. The dog itself remained in the house even after the death
of Vicente Miranda in until 1975, when the incident in question occurred. It is also noteworthy that the Vestils offered to
assist the Uys with their hospitalization expenses although Purita said she knew them only casually.
The Vestils also argue that even assuming that they were the possessors of the dog that bit Theness, there was no clear
showing that she died as a result thereof. On the contrary, the death certificate declared that she died of broncho-
pneumonia, which had nothing to do with the dog bites for which she had been previously hospitalized.
We do not agree. Theness developed hydrophobia, a symptom of rabies, as a result of the dog bites, and second, that
asphyxia broncho-pneumonia, which ultimately caused her death, was a complication of rabies. That Theness became
afraid of water after she was bitten by the dog is established by the testimony of Dr. Tautjo. As for the link between rabies
and broncho-pneumonia, the doctor stated under oath that ―broncho-pneumonia can be a complication of rabies.‖
The death certificate is not conclusive proof of the cause of death but only of the fact of death. Indeed, the evidence of
the child‘s hydrophobia is sufficient to convince us that she died because she was bitten by the dog even if the death
certificate stated a different cause of death.
The Vestils‘ contention that they could not be expected to exercise remote control of the dog is not acceptable. In fact,
Article 2183 holds the possessor liable even if the animal should ―escape or be lost‖ and so be removed from his
control. And it does not matter either that, as the Vestils also contend, the dog was tame and was merely provoked by
the child into biting her. The law does not speak only of vicious animals but covers even tame ones as long as they cause
injury. As for the alleged provocation, the Vestils forget that Theness was only 3 years old at the time she was attacked
and can hardly be faulted for whatever she might have done to the animal.
It is worth observing that the above defenses of the Vestils are an implied rejection of their original posture that there was
no proof that it was the dog in their father‘s house that bit Theness.
According to Manresa, the obligation imposed by Article 2183 of the Civil Code is not based on the negligence or on the
presumed lack of vigilance of the possessor or user of the animal causing the damage. It is based on natural equity
and on the principle of social interest that he who possesses animals for his utility, pleasure or service must answer
for the damage which such animal may cause.
B. Owners of Motor Vehicles
- See Section III(D)(iii)(a) above.
C.Manufacturers and Processors
1.Coca-Cola Bottlers v. Court of Appeals, G.R. No. 110295, October 18, 1993.
Facts: Lydia Geronimo was the proprietress of Kindergarten Wonderland Canteen in Dagupan City; she was engaged in
the sale of softdrinks i.e. Coke and Sprite to students thereat and to the public. On 12 August 1989, some parents
complained that some of the drinks contained fiber-like matter and other foreign things. She checked her stock and
discovered the same, along with some plastic matter in an unopened Sprite bottle. She brought samples to the Regional
Health Office of the DOH, and was informed that they were adulterated. Her sales plummeted from 10 cases per day to
merely 2 or 3 per day. She had to close shop soon after, becoming jobless. She thus filed a complaint for damages on 7
May 1990.
Coke moved to dismiss on grounds of failure to exhaust administrative remedies and prescription. It claimed prescription
since the complaint is a breach of warranty under Art. 1561, and should have been filed within 6 months. The RTC
ruled that the existing administrative remedy was inadequate (no mention of what), but granted dismissal on the latter
ground. The CA ruled that it was based on quasi-delict, and was thus timely filed; the mere existence of a contract does
not bar an action for quasi-delict. Hence, this petition.
The Coke insists that a cursory reading of the complaint will reveal that the primary legal basis for private respondent's
cause of action is not Article 2176 of the Civil Code on quasi-delict — for the complaint does not ascribe any tortious or
wrongful conduct on its part — but Articles 1561 and 1562 thereof on breach of a seller's implied warranties under the
law on sales. It contends the existence of a contractual relation between the parties (arising from the contract of
sale) bars the application of the law on quasi-delicts and that since Geronimo's cause of action arose from the breach of
implied warranties, the complaint should have been filed within si6x months room delivery of the soft drinks pursuant
to Article 171 of the Civil Code.
In her Comment, Geronimo argues that in case of breach of the seller's implied warranties, the vendee may, under
Article 1567 of the Civil Code, elect between withdrawing from the contract or demanding a proportionate reduction of
the price, with damages in either case. She asserts that Civil Case No. D-9629 is neither an action for rescission nor for
proportionate reduction of the price, but for damages arising from a quasi-delict and that the public respondent was correct
in ruling that the existence of a contract did not preclude the action for quasi-delict. As to the issue of prescription, the
private respondent insists that since her cause of action is based on quasi-delict, the prescriptive period therefore is 4
years in accordance with Article 1144 of the Civil Code and thus the filing of the complaint was well within the said
period.
Issue: Whether the action was a breach of implied warranty or quasi-delict.
Held: QUASI-DELICT. We find no merit in the petition. Geronimo‘s conclusion that the cause of action in Civil
Case No. D-9629 is found on quasi-delict and that, therefore, pursuant to Article 1146 of the Civil Code, it prescribes in
4 years is supported by the allegations in the complaint, more particularly paragraph thereof, which makes reference to
the reckless and negligent manufacture of "adulterated food items intended to be sold for public consumption."
The vendee's remedies against a vendor with respect to the warranties against hidden defects of or encumbrances upon
the thing sold are not limited to those prescribed in Article 1567 which provides:
Art. 1567. In the case of Articles 1561, 1562, 1564, 1565 and 1566, the vendee may elect
between withdrawing from the contract and demanding a proportionate reduction of
the price, with damages either case.
The vendee may also ask for the ANNULMENT OF THE CONTRACT upon proof of error or fraud, in which case the
ordinary rule on obligations shall be applicable. Under the law on obligations, responsibility arising from fraud is
demandable in all obligations and any waiver of an action for future fraud is void. Responsibility arising from
negligence is also demandable in any obligation, but such liability may be regulated by the courts, according to the
circumstances. Those guilty of fraud, negligence, or delay in the performance of their obligations and those who in any
manner contravene the tenor thereof are liable for damages.
The vendor could likewise be liable for quasi-delict under Article 2176 and an action based thereon may be brought
by the vendee. While it may be true that the pre-existing contract between the parties may, as a general rule, bar the
applicability of the law on quasi-delict, the liability may itself be deemed to arise from quasi-delict, i.e., the acts which
breaks the contract may also be a quasi-delict. Thus, in Singson vs. Bank of the Philippine Islands, this Court stated:
We have repeatedly held, however, that the existence of a contract between the
parties does not bar the commission of a tort by the one against the other and the
consequent recovery of damages therefor. Indeed, this view has been, in effect,
reiterated in a comparatively recent case. Thus, in Air France vs. Carrascoso, involving
an airplane passenger who, despite hi first-class ticket, had been illegally ousted from his
first-class accommodation and compelled to take a seat in the tourist compartment, was
held entitled to recover damages from the air-carrier, upon the ground of tort on the
latter's part, for, although the relation between the passenger and a carrier is "contractual
both in origin and nature ... the act that breaks the contract may also be a tort.
Otherwise put, liability for quasi-delict may still exist despite the presence of contractual relations.
Under American law, the liabilities of a manufacturer or seller of injury-causing products may be based on
negligence, breach of warranty, tort, or other grounds such as fraud, deceit, or misrepresentation. Quasi-delict, as
defined in Article 2176 of the Civil Code, (which is known in Spanish legal treaties as culpa aquiliana, culpa extra-
contractual or cuasi-delitos) is homologous but not identical to tort under the common law, which includes not only
negligence, but also intentional criminal acts, such as assault and battery, false imprisonment and deceit.
It must be made clear that our affirmance of the decision of the CA should by no means be understood as suggesting that
the Generoso‟s claims for moral damages have sufficient factual and legal basis.
D. Municipal Corporations
- Republic Act No. 7160, Section 24

Section 24. Liability for Damages. - Local government units and their officials are not exempt from liability for
death or injury to persons or damage to property.
1. City of Manila v. Teotico, 22 SCRA 267 (1968)
Facts: On January 27, 1958, at about 8PM., Genaro N. Teotico was at the corner of the Old Luneta and P. Burgos Avenue
within a ―loading and unloading‖ zone, waiting for a jeepney to take him down town.
After waiting for about 5 minutes, he managed to hail a jeepney that came along to a stop. As he stepped down from
the curb to board the jeepney, and took a few steps, he fell inside an uncovered and unlighted catchbasin or manhole
on P. Burgos Avenue. Due to the fall, his head hit the rim of the manhole breaking his eyeglasses and causing broken
pieces thereof to pierce his left eyelid. As blood flowed therefrom, impairing his vision, several persons came to his
assistance and pulled him out of the manhole. Teotico was brought to the PGH. In addition to the lacerated wound in his
left upper eyelid, Teotico suffered contusions on the left thigh, the left upper arm, the right leg and the upper lip, apart
from an abrasion on the right infra-patella region. These injuries and the allergic eruptions caused by anti-tetanus
injections administered to him in the hospital, required further medical treatment and expenses.
Teotico filed, with the CFI of Manila, a complaint for damages against the City of Manila, its mayor, city engineer, city
health officer, city treasurer and chief of police.
At the time of the incident, plaintiff was a practicing public accountant, a businessman and a professor at the
University of the East. He held responsible positions in various business firms (Philippine Merchandising Co., the
A.U. Valencia and Co., the Silver Swan Manufacturing Company and the Sincere Packing Corporation) and was
associated with several civic organizations (Wack Wack Golf Club, the Chamber of Commerce of the Philippines, Y's
Men Club of Manila and the Knights of Rizal) As a result of the incident, plaintiff was prevented from engaging in his
customary occupation for 20 days and was subjected to humiliation and ridicule by his business associates and
friends.
The defense presented evidence, oral and documentary, to prove that the Office of the City Engineer of Manila, received
a report of the uncovered condition of a catchbasin at the corner of P. Burgos and Old Luneta Streets, Manila, on January
24, 1958, but the same was covered on the same day; That again the iron cover of the same catchbasin was reported
missing on January 30, 1958, but the said cover was replaced the next day; and that the Office of the City Engineer
never received any report to the effect that the catchbasin in question was not covered between January 25 and 29,
1968; that it has always been a policy of the said office, which is charged with the duty of installation, repair and care of
storm drains in the City of Manila, and that whenever a report is received from whatever source of the loss of a catchbasin
cover, the matter is immediately attended to, either by immediately replacing the missing cover or covering the
catchbasin with steel matting. They also noted that because of the lucrative scrap iron business then prevailing, stealing
of iron catchbasin covers was rampant and in order to prevent such thefts, the city government has changed the position
and layout of catchbasins in the City by constructing them under the sidewalks with concrete cement covers and openings
on the side of the gutter
CFI of Manila rendered the aforementioned decision sustaining the theory of the defendants and dismissing the
amended complaint. CA affirmed except insofar as the City of Manila is concerned which was sentenced to pay
damages in the aggregate sum of P6,750.00. City of Manila appealed.
Issue: (1) Whether or not, in determining liability, the Charter of Manila is the applicable law.
(2) Whether the City of Manila is liable for damages sustained by Teotico.
Held: (1) NO. Section 4 of Republic Act No. 409 (Charter of the City of Manila) provides that:
The city shall not be liable or held for damages or injuries to persons or property
arising from the failure of the Mayor, the Municipal Board, or any other city officer, to
enforce the provisions of this chapter, or any other law or ordinance, or from
negligence of said Mayor, Municipal Board, or other officers while enforcing or
attempting to enforce said provisions.
Article 2189 of the Civil Code provides that:
Provinces, cities and municipalities shall be liable for damages for the death of, or
injuries suffered by, any person by reason of defective conditions of roads, streets,
bridges, public buildings, and other public works under their control or supervision.
Manila maintains that the former provision should prevail over the latter, because Republic Act 409 is a special law,
intended exclusively for the City of Manila, whereas the Civil Code is a general law.
The CA, however, applied the Civil Code, and, we think, correctly.
It is true that, insofar as its TERRITORIAL APPLICATION is concerned, RA No. 409 is a special law and the Civil Code a
general legislation; but, as regards the SUBJECT-MATTER of the provisions above quoted, Section 4 of RA 409
establishes a general rule regulating the liability of the City of Manila for "damages or injury to persons or property
arising from the failure of" city officers "to enforce the provisions of" said Act "or any other law or ordinance, or from
negligence" of the city "Mayor, Municipal Board, or other officers while enforcing or attempting to enforce said
provisions."
Upon the other hand, Article 2189 of the Civil Code constitutes a particular prescription making "provinces, cities and
municipalities x x x liable for damages for the death of, or injury suffered by, an by reason"—specifically—"of the
defective condition of roads, streets, bridges, public buildings, and other public works under their control or supervision."
In other words, said section 4 refers to liability arising from negligence, in general, regardless of the object thereof,
whereas Article 2189 governs liability due to "defective streets," IN PARTICULAR. Since the present action is based upon
the alleged defective condition of a road, said Article 2189 is decisive thereon.
(2) YES. The City of Manila may be held liable for damages as the street where the accident happened was under
the supervision and control of the City.
It is urged that the City of Manila cannot be held liable to Teotico for damages: 1) because the accident involving him
took place in a national highway; and 2) because the City of Manila has not been negligent in connection therewith.
Teotico alleged in his complaint, as well as in his amended complaint, that his injuries were due to the defective
condition of a street which is "under the supervision and control" of the City. In its answer to the amended complaint,
the City, in turn, alleged that "the streets aforementioned were and have been constantly kept in good condition and
regularly inspected and the storm drains and manholes thereof covered by the defendant City and the officers concerned"
who "have been ever viligant and zealous in the performance of their respective functions and duties as imposed upon
them by law." Thus, the City had, in effect, admitted that P. Burgos Avenue was and is under its control and
supervision.
Moreover, the assertion to the effect that said Avenue is a national highway was made, for the first time, in its motion
for reconsideration of the decision of the CA. Such assertion raised, therefore, a question of fact, which had not been put
in issue in the trial court, and cannot be set up for the first time on appeal, much less after the rendition of the decision of
the appellate court in a motion for the reconsideration thereof.
At any rate, under Article 2189, it is not necessary for the liability therein established to attach that the defective roads
or streets belong to the province, city or municipality from which responsibility is exacted. What said article requires is
that the province, city or municipality have either " CONTROL or SUPERVISION" over said street or road. Even if P.
Burgos Avenue were, therefore, a national highway, this circumstance would not necessarily detract from its "control
or supervision" by the City of Manila, under RA 409.
This authority has been neither withdrawn nor restricted by Republic Act No. 917 and Executive Order No. 113, dated
May 2, 1955, upon which the City relies. Said Act governs the disposition or appropriation of the highway funds and the
giving of aid to provinces, chartered cities and municipalities in the construction of roads and streets within their
respective boundaries, and Executive Order No. 113 merely implements the provisions of said Republic Act No. 917,
concerning the disposition and appropriation of the highway funds.
Moreover, it provides that "the construction, maintenance and improvement of national primary, national secondary and
national aid provincial and city roads shall be accomplished by the Highway District Engineers and Highway City
Engineers under the supervision of the Commissioner of Public Highways and shall be financed from such appropriations
as may be authorized by the Republic of the Philippines in annual or special appropriation Acts.
Notably, the determination of whether or not P. Burgos Avenue is under the control or supervision of the City of
Manila and whether the latter is guilty of negligence, in connection .with the maintenance of said road, which were
decided by the CA in the affirmative, is one of fact, and the findings of said Court thereon are not subject to our review.
2. Jimenez v. City of Manila, 150 SCRA 510 (1987)

Facts: Jimenez shows that in the morning of August 15, 1974 he, together with his neighbors, went to Sta. Ana public
market to buy "bagoong" at the time when the public market was flooded with ankle deep rainwater. After purchasing
the "bagoong" he turned around to return home but he stepped on an uncovered opening which could not be seen
because of the dirty rainwater, causing a dirty and rusty 4-inch nail, stuck inside the uncovered opening, to pierce
the left leg of plaintiff-petitioner penetrating to a depth of about one and a half inches.
After administering first aid treatment at a nearby drugstore, his companions helped him hobble home. He developed
fever and he had to be carried to Dr. Juanita Mascardo. His left leg swelled with great pain and was subsequently rushed
to the Veterans Memorial Hospital where he was confined for 20 days due to high fever and severe pain. He walked
around with crutches for 15 days. His injury prevented him from attending to the school buses he is operating. He had
to engage the services of one Bienvenido Valdez to supervise his business for an aggregate compensation of P900.00.
Petitioner sued for damages the City of Manila and the Asiatic Integrated Corporation under whose administration the
Sta. Ana Public Market had been placed by virtue of a Management and Operating Contract.
Defendants do not deny that plaintiff was in fact injured although the Asiatic Integrated Corporation tries to minimize the
extent of the injuries, claiming that it was only a small puncture and that as a war veteran, plaintiff‘s hospitalization at the
War Veteran's Hospital was free. City of Manila maintains that it cannot be held liable for the injuries sustained by the
petitioner because under the Management and Operating Contract, Asiatic Integrated Corporation assumed all
responsibility for damages which may be suffered by third persons for any cause attributable to it.
It has also been argued that the City of Manila cannot be held liable under Article I, Section 4 of Republic Act No.
409 as amended (Revised Charter of Manila) which provides:
The City shall not be liable or held for damages or injuries to persons or property arising
from the failure of the Mayor, the Municipal Board, or any other City Officer, to enforce
the provisions of this chapter, or any other law or ordinance, or from negligence of said
Mayor, Municipal Board, or any other officers while enforcing or attempting to enforce
said provisions.
The lower court decided in favor of respondents. The IAC held the Asiatic Integrated Corporation liable for damages
but absolved City of Manila.
Issue: Whether Manila should be jointly and severally liable with Asiatic Integrated Corporation for the injuries petitioner
suffered.
Held: YES. There is no doubt that the plaintiff suffered injuries when he fell into a drainage opening without any cover in
the Sta. Ana Public Market. In the case of Teotico, Supreme Court squarely ruled that Republic Act No. 409 establishes
a GENERAL RULE regulating the liability of the City of Manila for damages or injury to persons or property arising
from the failure of city officers to enforce the provisions of said Act, or any other law or ordinance or from negligence
of the City Mayor, Municipal Board, or other officers while enforcing or attempting to enforce said provisions.
Upon the other hand, Article 2189 constitutes a PARTICULAR PRESCRIPTION making "provinces, cities and
municipalities liable for damages for the death of, or injury suffered by any person by reason— specifically—of the
defective condition of roads, streets, bridges, public buildings, and other public works under their control or supervision.
In other words, Art. 1, sec. 4, R.A. No. 409 refers to liability arising from negligence, in general, regardless of the
object, thereof, while Article 2189 governs liability due to "defective streets, public buildings and other public works"
in particular and is therefore decisive on this specific case.
Supreme Court clarified further that under Article 2189, it is not necessary for the liability therein established to attach,
that the defective public works belong to the province, city or municipality from which responsibility is exacted. What
said article requires is that the province, city or municipality has either " CONTROL OR SUPERVISION" over the public
building in question. There is no question that the Sta. Ana Public Market, despite the Management and Operating
Contract between respondent City and Asiatic Integrated Corporation, remained under the control of the former.
Said contract is explicit in this regard, when it provides:
That immediately after the execution of this contract, the SECOND PARTY shall start
the painting, cleaning, sanitizing and repair of the public markets and talipapas and
within ninety (90) days thereof, the SECOND PARTY shall submit a program of
improvement, development, rehabilitation and reconstruction of the city public markets
and talipapas subject to prior approval of the FIRST PARTY.
That all present personnel of the City public markets and talipapas shall be retained by
the SECOND PARTY as long as their services remain satisfactory and they shall be
extended the same rights and privileges as heretofore enjoyed by them. Provided,
however, that the SECOND PARTY shall have the right, subject to prior approval of the
FIRST PARTY to discharge any of the present employees for cause.
That the SECOND PARTY may from time to time be required by the FIRST PARTY,
or his duly authorized representative or representatives, to report on the activities and
operation of the City public markets and talipapas and the facilities and conveniences
installed therein, particularly as to their cost of construction, operation and maintenance
in connection with the stipulations contained in this Contract.
The fact of supervision and control of the City over subject public market was admitted by Mayor Ramon Bagatsing in
his letter to Secretary of Finance:
These cases arose from the controversy over the Management and Operating Contract
entered into on December 28, 1972 by and between the City of Manila and the Asiatic
Integrated Corporation, whereby in consideration of a fixed service fee, the City hired the
services of the said corporation to undertake the physical management, maintenance,
rehabilitation and development of the City's public markets and 'Talipapas' subject to the
control and supervision of the City.
It is believed that there is nothing incongruous in the exercise of these powers vis-a-vis
the existence of the contract, inasmuch as the City retains the power of supervision and
control over its public markets and talipapas under the terms of the contract.
City of Manila employed a market master for the Sta. Ana Public Market whose primary duty is to take direct
supervision and control of that particular market, more specifically, to check the safety of the place for the public
Moreover, Section 30 (g) of the Local Tax Code provides:
"The TREASURER shall exercise direct and immediate supervision, administration and
control over public markets and the personnel thereof, including those whose duties
concern the maintenance and upkeep of the market and ordinances and other pertinent
rules and regulations."
The contention of City of Manila that petitioner should not have ventured to go to Sta. Ana Public Market during a
stormy weather is indeed untenable. It is an error for the trial court to attribute the negligence to herein petitioner.
A customer in a store has the right to assume that the owner will comply with his duty to keep the premises safe for
customers. If he ventures to the store on the basis of such assumption and is injured because the owner did not comply
with his duty, no negligence can be imputed to the customer.
As a defense against liability on the basis of a quasi-delict, one must have exercised the diligence of a good father of a
family. There is no argument that it is the duty of the City of Manila to exercise reasonable care to keep the public
market reasonably safe for people frequenting the place for their marketing needs. While it may be conceded that the
fulfillment of such duties is extremely difficult during storms and floods, it must however, be admitted that ordinary
precautions could have been taken during good weather to minimize the dangers to life and limb under those difficult
circumstances. The drainage hole could have been placed under the stalls instead of on the passageways. The city should
have seen to it that the openings were covered.
Evidence indicates that long before petitioner fell into the opening, it was already uncovered, and 5 months after the
incident happened, the opening was still uncovered. While there are findings that during floods the vendors remove the
iron grills to hasten the flow of water there is no showing that such practice has ever been prohibited, much less penalized
by the City of Manila. Neither was it shown that any sign had been placed thereabouts to warn passers-by of the
impending danger.
It is evident that the City of Manila is likewise liable for damages under Article 2189, respondent City having retained
control and supervision over the Sta. Ana Public Market and as tort-feasor under Article 2176 of the Civil Code on
quasi-delicts. Petitioner had the right to assume that there were no openings in the middle of the passageways and if any,
that they were adequately covered. Had the opening been covered, petitioner could not have fallen into it. Thus the
negligence of the City of Manila is the PROXIMATE CAUSE of the injury suffered, the City is therefore liable for the
injury suffered by the petitioner. Respondent City of Manila and Asiatic Integrated Corporation being joint tort-feasors,
are solidarily liable under Article 2194 of the Civil Code.
3. Municipality of San Juan, Metro Manila v. Court of Appeals, G.R. No. 121920, August 9, 2005
Facts: The Municipality of San Juan engaged the services of MWSS and Kwok Cheung as the sole proprietor of KC
Waterworks System Construction for the installation of water service connections. KC was given a Job Order by the
South Sector Office of MWSS to conduct and effect excavations at the corner of M. Paterno and Santolan Road, San
Juan, a national road, for the laying of water pipes and tapping of water to the respective houses of water concessionaires.
The workers dug a hole 1 meter wide and 1.5 meters deep, after which they refilled the excavated portion of the road
with the same gravel and stone excavated from the area. At that time, only ¾ of the job was finished in view of the fact
that the workers were still required to re-excavate that particular portion for the tapping of pipes for the water connections
to the concessionaires.
On the evening of the same day, Priscilla Chan, along with Prosecutor Laura Biglang-awa was driving her Toyota
Crown Car at a speed of 30 kph along the same road. The road was flooded as it was then raining hard. Suddenly, the
left front wheel of the car fell on a manhole where the workers of KC had earlier made excavations. As a result, the
humerus on the right arm of Prosecutor Biglang-awa was fractured. She was rushed to Cardinal Santos where she was
treated.
Biglang-awa filed before the RTCt at Pasig, Metro Manila a complaint for damages against MWSS, the Municipality
of San Juan and a number of San Juan municipal officials. Later, Biglang-awa amended her complaint twice. In her
second amended complaint, she included KC as one of the defendants.
Petitioner maintains that under Section 149, [1][z] of the Local Government Code, it is obliged to provide for the
construction, improvement, repair and maintenance of only municipal streets, avenues, alleys, sidewalks, bridges, parks
and other public places. Ergo, since Santolan Road is concededly a national and not a municipal road, it cannot be held
liable for the injuries suffered by Biglang-awa on account of the accident that occurred on said road.
Additionally, petitioner contends that under Section 8, Ordinance No. 82-01, of the Metropolitan Manila Commission,
only the Project Engineer of KC and MWSS can be held liable for the same accident.
Issue: Whether Municapility of San Juan is liable.
Held: YES. The court rules against these contentions. Teotico teaches that for liability to arise under Article 2189 of
the Civil Code, ownership of the roads, streets, bridges, public buildings and other public works, is not a controlling
factor, it being sufficient that a province, city or municipality has control or supervision thereof.
Also under Section 149 of the LGC, it provides inter alia:
The sangguniang bayan shall:
(bb) Regulate the drilling and excavation of the ground for the laying of gas, water,
sewer, and other pipes; the building and repair of tunnels, sewers, drains and other
similar structures; erecting of poles and the use of crosswalks, curbs and gutters therein,
and adopt measures to ensure public safety against open canals, manholes, live wires
and other similar hazards to life and property, and provide just compensation or
relief for persons suffering from them;
Clear it is from the above that the Municipality of San Juan can ―regulate‖ the drilling and excavation of the ground
for the laying of gas, water, sewer, and other pipes within its territorial jurisdiction.
Doubtless, the term ―REGULATE‖ found in the aforequoted provision of Section 149 can only mean that petitioner
municipality exercises the power of control, or, at the very least, supervision over all excavations for the laying of gas,
water, sewer and other pipes within its territory.
It must be emphasized that under paragraph [1][bb] of Section 149, supra, of the LGC, the phrases ―regulate the
drilling and excavation of the ground for the laying of gas, water, sewer, and other pipes‖, and ―adopt measures to
ensure public safety against open canals, manholes, live wires and other similar hazards to life and property‖, are
not modified by the term “municipal road”. And neither can it be fairly inferred from the same provision of Section 149
that petitioner‘s power of regulation vis-à-vis the activities therein mentioned applies only in cases where such activities
are to be performed in municipal roads. To the court‘s mind, the municipality‘s liability for injuries caused by its failure
to regulate the drilling and excavation of the ground for the laying of gas, water, sewer, and other pipes, attaches
regardless of whether the drilling or excavation is made on a national or municipal road, for as long as the same is
within its territorial jurisdiction.
Concededly, Section 8 of the Ordinance makes the permittee/excavator liable for death, injury and/or damages caused by
the non-completion of works and/or failure of the one undertaking the works to adopt the required precautionary measures
for the protection of the general public. Significantly, however, nowhere can it be found in said Ordinance any
provision exempting municipalities in Metro Manila from liabilities caused by their own negligent acts.
4. Guilatco v. City of Dagupan, 171 SCRA 382 (1989)

Facts: Florentina Guilatco was a Court Interpreter of Br. 3 CFI Dagupan City. As she was about to board a motorized
tricycle (not ―tray-si-kol‖) at a sidewalk along Perez Blvd. (a National Road under the control and supervision of the
city) accidentally fell into a manhole on the sidewalk.
Description of Manhole: It was on the sidewalk, partially covered by a concrete flower pot, there was a gaping hole
about 2 ft long x 1.5 ft wide OR 42 cm wide, 75 cm long, 150 cm deep.
Effects of Accident: Her leg was fractured; she had to be hospitalized (Pangasinan Provincial Hospital and then Med City
General Hospital), operated on, and confined; incurred medical expenses; suffered excruciating pain in all parts of her
body. Despite her discharge from the hospital, she still wore crutches and had difficulty in locomotion. Thus, she was not
able to report for duty and was not able to earn income. Her accrued leaves had already been consumed; lost several
pounds; no longer her jovial self. All these were confirmed by Drs. Felix, Manzano, and Sison.
Defendant Engr. Alfredo Tangco (City Engineer of Public Works and ex-officio Highway Engineer, Building Official
of City) admitted the existence of said manhole. Also admitted that the manhole was owned by the National Government.
As City Engineer, he supervises and maintains them and sees to it they are properly covered. Such job is specifically done
by his subordinates De Vera (Maintenance Foreman) and Engr. Solermo (Maintenance Engineer). As ex-officio Highway
Engineer, he admits to having supervision & control over National roads including Perez Blvd.
Guilatco sued Dagupan City for recovery of damages pursuant to Art. 2189. Lower court ruled for Guilatco. On
appeal, appellate court reversed on the ground that no evidence that Dagupan had supervision and control over Perez Blvd
was presented. Thus, as a national road, it was not under Dagupan‘s supervision.
Issue: Whether or not control or supervision over a national road by the City of Dagupan exists, in effect binding the city
to answer for damages in accordance with article 2189 of the Civil Code.
Held: YES. DAGUPAN IS LIABLE. The liability of public corporations for damages arising from injuries suffered by
pedestrians from the defective condition of roads is expressed in the Civil Code as follows:
Article 2189. Provinces, cities and municipalities shall be liable for damages for the
death of, or injuries suffered by, any person by reason of the defective condition of
roads, streets, bridges, public buildings, and other public works under their control or
supervision.
It is not even necessary for the defective road or street to belong to the province, city or municipality for liability to
attach. The article only requires that either control or supervision is exercised over the defective road or street.
In the case at bar, this control or supervision is provided for in the charter of Dagupan and is exercised through the
City Engineer who has the following duties:
Sec. 22. The City Engineer — His powers, duties and compensation — There shall be a
city engineer, who shall be in charge of the department of Engineering and Public
Works. He shall receive a salary of not exceeding three thousand pesos per annum. He
shall have the following duties:
(j) He shall have the care and custody of the public system of waterworks and sewers,
and all sources of water supply, and shall control, maintain and regulate the use of the
same, in accordance with the ordinance relating thereto; shall inspect and regulate the use
of all private systems for supplying water to the city and its inhabitants, and all private
sewers, and their connection with the public sewer system.
The same charter of Dagupan also provides that the laying out, construction and improvement of streets, avenues and
alleys and sidewalks, and regulation of the use thereof, may be legislated by the Municipal Board. Thus the charter
clearly indicates that the city indeed has supervision and control over the sidewalk where the open drainage hole is
located.
The express provision in the charter holding the city not liable for damages or injuries sustained by persons or property
due to the failure of any city officer to enforce the provisions of the charter, cannot be used to exempt the city.
The charter only lays down general rules regulating the liability of the city. On the other hand Art. 2189 applies IN
PARTICULAR to the liability arising from ―defective streets, public buildings and other public works.‖
Tangco, in his official capacity as City Engineer of Dagupan, as Ex-Officio Highway Engineer, as Ex-Officio City
Engineer of the Bureau of Public Works, and, last but not the least, as Building Official for Dagupan City, receives the
following monthly compensation:
(1) P1,810.66 from Dagupan City;

(2) P200.00 from the Ministry of Public Highways;
(3) P100.00 from the Bureau of Public Works; and
(4) P500.00 by virtue of P.D. 1096, respectively.
This function of supervision over streets, public buildings, and other public works pertaining to the City Engineer is
coursed through a Maintenance Foreman and a Maintenance Engineer. Although these last 2 officials are employees of
the National Government, they are detailed with the City of Dagupan and hence receive instruction and supervision
from the city through the City Engineer. There is, therefore, no doubt that the City Engineer exercises control or
supervision over the public works in question. Hence, the liability of the city to the petitioner under article 2198 of the
Civil Code is clear.
*Discussion on damages omitted
E. Building Proprietors
1. De Roy v. Court of Appeals, 157 SCRA 757 (1988)

Facts: The firewall of a burned-out building owned by De Roy collapsed and destroyed the tailoring shop occupied by
the family of private respondents Bernal, resulting in injuries to private respondents and the death of Marissa Bernal, a
daughter.
Bernals had been warned by De Roy to vacate their shop in view of its proximity to the weakened wall but the former
failed to do so.
RTC: rendered judgment finding De Roy guilty of gross negligence and awarding damages to Bernal.
CA: affirmed. On September 9, 1987, the last day of the 15-day period to file an appeal, petitioners filed a motion for
extension of time to file a motion for reconsideration, which was eventually denied by the CA.
Issue: Whether CA gravely abused its discretion in holding De Roy liable.
Held: NO. DE ROY IS LIABLE. The owner of the building is liable under Art. 2190 which provides that—
The proprietor of a building or structure is responsible for the damages resulting from
its total or partial collapse, if it should be due to the lack of necessary repairs.
This Court likewise finds that the CA committed no grave abuse of discretion in affirming the trial court's decision
holding De Roy liable under Article 2190 of the Civil Code.
Nor was there error in rejecting De Roy argument that Bernals had the "last clear chance" to avoid the accident if
only they heeded the warning to vacate the tailoring shop and, therefore, petitioners prior negligence should be
disregarded, since the doctrine of "last clear chance," which has been applied to vehicular accidents, is inapplicable to this
case.
2. Cinco v. Canonoy, G.R. No. L-33171, May 31, 1979

(NO MENTION IN THIS CASE OF BUILDING PROPRIETORS)
Facts: Petitioner filed for recovery of damages due to a vehicular accident involving his automobile and a jeepney
driven by Romeo Hilot and operated by Valeriana Pepito and Carlos Pepito. A criminal case was filed against the driver,
Romeo Hilot, arising from the same accident. At the pre-trial in the civil case, private respondents moved to suspend the
civil action pending the final determination of the criminal suit
The Court ordered the suspension of the civil case. Motion for Reconsideration was denied. Certiorari was filed alleging
that the City Judge had acted with grave abuse of discretion in suspending the civil action but was likewise dismissed.
Hence, this Petition for Review.
Issue: Whether there can be an independent civil action for damage to property during the pendency of the criminal action.
Held: YES. From the complaint filed by petitioner, it is evident that his action was quasi-delictual based on Articles
2176 and 2180 of the Civil Code. Plaintiff made the essential averments that it was the fault or negligence of the driver,
Romeo Hilot, in the operation of the jeepney owned by the Pepitos which caused the collision between his automobile and
said jeepney; that damages were sustained by petitioner because of the collision; that there was a direct causal connection
between the damages he suffered and the fault and negligence of private respondents. In the Answer, private respondents
contended that defendant, Valeriana Pepito, observed due diligence in the selection and supervision of her employees,
particularly of her co-defendant Romeo Hilot, a defense peculiar to actions based on quasi-delict.
Being predicated on quasi-delict, the civil case may proceed as a separate and independent civil action.
Art. 2177. Responsibility for fault or negligence under the preceding article is entirely
separate and distinct from the civil liability arising from negligence under the Penal Code.
But the plaintiff cannot recover damages twice for the same act or omission of the
defendant
The crucial distinction between criminal negligence and quasi-delict has been expounded in Barredo vs. Garcia:
FIRSTLY, the Revised Penal Code in article 365 punishes not only reckless but also simple imprudence. If we were to
hold that articles 1902 to 1910 of the Civil Code refer only to fault or negligence not punished by law, the legal institution
of culpa aquiliana would have very little scope and application in actual life. Death or injury to persons and damage to
property through any degree of negligence —even the slightest would have to be indemnified only through the principle
of civil liability arising from crime. We are loath to impute to the lawmaker any intention to bring about a situation so
absurd and anomalous.
SECONDLY, to find the accused guilty in a criminal case, proof of guilt beyond reasonable doubt is required, while in a
civil case, preponderance of evidence is sufficient. There are numerous cases of criminal negligence which cannot be
shown beyond reasonable doubt, but can be proved by a preponderance of evidence. In such cases, the defendant can and
should be made responsible in a civil action under articles 1902 to 1910 of the Civil Code, otherwise, there would be
many instances of unvindicated civil wrongs.
THIRDLY, to hold that there is only one way to make defendants liability effective, and that is, to sue the driver and
exhaust his (the latter‘s) property first, would be tantamount to compelling the plaintiff to follow a devious and
cumbersome method of obtaining a relief. There is also a more expeditious way, which is based on the primary and
direct responsibility of the defendant. The procedure indicated by the defendant is wasteful and productive of delay, it
being a matter of common knowledge that professional drivers of taxis and similar public conveyances usually do not
have sufficient means with which to pay damages. Why, then, should the plaintiff be required in all cases to go through
this roundabout, unnecessary, and probably useless procedure?
The primary and direct responsibility of employers and their presumed negligence are principles calculated to
protect society. Workmen and employees should be carefully chosen and supervised in order to avoid injury to the public.
It is the masters or employers who principally reap the profits resulting from the services of these servants and employees.
They should guarantee the latter‘s careful conduct for the personnel and patrimonial safety of others. As Theilhard has
said, ‗they should reproach themselves, at least, some for their weakness, others for their poor selection and all for their
negligence.‘ And according to Manresa, ‗It is much more equitable and just that such responsibility should fail upon
the principal or director who could have chosen a careful and prudent employee, and not upon the such employee
because of his confidence in the principal or director.‘ Many jurists also base this primary responsibility of the employer
on the principle of representation of the principal by the agent. Oyuelos says that before third persons the employer and
employee become as one personality by the merging of the person of the employee in that of him who employs and utilizes
him. All these observations acquire a peculiar force and significance when it comes to motor accidents, and there is need
of stressing and accentuating the responsibility of owners of motor vehicles.
FOURTHLY, there has grown up a common practice to seek damages only by virtue of the Civil responsibility arising from
crime, forgetting that there is another remedy, which is by invoking articles 1902-1910 of the Civil Code.
Although this habitual method is allowed by our laws, it has nevertheless rendered practically useless and nugatory the
more expeditious and effective remedy based on culpa aquiliana or culpa extra-contractual . It is high time we cause the
stream of quasi-delict or culpa aquiliana to flow on its own natural channel, so that its waters may no longer be
diverted into that of a crime under the Penal Code. This will make for the better safeguarding of private rights because it
reestablishes an ancient and additional remedy, and for the further reason that an independent civil action, not depending
on the issues, limitations and results of a criminal prosecution, and entirely directed by the party wronged or his counsel,
is more likely to secure adequate and efficacious redress.
Separate and independent civil action for a quasi-delict is also clearly recognized in section 2, Rule 111 of the Rules of
Court
Sec. 2. Independent civil action.—In the cases provided for in Articles 31, 32, 33, 34 and
2177 of the Civil Code of the Philippines, an independent civil action entirely separate
and distinct from the criminal action, may be brought by the injured party during
the pendency of the criminal case, provided the right is reserved as required in the
preceding section. Such civil action shall proceed independently of the criminal
prosecution, and shall require only a preponderance of evidence.
The City Court, in suspending the civil action, erred in relying on section 3 (b) of Rule 111 of the Rules of Court which
refers to ―other civil actions arising from cases not included in the section just cited‖ (i.e. Section 2, Rule 111 above
quoted), in which case ―once the criminal action has being commenced, no civil action arising from the same offense can
be prosecuted and the same shall be suspended in whatever stage it may be found, until final judgment in the criminal
proceeding has been rendered.‖ The civil action referred to in Secs. 3(a) and 3(b) of Rule 111 of the Rules of Court,
which should be suspended after the criminal action has been instituted is that arising from the criminal offense not
the civil action based on quasi-delict.
Art. 31. When the civil action is based on an obligation not arising from the act or
omission complained of as a felony, such civil action may proceed independently of the
criminal proceedings and regardless of the result of the latter.
Quasi-delict is that of an independent source of obligation ―not arising from the act or omission complained of as a
felony.‖
Petitioner‘s cause of action is based on quasi-delict. Article 2176 includes not only injuries to persons but also damage to
property. It makes no distinction between ―damage to persons‖ on the one hand and ―damage to property. The word
―damage‖ is used in two concepts: the ―harm‖ done and ―reparation‖ for the harm done. ―Harm‖ includes both injuries
to person and property since ―harm‖ is not limited to personal but also to property injuries. The examples of quasi-delict
in the law itself include damage to property. An instance is Article 2191(2) of the Civil Code which holds proprietors
responsible for damages caused by excessive smoke which may be harmful ―to persons or property.‖
Respondent Judge gravely abused his discretion in upholding the Decision of the City Court of Mandaue City, Cebu,
suspending the civil action based on a quasi-delict until after‘the criminal case is finally terminated.
F.Engineers/Architects/Contractors
1.Nakpil & Sons v. Court of Appeals, G.R. No. L-47851, October 3, 1986
Facts: The plaintiff, Philippine Bar Association, a civic-non- profit association, decided to construct an office building
at the corner of Aduana and Arzobispo Streets, Intramuros, Manila. The construction was undertaken by the United
Construction, Inc. on an ―administration‖ basis, on the suggestion of Juan J. Carlos, the president and general manager
of said corporation. The proposal was approved by plaintiff‘s board of directors and signed by its president Roman Ozaeta,
a third-party defendant in this case. The PLANS and SPECIFICATIONS for the building were prepared by the other third-
party defendants Juan F. Nakpil & Sons. The building was completed in June, 1966.
2 years later an unusually strong earthquake hit Manila and the building in question sustained major damage. The
front columns of the building buckled, causing the building to tilt forward dangerously. The tenants vacated the
building in view of its precarious condition. As a temporary remedial measure, the building was shored up by United
Construction, Inc.
The plaintiff commenced this action for the recovery of damages arising from the partial collapse of the building
against United Construction, Inc. and its President and General Manager Juan J. Carlos as defendants. Plaintiff
alleges that the collapse of the building was accused by defects in the construction, the failure of the contractors to
follow plans and specifications and violations by the defendants of the terms of the contract.
Defendants in turn filed a third-party complaint against the architects who prepared the plans and specifications, alleging
in essence that the collapse of the building was due to the defects in the said plans and specifications. Roman Ozaeta,
the then president of the plaintiff Bar Association was included as a third-party defendant for damages for having included
Juan J. Carlos, President of the United Construction Co., Inc. as party defendant.
The issues of this case were divided into technical issues and non-technical issues. The technical issues were referred to
the Commissioner. The non-technical issues were tried by the Court.
Plaintiff moved twice for the demolition of the building on the ground that it may topple down in case of a strong
earthquake. The motions were opposed by the defendants and the matter was referred to the Commissioner.
The building was authorized to be demolished at the expense of the plaintiff, but another earthquake of high intensity on
April 7, 1970 followed by other strong earthquakes on April 9, and 12, 1970, caused further damage to the property.
The actual demolition was undertaken by the buyer of the damaged building.
After the protracted hearings, COMMISSIONER HIZON (a lawyer and structural engineer) eventually submitted his report
with the findings that while the damage sustained by the PBA building was caused directly by the August 2, 1968
earthquake whose magnitude was estimated at 7.3 they were also caused by the defects in the plans and
specifications prepared by the third-party defendants‟ architects, deviations from said plans and specifications by the
defendant contractors and failure of the latter to observe the requisite workmanship in the construction of the building
and of the contractors, architects and even the owners to exercise the requisite degree of supervision in the construction of
subject building.
The trial court agreed with the findings of the Commissioner except as to the holding that the owner is charged with
full time supervision of the construction. The lower court rendered the assailed decision which was modified by the IAC.
The United Architects of the Philippines, the Association of Civil Engineers, and the Philippine Institute of Architects
filed with the Court a motion to intervene as amicus curiae. The amicus curiae gave the opinion that the plans and
specifications of the Nakpils were not defective. But the Commissioner, when asked by Us to comment, reiterated his
conclusion that the defects in the plans and specifications indeed existed.
Using the same authorities availed of by the amicus curiae such as the Manila Code and the 1966 Asep Code, the
Commissioner added that even if it can be proved that the defects in the construction alone (and not in the plans and
design) caused the damage to the building, still the deficiency in the original design and lack of specific provisions
against torsion in the original plans and the overload on the ground floor columns (found by all the experts including
the original designer) certainly contributed to the damage which occurred.
Issue: Whether an act of god — strong earthquake — which caused the failure of the building, exempts from liability,
parties who are otherwise liable because of their negligence.
Held: NO. LIABLE. The applicable law governing the rights and liabilities of the parties herein is Article 1723 of the
New Civil Code, which provides:
Art. 1723. The ENGINEER or ARCHITECT who drew up the plans and specifications for
a building is liable for damages if within fifteen years from the completion of the
structure the same should collapse by reason of a defect in those plans and
specifications, or due to the defects in the ground. The CONTRACTOR is likewise
responsible for the damage if the edifice falls within the same period on account of
defects in the construction or the use of materials of inferior quality furnished by him,
or due to any violation of the terms of the contract. If the engineer or architect
supervises the construction, he shall be solidarity liable with the contractor.
Acceptance of the building, after completion, does not imply waiver of any of the causes
of action by reason of any defect mentioned in the preceding paragraph.
The action must be brought within ten years following the collapse of the building.
On the other hand, the general rule is that no person shall be responsible for events which could not be foreseen or
which, though foreseen, were inevitable (Article 1174, New Civil Code).
An ACT OF GOD has been defined as an accident, due directly and exclusively to natural causes without human
intervention, which by no amount of foresight, pains or care, reasonably to have been expected, could have been
prevented.
The earthquake of August 2, 1968 is a fortuitous event or an act of God.
To exempt the obligor from liability under Article 1174 of the Civil Code, for a breach of an obligation due to an ―act of
God,‖ the following must concur: (a) the cause of the breach of the obligation must be independent of the will of the
debtor; (b) the event must be either unforseeable or unavoidable; (c) the event must be such as to render it impossible
for the debtor to fulfill his obligation in a normal manner; and (d) the debtor must be free from any participation in, or
aggravation of the injury to the creditor.
Thus, if upon the happening of a fortuitous event or an act of God, there concurs a corresponding fraud, negligence, delay
or violation or contravention in any manner of the tenor of the obligation as provided for in Article 1170 of the Civil Code,
which results in loss or damage, the obligor cannot escape liability.
The principle embodied in the act of God doctrine strictly requires that the act must be one occasioned exclusively by
the violence of nature and all human agencies are to be excluded from creating or entering into the cause of the
mischief. When the effect, the cause of which is to be considered, is found to be in part the result of the participation of
man, whether it be from active intervention or neglect, or failure to act, the whole occurrence is thereby humanized, as it
were, and removed from the rules applicable to the acts of God.
When the negligence of a person concurs with an act of God in producing a loss, such person is not exempt from
liability by showing that the immediate cause of the damage was the act of God. To be exempt from liability for loss
because of an act of God, he must be free from any previous negligence or misconduct by which that loss or damage
may have been occasioned.
The negligence of the defendant and the third-party defendants petitioners was established beyond dispute. UNITED
CONSTRUCTION CO., INC. was found to have made substantial deviations from the plans and specifications, and to have
failed to observe the requisite workmanship in the construction as well as to exercise the requisite degree of
supervision; while the third-party defendants were found to have inadequacies or defects in the plans and specifications
prepared by them.
The DEFECTS IN THE CONSTRUCTION and in the PLANS AND SPECIFICATIONS were the proximate causes that rendered
the PBA building unable to withstand the earthquake of August 2, 1968. For this reason the defendant and third-party
defendants cannot claim exemption from liability.
In any event, the relevant and logical observations of the trial court as affirmed by the Court of Appeals that ―while it is
not possible to state with certainty that the building would not have collapsed were those defects not present, the fact
remains that several buildings in the same area withstood the earthquake to which the building of the plaintiff was
similarly subjected,‖ cannot be ignored.
2.Nakpil & Sons v. Court of Appeals, G.R. No. L-47851, April 15, 1988
RESOLUTION: PRIOR JUDGMENT AFFIRMED.
1. Whether the findings of the Commissioner, as adopted by the trial court, and affirmed by both the CA and the
SC negate the premise that the subject building collapsed
United Construction Co., Inc. (UNITED for short), gave considerable emphasis on the fact that the PBA building did not
collapse as found by the trial court and affirmed by the Court of Appeals. Otherwise stated, UNITED wishes to stress
that subject building did not disintegrate completely as the term "collapse" is supposed to connote.
Be that as it may, it will be observed that in the assailed decision, this Court is in complete accord with the findings of the
trial court and affirmed by the CA, that after the April 2, 1968 earthquake the building in question was not totally lost,
the collapse was only partial and the building could still be restored at the expense of P900,000.00. But after the
subsequent earthquake on April 7, 9, and 12, 1970 there was no question that further damage was caused to the
property resulting in an eventual and unavoidable collapse or demolition (compete collapse). In fact, on April 30, 1970
the building was authorized by the trial court to be demolished at the expense of the plaintiff. Note that a needed
demolition is in fact a form of "collapse".
The bone of contention is therefore, not on the fact of collapse but on who should shoulder the damages resulting from the
partial and eventual collapse. As ruled by this Court in said decision, there should be no question that the NAKPILS
and UNITED are liable for the damage.
Citing the case of Tucker v. Milan (49 O.G. 4379, 4380) as the case in point, the pertinent portion of the decision reads:
One who negligently creates a dangerous condition cannot escape liability for the
natural and probable consequences thereof, although the act of a third person, or an
act of God for which he is not responsible, intervenes to precipitate the loss.
2. Whether PBA has a duty of fulltime and active supervision in the construction of the building as imposed by
public interest, usage, and custom, failure in which requires that it share in the liability
UNITED argues that it is the legal duty of PBA to provide full-time and active supervision in the construction of the
subject building. Failing to cite any provision of law to support its arguments, UNITED insists on the inherent legal
duty of the owner, reinforced by practice, usage and custom, to exercise such supervision. Apart from the fact that
UNITED seems to have completely contradicted its own view that this construction involves highly technical matters
and therefore beyond the ambit of ordinary understanding and experience, the contrary appears to be more in accord
with ordinary practice, which is to avail oneself of the services of architects and engineers whose training and expertise
make them more qualified to provide effective supervision of the construction. In fact, it was on the suggestion of Juan F.
Nakpil, one of the petitioners herein, that the construction was undertaken on an administration basis (Decision, p. 3).
Thus, the trial court did not err in holding that charging the owner with fun time supervision of the construction has no
legal or contractual basis.
3. Whether liability must be borne by all the parties
UNITED points out that bad faith is a question of fact which was not established. The Commissioner, the trial court and
the Court of Appeals, all of which are triers of fact, allegedly concede that there was negligence but not bad faith.
A careful study of the decision will show that there is no contradiction between the above finding of negligence by the
trial court which was formed by the Court of Appeals and the ruling of this Court. On the contrary, on the basis of such
finding, it was held that such wanton negligence of both the defendant and the third-party defendants in effecting
the plans, designs, specifications, and construction of the PBA building is equivalent to bad faith in the performance
of their respective tasks.
4. Whether there is bad faith & whether damages are warranted
UNITED takes exception to the five (5) fold increase in the award of damages from P1,189,335.00 to P5 million pesos. It
is claimed that the report of the Commissioner speaks of only P1,100,000.00 so that there is no basis for such award. It
will be recalled that the estimate of the Commissioner was limited to P1,100,000.00 for cost of repairs after the partial
collapse of the building on April 2, 1968 but not after its total collapse resulting from the subsequent earthquakes. It is
therefore evident that the actual cost of total reconstruction of the building him question was not considered by the
commissioner in the computation. Considering further the present cost of reconstruction, the new amount (arrived at
almost 20 years later) is far from being excessive. It is indeed a very conservative estimate.
Any allegation that PBA could have mitigated its loss by executing an offer to purchase the building prior to its complete
demolition loses sight of the fact, that the offer was very low, considering the combined value of the building and the lot.
In addition, there is merit in the PBA claim that the unrealized rental income awarded to it should not be limited to a
period of one-half year but should be computed on a continuing basis at the rate of P178,671.76 a year until judgment for
the principal amount shag have been satisfied. Thus, this Court awarded an "indemnity in favor of the Philippine Bar
Assodation of FIVE MILLION (P5,000,000.00) Pesos to cover damages (with the exception of attorney's fees) occasioned
by the loss of the building (including interest charges and lost rentals) ...
As for the award of attorney's fees, there is no question that the size of attorney's fees as well as the amount of damages, is
subject to the sound discretion of the court (Magbanua v. IAC, 137 SCRA 332 [1985]). Earlier, this Court has ruled that
an award of 10% of the amount of total recovery, for attomey's fees, is reasonable.
G. Strict liability torts
- Liability is imposed even without fault or negligence.
VI. SPECIAL TORTS (HUMAN RELATIONS)
A. Abuse of Rights
- Civil Code
o Article 19 (Memorize)
2.Velayo v. Shell, G.R. No. L-7817, October 31, 1956

Facts: Commercial Air Lines, Inc (CALI) is a corporation duly organized and existing in accordance with the
Philippines laws with offices in the City of Manila and previously engaged in air transportation business. Shell Company
of the P.I., Ltd., which will be designated as the defendant, is on the other hand, a corporation organized under the laws
of England and duly licensed to do business in the Philippines, with principal offices at the Hongkong and Shanghai
Bank building in the City of Manila.
Since the start of Commercial Air Lines, Inc.‘s (CALI) operations, its fuel needs were all supplied by the Shell
Company. Mr. Desmond Fitzgerald, its Credit Manager who extended credit to CALI, was in charge of the collection
thereof.
On August 6, 1948, the management of CALI informally convened its principal creditors who were invited to a
luncheon and informed them that CALI was in a state of insolvency and had to stop operation. In that meeting, out of
the 194 creditors in all, 15 were listed as principal creditors having big balances. Mr. Alexander Sycip, Secretary of the
Board of Directors of the CALI, informed the creditors present that the corporation was insolvent and had to stop
operations. He explained the memorandum agreement executed by the CALI with the Philippine Air Lines regarding the
proposed sale to the latter of the aviation equipments of the former. Mr. Alexander Sycip was assisted in the explanation
by CPA Alfredo Velayo of Washington, Sycip & Company, Auditors of the CALI, who discussed the balance sheets and
distributed copies thereof to the creditors present. The said balance sheet made mention of a C54 plane in the United
States, the property now involved in this suit.
There was a general understanding among all the creditors present on the desirability of consummating the sale in
favor of the Philippine Air Lines Inc. There was also a discussion on the payment of claims of creditors and the
preferences. After the creditors present knew the balance sheet and heard the explanations of the officers of the CALI, it
was their unanimous opinion that it would be advantageous not to present suits against this corporation but to strive for
a fair pro-rata division of its assets, although the management of the CALI announced that in case of non-agreement
of the creditors on a pro-rata division of the assets, it would file insolvency proceedings
Atty. Pacifico Agcaoili promised to refer the arguments adduced at the second meeting to the General Manager of the
National Airports Corporations and to obtain the advice of the Corporate Counsel, so the negotiation with respect to the
division of assets of the CALI among the creditors was left pending or under advice when,h owever, on that very day of
the meeting of the working committee, August 9, 1948, which Mr. Fitzgerald attended, Defendant effected a telegraphic
transfer of its credit against the CALI to the American corporation Shell Oil Company, Inc., assigning its credit,
amounting to $79,440.00, which was subsequently followed by a deed of assignment of credit dated August 10, 1948,
the credit amounting this time to the sum of $85,081.29.
American corporation Shell Oil Company, Inc., filed a complaint against the CALI in the Superior Court of the State
of California, U.S.A. for the collection of an assigned credit of $79,440.00 and a writ of attachment was applied for and
issued on the same date against a C-54 plane.
Unaware of Dedendant‟s assignments of credit and attachment suit, the stockholders of CALI resolved in a special
meeting of August 12, 1948, to approve the memorandum agreement of sale to the Philippine Air Lines, Inc. and noted
―that the Board had been trying to reach an agreement with the creditors of the corporation to prevent insolvency
proceedings, but so ex ar no definite agreement had been reached‖
By the first week of September, 1948, the National Airports Corporation learned of Defendant‘s action in the United
States and hastened to file its own complaint with attachment against the CALI in the Court of First Instance of Manila.
CALI, also prompted by Defendant‘s action in getting the alleged undue preference over the other creditors by
attaching the C-54 plane in the United States, beyond the jurisdiction of the Philippines, filed on October 7, 1948, a
petition for voluntary insolvency.
On this date, an order of insolvency was issued by the court which necessarily stayed the National Airports Corporation‘s
action against the CALI and dissolved its thus compelling the National Airports Corporation to file its claims with the
insolvency court
The Court confirmed the appointment of Mr. Alfredo M. Velayo, who was unanimously elected by the creditors as
Assignee in the proceedings.
After properly qualifying as Assignee, Alfredo M. Velayo instituted this case on December 17, 1948, against the Shell
Company of P.I., Ltd., for the purpose of securing a writ of injunction against Defendant from prosecuting the
aforementioned Civil Case against the insolvent Commercial Air Lines, Inc., begun by it in the name of the American
corporation Shell Oil Company, Inc.
Issue: Whether or not Shell is liable for damages for taking advantage of the knowledge it acquired from the luncheon
meeting (Insolvency and the existence of the C-54 plane) by assigning its credit, to the prejudice of the other creditors.
Held:YES. The mere enunciation of the first proposition can lead to no other conclusion than that Shell, upon learning
the precarious economic situation of CALI and that with all probability, it could not get much of its outstanding
credit because of the preferred claims of certain other creditors, forgot that ―Man does not live by bread alone‖ and
entirely disregarded all moral inhibitory tenets.
So, on the very day its Credit Manager attended the meeting of the Working Committee on August 9, 1948, it hastily
made a telegraphic assignment of its credit against the CALI to its sister Amercian Corporation, the Shell Oil Company,
Inc., and by what is stated in the preceding pages hereof, We know that were the damaging effects of said assignment upon
the right of other creditors of the CALI to participate in the proceeds of said CALI‘s plane C-54.
Defendants endeavor to extricate itself from any liability caused by such evident misdeed of its part, alleging that Mr.
Fitzgerald had no authority from his principal to commit the latter on any agreement; that the assignment of its credit in
favor of its sister corporation, Shell Oil Company, Inc., was for a valuable consideration and in accordance with the
established commercial practices; that there is no law prohibiting a creditor from assigning his credit to another; and
that the Shell Oil Company Inc., of the United States is a corporation different and independent from the Defendant.
But all these defenses are entirely immaterial and have no bearing on the main question at issue in this appeal. Moreover,
we might say that Shell could not have accomplished the transfer of its credit to its sister corporation if all the Shell
companies throughout the world would not have a sort of union, relation or understanding among themselves to come to
the aid of each other. The TELEGRAPHIC TRANSFER made without knowledge and at the back of the other creditors of
CALI may be a shrewd and surprise move that enabled Defendant to collect almost all if not the entire amount of its
credit, but the Court of Justice cannot countenance such attitude at all, and much less from a foreign corporation to
the detriment of our Government and local business.
To justify its actions, Shell may also claim that Mr. Fitzgerald, based on his feeling of distrust and apprehension,
entertained the conviction that intervenors Alfonso Sycip and Yek Hua Trading Corporation tried to take undue advantage
by infiltrating their credits.
APPLYING THE INSOLVENCY LAW
But it must not be forgotten that in accordance with the Insolvency Law and with the provisions of Chapter V thereof
which deal with the powers and duties of a receiver, the assignee represents the insolvent as well as the creditors in
voluntary and involuntary proceedings. Therefore plaintiff, as Assignee of the Insolvent CALI, had personality and
authority to institute this case for damages, and the only question that remains determination is whether the payment of
damages sought to be recovered from Defendant may be ordered under the Law and the evidence of record.
The same Insolvency Law also provides that IF ANY PERSON, before the assignment is made, having notice of the
commencement of the procedings in insolvency, or having reason to believe that insolvency proceedings are about to be
commenced, embezzles or disposes of any money, goods, chattels, or effects of the insolvent, he is chargeable therewith,
and liable to an action by the assignee for double the value of the property sought to be embezzled or disposed of, to be
recieved for the benefit of the insolvent estate.
The writer of this decision does not entertain any doubt that the Defendant — taking advantage of his knowledge that
insolvency proceedings were to be institued by CALI if the creditors did not come to an understanding as to the
manner of distribution of the insolvent asset among them, and believing it most probable that they would not arrive at
such understanding as it was really the case — schemed and effected the transfer of its sister corporation in the
United States, where CALI‘s plane C-54 was by that swift and unsuspected operation efficaciously disposed of said
insolvent‘s property depriving the latter and the Assignee that was latter appointed, of the opportunity to recover said
plane.
APPLYING ABUSE OF RIGHT DOCTRINE

In addition to the aforementioned Section 37, Chapter 2 of the PRELIMINARY TITLE of the Civil Code, dealing on
Human Relations, provides the following: ―Art 19. Any person must, in the exercise of his rights and in the
performances of his duties, act with justice, give everyone his due and observe honesty and good faith‖.
It maybe said that this article only contains a mere declarations of principles and while such statement may be is
essentially correct, yet We find that such declaration is implemented by Article 21 and sequence of the same Chapter
which prescribe the following:
Art. 21. Any person who willfully 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. The Code Commission commenting on this article, says that in
the last analysis, every good law draws its breath of life from morals, from those principles which are written with
words of fire in the conscience of man.
A moral wrong or injury, even if it does not constitute a violation of a statute law, should be compensated by
damages. Moral damages (Art. 2217) may be recovered (Art. 2219).
In Article 20, the liability for damages arises from a willful or negligent act contrary to law. In this article, the act is
contrary to morals, good customs or public policy.
Now, if Article 23 of the Civil Code goes as far as to provide that: ―Even if an act or event causing damage to another‘s
property was not due to the fault or negligence of the defendant, the latter shall be liable for indemnity if through the act
or event he was benefited.‖, with mere much more reason the Defendant should be liable for indemnity for acts it
committed in bad faith and with betrayal of confidence.
ON RETROACTIVITY OF THE CIVIL CODE PROVISION ON ABUSE OF RIGHT

It may be argued that the aforequoted provisions of the Civil Code only came into effect on August 30, 1950, and that
they cannot be applicable to acts that took place in 1948, prior to its effectivety. But Article 2252 of the Civil Code,
though providing that:
Changes made and new provisions and rules laid down by this Code which may be
prejudice or impair vested or acquired rights in accordance with the old legislation,
shall have no retroactive effect.
This implies that when the new provisions of the Code does nor prejudice or impair vested or acquired rights in
accordance with the old legislation — and it cannot be alleged that in the case at bar Defendant had any vested or
acquired right to betray the confidence of the insolvent CALI or of its creditors-said new provisions , like those on
Human Relations, can be given retroactive effect.
Moreover, Article 2253 of the Civil Code further provides:
But if a right should be declared for the first time in this Code, it shall be effective at
once, even though the act or event which may give rise thereto may have ben done or
may have occurred under the prior legislation, provided said new right does not
prejudice or impair any vested or acquired right, of the same origin.
Morover, according to Article 2254, ―no vested or acquired right can arise from acts or omissions which are against the
law or which infringe upon the right of others.‖
The writer of this decision does not see any reason for not applying the provisions of Section 37 of the Insolvency Law to
the case at bar, especially if we take into consideration that the term ―any person‖ used therein cannot be limited to the
officers or employee of the insolvent, as no such limitation exist in the wording of the section and that, as stated before,
the Defendant schemed and affected the transfer of its credits (from which it could derive practically nothing) to its sister
company in the U.S. where CALI‘s plane C-54 was then situated, succeeding by such swift and unsuspected operation in
disposing of said insolvent‘s property by removing it from the possession and ownership of the insolvent.
However, some members of this Court entertain doubt as to the applicability of said section 37 because in their opinion
what Defendant in reality disposed of was its own credit and not the insolvent‟s property, although this was practically
the effect and result of the scheme.
Having in mind this objection and that the provisions of sec. 37 making the person coming within its purview liable for
double the value of the property sought to be disposed of constitute a sort of penal clause which shall be strictly construed,
and considering further that the same result may be obtained, by applying only the provisions of the Civil Code,
the writer of this decision yields to the objection aforementioned.
Wherefore, and on the strength of the foregoing considerations, the decision appealed from is reversed and Shell
Company of the Philippine Islands, Ltd., is hereby sentenced to pay to Plaintiff-Appellant, as Assignee of the
insolvent CALI, damages in a sum double the amount of the value of the insolvent‟s airplane C-54 at the time
Defendant‟s credit against the CALI was assigned to its sister corporation in the United States, which value shall be
determined in the corresponding incident in the lower court after this decision becomes final.
2.Far East Bank and Trust Company v. Pacilan, G.R. No. 157314, July 29, 2005
Facts: Pacilan opened a current account with petitioner bank‘s Bacolod Branch on May 23, 1980. Respondent had
since then issued several postdated checks to different payees drawn against the said account.
Sometime in March 1988, the respondent issued Check No. 2434886 in the amount of P680.00 and the same was
presented for payment to FEBTC on April 4, 1988. Upon its presentment on the said date, Check No. 2434886 was
dishonored. The next day, or on April 5, 1988, the respondent deposited to his current account the amount of P800.00.
The said amount was accepted by petitioner bank; hence, increasing the balance of the respondent‘s deposit to P1,051.43.
When the respondent verified with petitioner bank about the dishonor of Check No. 2434866, he discovered that his
current account was closed on the ground that it was “improperly handled.” Records of petitioner bank disclosed that
between the period of March 30, 1988 and April 5, 1988, the respondent issued 4 checks or a total amount of P7,410.00.
At the time, however, the respondent‟s current account with petitioner bank only had a deposit of P6,981.43. The total
amount of the checks presented for payment on April 4, 1988 exceeded the balance of the respondent‘s deposit in his
account.
Petitioner bank, through its branch accountant, Villadelgado, closed the respondent‟s current account and as a
consequence of the overdraft, Check No. 2434886 was dishonored. Respondent wrote to petitioner bank complaining
that the closure of his account was unjustified.
When he did not receive a reply from FEBTC, the respondent filed with the RTC a complaint for damages against
FEBTC and Villadelgado. Respondent, as complainant therein, alleged that the closure of his current account by
petitioner bank was unjustified because on the first banking hour of April 5, 1988, he already deposited an amount
sufficient to fund his checks. Respondent pointed out that Check No. 2434886, in particular, was delivered to FEBTC at
the close of banking hours on April 4, 1988 and, following normal banking procedure, it (petitioner bank) had until the
last clearing hour of the following day, or on April 5, 1988, to honor the check or return it, if not funded.
In disregard of this banking procedure and practice, however, FEBTC hastily closed the respondent‟s current
account and dishonored his Check No. 2434886. Respondent further alleged that prior to the closure of his current
account, he had issued several other postdated checks. He claims that the bank‘s act of closing his current account
allegedly preempted the deposits that he intended to make to fund those checks and thus petitioner bank‘s act
exposed him to criminal prosecution for violation of Batas Pambansa Blg. 22.
According to the respondent, the indecent haste that attended the closure of his account was patently malicious and
intended to embarrass him. He claimed that he is a Cashier of Prudential Bank and Trust Company, whose branch office
is located just across that of petitioner bank, and a prominent and respected leader both in the civic and banking
communities.
It was alleged that the malicious acts of FEBTC besmirched the respondent‘s reputation and caused him ―social
humiliation, wounded feelings, insurmountable worries and sleepless nights‖ entitling him to an award of damages.
FEBTC and Villadelgado maintained that the respondent‘s current account was subject to petitioner bank‘s Rules and
Regulations Governing the Establishment and Operation of Regular Demand Deposits which provide that ―the Bank
reserves the right to close an account if the depositor frequently draws checks against insufficient funds and/or
uncollected deposits‖ and that ―the Bank reserves the right at any time to return checks of the depositor which are
drawn against insufficient funds or for any reason.
The bank showed that the respondent had improperly and irregularly handled his current account. For example, in
1986, the respondent‘s account was overdrawn 156 times, in 1987, 117 times and in 1988, 26 times. In all these instances,
the account was overdrawn due to the issuance of checks against insufficient funds. The bank averred that respondent
also signed several checks with a different signature from the specimen on file for dubious reasons. When his Check
No. 2434886 was presented for payment on April 4, 1988, he had already incurred an overdraft; hence, petitioner bank
rightfully dishonored the same for insufficiency of funds.
RTC Ruling
Bank is liable for damages. According to the RTC, following these rules and regulations, the respondent, as depositor, had
the right to put up sufficient funds for a check that was taken as a returned item for insufficient funds the day following
the receipt of said check from the clearing office. In fact, the said check could still be recleared for one more time.
Petitioner bank thus acted unjustifiably when it immediately closed the respondent‘s account on April 4, 1988 and
deprived him of the opportunity to reclear his check or deposit sufficient funds therefor the following day. As a
result of the closure of his current account, several of the respondent‘s checks were subsequently dishonored and he was
humiliated, embarrassed and lost his credit standing in the business community. The RTC further ratiocinated that even
granting arguendo that petitioner bank had the right to close the respondent‘s account, the manner which attended the
closure constituted an abuse of the said right. Citing Article 19 of the Civil Code and Article 20 RTC adjudged
petitioner bank of acting in bad faith.
CA ruling
The appellate court substantially affirmed the factual findings of the RTC as it held that petitioner bank unjustifiably
closed the respondent‘s account notwithstanding that its own rules and regulations allow that a check returned for
insufficiency of funds or any reason of similar import, may be subsequently recleared for one more time, subject to
standard charges.
Even when they had already closed his account on April 4, 1988, FEBTC still accepted the deposit that the
respondent made on April 5, 1988, supposedly to cover his checks. Even as it may be conceded that petitioner bank had
reserved the right to close an account for repeated overdrafts by the respondent, the exercise of that right must never be
despotic or arbitrary. That petitioner bank chose to close the account outright and return the check, even after accepting a
deposit sufficient to cover the said check, is contrary to its duty to handle the respondent‘s account with utmost fidelity.
The exercise of the right is not absolute and good faith, at least, is required. The manner by which petitioner bank closed
the account of the respondent runs afoul of Article 19 of the Civil Code which enjoins every person, in the exercise of his
rights, ―to give every one his due, and observe honesty and good faith.
Petitioner Bank‟s defense

FEBTC maintains that, in closing the account of the respondent in the evening of April 4, 1988, it acted in good faith
and in accordance with the rules and regulations governing the operation of a regular demand deposit which reserves
to the bank ―the right to close an account if the depositor frequently draws checks against insufficient funds and/or
uncollected deposits.‖ The same rules and regulations also provide that ―the depositor is not entitled, as a matter of right,
to overdraw on this deposit and the bank reserves the right at any time to return checks of the depositor which are drawn
against insufficient funds or for any reason.‖ Petitioner bank further posits that there is no law or rule which gives the
respondent a legal right to make good his check or to deposit the corresponding amount to cover said check within 24
hours after the same is dishonored or returned by the bank for having been drawn against insufficient funds. The bank
vigorously denies having violated Article 19 of the Civil Code as it insists that it acted in good faith
Issue: Whether FEBTC violated Art. 19 of the Civil Code.
Held: NO.. The award of damages in the respondent‘s favor was anchored mainly on Article 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.
The ELEMENTS OF ABUSE OF RIGHTS are the following:

(a) the existence of a legal right or duty;
(b) which is exercised in bad faith; and
(c) for the sole intent of prejudicing or injuring another.
Malice or bad faith is at the core of the said provision. The law always presumes good faith and any person who seeks
to be awarded damages due to acts of another has the burden of proving that the latter acted in bad faith or with ill-
motive. GOOD FAITH refers to the state of the mind which is manifested by the acts of the individual concerned. It consists
of the intention to abstain from taking an unconscionable and unscrupulous advantage of another. BAD FAITH does
not simply connote bad judgment or simple negligence, dishonest purpose or some moral obliquity and conscious doing
of a wrong, a breach of known duty due to some motives or interest or ill-will that partakes of the nature of fraud. Malice
connotes ill-will or spite and speaks not in response to duty. It implies an intention to do ulterior and unjustifiable
harm. Malice is bad faith or bad motive.
FEBTC has the right to close the account of the respondent based on the following provisions of its Rules and
Regulations Governing the Establishment and Operation of Regular Demand Deposits:
10) The Bank reserves the right to close an account if the depositor frequently draws checks against insufficient
funds and/or uncollected deposits.
12) However, it is clearly understood that the depositor is not entitled, as a matter of right, to overdraw on this
deposit and the bank reserves the right at any time to return checks of the depositor which are drawn against
insufficient funds or for any other reason.
The facts, as found by the RTC and the CA, do not establish that, in the exercise of this right, petitioner bank committed
an abuse thereof. The second and third elements for abuse of rights are not attendant in the present case. The evidence
presented by FEBTC negates the existence of bad faith or malice on its part in closing the respondent‟s account on
April 4, 1988 because on the said date the same was already overdrawn.
The respondent issued 4 checks, all due on April 4, 1988, amounting to P7,410.00 when the balance of his current
account deposit was only P6,981.43. Thus, he incurred an overdraft of P428.57 which resulted in the dishonor of his
Check No. 2434886. In 1986, current account of the respondent was overdrawn 156 times due to his issuance of
checks against insufficient funds. In 1987, the said account was overdrawn 117 times for the same reason and in
1988, 26 times. There were also several instances when the respondent issued checks deliberately using a signature
different from his specimen signature on file with petitioner bank. All these circumstances taken together justified the
petitioner bank‘s closure of the respondent‘s account on April 4, 1988 for ―improper handling.‖
Nowhere under its rules and regulations is petitioner bank required to notify the respondent, or any depositor for that
matter, of the closure of the account for frequently drawing checks against insufficient funds. No malice or bad faith
could be imputed on FEBTC for so acting since the records bear out that the respondent had indeed been improperly and
irregularly handling his account not just a few times but hundreds of times. Upon the opening of his account, the
respondent had agreed to be bound by these terms and conditions.
Neither the fact that FEBTC accepted the deposit made by the respondent the day following the closure of his
account constitutes bad faith or malice. The same could be characterized as SIMPLE NEGLIGENCE by its personnel.
Said act, by itself, is not constitutive of bad faith. Respondent had thus failed to discharge his burden of proving bad faith
on the part of FEBTC or that it was motivated by ill-will. It has not been shown that these acts were done by petitioner
bank with the sole intention of prejudicing and injuring the respondent. It is conceded that the respondent may have
suffered damages as a result of the closure of his current account. However, there is a material distinction between
damages and injury.
INJURY is the illegal invasion of a legal right; DAMAGE is the loss, hurt or harm which results from the injury; and
damages are the recompense or compensation awarded for the damage suffered. Thus, there can be damage without
injury in those instances in which the loss or harm was not the result of a violation of a legal duty . In such cases, the
consequences must be borne by the injured person alone, the law affords no remedy for damages resulting from an act
which does not amount to a legal injury or wrong.
These situations are often called damnum absque injuria. In order that a plaintiff may maintain an action for the injuries
of which he complains, he must establish that such injuries resulted from a breach of duty which the defendant owed to
the plaintiff — a concurrence of injury to the plaintiff and legal responsibility by the person causing it. The underlying
basis for the award of tort damages is the premise that the individual was injured in contemplation of law. Thus, there
must first be a breach of some duty and the imposition of liability for that breach before damages may be awarded; and
the breach of such duty should be the proximate cause of the injury.
Whatever damages the respondent may have suffered as a consequence, e.g., dishonor of his other insufficiently
funded checks, would have to be borne by him alone. It was the respondent‟s repeated improper and irregular
handling of his account which constrained FEBTC to close the same in accordance with the rules and regulations
governing its depositors‟ current accounts. The respondent‘s case is clearly one of damnum absque injuria
3. Rellosa v. Pellosis, G.R. No. 138964, August 9, 2001
Facts: Pellosis et al. were lessees of a parcel of land, owned by one Marta Reyes in Manila, where they built a house,
which, over the years, underwent continuous improvements. After the demise of Marta, the land was inherited by her
son Victor Reyes.
Sometime later, Victor informed respondents that, for being lessees of the land for more than 20 years, they would have
a right of first refusal to buy the land. However, without the knowledge of respondents, the land occupied by them was
sold to petitioner Cynthia Ortega who was able to ultimately secure title to the property in her name.
Cynthia Ortega filed a petition for condemnation of the structures on the land. Respondents filed with the RTC of
Manila a suit for the declaration of nullity of the sale upon which the same was predicated upon their right of first refusal
which was claimed to have been impinged upon the sale of the land to petitioner Ortega without their knowledge.
After due hearing in the condemnation case, the Office of the Building Official issued a resolution, ordering the
demolition of the houses of respondents. The following day Cynthia Ortega, together with her father and co-petitioner,
Vicente Rellosa, hired workers to commence the demolition of respondents' houses.
Due to the timely intervention of the police, the intended demolition did not take place following talks between
petitioner Rellosa and counsel who pleaded that the demolition be suspended since the order sought to be implemented
was not yet final and executory. Respondents appealed. Petitioners once again hired workers to continue the demolition.
Respondents filed a complaint for damages with the RTC. The RTC dismissed the same. The CA reversed and ordered
petitioners to pay moral and exemplary damages. The appellate court ruled:
x x x, by the clear provisions of paragraph 23 of the Implementing Rules and Regulations of PD 1096
above, appellants, being the parties adversely affected by the November 27, 1989 Resolution of the Office
of the Building Official, had fifteen (15) days from receipt of a copy of the same within which to perfect
an administrative appeal. Thus, since appellants received a copy of the Resolution on December 7,
1989, they had until December 22, 1989 within which to perfect an administrative appeal and until
such time, the said Resolution was not yet final and executory."
Issue: Whether Rellosa et al are liable for damages.
Held: YES. A RIGHT is a power, privilege, or immunity guaranteed under a constitution, statute or decisional law, or
recognized as a result of long usage, constitutive of a legally enforceable claim of one person against another.
Petitioner might verily be the owner of the land, with the right to enjoy and to exclude any person from the enjoyment
and disposal thereof, but the exercise of these rights is not without limitations. The ABUSE OF RIGHTS RULE established
in Article 19 requires every person to act with justice, to give everyone his due; and to observe honesty and good faith.
When a right is exercised in a manner which discards these norms resulting in damage to another, a legal wrong is
committed for which the actor can be held accountable. In this instance, the issue is not so much about the existence of
the right or validity of the order of demolition as the question of whether or not petitioners have acted in conformity with,
and not in disregard of, the standard set by Article 19 of the Civil Code.
At the time petitioners implemented the order of demolition, barely 5 days after respondents received a copy thereof,
the same was NOT YET FINAL AND EXECUTORY . The law provided for a 15-day appeal period in favor of a party
aggrieved by an adverse ruling of the Office of the Building Official but by the precipitate action of petitioners in
demolishing the houses of respondents (prior to the expiration of the period to appeal), the latter were effectively deprived
of this recourse. The fact that the order of demolition was later affirmed by the Department of Public Works and
Highways was of no moment. The action of petitioners up to the point where they were able to secure an order of
demolition was not condemnable but implementing the order unmindful of the right of respondents to contest the
ruling was a different matter and could only be held utterly indefensible.
4.Cebu Country Club, Inc., (CCCI) v. Elizagaque, G.R. No. 160273, January 18, 2008
Facts: CCCI is non-stock non-profit private membership club in Banilad, Cebu. Co-petitioners Dapat, Almendras, Neri,
Luym, Libi, Garcia, and Sala are members of CCCI‘s Board of Directors (BOARD).
In 1987, San Mig Corp (SMC), a special company proprietary member of CCCI designated Ricardo Elizagaque as a
special non-proprietary member. Elizagaque was SMC‘s SVP and Operations Manager for VisMin. This designation was
approved by the BOARD.
In 1996, Elizagaque applied for a proprietary membership. The application was endorsed by 2 other proprietary members
of CCCI.
Elizagaque was able to purchase the proprietary share of a certain Dr. Butalid for only 3M (the current price of the share
was 5M, so nakatipid siya). Thereafter, CCCI issued a Proprietary Ownership Certificate in his favor on Sept 6, 1996.
The BOARD met on Apr 4 and May 30 1997 wherein the action on the application of Elizagaque was deferred. In July,
his application was voted upon. Then on Aug, Elizagaque received a letter from CCCI‘s corporate secretary (Neri)
informing him that his application for proprietary membership was disapproved.
A letter for reconsideration was sent in the same month but CCCI did not reply. Subsequent letters for reconsideration
were sent to CCCI in Oct and November but CCCI never replied to any of Elizagaque‘s requests.
On Dec 23 1998, Elizagaque filed a complaint for damages against CCCI and its abovementioned Board. RTC Pasic ruled
for Elizagaque and ordered CCCI and BOARD to jointly and severally pay compensatory, moral, exemplary damages
each in the millions as well as litigation expenses. On appeal, CA affirmed but removed compensatory damages. MR
denied. Hence, we are here.
CCCI & BOARD contend that CA erred in making them liable because no evidence was presented showing they acted in
bad faith and in disregarding damnum absque injuria as a defense.
Issue: Whether in disapproving Elizagaque‘s application for proprietary membership, CCCI is liable to the former for
damages.
Held: YES. LIABLE. CCCI‘s Articles of Incorporation provide that:
SEVENTH: That this is a non-stock corporation and membership therein as well as the
right of participation in its assets shall be limited to qualified persons who are duly
accredited owners of Proprietary Ownership Certificates issued by the corporation
inaccordance with its By-Laws.
In connection, the amended by-laws (amended in 1978) provide that:
SECTION 3. HOW MEMBERS ARE ELECTED.—The procedure for the admission of

new members of the Club shall be as follows:
(c) After the expiration of the aforesaid 30 days, the Board may, by unanimous vote of
all directors present at a regular or special meeting, approve the inclusion of the
candidate in the ―Eligible-for-Membership List.‖
The Board adopted a secret balloting known as the ―black ball system‖ of voting wherein each member will drop a ball
in the ballot box. A white ball represents conformity to the admission of an applicant, while a black ball means
disapproval. Pursuant to by-law provision above, a unanimous vote of the directors is required. When Elizagaque‘s
application for proprietary membership was voted upon during the Board meeting on July 30, 1997, the ballot box
contained 1 black ball. Thus, for lack of unanimity, his application was disapproved.
The CCCI Board of Directors, under its Articles of Incorporation, has the right to approve or disapprove an application for
proprietary membership. But such right should not be exercised arbitrarily and must always be in accordance with
Articles 19 and 21 of the Civil Code, to wit:
Article 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.
Article 21. Any person who willfully 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.
In GF Equity v. Valenzona, it was held that a right, though by itself legal because recognized or granted by law as such,
may nevertheless become the source of some illegality. When a right is exercised in a manner which does not conform
with the norms enshrined in Article 19 and results in damage to another, a legal wrong is thereby committed for which
the wrongdoer must be held responsible.
In rejecting Elizagaque‘s application for proprietary membership, we find that CCCI violated the rules governing
human relations, the basic principles to be observed for the rightful relationship between human beings and for the
stability of social order. The trial court and the CA aptly held that CCCI committed fraud and evident bad faith in
disapproving the applications. This is contrary to morals, good custom or public policy.
It bears stressing that the amendment to Section 3(c) requiring the unanimous vote of the directors present at a special or
regular meeting was NOT PRINTED on the application form Elizagaque filled and submitted to CCCI. What was
printed thereon was the original provision of Section 3(c) which was silent on the required number of votes needed for
admission of an applicant as a proprietary member. The original provision stated that:
After the expiration of the aforesaid thirty (30) days, if no objections have been filed or if
there are, the Board considers the objections unmeritorious, the candidate shall be
qualified for inclusion in the ―Eligible-for-Membership List‖
CCCI explained that the amendment was not printed on the application form due to economic reasons. We find this
excuse flimsy and unconvincing. Such amendment, aside from being extremely significant, was introduced way back in
1978 or almost 20 years before the filing of the application. We cannot fathom why such a prestigious and exclusive golf
country club, like the CCCI, whose members are all affluent, did not have enough money to cause the printing of an
updated application form.
It is thus clear that Elizagaque was left groping in the dark wondering why his application was disapproved. He was not
even informed that a unanimous vote of the Board members was required. When he sent a letter for reconsideration
and an inquiry whether there was an objection to his application, CCCI apparently ignored him. Certainly, he did not
deserve this kind of treatment. Having been designated by San Miguel Corporation as a special non-proprietary member
of CCCI, he should have been treated by CCCI with courtesy and civility. At the very least, they should have informed
him why his application was disapproved.
The exercise of a right, though legal by itself, must nonetheless be in accordance with the proper norm. When the
right is exercised arbitrarily, unjustly or excessively and results in damage to another, a legal wrong is committed for
which the wrongdoer must be held responsible. Such is the case here.
Damnum Absque Injuria not applicable

In Amonoy v. Gutierrez, we held that this principle does not apply when there is an abuseof a person‘s right, as in this
case.
Joint and Several Liability

CCCI‘s argument that they could not be held jointly and severally liable for damages because only 1 voted for the
disapproval of respondent‘s application lacks merit pursuant to § 31 of the Corporation Code which provides that —
SEC. 31. Liability of directors, trustees or officers.—Directors or trustees who willfully

and knowingly vote for or assent to patently unlawful acts of the corporation or who are
guilty of gross negligence or bad faith in directing the affairs of the corporation or
acquire any personal or pecuniary interest in conflict with their duty as such directors, or
trustees shall be liable jointly and severally for all damages resulting therefrom
suffered by the corporation, its stockholders or members and other persons.
5.Nikko Hotel Manila Garden v. Reyes, G.R. No. 154259, February 28, 2005
Facts: The CAUSE OF ACTION before the trial court was one for damages brought under the human relations provisions
of the New Civil Code. Reyes, more popularly known by the screen name ―Amay Bisaya,‖ alleged that at around
6:00PM of 13 October 1994, while he was having coffee at the lobby of Hotel Nikko, he was spotted by Dr. Violeta
Filart, who then approached him. Mrs. Filart invited him to join her in a party at the hotel‘s penthouse in celebration
of the natal day of the hotel‘s manager, Mr. Masakazu Tsuruoka. Mr. Reyes asked if she could vouch for him for which
she replied: ―of course.‖
After a couple of hours, when the buffet dinner was ready, Mr. Reyes lined-up at the buffet table but, to his great
shock, shame and embarrassment, he was stopped by petitioner herein, Ruby Lim (Executive Secretary of Hotel
Nikko). In a loud voice and within the presence and hearing of the other guests who were making a queue at the buffet
table, Ruby Lim told him to leave the party (―huwag ka nang kumain, hindi ka imbitado, bumaba ka na lang‖). Dr.
Filart, who was within hearing distance, however, completely ignored him thus adding to his shame and humiliation.
Like a common criminal, he was escorted out of the party by the policeman. Claiming damages, Mr. Reyes asked for 1M
actual damages, 1M moral and/or exemplary damages and 200k attorney‘s fees.
Ruby Lim, for her part, admitted having asked Mr. Reyes to leave the party but not under the ignominious
circumstance painted by the latter. The guest list was limited to Mr. Tsuruoka‟s closest friends and some hotel
employees and that Mr. Reyes was not one of those invited.
There were TWO INSTANCES when Lim attempted to inform Reyes to step out. But when Ms. Lim spotted Mr. Reyes by
the buffet table, she decided to speak to him herself as there were no other guests in the immediate vicinity. However,
as Mr. Reyes was already helping himself to the food, she decided to wait. When Mr. Reyes went to a corner and started
to eat, Ms. Lim approached him and said: ―alam ninyo, hindo ho kayo dapat nandito. Pero total nakakuha na ho kayo ng
pagkain, ubusin na lang ninyo at pagkatapos kung pwede lang po umalis na kayo.‖ She then turned around trusting that
Mr. Reyes would show enough decency to leave, but to her surprise, he began screaming and making a big scene, and
even threatened to dump food on her.
Dr. Violeta Filart, the third defendant in the complaint before the lower court, also gave her version of the story to the
effect that she never invited Mr. Reyes to the party. According to her, it was Mr. Reyes who volunteered to carry the
basket of fruits intended for the celebrant as he was likewise going to take the elevator, not to the penthouse but to
Altitude 49. When they reached the penthouse, she reminded Mr. Reyes to go down as he was not properly dressed and
was not invited. Then there was a commotion and she saw Mr. Reyes shouting. She was embarrassed and did not want the
celebrant to think that she invited him,
After trial on the merits, trial court dismissed the complaint, giving more credence to the testimony of Ms. Lim that she
was discreet in asking Mr. Reyes to leave the party. Thus, no recovery can be had against defendants Nikko Hotel and
Ruby Lim because he himself was at fault. He knew that it was not the party of Violeta Filart even if she allowed him to
join her and took responsibility for his attendance at the party. His action against defendants Nikko Hotel and Ruby Lim
must therefore fail.
On appeal, the CA reversed the ruling of the trial court as it found more commanding of belief the testimony of Mr.
Reyes that Ms. Lim ordered him to leave in a loud voice within hearing distance of several guests. It likewise ruled that
the actuation of Ms. Lim in approaching several people to inquire into the presence of Mr. Reyes exposed the latter to
ridicule and was uncalled for as she should have approached Dr. Filart first and both of them should have talked to Mr.
Reyes in private. Were it not for Mrs. Filart‘s invitation, appellant could not have suffered such humiliation. For that,
appellee Filart is equally liable.
Under Article 20 of the Civil Code, every person who violates this duty becomes liable for damages, especially if said acts
were attended by malice or bad faith. Bad faith does not simply connote bad judgment or simple negligence. It imports a
dishonest purpose or some moral obliquity and conscious doing of a wrong, a breach of a known duty to some motive or
interest or ill-will that partakes of the nature of fraud.
Issue: (1) Whether Ruby Lim acted abusively in asking Reyes to leave the party where he was not invited such as to make
her liable under Art. 19 and 21 of the Civil Code.
(2) Whether Hotel Nikko can be held solidarily liable with Lim.
Held: (1) VOLENTI NON FIT INJURIA (Assumption of Risk) DOES NOT APPLY
Despite the argument of Lim and Hotel Nikko contend that they cannot be made liable for damages as Reyes assumed the
risk of being asked to leave (and being embarrassed and humiliated in the process) as he was a ―gate-crasher.‖ The
doctrine of volenti non fit injuria (―to which a person assents is not esteemed in law as injury‖) refers to self-inflicted
injury or to the consent to injury which precludes the recovery of damages by one who has knowingly and voluntarily
exposed himself to danger, even if he is not negligent in doing so. This doctrine does not find application to the case at
bar because even if Reyes assumed the risk of being asked to leave the party, petitioners, under Articles 19 and 21 of
the New Civil Code, were still under obligation to treat him fairly in order not to expose him to unnecessary ridicule
and shame.
(2) According to the trial court:
We are dealing with a formal party in a posh, five-star hotel, for-invitation-only, thrown
for the hotel‘s former Manager, a Japanese national. Then came a person who was clearly
uninvited (by the celebrant) and who could not just disappear into the crowd as his
face is known by many, being an actor. To unnecessarily call attention to the
presence of Mr. Reyes would certainly reflect badly on Ms. Lim‟s ability to follow the
instructions of the celebrant to invite only his close friends and some of the hotel‟s
personnel. Mr. Reyes, upon whom the burden rests to prove that indeed Ms. Lim loudly
and rudely ordered him to leave, could not offer any satisfactory explanation why Ms.
Lim would do that and risk ruining a formal and intimate affair. On the contrary, Mr.
Reyes, on cross-examination, had unwittingly sealed his fate by admitting that when
Ms. Lim talked to him, she was very close. Mr. Reyes, however, had not presented any
witness to back his story up. All his witnesses – Danny Rodinas, Pepito Guerrero and
Alexander Silva - proved only that it was Dr. Filart who invited him to the party.
Ms. Lim, not having abused her right to ask Mr. Reyes to leave the party to which he was not invited , cannot be
made liable to pay for damages under Articles 19 and 21 of the Civil Code.
Article 19, known to contain what is commonly referred to as the principle of abuse of rights, is not a panacea for all
human hurts and social grievances. Article 19 states: 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.
The object of this article, therefore, is to set certain standards which must be observed not only in the exercise of
one‘s rights but also in the performance of one‘s duties. These standards are the following: act with justice, give
everyone his due and observe honesty and good faith. Its antithesis, necessarily, is any act evincing bad faith or intent
to injure.
Its elements are the following:

(1) There is a legal right or duty;
(2) Which is exercised in bad faith; and
(3) For the sole intent of prejudicing or injuring another.
When Article 19 is violated, an action for damages is proper under Articles 20 or 21 of the Civil Code. ARTICLE 20
pertains to damages arising from a violation of law which does not obtain herein as Ms. Lim was perfectly within her
right to ask Mr. Reyes to leave.
ARTICLE 21 refers to 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) It is done with intent to injure.
The manner by which Ms. Lim asked Mr. Reyes to leave was likewise acceptable and humane under the
circumstances. Without proof of any ill-motive on her part, Ms. Lim‟s act of by-passing Mrs. Filart cannot amount to
abusive conduct especially because she did inquire from Mrs. Filart‟s companion who told her that Mrs. Filart did not
invite Mr. Reyes. If at all, Ms. Lim is guilty only of bad judgment which, if done with good intentions, cannot amount to
bad faith.
6.Calatagan Golf Club, Inc., v. Clemente, G.R. No. 165443, April 16, 2009
Facts: Clemente applied to purchase one share of stock of Calatagan, indicating in his application for membership his
mailing address at Phimco Industries, Inc. Calatagan issued to him the Certificate of Stock. Calatagan charges monthly
dues on its members. The provision on monthly dues is incorporated in Calatagan‘s Articles of Incorporation and By-
Laws. It is also reproduced at the back of each certificate of stock.
When Clemente became a member the monthly charge stood at P400.00. He paid P3,000.00 for his monthly dues on 21
March 1991 and another P5,400.00 on 9 December 1991. Then he ceased paying the dues. At that point, his balance
amounted to P400.00.
10 months later Calatagan sought to collect Clemente‟s back accounts by sending a demand letter; it was followed by a
second letter. Both letters were sent to Clemente‘s mailing address as indicated in his membership application but
were sent back to sender with the postal note that the address had been closed. Calatagan declared Clemente
delinquent for having failed to pay his monthly dues for more than sixty (60) days, specifically P5,600.00.
Calatagan‘s board of directors adopted a resolution authorizing the foreclosure of shares of delinquent members,
including Clemente‘s; and the public auction of these shares. Calatagan sent a third and final letter to Clemente, this
time signed by its Corporate Secretary which contained a warning that unless Clemente settles his outstanding dues, his
share would be included among the delinquent shares to be sold at public auction. The letter was sent to Clemente‘s
mailing address that had already been closed. A notice of auction sale was posted on the Club‘s bulletin board, as well
as on the club‘s premises.
The auction sale took place as scheduled on 15 January 1993 and Clemente‘s share sold for P64,000. At the time of the
sale, Clemente‘s accrued monthly dues amounted to P5,200.00. A notice of foreclosure of Clemente‘s share was
published in the Business World.
Clemente learned of the sale of his share only in November of 1997. He filed a claim with the SEC seeking the
restoration of his shareholding in Calatagan with damages. SEC dismissed citing Section 69 of the Corporation Code
which provides that the sale of shares at an auction sale can only be questioned within 6 months from the date of sale.
Clemente‘s claim, filed four 4 years after the sale, had already prescribed. Clemente failed to inform Calatagan that the
address he had earlier supplied was no longer his address.
CA reversing the SEC, restored Clemente‟s one share with a directive to Calatagan to issue in his a new share, and
awarded to Clemente damages. CA also pointed out that since that Calatagan‟s first two demand letters had been
returned to it as sender with the notation about the closure of the mailing address, it very well knew that its third and
final demand letter also sent to the same mailing address would not be received by Clemente. ―a person who is in
danger of the imminent loss of his property has the right to be notified and be given the chance to prevent the loss.‖
Hence, the present appeal.
Issue: Whether the action has prescribed and whether Calatagan Golf complied with its by-laws when it sold Clemente‘s
share.
Held: (1) NO. What applies is Art. 1140 which gives 8 years for the recovery of movables which includes shares of stock.
(2) NO. Calatagan is liable for damages. Calatagan‘s Articles of Incorporation states that the ―dues, together with all
other obligations of members to the club, shall constitute a first lien on the shares in the event of delinquency such shares
may be ordered sold in the manner provided in the By-Laws.
There are several provisions in the By-laws that govern the payment of dues, the lapse into delinquency of the member,
and the constitution and execution on the lien.
ARTICLE XII – MEMBER‘S ACCOUNT

SEC. 31. (a) Billing Members, Posting of Delinquent Members.—The Treasurer shall bill
all members monthly. If the bill of any member remains unpaid by the 20th of the month,
the Treasurer shall notify him that if his bill is not paid in full by the end of the succeeding
month his name will be posted as delinquent the following day at the Clubhouse bulletin
board. While posted, a member, the immediate members of his family, and his guests,
may not avail of the facilities of the Club.
(b) Members on the delinquent list for more than 60 days shall be reported to the Board
and their shares or the shares of the juridical entities they represent shall thereafter be
ordered sold by the Board at auction to satisfy the claims of the Club as provided for in
Section 32 hereon. A member may pay his overdue account at any time before the
auction sale.
Sec. 32. Lien on Shares; Sale of Share at Auction.—The club shall have a first lien on
every share of stock to secure debts of the members to the Club. This lien shall be
annotated on the certificates of stock and may be enforced by the Club in the following
manner: (a) Within ten (10) days after the Board has ordered the sale at auction of a
member‘s share of stock for indebtedness under Section 31(b) hereof, the Secretary
shall notify the owner thereof, and shall advise the Membership Committee of such
fact. (b) The Membership Committee shall then notify all applicants on the Waiting List
and all registered stockholders of the availability of a share of stock for sale at auction at
a specified date, time and place, and shall post a notice to that effect in the Club bulletin
board for at least ten (10) days prior to the auction sale. (c) On the date and hour fixed,
the Membership Committee shall proceed with the auction by viva voce bidding and
award the sale of the share of stock to the highest bidder. (d) The purchase price shall be
paid by the winning bidder to the Club within twenty-four (24) hours after the bidding.
The winning bidder or the representative in the case of a juridical entity shall become a
Regular Member upon payment of the purchase price and issuance of a new stock
certificate in his name or in the name of the juridical entity he represents. The proceeds of
the sale shall be paid by the Club to the selling stockholder after deducting his obligations
to the Club. (e) If no bids be received or if the winning bidder fails to pay the amount of
this bid within twenty-four (24) hours after the bidding, the auction procedures may be
repeated from time to time at the discretion of the Membership Committee until the share
of stock be sold. (f) If the proceeds from the sale of the share of stock are not sufficient to
pay in full the indebtedness of the member, the member shall continue to be obligated to
the Club for the unpaid balance. If the member whose share of stock is sold fails or refuse
to surrender the stock certificate for cancellation, cancellation shall be effected in the
books of the Club based on a record of the proceedings. Such cancellation shall render
the unsurrendered stock certificate null and void and notice to this effect shall be duly
published.
It is plain that Calatagan had endeavored to install a clear and comprehensive procedure to govern the payment of
monthly dues, the declaration of a member as delinquent, and the constitution of a lien on the shares and its eventual
public sale to answer for the member‘s debts.
Section 91 of the Corporation Code, membership in a non-stock corporation ―shall be terminated in the manner and for
the causes provided in the articles of incorporation or the by- laws.‖ The By-law provisions are elaborate in explaining
the manner and the causes for the termination of membership in Calatagan, through the execution on the lien of
the share. The Court is satisfied that the By-Laws, as written, affords due protection to the member by assuring that the
member should be notified by the Secretary of the looming execution sale. If followed to the letter, the termination of
membership under this procedure outlined in the By-Laws would accord with substantial justice.
Did Calatagan actually comply with the by-law provisions when it sold Clemente‘s share?
Calatagan sent the third and final demand letter to Clemente on December 7, 1992 . The letter states that if the
amount of delinquency is not paid, the share will be included among the delinquent shares to be sold at public auction.
This letter was signed by Atty. Benjamin Tanedo, Jr., Calatagan Golf‘s Corporate Secretary. It was again sent to
Clemente‟s mailing address — Phimco Industries Inc., P.O. Box 240, MCC Makati. As expected, it was returned
because the post office box had been closed.
Under the By-Laws, the Corporate Secretary is tasked to ―give or cause to be given, all notices required. Sec. 32 (a)
of the By-Laws further provides that ―within ten (10) days after the Board has ordered the sale at auction of a member‘s
share of stock for indebtedness under Section 31 (b) hereof, the Secretary shall notify the owner thereof and shall
advise the Membership Committee of such fact.,‖ The records do not disclose what report the Corporate Secretary
transmitted to the Membership Committee to comply with Section 32(a).
The reason for this mandatory requirement is to give the Membership Committee the opportunity to find out, before the
share is sold, if proper notice has been made to the shareholder member. We presume that the Corporate Secretary, as a
lawyer is knowledgeable on the law and on the standards of good faith and fairness that the law requires. As custodian of
corporate records, he should also have known that the first two letters sent to Clemente were returned because the
P.O. Box had been closed.
Thus, we are surprised — given his knowledge of the law and of corporate records — that he would send the third and
final letter — Clemente‘s last chance before his share is sold and his membership lost — to the same P.O. Box that had
been closed. Calatagan argues that it ―exercised due diligence before the foreclosure sale‖ and ―sent several notices to
Clemente‘s specified mailing address.‖ We do not agree; we cannot label as due diligence Calatagan‘s act of sending the
December 7, 1992 letter to Clemente‘s mailing address knowing fully well that the P.O. Box had been closed. Due
diligence or good faith imposes upon the Corporate Secretary—the chief repository of all corporate records — the
obligation to check Clemente‘s other address which, under the By-Laws, have to be kept on file and are in fact on
file.
One obvious purpose of giving the Corporate Secretary the duty to keep the addresses of members on file is specifically
for matters of this kind, when the member cannot be reached through his or her mailing address. One telephone call to
Clemente‘s phone numbers on file would have alerted him of his impending loss.‖
Ultimately, the petition must fail because Calatagan had failed to duly observe both the spirit and letter of its own by-
laws. The by-law provisions was clearly conceived to afford due notice to the delinquent member of the impending sale ,
and not just to provide an intricate façade that would facilitate Calatagan‘s sale of the share .
The bad faith on Calatagan‘s part is palpable. Calatagan very well knew that Clemente‟s postal box to which it sent
its previous letters had already been closed, yet it persisted in sending that final letter to the same postal box. What
for? Just for the exercise, it appears, as it had known very well that the letter would never actually reach Clemente.
Clemente in his membership application had provided his residential address along with his residence and office
telephone numbers. Nothing in Section 32 of Calatagan‘s ByLaws requires that the final notice prior to the sale be
made solely through the member‘s mailing address. A simple telephone call and an ounce of good faith could have
prevented this present controversy.
Calatagan‘s bad faith and failure to observe its own By-Laws had resulted not merely in the loss of Clemente‘s privilege
to play golf at its golf course and avail of its amenities, but also in significant pecuniary damage to him. The only
blame that could be thrown Clemente‘s way was his failure to notify Calatagan of the closure of the P.O. Box. But
knowing as he did that Calatagan was in possession of his home address as well as residence and office telephone
numbers, he had every reason to assume that the club would not be at a loss should it need to contact him.
According to Clemente, he was not even aware of the closure of the postal box, the maintenance of which was not his
responsibility but his employer Phimco‘s.
The utter bad faith exhibited by Calatagan brings into operation Articles 19, 20 and 21 of the Civil Code. These
provisions enunciate a general obligation under law for every person to act fairly and in good faith towards one
another. A non-stock corporation like Calatagan is not exempt from that obligation in its treatment of its members.
The obligation of a corporation to treat every person honestly and in good faith extends even to its shareholders or
members, even if the latter find themselves contractually bound to perform certain obligations to the corporation. A
certificate of stock cannot be a charter of dehumanization.
The award of actual damages is of course warranted since Clemente has sustained pecuniary injury by reason of
Calatagan‘s wrongful violation of its own By-Laws. It would not be feasible to deliver Clemente‘s original Certificate of
Stock because it had already been cancelled and a new one issued in its place in the name of the purchases at the auction.
CA instead directed that Calatagan to issue to Clemente a new certificate of stock. That sufficiently redresses the actual
damages sustained by Clemente. After all, the certificate of stock is simply the evidence of the share.
The Court of Appeals cited Calatagan for violation of Article 32 of the Civil Code, which allows recovery of damages
from any private individual ―who directly or indirectly obstructs, defeats, violates or in any manner impedes or impairs‖
the right ―against deprivation of property without due process of laws.‖ But even without Article 32, Calatagan will still
be bound to pay moral and exemplary damages to Clemente. The latter was able to duly prove that he had sustained
mental anguish, serious anxiety and wounded feelings by reason of Calatagan‘s acts, thereby entitling him to moral
damages under Article 2217 of the Civil Code. Calatagan‘s bad faith is evident in the course of its corporate actions and
warrants correction for the public good, thereby justifying exemplary damages under Article 2229 of the Civil Code.
7. University of the East v. Jader, G.R. No. 132344, February 17, 2000
Facts: May an educational institution be held liable for damages for misleading a student into believing that the latter had
satisfied all the requirements for graduation when such is not the case?
Jader was enrolled in the UE College of Law from 1984 up to 1988. In the first semester of his last year he failed to take
the regular final examination in Practice Court I for which he was given an incomplete grade. He then enrolled for
the second semester as fourth year law student. He filed an application for the removal of the incomplete grade given
him by Professor Carlos Ortega, which was approved by Dean Celedonio Tiongson after payment of the required fee.
He took the examination and Professor Carlos Ortega submitted his grade. It was a grade of 5.
In the meantime, the Dean and the Faculty Members of the College of Law met to deliberate on who among the fourth
year students should be allowed to graduate. The plaintiff‘s name appeared in the Tentative list of Candidates for
graduation for the Degree of Bachelor of Laws (LL.B) as of Second Semester (19871988) with the following annotation:
The 35th Investitures & Commencement Ceremonies for the candidates of Bachelor of Laws was scheduled on the 16th of
April 1988 at 3PM, and in the invitation for that occasion the name of the plaintiff appeared as one of the candidates.
At the foot of the list of the names of the candidates there appeared however the following annotation: ―This is a
tentative list. Degrees will be conferred upon these candidates who satisfactorily complete requirements as stated in the
University Bulletin and as approved of the Department of Education, Culture and Sports.‖
The plaintiff attended the investiture ceremonies at F. dela Cruz Quadrangle, U.E., Recto Campus, during the program
of which he went up the stage when his name was called, escorted by his mother and his eldest brother who assisted in
placing the Hood, and his Tassel was turned from left to right, and he was thereafter handed by Dean Celedonio a rolled
white sheet of paper symbolical of the Law Diploma. His relatives took pictures of the occasion. He tendered a blow-out
that evening which was attended by neighbors, friends and relatives who wished him good luck in the forthcoming bar
examination. There were pictures taken too during the blow-out. He thereafter prepared himself for the bar
examination. He took a leave of absence without pay from his job and enrolled at the pre-bar review class in Far
Eastern University.
Having learned of the deficiency he dropped his review class and was not able to take the bar examination.
Consequently, respondent sued petitioner for damages alleging that he suffered moral shock, mental anguish,
serious anxiety, besmirched reputation, wounded feelings and sleepless nights when he was not able to take the 1988
bar examinations arising from the latter‘s negligence. He prayed for an award of moral and exemplary damages,
unrealized income, attorney‘s fees, and costs of suit.
In its ANSWER with counterclaim, UE denied liability arguing mainly that it never led respondent to believe that he
completed the requirements for a Bachelor of Laws degree when his name was included in the tentative list of
graduating students.
UE elevated the case to this Court on a petition for review arguing that it has no liability to respondent Romeo A. Jader,
considering that the proximate and immediate cause of the alleged damages incurred by the latter arose out of his own
negligence in not verifying from the professor concerned the result of his removal exam.
Issue: Whether UE College of Law can be held liable for damages.
Held: YES. When a student is enrolled in any educational or learning institution, a CONTRACT OF EDUCATION is
entered into between said institution and the student. The professors, teachers or instructors hired by the school are
considered merely as agents and administrators tasked to perform the school‘s commitment under the contract. Since the
contracting parties are the school and the student, the latter is not duty-bound to deal with the former‟s agents, such as
the professors with respect to the status or result of his grades, although nothing prevents either professors or students
from sharing with each other such information.
The Court takes judicial notice of the traditional practice in educational institutions wherein the professor directly
furnishes his/her students their grades. It is the contractual obligation of the school to timely inform and furnish
sufficient notice and information to each and every student as to whether he or she had already complied with all the
requirements for the conferment of a degree or whether they would be included among those who will graduate.
Although commencement exercises are but a formal ceremony, it nonetheless is not an ordinary occasion, since such
ceremony is the educational institution‘s way of announcing to the whole world that the students included in the
list of those who will be conferred a degree during the baccalaureate ceremony have satisfied all the requirements for
such degree.
Prior or subsequent to the ceremony, the school has the obligation to PROMPTLY INFORM the student of any problem
involving the latter‘s grades and performance and also most importantly, of the procedures for remedying the same.
UE, in belatedly informing respondent of the result of the removal examination, particularly at a time when he had
already commenced preparing for the bar exams, cannot be said to have acted in good faith. Absence of good faith must
be sufficiently established for a successful prosecution by the aggrieved party in a suit for abuse of right under Article 19
of the Civil Code.
GOOD FAITH connotes an honest intention to abstain from taking undue advantage of another, even though the forms
and technicalities of the law, together with the absence of all information or belief of facts, would render the transaction
unconscientious.
It is the school that has access to those informations and it is only the school that can compel its professors to act and
comply with its rules, regulations and policies with respect to the computation and the prompt submission of grades .
Students do not exercise control, much less influence, over the way an educational institution should run its affairs,
particularly in disciplining its professors and teachers and ensuring their compliance with the school‘s rules and orders.
Being the party that hired them, it is the school that exercises general supervision and exclusive control over the
professors with respect to the submission of reports involving the students‟ standing. Exclusive control means that no
other person or entity had any control over the instrumentality which caused the damage or injury.
The COLLEGE DEAN is the senior officer responsible for the operation of an academic program, enforcement of rules and
regulations, and the supervision of faculty and student services. He must see to it that his own professors and teachers,
regardless of their status or position outside of the university, must comply with the rules set by the latter . The
negligent act of a professor who fails to observe the rules of the school, for instance by not promptly submitting a
student‟s grade, is not only imputable to the professor but is an act of the school, being his employer.
Considering further, that the institution of learning involved herein is a university which is engaged in legal education, it
should have practiced what it inculcates in its students, more specifically the principle of good dealings enshrined in
Articles 19 and 20 of the Civil Code which states:
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 the same.
Article 19 was intended to expand the concept of torts by granting adequate legal remedy for the untold number of
moral wrongs which is impossible for human foresight to provide specifically in statutory law. In civilized society,
men must be able to assume that others will do them no intended injury that others will commit no internal aggressions
upon them; that their fellowmen, when they act affirmatively will do so with due care which the ordinary understanding
and moral sense of the community exacts and that those with whom they deal in the general course of society will act in
good faith. The ultimate thing in the theory of liability is justifiable reliance under conditions of civilized society.
Schools and professors cannot just take students for granted and be indifferent to them, for without the latter, the
former are useless. Educational institutions are duty-bound to inform the students of their academic status and not wait
for the latter to inquire from the former.
The conscious indifference of a person to the rights or welfare of the person/persons who may be affected by his act
or omission can support a claim for damages. Want of care to the conscious disregard of civil obligations coupled with
a conscious knowledge of the cause naturally calculated to produce them would make the erring party liable.
Petitioner ought to have known that time was of the essence in the performance of its obligation to inform
respondent of his grade. It cannot feign ignorance that respondent will not prepare himself for the bar exams since
that is precisely the immediate concern after graduation of an LL.B. graduate. It failed to act seasonably. Petitioner
cannot just give out its student‘s grades at any time because a student has to comply with certain deadlines set by the
Supreme Court on the submission of requirements for taking the bar. Petitioner‘s liability arose from its failure to
promptly inform respondent of the result of an examination and in misleading the latter into believing that he had
satisfied all requirements for the course.
Petitioner cannot pass on its blame to the professors to justify its own negligence that led to the delayed relay of
information to respondent. When one of two innocent parties must suffer, he through whose agency the loss occurred
must bear it. The modern tendency is to grant indemnity for damages in cases where there is abuse of right, even
when the act is not illicit. If mere fault or negligence in one‟s acts can make him liable for damages for injury caused
thereby, with more reason should abuse or bad faith make him liable. A person should be protected only when he acts in
the legitimate exercise of his right, that is, when he acts with prudence and in good faith, but not when he acts with
negligence or abuse.
However, while petitioner was guilty of negligence and thus liable to respondent for the latter‘s actual damages, we hold
that respondent should not have been awarded moral damages. We do not agree with the Court of Appeals‘ findings
that respondent suffered shock, trauma and pain when he was informed that he could not graduate and will not be allowed
to take the bar examinations. At the very least, it behooved on respondent to verify for himself whether he has
completed all necessary requirements to be eligible for the bar examinations. As a senior law student, respondent
should have been responsible enough to ensure that all his affairs, specifically those pertaining to his academic
achievement, are in order.
Given these considerations, we fail to see how respondent could have suffered untold embarrassment in attending the
graduation rites, enrolling in the bar review classes and not being able to take the bar exams. If respondent was indeed
humiliated by his failure to take the bar, he brought this upon himself by not verifying if he has satisfied all the
requirements including his school records, before preparing himself for the bar examination. Certainly, taking the bar
examinations do not only entail a mental preparation on the subjects thereof; there are also prerequisites of documentation
and submission of requirements which the prospective examinee must meet.
8. Manaloto v. Veloso, G.R. No. 171365, October 6, 2010

Facts: Manaloto and 7 others filed an unlawful detainer case against Veloso. They alleged that they were lessors of a
house in Horshoe Village, QC, with Veloso as lessee for P17,000/mo. Veloso failed to pay from May 1997 to December
1998 despite demands. Veloso denied this, alleging and advance payment of P825,000 when he paid for repairs done
thereon.
The MeTC ordered Veloso to vacate the property. The RTC reversed, giving him the choice over either staying or
leaving, with the right to remove the improvements if the petitioners refused to pay therefor. After successive appeals, the
decision became final and executory.
However, while the abovementioned case was pending with the RTC, Veloso filed with the RTC a complaint for
Breach of Contract and Damages based on TWO CAUSES OF ACTION – (1) damages due to embarrassment and
humiliation when petitioners distributed copies of the MeTC decision to other homeowners, and (2) breach of contract,
since they failed to preserve the property in a tenantable condition.
Petitioners filed an Omnibus Motion including a prayer for dismissal, since the decision was a matter of public record, and
they violated no law or legal right; further, the action for breach of contract was barred by prior judgment since it was the
same as the counterclaim in the above case. The RTC dismissed the case. The CA agreed in dismissing the second COA
(breach), but went on to hear the first COA (damages). The CA held petitioners liable, finding bad faith.
Issue: (1) Whether the appeal to CA was filed on time.

(2) Whether Veloso is entitled to damages.
Held: We answer the first issue on the timeliness of respondent‘s appeal affirmatively.
Jurisprudence has settled the ―fresh period rule,‖ according to which, an ordinary appeal from the RTC to the Court of
Appeals, under Section 3 of Rule 41 of the Rules of Court, shall be taken within 15 days either from receipt of the original
judgment of the trial court or from receipt of the final order of the trial court dismissing or denying the motion for new
trial or motion for reconsideration.
We likewise agree with the CA that the RTC-Branch 227 should not have dismissed respondent‘s complaint for damages
on the ground of failure to state a cause of action.
According to Rule 2, Section 2 of the Rules of Court, a cause of action is the act or omission by which a party violates a
right of another. When the ground for dismissal is that the complaint states no cause of action, such fact can be determined
only from the facts alleged in the complaint and from no other, and the court cannot consider other matters aliunde. The
test, therefore, is whether, assuming the allegations of fact in the complaint to be true, a valid judgment could be rendered
in accordance with the prayer stated therein.
Respondent made the following allegations in support of his claim for damages against petitioners:
FIRST CAUSE OF ACTION
28. After the promulgation of the Metropolitan Trial Court of its Decision dated
August 3, 1999, ordering the [herein respondent] and all person claiming rights under
him to –
(a) Vacate the leased premises;

(b) pay the [herein petitioners] the sum of P306,000.00 as unpaid rentals from
May 23, 1997 to November 22, 1998; and
(c) pay the sum of P5,000.00 as attorneys fees;
But while said Decision was still pending appeal with the Regional Trial Court, the
[petitioners], through [petitioner] Manaloto, already distributed copies of said
Decision to some of the homeowners of Horseshoe Village, who personally know the
[respondent]. This act is a direct assault or character assassination on the part of the
[respondent] because as stated in the said decision, [respondent] has been staying in the
premises but did not or refused to pay his monthly rentals for a long period of time when
in truth and in fact was untrue.
29. That from the time the said decision was distributed to said members
homeowners, the [respondent] became the subject of conversation or talk of the town
and by virtue of which [respondent‘s] good name within the community or society
where he belongs was greatly damaged; his reputation was besmirched; [respondent]
suffered sleepless night and serious anxiety. [Respondent], who is the grandson of the
late Senator Jose Veloso and Congressman Ismael Veloso, was deprived of political
career and to start with was to run as candidate for Barangay Chairman within their area
which was being offered to him by the homeowners but this offer has started to fade and
ultimately totally vanished after the distribution of said Decision. Damages to his good
names and reputations and other damages which he suffered as a consequence thereof,
may be reasonably compensated for at least P1,500,000.00 as moral and consequential
damages.
30. In order to deter [petitioners] and others from doing as abovementioned,

[petitioners] should likewise be assessed exemplary damages in the amount of
P500,000.00.
A cause of action (for damages) exists if the following elements are present: (1) a right in favor of the plaintiff by
whatever means and under whatever law it arises or is created; (2) an obligation on the part of the named defendant to
respect or not to violate such right; and (3) an act or omission on the part of such defendant violative of the right of the
plaintiff or constituting a breach of the obligation of defendant to the plaintiff for which the latter may maintain an action
for recovery of damages. We find that all three elements exist in the case at bar. Respondent may not have specifically
identified each element, but it may be sufficiently determined from the allegations in his complaint.
First, respondent filed the complaint to protect his good character, name, and reputation. Every man has a right to build,
keep, and be favored with a good name. This right is protected by law with the recognition of slander and libel as
actionable wrongs, whether as criminal offenses or tortuous conduct.
Second, petitioners are obliged to respect respondent‘s good name even though they are opposing parties in the unlawful
detainer case. As Article 19 of the Civil Code requires, ―[e]very 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.‖ A violation of
such principle constitutes an abuse of rights, a tortuous conduct.
Petitioners are also expected to respect respondent‘s ―dignity, personality, privacy and peace of mind‖ under Article
26 of the Civil Code, which provides:
ART. 26. Every person shall respect the dignity, personality, privacy and peace of mind
of his neighbors and other persons. The following and similar acts, though they may not
constitute a criminal offense, shall produce a cause of action for damages, prevention and
other relief:
(1) Prying into the privacy of another‘s residence;

(2) Meddling with or disturbing the private life or family relations of another;
(3) Intriguing to cause another to be alienated from his friends;
(4) Vexing or humiliating another on account of his religious beliefs, lowly station in
life, place of birth, physical defect, or other personal condition.
Thus, Article 2219(10) of the Civil Code allows the recovery of moral damages for acts and actions referred to in Article
26, among other provisions, of the Civil Code.
In Concepcion v. Court of Appeals, we explained that:
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. 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. 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.
And THIRD, respondent alleged that the distribution by petitioners to Horseshoe Village homeowners of copies of the
MeTC decision in the unlawful detainer case, which was adverse to respondent and still on appeal before the RTC-Branch
88, had no apparent lawful or just purpose except to humiliate respondent or assault his character. As a result, respondent
suffered damages – becoming the talk of the town and being deprived of his political career.
Petitioners reason that respondent has no cause of action against them since the MeTC decision in the unlawful detainer
case was part of public records.
It is already settled that the public has a right to see and copy judicial records and documents . However, this is not
a case of the public seeking and being denied access to judicial records and documents . The controversy is rooted in
the dissemination by petitioners of the MeTC judgment against respondent to Horseshoe Village homeowners, who
were not involved at all in the unlawful detainer case, thus, purportedly affecting negatively respondent‘s good
name and reputation among said homeowners.
The unlawful detainer case was a private dispute between petitioners and respondent, and the MeTC decision against
respondent was then still pending appeal before the RTC-Branch 88, rendering suspect petitioners‘ intentions for
distributing copies of said MeTC decision to non-parties in the case. While petitioners were free to copy and distribute
such copies of the MeTC judgment to the public, the question is whether they did so with the intent of humiliating
respondent and destroying the latter‘s good name and reputation in the community.
Nevertheless, we further declare that the CA erred in already awarding moral and exemplary damages in respondent‘s
favor when the parties have not yet had the chance to present any evidence before the RTC-Branch 227. In civil cases, he
who alleges a fact has the burden of proving it by a preponderance of evidence. It is incumbent upon the party claiming
affirmative relief from the court to convincingly prove its claim. Bare allegations, unsubstantiated by evidence are not
equivalent to proof under our Rules. In short, mere allegations are not evidence.
At this point, the finding of the CA of bad faith and malice on the part of petitioners has no factual basis. Good faith is
presumed and he who alleges bad faith has the duty to prove the same. Good faith refers to the state of the mind which
is manifested by the acts of the individual concerned. It consists of the intention to abstain from taking an
unconscionable and unscrupulous advantage of another. Bad faith, on the other hand, does not simply connote bad
judgment to simple negligence. It imports a dishonest purpose or some moral obliquity and conscious doing of a wrong, a
breach of known duty due to some motive or interest or ill will that partakes of the nature of fraud. Malice connotes ill
will or spite and speaks not in response to duty. It implies an intention to do ulterior and unjustifiable harm.
We cannot subscribe to respondent‘s argument that there is no more need for the presentation of evidence by the parties
since petitioners, in moving for the dismissal of respondent‘s complaint for damages, hypothetically admitted
respondent‘s allegations. The hypothetical admission of respondent‘s allegations in the complaint only goes so far as
determining whether said complaint should be dismissed on the ground of failure to state a cause of action. A finding that
the complaint sufficiently states a cause of action does not necessarily mean that the complaint is meritorious; it
shall only result in the reinstatement of the complaint and the hearing of the case for presentation of evidence by
the parties.
WHEREFORE, in view of all the foregoing, the petition is PARTIALLY GRANTED. The Decision dated January 31,
2006 of the Court of Appeals in CA-G.R. CV No. 82610 is AFFIRMED WITH MODIFICATIONS. The award of moral
and exemplary damages made by the Court of Appeals in favor of respondent Ismael Veloso III is DELETED. The
complaint of respondent Ismael Veloso III in Civil Case No. Q-02-48341 is hereby REINSTATED before Branch 227 of
the Regional Trial Court of Quezon City only in so far as the first cause of action is concerned. The said court is
DIRECTED to hear and dispose of the case with dispatch.
B. Contrary to Law and Morals
- Civil Code
o Articles 20 and 21 (Memorize)
1. Hermosisima v. Court of Appeals, 109 Phil. 628 (1960)

Facts: On October 4, 1954, Soledad Cagigas, hereinafter referred to as complainant, filed with said CFI a complaint for
the acknowledgment of her child, Chris Hermosisima, as natural child of said petitioner, as well as for support of
said child and moral damages for alleged breach of promise to marry. Francisco Hermosisima (petitioner) admitted the
paternity of child and expressed willingness to support the later, but denied having ever promised to marry the
complainant.
Complainant Soledad Cagigas was born in 1917. Since 1950, complainant (33 years old) who was then a teacher in the
Sibonga Provincial High School in Cebu, and Francisco, who was almost 10 years younger than she, used to go around
together and were regarded as engaged, although he had made no promise of marriage prior thereto.
In 1951, she gave up teaching and became a life insurance underwriter - in the City of Cebu, where intimacy developed
among her and the Francisco, since one evening, in 1953, when after coming from the movies, they had sexual
intercourse in his cabin on board M/V "Escaño," to which he was then attached as apprentice pilot.
In February, 1954, Soledad advised Francisco that she was in the family way, whereupon he promised to marry her.
Their child, Chris Hermosisima, was born on June 17, 1954, in a private maternity and clinic. However, subsequently, or
on July 24, 1954, defendant married one Romanita Perez. Hence, the present action, which was commenced on or about
October 4, 1954.
Issue: Whether or not moral damages are recoverable, under our laws, for breach of promise to marry.
Held: NO. It will be noted that the Civil Code of Spain permitted the recovery of damages for breach of promise to
marry.
ART. 44. If, the promise has been in a public or private instrument by an adult, or by a
minor with the concurrence of the person whose consent is necessary for the celebration
of the marriage, or if the banns have been published, the one who without just cause
refuses to marry shall be obliged to reimburse the other for the expenses which he or
she may have incurred by reason of the promised marriage.
The action for reimbursement of expenses to which the foregoing article refers must be
brought within one year, computed from the day of the refusal to celebrate the marriage.
Inasmuch as these articles were never in force in the Philippines, the Court ruled in De Jesus vs. Syquia that the action
for breach of promise to marry has no standing in the civil law, apart from the right to recover money or property
advanced upon the faith of such promise.
Based on the Report of the Code Commission on the Proposed Civil Code, provisions regarding breach of promise to
marry were inserted in said Proposed Civil Code, under Chapter I, Title III, Book I thereof. However, these were
eliminated in Congress. The reason was set forth in the report of the corresponding Senate Committee:
The elimination of this Chapter is proposed. That breach of promise to marry is not
actionable has been definitely decided in the case of De Jesus vs. Syquia. The history of
breach of promise suits in the United States and in England has shown that no other
action lends itself more readily to abuse by designing women and unscrupulous men. It
is this experience which has led to the abolition of rights of action in the so-called Balm
suits in many of the American States.
The Commission perhaps thought that it has followed the more progressive trend in legislation when it provided for
breach of promise to marry suits. But it is clear that the creation of such causes of action at a time when so many States,
in consequence of years of experience are doing away with them, may well prove to be a step in the wrong direction.
The views thus expressed were accepted by both houses of Congress. In the light of the clear and manifest intent of our
law making body not to sanction actions for breach of promise to marry, the award of moral damages made by the
lower court is, accordingly, untenable.
In justifying the award, the CA said that:
Moreover, it appearing that because of defendant-appellant's seductive powers, plaintiff-appellee,

overwhelmed by her love for him finally yielded to his sexual desires in spite of her age and self-
control, she being a woman after all (LOOOOL), we hold that said defendant- appellant is
liable for seduction and, therefore, moral damages may be recovered from him under the
provisions of Article 2219, paragraph 3, of the new Civil Code.
Apart from the fact that the general tenor of said Article 2219, particularly the paragraphs preceding and those following
the one cited by the Court of Appeals, and the language used in said paragraph strongly indicates that the "seduction"
therein contemplated is the crime punished as such in Articles 337 and 338 of the Revised Penal Code, which
admittedly does not exist in the present case, we find ourselves unable to say that Francisco is morally guilty of
seduction, not only because he is approximately 10 years younger than the complainant — who was around 36
years of age, and as highly enlightened as a former high school teacher and a life insurance agent are supposed to
be — when she became intimate with Francisco, then a mere apprentice pilot, but, also, because, the CFI found that,
complainant "surrendered herself" to petitioner because, "overwhelmed by her love" for him, she "wanted to bind" him
"by having a fruit of their engagement even before they had the benefit of clergy"
CFI: awarded monthly pension for child support, unearned income, attorney‘s fees, and award for moral damages
CA: Increased award for moral damages
With the elimination of this award for moral damages, the decision of the CA is hereby affirmed, therefore, in all other
respects, without special pronouncement as to costs in this instance.
2. Wassmer v. Velez, 12 SCRA 648 (1964)

Facts: “The facts that culminated in this case started with dreams and hopes, followed by appropriate planning and
serious endeavors, but terminated in frustration and, what is worse, complete public humiliation.”
Francisco X. Velez and Beatriz P. Wassmer, following their mutual promise of love, decided to get married on
September 4, 1954. On September 2, 1954 Velez left this note for his bride-to-be:
Dear Bet— “Will have to postpone wedding —My mother opposes it. Am leaving on the
Convair today.
Please do not ask too many people about the reason why — That would only create a
scandal.
Paquing
But the next day, September 3, he sent her the following telegram:
NOTHING CHANGED REST ASSURED RETURNING VERY SOON APOLOGIZE
MAMA PAPA LOVE PAKING
Thereafter Velez did not appear nor was he heard from again. Sued by Beatriz for damages, Velez filed no answer
and was declared in default.
Plaintiff adduced evidence before the clerk of court as commissioner. Judgment was rendered ordering Velez to pay
plaintiff P2,000.00 as actual damages; P25,000.00 as moral and exemplary damages; P2,500.00 as attorney‘s fees; and the
costs.
Velez filed a petition for relief from orders, judgment and proceedings and motion for new trial and reconsideration .
The court, on August 2, 1955, ordered the parties and their attorneys to appear before it on August 23, 1955 ―to explore
at this stage of the proceedings the possibility of arriving at an amicable settlement and should any of them fail to appear,
―the petition for relief and the opposition thereto will be deemed submitted for resolution.‖
Velez failed to appear before court. The following day his counsel filed a motion to defer for 2 weeks the resolution on
defendant‘s petition for relief. His counsel stated that he would confer with Velez in Cagayan de Oro City — the latter‘s
residence — on the possibility of an amicable settlement. The court granted 2 weeks. Plaintiff manifested on June 15,
1956 that the 2 weeks given by the court had expired on September 8, 1955 but that Velez and his counsel had failed to
appear. Another chance for amicable settlement was given. Velez‘s counsel informed the court that chances of settling
the case amicably were nil. The court issued an order denying Velez aforesaid petition.
Velez has appealed to this Court. He alleged excusable negligence as ground to set aside the judgment by default. It was
stated that defendant filed no answer in the belief that an amicable settlement was being negotiated.
Issue: Whether Velez is liable for damages.
Held: YES. A petition for relief from judgment on grounds of fraud, accident, mistake or excusable negligence, must be
duly supported by an affidavit of merits stating facts constituting a valid defense. Velez‘s affidavit of merits attached to
his petition of June 21, 1955 stated: ―That he has a good and valid defense against plaintiff‘s cause of action, his failure
to marry the plaintiff as scheduled having been due to fortuitous event and/or circumstances beyond his control.‖ An
affidavit of merits like this stating mere conclusions or opinions instead of facts is not valid.
Velez, however, would contend that the affidavit of merits was in fact unnecessary, or a mere surplusage, because the
judgment sought to be set aside was null and void, it having been based on evidence adduced before the clerk of court.
In Province of Pangasinan vs. Palisoc, this Court pointed out that the procedure of designating the clerk of court as
commissioner to receive evidence is sanctioned by Rule 34 (now Rule 33) of the Rules of Court. Now as to defendant‘s
consent to said procedure, the same did not have to be obtained for he was declared in default and thus had no standing in
court.
ON BREACH OF PROMISE TO MARRY

Velez also asserts that the judgment is contrary to law. The reason given is that ―there is no provision of the Civil Code
authorizing‖ an action for breach of promise to marry. In Hermosisima, as reiterated in Estopa vs. Biansay the SC
held that—
Mere breach of a promise to marry is not an actionable wrong. We pointed out that
Congress deliberately eliminated from the draft of the new Civil Code the provisions that
would have it so.
It must not be overlooked, however, that the extent to which acts not contrary to law may
be perpetrated with impunity, is not limitless for Article 21 of said Code provides that
―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.
Record reveals that on August 23, 1954 Wassmer and Velez applied for a license to contract marriage, which was
subsequently issued. The wedding was set for September 4, 1954. Invitations were printed and distributed to relatives,
friends and acquaintances. The bride-to-be‘s trousseau, party dresses and other apparel for the important occasion were
purchased. Dresses for the maid of honor and the flower girl were prepared. A matrimonial bed, with accessories, was
bought. Bridal showers were given and gifts received.
With but 2 days before the wedding, Velez, who was then 28 years old, simply left a note the above note. He enplaned
to his home city in Mindanao, and the next day, the day before the wedding, he wired plaintiff saying that nothing
changed rest assured returning soon. But he never returned and was never heard from again.
Surely this is NOT A CASE OF MERE BREACH OF PROMISE TO MARRY . As stated, mere breach of promise to marry is not
an actionable wrong. But to formally set a wedding and go through all the above-described preparation and publicity,
only to walk out of it when the matrimony is about to be solemnized, is quite different. This is palpably and
unjustifiably CONTRARY TO GOOD CUSTOMS for which defendant must be held answerable in damages in
accordance with Article 21.
Per express provision of Article 2219(10) of the New Civil Code, moral damages are recoverable in the cases mentioned
in Article 21 of said Code. As to exemplary damages, defendant contends that the same could not be adjudged against him
because under Article 2232 of the New Civil Code the condition precedent is that ―the def endant acted in a wanton,
fraudulent, reckless, oppressive, or malevolent manner.‖ The argument is devoid of merit as under the above-narrated
circumstances of this case defendant clearly acted in a ―wanton x x x, reckless [and] oppressive manner.‖ This Court‘s
opinion, however, is that considering the particular circumstances of this case, P15,000.00 as moral and exemplary
damages is deemed to be a reasonable award.
3. Baksh v. Court of Appeals, G.R. No. 97336, February 19, 1993

Facts: Private respondent Marilou Gonzales filed a complaint against Baksh, claiming damages against petitioner for the
alleged violation of their agreement to get married.
Gonzales is a 22 year old, single, Filipino and a pretty lass of good moral character and reputation duly respected in her
community. Baksh, meanwhile, is an Iranian citizen residing at the Lozano Apartments, Dagupan City, and is an
exchange student taking a medical course at the Lyceum Northwestern Colleges in Dagupan City;
Before 20 August 1987, the latter courted and proposed to marry her. Gonzales accepted his love on the condition
that they would get married. They agreed to do so at the end of the semester. They eventually visited their parents to
secure their approval. Sometime in 20 August 1987, the Baksh forced her to live with him in the Lozano Apartments.
Apparently she was a virgin before she began living with him.
However, a week before the filing of the complaint, Baksh‟s attitude towards her started to change. He maltreated and
threatened to kill her, which as a result of such maltreatment, she sustained injuries. During a confrontation with a
representative of the barangay captain of Guilig a day before the filing of the complaint, Baksh repudiated their
marriage agreement and asked her not to live with him anymore and claimed that he is already married to someone
living in Bacolod City. Gonzales then prayed for judgment ordering the petitioner to pay her damages.
Baksh countered, claiming that he never proposed marriage to or agreed to be married with the private respondent; he
neither sought the consent and approval of her parents nor forced her to live in his apartment; he did not maltreat her, but
only told her to stop coming to his place because he discovered that she had deceived him by stealing his money and
passport; and finally, no confrontation took place with a representative of the barangay captain.
The trial court ruled in favor of Gonzales. The CA affirmed.
Issue: Whether Baksh can be held liable under Art. 21.
Held: YES. The existing rule is that a breach of promise to marry per se is NOT an actionable wrong. Congress
deliberately eliminated from the draft of the New Civil Code the provisions that would have made it so. The reason has
been set forth in the report of the Senate Committees thus:
The elimination of this chapter is proposed. That breach of promise to marry is not
actionable has been definitely decided in the case of De Jesus vs. Syquia. The history of
breach of promise suits in the United States and in England has shown that no other
action lends itself more readily to abuse by designing women and unscrupulous men. It is
this experience which has led to the abolition of rights of action in the so-called Heart
Balm suits in many of the American states
This notwithstanding, the said Code contains a provision, Article 21, which is designed to expand the concept of torts
or quasi-delict in this jurisdiction by granting adequate legal remedy for the untold number of moral wrongs which is
impossible for human foresight to specifically enumerate and punish in the statute books. This was explained by the
Code Commission in its report:
But the Code Commission had gone farther than the sphere of wrongs defined or
determined by positive law. Fully sensible that there are countless gaps in the statutes,
which leave so many victims of moral wrongs helpless, even though they have actually
suffered material and moral injury, the Commission has deemed it necessary, in the
interest of justice, to incorporate in the proposed Civil Code the following rule:
Art. 23. 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.
An example will illustrate the purview of the foregoing norm: "A" seduces the nineteen-
year old daughter of "X". A promise of marriage either has not been made, or cannot be
proved. The girl becomes pregnant. Under the present laws, there is no crime, as the girl
is above nineteen years of age. Neither can any civil action for breach of promise of
marriage be filed. Therefore, though the grievous moral wrong has been committed, and
though the girl and family have suffered incalculable moral damage, she and her parents
cannot bring action for damages. But under the proposed article, she and her parents
would have such a right of action.
The court holds that where a man's promise to marry is in fact the proximate cause of the acceptance of his love by a
woman and his representation to fulfill that promise thereafter becomes the proximate cause of the giving of herself
unto him in a sexual congress, proof that he had, in reality, no intention of marrying her and that the promise was only
a subtle scheme or deceptive device to entice or inveigle her to accept him and to obtain her consent to the sexual
act, could justify the award of damages pursuant to Article 21 NOT BECAUSE OF SUCH PROMISE TO MARRY BUT
BECAUSE OF THE FRAUD AND DECEIT BEHIND IT and THE WILLFUL INJURY TO HER HONOR AND REPUTATION WHICH
FOLLOWED THEREAFTER. It is essential, however, that such injury should have been committed in a manner contrary to
morals, good customs or public policy.
It was the Baksh‘s "fraudulent and deceptive protestations of love for and promise to marry plaintiff that made her
surrender her virtue and womanhood to him and to live with him on the honest and sincere belief that he would keep
said promise, and it was likewise these fraud and deception on appellant's part that made plaintiff's parents agree to their
daughter's living-in with him preparatory to their supposed marriage." In short, the Gonzales surrendered her virginity,
the cherished possession of every single Filipina, not because of lust but because of moral seduction — the kind
illustrated by the Code Commission in its example earlier adverted to.
Baksh‘s claim that Gonzales is in pari delicto must also fail. The pari delicto rule does not apply in this case for while
indeed, the Gonzales may not have been impelled by the purest of intentions, she eventually submitted to the petitioner
in sexual congress not out of lust, but because of moral seduction. In fact, it is apparent that she had qualms of
conscience about the entire episode for as soon as she found out that the Baksh was not going to marry her after all, she
left him. She is not, therefore, in pari delicto with the petitioner. Pari delicto means "in equal fault; in a similar offense or
crime; equal in guilt or in legal fault." At most, it could be conceded that she is merely in delicto.
ADDED DISCUSSION:
Associate Justice Edgardo L. Paras, opined that in a breach of promise to marry where there had been carnal
knowledge, moral damages may be recovered together with actual damages, should there be any, such as the expenses
for the wedding presentations. Senator Tolentino also takes the same view.
C. Unjust Enrichment
- Civil Code
o Articles 22 and 23 (Memorize)
2.Security Bank & Trust Company v. Court of Appeals, G.R. No. 117009, October 11, 1995
Facts: Ysmael Ferrer was contracted by the Bank and Rosito Manhit to construct a building in Davao City for 1.76M. The
contract dated Feb 4, 1980 provided that the construction should be completed within 200 working days.
Ferrer was able to do complete the construction on Aug 15, 1980 which was within the prescribed period. However,
Ferrer was compelled by a drastic increase in the cost of construction materials to incur expenses of 300,000 on top of
the original cost.
These additional expenses were made known to the Bank through its VP as early as March 1980. Ferrer also made
timely demands for payment of the increased cost which were supported by receipts, invoices, payrolls, etc.
In March 1981, AVP Guanio and a representative of an architectural firm consulted by the Bank verified Ferrer‘s claims
for additional cost. From this, a recommendation was made to settle the claim but only to the extent of 200,000.
However, instead of paying for the recommended amount, the Bank denied having authorized the payment of any
account beyond the original contract price. It likewise denied payment of the additional cost based on Article IX of their
contract which provides:
If at any time prior to the completion of the work to be performed hereunder, increase
in prices of construction materials and/or labor shall supervene through no fault on
the part of the contractor whatsoever or any act of the government and its
instrumentalities which directly or indirectly affects the increase of the cost of the project,
OWNER shall equitably make the appropriate adjustment on mutual agreement of
both parties.
Thus, Ferrer filed a complaint for breach of contract with damages.
TC ruled for Ferrer ordering Bank and Manhit to pay 260K for the increase of cost of labor and materials plus damages.
On appeal, CA affirmed. Hence, this petition.
Bank argues that based on the quoted provision of the contract, since there was no mutual agreement between the parties,
the obligation to pay amounts above the original contract price never materialized.
Ferrer opposed. (It is worthy to note, however, that the pleadings it filed hardly refute the Bank‟s arguments as the
pleadings merely quoted portions of the CA decision. Thus, the Court apprised Ferrer‟s lawyer to exert more diligence
and legal know-how.)
Issue: Whether the Bank is liable to pay the costs above the original contract price incurred by Ferrer.
Held: YES. Article 22 of the Civil Code which embodies the maxim, Nemo ex alterius incommodo debet lecupletari (no
man ought to be made rich out of another‘s injury) states:
Art. 22. Every person who through an act of performance by another, or any other means,
acquires or comes into possession of something at the expense of the latter without
just or legal ground, shall return the same to him.
The above-quoted article is part of the chapter on Human Relations, the provisions of which were formulated as ―basic
principles to be observed for the rightful relationship between human beings and for the stability of the social order,
x x x designed to indicate certain norms that spring from the fountain of good conscience, x x x guides for human
conduct [that] should run as golden threads through society to the end that law may approach its supreme ideal which is
the sway and dominance of justice.
Under the previously quoted Article IX of the construction contract, the Bank would make the appropriate adjustment
to the contract price in case the cost of the project increases through no fault of Ferrer . Ferrer informed the Bank
of the drastic increase in construction cost as early as March 1980.
The Bank in turn had the increased cost evaluated and audited. When Ferrer demanded payment of P259,417.23, the
Bank‘s VP Rosito Manhit and the bank‘s architectural consultant were directed by the bank to verify and compute private
respondent‘s claims of increased cost. A recommendation was then made to settle Ferrer‘s claim for P200,000.00.
Despite this recommendation and several demands, the Bank failed to make payment. It denied authorizing anyone to
make a settlement of the claim and likewise denied any liability, contending that the absence of a mutual agreement made
Ferrer‟s demand premature and baseless.
It is not denied that Ferrer incurred additional expenses in constructing the Bank‘s building due to a drastic and
unexpected increase in construction cost. In fact, the Bank admitted liability for increased cost when a recommendation
was made to settle the claim for P200,000.00. Ferrer‘s claim for the increased amount was adequately proven during
the trial by receipts, invoices and other supporting documents.
Under Article 1182, a conditional obligation shall be void if its fulfillment depends upon the sole will of the debtor
(potestative). In the present case, the mutual agreement, the absence of which the Bank relies upon to support its non-
liability for the increased construction cost, is in effect a condition dependent on the Bank‟s sole will, since Ferrer
would naturally and logically give consent to such an agreement which would allow him recovery of the increased cost.
Also, it cannot be denied that the Bank derived benefits when Ferrer completed the construction even at an increased
cost. To allow the Bank to acquire the constructed building at a price far below its actual construction cost would
undoubtedly constitute unjust enrichment for the bank to the prejudice of Ferrer. Such unjust enrichment, as
previously discussed, is not allowed by law.
*Discussion on damages omitted
2.Car Cool Philippines, Inc., v. Ushio Realty and Development Corporation, G.R. No. 138088, January 23, 2006
Facts: USHIO Realty alleges that the former owners of the property, ―Spouses Lopez‖, leased the property to CAR
COOL since 1972. In 1990, the Spouses Lopez and CAR COOL executed a written lease agreement over the property
for 2 years.
On 16 August 1992, on the expiration of the written lease agreement, the Spouses Lopez allowed CAR COOL to
continue occupying the property upon payment of monthly rentals. Later, a verbal month-to-month lease agreement
continued until 31 August 1995.
On 15 June 1995, Hector Lopez wrote CAR COOL to inform it of his intention to sell the property. Hector Lopez
gave CAR COOL the option to buy the property before offering the same to other prospective buyers. CAR COOL
failed to respond to the offer.
On 28 June 1995, Hector Lopez terminated the verbal lease agreement and gave CAR COOL until 31 August 1995 to
vacate the property. In his subsequent letters dated 22 July, 1 August and 12 August 1995, Hector Lopez reiterated his
demand for CAR COOL to vacate the property. CAR COOL allegedly ignored the demands to vacate the property and
continued to occupy the same.
In a letter dated 31 August 1995, USHIO Realty informed CAR COOL that it had purchased the property from the
Spouses Lopez. USHIO Realty gave CAR COOL another 30 days from 31 August 1995 to vacate the property. CAR
COOL failed to respond to the demand letter and continued to occupy the property. On 3 December 1995, USHIO Realty
sent a final demand to CAR COOL, giving it a non-extendible 15 days within which to vacate the property. CAR COOL
refused to vacate the property, prompting USHIO Realty to file the complaint for ejectment on 19 December 1995.
CAR Cool‘s contentions:

 USHIO Realty was aware of the lease agreement between CAR COOL and the former owner, Hector Lopez.
 Hector Lopez agreed to renew the lease for another two years; and upon his receipt of the advance rentals and
security deposit, Hector Lopez allegedly promised to execute a written contract of lease for two years covering
the period from 1 January 1995 to 31 December 1996.
 On 1 October 1995, USHIO Realty allegedly broke into the leased premises, demolished the improvements on the
premises, and threatened and inflicted bodily injuries upon two employees of CAR COOL. CAR COOL later
amended the complaint-affidavit to include the charge of grave coercion.
Thus on 21 November 1995, CAR COOL filed a complaint for specific performance and damages with the RTC of
Quezon City. The complaint sought to compel Hector Lopez to execute a written lease contract for the 2-year extension.
CA: affirmed the RTC decision (in favor of Ushio) and added that the payment of P18,000 monthly rental should start
from 19 December 1995 until CAR COOL finally vacates the property. The CA held that CAR COOL‘s possession of
the property became unlawful only on 19 December 1995, upon receipt of the demand to vacate the property and
CAR COOL‟s refusal to surrender possession.
CAR COOL asserts that to award damages to USHIO Realty would constitute unjust enrichment at the expense of
CAR COOL. CAR COOL claims that it never benefited from its occupation of the property after USHIO Realty‘s agents
entered the property on 1 October 1995 and unlawfully destroyed CAR COOL‘s office, equipment and spare parts.
Because of the destruction of the equipment and spare parts needed to operate its business, CAR COOL asserts that it was
no longer possible to continue its business operations.
Issue: Whether the award of rentals in favor of Ushio was proper
Held: PROPER. However, the Court rules in favor of Ushio, for the following reasons:
(1) USHIO IS THE LAWFUL OWNER OF THE PROPERTY.
In this case, there is no dispute on the ownership of the property. An Absolute Deed of Sale dated 14 September 1995
shows that the Spouses Lopez sold the property to USHIO Realty. On 19 September 1995, the Registry of Deeds of
Quezon City issued a Transfer Certificate of Title for the property in the name of USHIO Realty. On 3 December 1995,
USHIO Realty sent a final demand to CAR COOL, giving it a non-extendible 15 days within which to vacate the
property. When CAR COOL still refused to vacate the property, USHIO Realty filed the complaint for ejectment on 19
December 1995.
USHIO Realty, as the new owner of the property, has a right to physical possession of the property. Since CAR COOL
deprived USHIO Realty of its property, CAR COOL should pay USHIO Realty rentals as reasonable compensation for
the use and occupation of the property.
(2) Thus, THERE WOULD BE NO UNJUST ENRICHMENT. There is NO UNJUST ENRICHMENT WHEN THE PERSON
WHO WILL BENEFIT HAS A VALID CLAIM TO SUCH BENEFIt.
We have held that ―there is unjust enrichment when a person unjustly retains a benefit to the loss of another, or when
a person retains money or property of another against the fundamental principles of justice, equity and good
conscience.‖ Article 22 of the Civil Code provides that ―every person who through an act of performance by another, or
any other means, acquires or comes into possession of something at the expense of the latter without just or legal ground,
shall return the same to him.‖
The PRINCIPLE OF UNJUST ENRICHMENT under Article 22 requires 2 conditions:

(1) that a person is benefited without a valid basis or justification, and
(2) that such benefit is derived at another‘s expense or damage.
There is no unjust enrichment when the person who will benefit has a valid claim to such benefit. Under Section 17 of
Rule 70 of the Rules of Civil Procedure, USHIO Realty has the legal right to receive some amount as reasonable
compensation for CAR COOL‟s occupation of the property. Thus, in Benitez v. Court of Appeals, we held that:
Damages are recoverable in ejectment cases under Section 8, Rule 70 of the Revised Rules of Court.
These damages arise from the loss of the use and occupation of the property, and not the damages
which private respondents may have suffered but which have no direct relation to their loss of material
possession. Damages in the context of Section 8, Rule 70 is limited to ―rent‖ or ―fair market value‖
for the use and occupation of the property.
(3) PERIOD DURING WHICH CAR COOL MUST PAY RENT: Dec 19 1995-Nov 18 1996.
The records show that CAR COOL already vacated the property on 18 November 1996. The Sheriff of the
RTC of Quezon City certified that on 18 November 1996, he turned over the possession of the property to
USHIO Realty.
Thus, the P18,000 monthly rental for the use of the property should run from 19 December 1995 until 18
November 1996 or a period of 11 months. Therefore, the total amount due as reasonable compensation for the
use of the property is P198,000.
The trial court established this amount with reasonable accuracy or certainty because the trial court based this
amount on the latest monthly rental CAR COOL paid the previous owner of the property. Accordingly, this
amount should earn interest at 6 percent per annum from 19 November 1996 until finality of this decision, after
which the accrued interest, together with the P198,000, shall earn interest at 12 percent per annum until full
payment.
(4) However, the award of ATTORNEY‘S FEES WAS NOT PROPER.

We cannot sustain the award of attorney‘s fees. CA failed to state explicitly in its decision the basis for the
award of attorney‟s fees. The award of attorney‘s fees is the exception rather than the rule and the court must
state explicitly the legal reason for the award of attorney‘s fees.
3. Uy v. Public Estates Authority, G.R. No. 147925-26, July 7, 2010

Facts: Uy and PEA seek a reconsideration of our decision:
WHEREFORE, the petition is PARTIALLY GRANTED. The assailed Joint Decision

and Joint Resolution of the Court of Appeals in CA-G.R. SP Nos. 59308 and 59849 are
AFFIRMED with MODIFICATIONS. Respondent Public Estates Authority is ordered
to pay Elpidio S. Uy, doing business under the name and style Edison Development and
Construction, P55,680,492.38 for equipment rentals on standby; P2,275,721.00 for the
cost of idle manpower; and P6,050,165.05 for the construction of the nursery shade net
area; plus interest at 6% per annum to be computed fromthe date of the filing of the
complaint until finality of this Decision and 12% per annum thereafter until full payment.
Respondent PEA is further ordered to pay petitioner Uy 10% of the total award as
attorney‘s fees.
Uy objects to the factor rate used in the computation of the award for standby equipment costs. He points out that the
actual number of equipment deployed and which remained on standby, occasioned by the delay in delivery of work
areas, has not been considered in the computation. The Association of Carriers and Equipment Lessors rate or the
factor rate used was only the total average rate, without regard to the actual number of equipment deployed. He,
therefore, insists that an increase be made.
Issue: Whether the award in favor of Uy should be increased.
Held: YES. These equipment remained in the project site on the days that EDC was waiting for the turnover of
additional work areas. We agree with Uy that the actual number of equipment mobilized should be included in
computing the award for standby equipment cost. The award must, therefore, be modified using the following formula:
Actual period of delay (18.2 months) x average rate per ACEL x number of equipment
The records show that not all of the equipment were operational; several were under repair. We find it necessary to
remand the records of the case to the Construction Industry Arbitration Commission for the proper computation of
the award of standby equipment cost.
On the claim for costs for additional hauling distance of topsoil and for mobilization of water truck, we maintain our
ruling that a written approval of PEA‟s general manager was indispensable before the claim for additional cost can be
granted. The additional costs were incurred without the written approval of PEA. The denial of Uy‘s claims was,
therefore, appropriate.
We CANNOT SUSTAIN this claim that is premised mainly on the principle of unjust enrichment. The principle of
unjust enrichment cannot be validly invoked by a party who, through his own act or omission, took the risk of being
denied payment for additional costs by not giving the other party prior notice of such costs and/or by not securing their
written consent thereto, as required by law and their contract.
PEA insists that our Decision in this case transgresses the principle of res judicata. This Court was very explicit in its
declaration that its Decision was independent of, and without prejudice to, the appeal filed by Uy. This Court‘s Decision
in G.R. Nos. 147933-34 will not bar the grant of additional award to Uy.
4.Almario v. Philippine Airlines, Inc., G.R. No. 170928, September 11, 2007
Facts: Almario, then about 39 years of age and a Boeing 737 First Officer at PAL, successfully bid for the higher
position of Airbus 300 First Officer. Since said higher position required additional training, he underwent, at PAL‘s
expense, more than 5 months of training consisting of ground schooling in Manila and flight simulation in Melbourne,
Australia.
After completing the training course, Almario served as A300 First Officer of PAL, but after 8 months of service as
such, he tendered his resignation, for ―personal reasons,‖
PAL‘s Vice President for Flight Operations sent Almario a letter, the pertinent portions of which read:
As you are aware the Company invested heavily on your professional training in the
estimated amount of P786,713.00 on the basis that you continue to serve the Company
for a definite period of time which is approximately 3 years or 36 months. We urge you
to reconsider your proposed resignation otherwise you will be required to reimburse the
Company an amount equivalent to the cost of your professional training and the damages
caused to the Company.
Despite receipt of the letter, Almario pushed through with his resignation.
PAL filed a Complaint against Almario before the Makati RTC, for reimbursement of P851,107 worth of training costs,
attorney‘s fees equivalent to 20% of the said amount, and costs of litigation.
Issue: Whether Almario should reimburse PAL.
Held: YES. UNJUST ENRICHMENT. PAL invoked the existence of an innominate contract of do ut facias (I give that
you may do) with Almario in that by spending for his training, he would render service to it until the costs of training
were recovered in at least 3 years. Almario having resigned before the 3-year period, PAL prayed that he should be
ordered to reimburse the costs for his training.
Almario denied the existence of any agreement with PAL that he would have to render service to it for 3 years after his
training failing which he would reimburse the training costs. He pointed out that the 1991-1994 CBA between PAL and
the Airline Pilot‘s Association of the Philippines (ALPAP), of which he was a member, carried no such agreement.
The CBA is the law between the contracting parties — the collective bargaining representative and the employer-
company. Compliance with a CBA is mandated by the expressed policy to give protection to labor. In the same vein, CBA
provisions should be construed liberally rather than narrowly and technically, and the courts must place a practical and
realistic construction upon it, giving due consideration to the context in which it is negotiated and purpose which it is
intended to serve. This is founded on the dictum that a CBA is not an ordinary contract but one impressed with public
interest. It goes without saying, however, that only provisions embodied in the CBA should be so interpreted and
complied with. Where a proposal raised by a contracting party does not find print in the CBA, it is not a part thereof and
the proponent has no claim whatsoever to its implementation.
Section 1, Article XXIII of the 1985-1987 CBA provides:
Pilots 55 years of age or over who have not previously qualified in any Company turbo-
jet aircraft shall not be permitted to bid into the Company‟s turbo-jet operations. Pilots
55 years of age or over who have previously qualified in the Company‟s turbo-jet
operations may be by-passed at Company option, however, any such pilot shall be paid
the by-pass pay effective upon the date a junior pilot starts to occupy the bidded position.
PAL proposed to amend the provision in this wise:
The compulsory retirement age for all pilots is 60 years. Pilots who reach the age of 55
years and over without having previously qualified in any Company turbo-jet aircraft
shall not be permitted to occupy any position in the Company‟s turbo-jet fleet. Pilots 54
years of age and over are ineligible for promotion to any position in Group I. Pilots
reaching the age of 55 shall be frozen in the position they currently occupy at that time
and shall be ineligible for any further movement to any other positions.
PAL‘s contention is basically premised on prohibitive training costs. The return on this investment in the form of the pilot
promoted is allegedly five years. Considering the pilot‘s age, the chances of full recovery are asserted to be quite slim.
ALPAP opposed the proposal and argued that the training cost is offset by the pilot‘s maturity, expertise and experience.
By way of compromise, we rule that a pilot should remain in the position where he is upon reaching age 57
irrespective of whether or not he has previously qualified in the Company‘s turbo-jet operations. The rationale
behind this is that a pilot who will be compulsorily retired at age 60 should no longer be burdened with training for a new
position. But if a pilot is only at age 55, and promotional positions are available, he should still be considered and
promoted if qualified, provided he has previously qualified in any company turbo-jet aircraft. In the latter case, the
prohibitive training costs are more than offset by the maturity, expertise, and experience of the pilot.
Thus, the provision on age limit should now read:
Pilots 57 years of age shall be frozen in their positions. Pilots 55 years of age provided
they have previously qualified in any company turbo-jet aircraft shall be permitted to
occupy any position in the company‟s turbo-jet fleet.
The above-quoted provision of the 1985-1987 CBA, as construed by the DOLE Secretary, was substantially incorporated
in the 1991-1994 CBA between PAL and ALPAP as follows:
Pilots 57 years of age shall be frozen in their position. Pilots who are less than 57 years
of age provided they have previously qualified in any company‟s turbo-jet aircraft shall
be permitted to occupy any position in the company‟s turbo-jet 30 fleet.
The same section of Article XXIII of the 1991-1994 CBA was reproduced in the 1994-2000 CBA.
PAL‘s Senior Vice President for Flight Operations, testifying on PAL‘s ―policy or practice‖ on under-writing the training
costs of its pilots at the time Almario was trained, with the ―expectation‖ of benefiting therefrom ―in order to
recover the cost of training.‖
It bears noting that when Almario took the training course, he was about 39 years old, 21 years away from the
retirement age of 60. Hence, with the maturity, expertise, and experience he gained from the training course, he was
expected to serve PAL for at least 3 years to offset ―the prohibitive costs‖ thereof.
UNJUST ENRICHMENT
The pertinent provision of the CBA and its rationale aside, contrary to Almario‘s claim, Article 22 of the Civil Code
which reads: ―Art. 22. Every person who through an act of performance by another, or any other means, acquires or
comes into possession of something at the expense of the latter without just or legal ground, shall return the same to him,‖
applies.
This provision on unjust enrichment recognizes the principle that one may not enrich himself at the expense of
another. An authority on Civil Law writes on the subject, viz: Enrichment of the defendant consists in every patrimonial,
physical, or moral advantage, so long as it is appreciable in money. It may consist of some positive pecuniary value
incorporated into the patrimony of the defendant, such as:
(1) the enjoyment of a thing belonging to the plaintiff;
(2) the benefits from service rendered by the plaintiff to the defendant;
(3) the acquisition of a right, whether real or personal;
(4) the increase of value of property of the defendant;
(5) the improvement of a right of the defendant, such as the acquisition of a right of preference;
(6) the recognition of the existence of a right in the defendant; and
(7) the improvement of the conditions of life of the defendant.
The enrichment of the defendant must have a correlative prejudice, disadvantage, or injury to the plaintiff. This
prejudice may consist, not only of the loss of property or the deprivation of its enjoyment, but also of non-payment of
compensation for a prestation or service rendered to the defendant without intent to donate on the part of the
plaintiff, or the failure to acquire something which the latter would have obtained. The injury to the plaintiff, however,
need not be the cause of the enrichment of the defendant. It is enough that there be some relation between them, that the
enrichment of the defendant would not have been produced had it not been for the fact from which the injury to the
plaintiff is derived.
Admittedly, PAL invested for the training of Almario to enable him to acquire a higher level of skill, proficiency, or
technical competence so that he could efficiently discharge the position of A-300 First Officer. Given that, PAL
expected to recover the training costs by availing of Almario‟s services for at least three years . The expectation of PAL
was not fully realized, however, due to Almario‘s resignation after only 8 months of service following the completion of
his training course. He cannot, therefore, refuse to reimburse the costs of training without violating the principle of
unjust enrichment.
5.Grandteq Industrial Steel Products, Inc., v. Margallo, G.R. No. 181393, July 28, 2009
Facts: Grandteq is engaged in the selling and welding of electrodes and alloys of steel, aluminum, and copper. Gonzales
is its President/Owner. Margallo was a Sales Engineer. Margallo claims that she got a car loan program offered to her
since she was ―Salesman of the Year‖, paying the downpayment of P201,000 on a new Toyota from her own pocket.
The monthly amortization was to be shared.
She then received a letter From Gonzales and De Leon, the VP for Administration, accusing her of diverting steel tools,
moonlighting with JVM Industrial Supply and Allied Services, sabotage, and breach of trust and confidence. She was
placed under preventative suspension. She explained that she was only doing what she was told by her superior as an
ordinary employee. De Leon asked her to resign, promising that she would still be paid her commissions, benefits, and
she would be reimbursed her car loan payments. Relying on this, she tendered her irrevocable resignation.
She alleged that she was never paid her claims or commissions. Grandteq sold her car to another employee for
P550,000. She filed a complaint with the LA for recovery of sales commissions, incentives, payments, and damages.
The LA dismissed her complaint. The NLRC reversed. The CA affirmed this. Hence, this petition.
Grandteq and Gonzales assert that the CA erred in declaring the car loan agreement between Grandteq and Margallo,
particularly the provision therein on the forfeiture of car loan payments in favor of Grandteq should Margallo resign from
the company, as null and void.
Issue: Whether Margallo is entitled to the recovery of the monetary claims.
Held: YES. The Court is in agreement with the CA and the NLRC. Generally speaking, contracts are respected as the
law between the contracting parties. 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.
The questionable provision in the car loan agreement between Grandteq and Margallo provides : ―In case of
resignation, of the personnel from the company, all payments made by the personnel shall be forfeited in favor of the
company.‖ Connected thereto is the provision in the same car loan agreement, which reads:
1. The COMPANY shall have the right to regain the possession of the car before
the expiration of the term of the loan in the event of any of the following:
a. The PERSONNEL resigns from the COMPANY during the effectivity of this
agreement.
Said provisions plainly are contrary to the fundamental principles of justice and fairness. It must be remembered that
Margallo herself paid for the down payment and her share in the monthly amortization of the car. However, she did not
get to leave with the car when she resigned from Grandteq. In effect, Margallo parted with her hard-earned money for
nothing, being left, as she is, with an empty bag.The inequitableness in the conduct of Grandteq and Gonzales is
heightened by the fact that after they regained possession of the car, they resold the same to another employee under a
similar contract bearing the same terms and conditions signed by Margallo.
The principle that no person may unjustly enrich oneself at the expense of another (Nemo cum alteris detrimento
locupletari potest) is embodied in Article 22 of the New Civil Code, to wit:
ART. 22. Every person who through an act of performance by another, or any other
means, acquires or comes into possession of something at the expense of the latter
without just or legal ground, shall return the same to him.
The above-quoted article is part of the chapter of the Civil Code on Human Relations, the provisions of which were
formulated as ―basic principles to be observed for the rightful relationship between human beings and for the
stability of the social order; designed to indicate certain norms that spring from the fountain of good conscience; [are]
guides for human conduct that should run as golden threads through society to the end that law may approach its
supreme ideal, which is the sway and dominance of justice.‖ There is UNJUST ENRICHMENT when a person unjustly
retains a benefit at the loss of another, or when a person retains the money or property of another against the
fundamental principles of justice, equity and good conscience.
As can be gleaned from the foregoing, there is unjust enrichment when (1) a person is unjustly benefited, and (2) such
benefit is derived at the expense of or with damages to another. The main objective of the principle of unjust enrichment
is to prevent one from enriching oneself at the expense of another. It is commonly accepted that this doctrine simply
means that a person shall not be allowed to profit or enrich himself inequitably at another‘s expense. One condition
for invoking this principle is that the aggrieved party has no other action based on a contract, quasi-contract, crime,
quasi-delict, or any other provision of law.
This is NOT A CASE OF EQUITY overruling or supplanting a positive provision of law or judicial rule. Rather, equity is
exercised in this case ―as the complement of legal jurisdiction [that] seeks to reach and to complete justice where courts
of law, through the inflexibility of their rules and want of power to adapt their judgments to the special circumstances of
cases, are incompetent to do so.‖
The principle against unjust enrichment obliges Grandteq and Gonzales to refund to Margallo the car loan payments
she had made, since she has not actually acquired the car. To relieve Grandteq and Gonzales of their obligation to
reimburse Margallo would, indeed, be to sanction unjust enrichment in favor of the first two and cause unjust poverty to
the latter.
The Court rigorously disapproves contracts that demonstrate a clear attempt to exploit the employee and deprive him of
the protection sanctioned by both the Constitution and the Labor Code.
The Constitution and the Labor Code mandate the protection of labor. Hence, as a matter of judicial policy, this Court has,
in a number of instances, leaned backwards to protect labor and the working class against the machinations and incursions
of their more financially entrenched employers.
Although not strictly a labor contract, the CAR LOAN AGREEMENT herein involves a benefit extended by the employers,
Grandteq and Gonzales, to their employee, Margallo. It should benefit, and not unduly burden, Margallo. The Court
cannot, in any way, uphold a car loan agreement that threatens the employee with the forfeiture of all the car loan
payments he/she had previously made, plus loss of the possession of the car, should the employee wish to resign;
otherwise, said agreement can then be used by the employer as an instrument to either hold said employee hostage to the
job or punish him/her for resigning.
The Court further finds no error in the grant by the A and the NLRC of Margallo‘s claim for sales commission. In cases
involving money claims of employees, the employer has the burden of proving that the employees did receive their
wages and benefits and that the same were paid in accordance with law.
It is settled that once the employee has set out with particularity in his complaint, position paper, affidavits and
other documents the labor standard benefits he is entitled to, and which the employer allegedly failed to pay him, it
becomes the employer‟s burden to prove that it has paid these money claims. One who pleads payment has the burden of
proving it; and even where the employees must allege nonpayment, the general rule is that the burden rests on the
defendant to prove payment, rather than on the plaintiff to prove nonpayment.
Under the terms and conditions of Margallo‘s employment with Grandteq, it is provided that she ―will do field sales with
commission on sales made after a month‘s training.‖ On this basis, Margallo‘s entitlement to sales commission is
unrebutted.
Hence, it was actually the Labor Arbiter who erred in denying Margallo‘s claim for sales commission ―for failure to state
the particulars to substantiate the same.‖ Grandteq and Gonzales have the burden of proof to show, by substantial 229
Agas, Anzures, Buan, Cusi, Navarrete, Ongchuan, Reposo, & Roco 3B
evidence, their claim that Margallo was not entitled to sales commissions because the sales made by the latter remained
outstanding and unpaid, rendering these sales as bad debts and thus nullifying Margallo‘s right to this monetary benefit.
Grandteq and Gonzales could have presented pertinent company records to prove this claim. It is a rule that failure
of employers to submit the necessary documents that are in their possession as employers gives rise to the presumption
that the presentation thereof is prejudicial to its cause.
D. Judicial Vigilance
- Civil Code
2.Everett Steamship Corporation v. Court of Appeals, G.R. No. 122494, October 8, 1998
Facts: Petitioner Everett Steamship Corporation, through this petition for review, seeks the reversal of the decision of the
CA which affirmed the decision of the RTC of Kalookan City finding petitioner liable to private respondent Hernandez
Trading Co., Inc. for the value of the lost cargo.
Hernandez imported 3 crates of bus spare parts (marked as MARCO C/No. 12, MARCO C/No. 13 and MARCO C/No.
14) from its supplier, Maruman Trading Company, Ltd. (Maruman Trading), a foreign corporation based in Japan. The
crates were shipped from Japan to Manila on board ―ADELFA EVERETTE,‖ a vessel owned by petitioner‘s principal,
Everett Orient Lines. The said crates were covered by Bill of Lading No. NGO53MN.
Upon arrival of the port of Manila, it was discovered that the crate marked MARCO C/No. 14 was missing. This was
confirmed and admitted by petitioner in its letter addressed to private respondent, which thereafter made a formal claim
upon petitioner for the value of the lost cargo amounting to ¥1,552,500. However, petitioner offered to pay ¥100,000,
the maximum amount stipulated under Clause 18 of the covering bill of lading which limits the liability of petitioner.
Hernandez rejected the offer and thereafter instituted a suit for collection against petitioner.
Trial court rendered judgment in favor of Hernandez. The fact that those conditions are printed at the back of the bill of
lading in letters so small that they are hard to read would not warrant the presumption that the plaintiff or its
supplier was aware of these conditions such that he had ―fairly and freely agreed‖ to these conditions.
CA deleted the award of attorney‘s fees but affirmed the trial court‘s findings with the additional observation that private
respondent can not be bound by the terms and conditions of the bill of lading because it was not privy to the
contract of carriage. The shipper named in the Bill of Lading is Maruman Trading Co., Ltd. whom the appellant (Everett
Steamship Corp.) contracted with for the transportation of the lost goods.
Petitioner now comes to us arguing that the CA erred (1) in ruling that the consent of the consignee to the terms and
conditions of the bill of lading is necessary to make such stipulations binding upon it; (2) in holding that the carrier‘s
limited package liability as stipulated in the bill of lading does not apply in the instant case; and (3) in allowing private
respondent to fully recover the full alleged value of its lost cargo.
Issue: Whether Clause 18 limiting carrier‘s liability is valid.
Held: YES. A stipulation in the bill of lading limiting the common carrier‘s liability for loss or destruction of a cargo to a
certain sum, unless the shipper or owner declares a greater value, is sanctioned by law, particularly Articles 1749 and
1750 of the Civil Code which provide:
ART. 1749. A stipulation that the common carrier‟s liability is limited to the value of
the goods appearing in the bill of lading, unless the shipper or owner declares a greater
value, is binding.
ART. 1750. A contract fixing the sum that may be recovered by the owner or shipper for
the loss, destruction, or deterioration of the goods is valid, if it is reasonable and just
under the circumstances, and has been freely and fairly agreed upon.
Pursuant to the afore-quoted provisions of law, it is required that the stipulation limiting the common carrier‘s liability for
loss must be ―reasonable and just under the circumstances, and has been freely and fairly agreed upon.‖
The bill of lading subject of the present controversy specifically provides, among others:
18. All claims for which the carrier may be liable shall be adjusted and settled on the
basis of the shipper‘s net invoice cost plus freight and insurance premiums, if paid, and in
no event shall the carrier be liable for any loss of possible profits or any consequential
loss. The carrier shall not be liable for any loss of or any damage to or in any
connection with, goods in an amount exceeding One Hundred Thousand Yen in
Japanese Currency (¥100,000.00) or its equivalent in any other currency per
package or customary freight unit (whichever is least) unless the value of the goods
higher than this amount is declared in writing by the shipper before receipt of the goods
by the carrier and inserted in the Bill of Lading and extra freight is paid as required.
The above stipulations are, to our mind, reasonable and just. In the bill of lading, the carrier made it clear that its
liability would only be up to ¥100,000.00 Yen. However, the shipper, Maruman Trading, had the option to declare a
higher valuation if the value of its cargo was higher than the limited liability of the carrier. Considering that the
shipper did not declare a higher valuation, it had itself to blame for not complying with the stipulations.
The trial court‘s ratiocination that Hernandez could not have ‗‗fairly and freely‘‘ agreed to the limited liability clause in
the bill of lading because the said conditions were printed in small letters does not make the bill of lading invalid.
We ruled in PAL, Inc. vs. CA that the ―jurisprudence on the matter reveals the consistent holding of the court that
contracts of adhesion are not invalid per se and that it has on numerous occasions upheld the binding effect thereof.‖
In Ong Yiu vs. CA, the Court held that the one who adheres to the contract is in reality free to reject it entirely ; if he
adheres he gives his consent.‘ In the present case, not even an allegation of ignorance of a party excuses non-
compliance with the contractual stipulations since the responsibility for ensuring full comprehension of the
provisions of a contract of carriage devolves not on the carrier but on the owner, shipper, or consignee as the case
may be.‖
Stipulations in contracts of adhesion are valid and binding. A contract limiting liability upon an agreed valuation does
not offend against the policy of the law forbidding one from contracting against his own negligence.
JUDICIAL VIGILANCE
GREATER VIGILANCE, however, is required of the courts when dealing with contracts of adhesion in that the said
contracts must be carefully scrutinized ―in order to shield the unwary (or weaker party) from deceptive schemes
contained in ready-made covenants,‖ such as the bill of lading in question. The stringent requirement which the courts are
enjoined to observe is in recognition of Article 24 of the Civil Code which mandates that ―(i)n all contractual, property
or other relations, when one of the parties is at a disadvantage on account of his moral dependence, ignorance,
indigence, mental weakness, tender age or other handicap, the courts must be vigilant for his protection.
The shipper, Maruman Trading, we assume, has been extensively engaged in the trading business. It cannot be said to
be ignorant of the business transactions it entered into involving the shipment of its goods to its customers . The shipper
could not have known, or should know the stipulations in the bill of lading and there it should have declared a higher
valuation of the goods shipped. Moreover, Maruman Trading has not been heard to complain that it has been deceived or
rushed into agreeing to ship the cargo in petitioner‘s vessel. In fact, it was not even impleaded in this case.
WHETHER CONSIGNEE IS BOUND BY THE BILL OF LADING

The next issue to be resolved is whether or not Hernandez, as consignee, who is not a signatory to the bill of lading is
bound by the stipulations thereof.
In Sea-Land Service, Inc. vs. IAC, we held that even if the consignee was not a signatory to the contract of carriage
between the shipper and the carrier, the consignee can still be bound by the contract.
There can, therefore, be no doubt or equivocation about the validity and enforceability of freely-agreed-upon stipulations
in a contract of carriage or bill of lading limiting the liability of the carrier to an agreed valuation unless the shipper
declares a higher value and inserts it into said contract or bill.
When Hernandez formally claimed reimbursement for the missing goods from petitioner and subsequently filed a case
against the latter based on the very same bill of lading, Hernandez accepted the provisions of the contract and thereby
made itself a party thereto, or at least has come to court to enforce it. Thus, he cannot now reject or disregard the
carrier‘s limited liability stipulation in the bill of lading. In other words, Hernandez is bound by the whole stipulations
in the bill of lading and must respect the same.
Hernandez, however, insists that the carrier should be liable for the full value of the lost cargo in the amount of
¥1,552,500.00, considering that the shipper, Maruman Trading, had ―fully declared the shipment, the contents of
each crate, the dimensions, weight and value of the contents,‖ as shown in the commercial Invoice No. MTM-941.
This claim was denied by petitioner, contending that it did not know of the contents, quantity and value of ―the shipment
which consisted of three pre-packed crates described in Bill of Lading No. NGO-53MN merely as ‗3 CASES SPARE
PARTS.‘ ‖ The bill of lading in question confirms petitioner‘s contention. To defeat the carrier‟s limited liability, the
aforecited Clause 18 of the bill of lading requires that the shipper should have declared in writing a higher valuation of
its goods before receipt thereof by the carrier and insert the said declaration in the bill of lading, with the extra freight
paid. These requirements in the bill of lading were never complied with by the shipper, hence, the liability of the carrier
under the limited liability clause stands. The commercial Invoice No. MTM-941 does not in itself sufficiently and
convincingly show that petitioner has knowledge of the value of the cargo as contended by private respondent. No other
evidence was proffered by private respondent to support its contention.
Thus, we are convinced that petitioner should be liable for the full value of the lost cargo. In fine, the liability of
petitioner for the loss of the cargo is limited to ¥100,000.00 Yen, pursuant to Clause 18 of the bill of lading.
E. Thoughtless Extravagance
- Civil Code
F. Disrespect of Persons
- Civil Code
2.St. Louis Realty Corporation v. Court of Appeals, G.R. No. L-46061, November 14, 1984
Facts: St. Louis Realty caused to be published with the permission of Arcadio S. Arcadio (but without permission of
Doctor Aramil) in the issue of the Sunday Times of December 15, 1968 an advertisement with the heading ―WHERE
THE HEART IS‖. Below that heading was the photograph of the residence of Doctor Aramil and the Arcadio family
and then below the photograph was the following write-up:
Home is where the heart is. And the hearts of MR. AND MRS. ARCADIO S. ARCADIO
and their family have been captured by BROOKSIDE HILLS. They used to rent a small
2-bedroom house in a cramped neighborhood, sadly inadequate and unwholesome for the
needs of a large family. They dream(ed) of a more pleasant place free from the din and
dust of city life yet near all facilities. Plans took shape when they heard of BROOKSIDE
HILLS. With thrift and determination, they bought a lot and built their dream house for
P31,000. The Arcadios are now part of the friendly, thriving community of BROOKSIDE
HILLS, a beautiful first-class subdivision planned for wholesome family living.
The same advertisement appeared in the Sunday Times dated January 5, 1969. Doctor Aramil, a neuropsychiatrist and
a member of the faculty of the U. E. Ramon Magsaysay Memorial Hospital, noticed the mistake. He wrote St. Louis
Realty the following letter of protest:
This is anent to your advertisements appearing in the December 15, 1968 and January 5,
1969 issues of the Sunday Times which boldly depicted my house at the above-
mentioned address and implying that it belonged to another person. I am not aware of
any permission or authority on my part for the use of my house for such publicity. This
unauthorized use of my house for your promotional gain and much more the
apparent distortions therein are I believe not only transgression to my private
property but also damaging to my prestige in the medical profession, I have had
invited in several occasions numerous medical colleagues, medical students and friends
to my house and after reading your December 15 advertisement, some of them have
uttered some remarks purporting doubts as to my professional and personal integrity.
Such sly remarks although in light vein as ‗it looks like your house,‘ ‗how much are
you renting from the Arcadios?‘, ‗like your wife portrayed in the papers as belonging to
another husband‘, etc., have resulted in no little menial anguish on my part. ―I have
referred this matter to the Legal Panel of the Philippine Medical Association and their
final advice is pending upon my submission of supporting ownership papers. I will
therefore be constrained to pursue court action against your corporation unless you
could satisfactorily explain this matter within a week upon receipt of this letter.
The letter was received by Ernesto Magtoto, an officer of St. Louis Realty in charge of advertising. He stopped
publication of the advertisement and contacted Doctor Aramil and offered his apologies. However, no rectification or
apology was published. Aramil‘s counsel demanded from St. Louis Realty actual, moral and exemplary damages of
P110,000. In its answer dated March 10, St. Louis Realty claimed that there was an honest mistake and that if Aramil so
desired, rectification would be published in the Manila Times. They published in the issue of the Manila Times of
March 18, 1969 a new advertisement with the Arcadio family and their real house however, they did not publish any
apology to Doctor Aramil and an explanation of the error.
Aramil filed his complaint for damages. St. Louis Realty published in the issue of the Manila Times of April 15, 1969
the following ―NOTICE OF RECTIFICATION‖ in a space 4 by 3 inches:
This will serve as a notice that our print ad ‗Where the Heart is‘ which appeared in the
Manila Times issue of March 18, 1969 is a rectification of the same ad that appeared in
the Manila Times issues of December 15, 1968 and January 5, 1969 wherein a photo of
the house of another Brookside Homeowner (Dr. Aramil) was mistakenly used as a
background for the featured homeowner‘s the Arcadio family. The ad of March 18,
1969 shows the Arcadio family with their real house in the background, as was intended
all along.
Judge Jose M. Leuterio observed that St. Louis Realty should have immediately published a rectification and apology.
It was found that as a result of St. Louis Realty‟s mistake, magnified by its utter lack of sincerity, Doctor Aramil
suffered mental anguish and his income was reduced by about P1,000 to P1,500 a month. There was violation of
Aramil‟s right to privacy (Art. 26, Civil Code). Hence, trial court awarded Aramil P8,000 as actual damages, P20,000 as
moral damages and P2,000 as attorney‘s fees. CA affirmed.
Appellate Court reasoned out that St. Louis Realty committed an actionable quasi-delict under articles 21 and 26 of the
Civil Code because the questioned advertisements pictured a beautiful house, which did not belong to Arcadio but to
Doctor Aramil who, naturally, was annoyed by that contretemps.
St. Louis Realty argues that the case is not covered by article 26 which provides that ―every person shall respect the
dignity, personality, privacy and peace of mind of his neighbors and other persons‖. ―Prying into the privacy of another‘s
residence‖ and ―meddling with or disturbing the private life or family relations of another‖ and ―similar acts‖, ―though
they may not constitute a criminal offense, shall produce a cause of action for damages, prevention and other relief‖.
Issue: Whether St. Louis should be liable for damages under Art. 26.
Held: YES. The damages fixed by Judge Leuterio are sanctioned by articles 2200, 2208 and 2219 of the Civil Code.
Article 2219 allows moral damages for acts and actions mentioned in article 26. As lengthily explained by Justice
Gatmaitan, the acts and omissions of the firm fall under article 26.
St. Louis Realty‟s employee was grossly negligent in mixing up the Aramil and Arcadio residences in a widely
circulated publication like the Sunday Times. To suit its purpose, it never made any written apology and
explanation of the mixup. It just contented itself with a cavalier ―rectification.‖
Persons who know the residence of Doctor Aramil were confused by the distorted, lingering impression that he was
renting his residence from Arcadio or that Arcadio had leased it from him. Either way, HIS PRIVATE LIFE WAS
MISTAKENLY AND UNNECESSARILY EXPOSED. He suffered diminution of income and mental anguish. Judgment of the
Appellate Court is affirmed.
The publication of the plaintiff‘s photograph without his consent and for the purely commercial purposes of the
defendant, has been held to be a ground for damages. A private individual has the right to be protected in the
representation of his picture of another without the latter‘s consent, causes moral damages. Many decisions of Italian and
French courts have protected the right to one‘s picture or likeness. A picture within the meaning of this principle is not
necessarily a photograph of the living person, but includes any representation of such person. (Tolentino,
Commentaries and Jurisprudence on the Civil Code of the Philippines, Vol. 1, 1983 Ed., p. 113.)
2. Gregorio v. Court of Appeals, G.R. No. 179799, September 11, 2009

Facts: The present case arose from the filing of a BP 22 case by respondent Datuin (OIC of the Accounts Receivables
Department of Sansio Philippines) against petitioner Gregorio and Belarmino, as proprietors of Alvi Marketing for
delivering insufficiently funded bank checks as payment for the numerous appliances bought by Alvi Marketing.
Gregorio was subsequently indicted for 3 counts of violation of BP 22.
Gregorio was detained eventually. She was able to secure temporary liberty when her husband posted bail. Thereafter,
Gregorio filed a Motion for Deferment of Arraignment and Reinvestigation, alleging that she could not have issued the
bounced checks, since she did not even have a checking account with the bank on which the checks were drawn, as
certified by the branch manager of the Philippine National Bank, Sorsogon Branch. She also alleged that her signature
was patently and radically different from the signatures appearing on the bounced checks.
The MeTC granted the motion and a reinvestigation was conducted. During the course of the reinvestigation, Datuin
submitted an Affidavit of Desistance, stating among others that Gregorio was not one of the signatories of the
bounced checks subject of prosecution. The cases were eventually dismissed.
Gregorio filed a complaint for damages against Sansio and Datuin before the RTC for damages suffered due to the
filing of the BP 22 Cases by Sansio and Datuin. Sansio and Datuin filed a Motion to Dismiss on the ground that the
complaint, being one for damages arising from malicious prosecution, failed to state a cause of action, as the ultimate
facts constituting the elements thereof were not alleged in the complaint. The RTC ruled in favor of Gregorio. The CA
reversed.
Issue: Whether the civil suit filed by Gregorio is based on quasi-delict or malicious prosectution.
Held: QUASI DELICT. A perusal of the allegations of Gregorio‘s complaint for damages readily shows that she filed a
civil suit against Sansio and Datuin for filing against her criminal charges for violation of B.P. Blg. 22.
Respondents did not exercise diligent efforts to ascertain the true identity of the person who delivered to them
insufficiently funded checks as payment for the various appliances purchased; and that respondents never gave her the
opportunity to controvert the charges against her, because they stated an incorrect address in the criminal complaint.
Gregorio claimed damages for the EMBARRASSMENT and HUMILIATION she suffered when she was suddenly arrested
at her city residence in Quezon City while visiting her family. She was, at the time of her arrest, a respected Kagawad in
Oas, Albay. Gregorio anchored her civil complaint on Articles 26, 2176, and 2180 of the Civil Code. Noticeably,
despite alleging either fault or negligence on the part of Sansio and Datuin, Gregorio never imputed to them any bad
faith in her complaint.
Basic is the legal principle that the nature of an action is determined by the material averments in the complaint and the
character of the relief sought. Undeniably, Gregorio‘s civil complaint, read in its entirety, is a complaint based on
QUASI-DELICT under Article 2176, in relation to Article 26, rather than on malicious prosecution.
In every tort case filed under Article 2176 of the Civil Code, the plaintiff has to prove by a preponderance of evidence: (1)
the damages suffered by him; (2) the fault or negligence of the defendant or some other person to whose act he must
respond; (3) the connection of cause and effect between the fault or negligence and the damages incurred; and (4) that
there must be no preexisting contractual relation between the parties.
On the other hand, Article 26 of the Civil Code grants a cause of action for damages, prevention, and other relief in cases
of breach, though not necessarily constituting a criminal offense, of the following rights:
(1) right to personal dignity;

(2) right to personal security;
(3) right to family relations;
(4) right to social intercourse;
(5) right to privacy; and
(6) right to peace of mind.
A scrutiny of Gregorio‘s civil complaint reveals that the averments thereof, taken together, fulfill the elements of Article
2176, in relation to Article 26 of the Civil Code. It appears that Gregorio‘s rights to personal dignity, personal security,
privacy, and peace of mind were infringed by Sansio and Datuin when they failed to exercise the REQUISITE
DILIGENCE IN DETERMINING THE IDENTITY OF THE PERSON they should rightfully accuse of tendering insufficiently
funded checks. This fault was compounded when they failed to ascertain the correct address of petitioner, thus depriving
her of the opportunity to controvert the charges, because she was not given proper notice. Because she was not able to
refute the charges against her, petitioner was falsely indicted for 3 counts of violation of B.P. Blg. 22. She suffered
embarrassment and humiliation over her sudden arrest and detention and she had to spend time, effort, and money to
clear her tarnished name and reputation, considering that she had held several honorable positions in different
organizations and offices in the public service. There exists no contractual relation between Gregorio and Sansio.
On the other hand, Gregorio is prosecuting Sansio, under Article 2180 of the Civil Code, for its VICARIOUS
LIABILITY, as employer, arising from the act or omission of its employee Datuin.
Sansio and Datuin are in error when they insist that Gregorio‘s complaint is based on malicious prosecution. In an
action to recover damages for malicious prosecution, it must be alleged and established that Sansio and Datuin were
impelled by legal malice or bad faith in deliberately initiating an action against Gregorio, knowing that the charges were
false and groundless, intending to vex and humiliate her. As previously mentioned, Gregorio did not allege this in her
complaint.
Moreover, the fact that she prayed for moral damages did not change the nature of her action based on quasi-delict.
She might have acted on the mistaken notion that she was entitled to moral damages, considering that she suffered
physical suffering, mental anguish, fright, serious anxiety, besmirched reputation, wounded feelings, moral shock, and
social humiliation on account of her indictment and her sudden arrest.
G. Dereliction of Duty
- Civil Code
2.Philippine Match Co., Ltd., v. City of Cebu, G.R. No. L-30745, January 18, 1978
Facts: Phil Match, whose principal office is in Manila, manufactures matches. It ships cartons of matches to its branch
office in Cebu for storage, sale, and distribution within the VisMin region.
In March 1960, the Mayor of Cebu approved an Ordinance 279 which imposed a quarterly tax on gross sales or
receipts of merchants, dealers, importers and manufacturers of any commodity doing business in Cebu. It imposes a
sales tax of 1% on the gross sales, receipts or value of commodities sold, bartered, exchanged or manufactured in the
city in excess of P2,000 a quarter.
Section 9 thereof provides that, for purposes of the tax, all deliveries of goods or commodities stored in the City of Cebu,
or if not stored are sold in that city, shall be considered as sales in the city and shall be taxable.
From this, it would seem that sales of matches consummated outside of the city are taxable as long as the matches sold
are taken from the company‘s stock stored in Cebu. The company does not question the tax on the sales of matches
consummated in Cebu, meaning matches sold and delivered within the city.
It assails the legality of the tax which the CITY TREASURER collected on out-of-town deliveries of matches, to wit:
(1) sales of matches booked and paid for in Cebu City but shipped directly to customers outside of the city;
 Refers to orders by personal/phone calls for which invoices are issued and then the matches are shipped from the
bodega in the city where the matches are stored to the place of the customers outside of Cebu.
(2) transfers of matches to salesmen assigned to different agencies outside of the city; and
 Embraces shipments of matches from the branch office in Cebu to salesmen who sell within their assigned
territories
(3) shipments of matches to provincial customers pursuant to salesmen‘s instructions.
 Embraces orders sent to the branch office by salesmen assigned outside Cebu
Despite the the opinion of the city fiscal that out-of-town deliveries are not subject to sales tax , the company paid
under protest to the city treasurer the sum of P12,844.61 as 1% sales tax on those 3 classes of out-of-town deliveries of
matches for the second quarter of 1961 to the second quarter of 1963.
Phil Match sought from the City Treasurer the refund of the sales tax paid for out-of-town deliveries. The request was
denied on the basis of the aforementioned § 9.
As a result, on Aug 1963, Phil Match filed a complaint praying that (a) the ordinace be declared void insofar as it taxed
delivieries of matches outside Cebu; (b) the city pay the refund; and (c) the city treasurer pay damages.
TC invalidated the tax paid on #2 and #3 and ordered the refund of 8,923 to Phil Match as they were not considered sales
tax but more of a storage tax. However, it upheld taxes on #1 because said sales were consummated within Cebu.
Cebu did not appeal. Phil Match appealed with respect to #1.
Issue: (1) Whether Cebu can tax sales of matches which were perfected and paid for in Cebu but the matches were
delivered outside.
(2) Whether the city treasurer is liable to pay exemplary damages predicated on Arts. 19, 20, 21, and 27.
Held: (1) YES. APPEAL IS DEVOID OF MERIT. The municipal board of Cebu is empowered ―to provide for the levy
and collection of taxes for general and special purposes in accordance with law.‖ Thus, the city can validly tax the sales of
matches to customers outside of the city as long as the orders were booked and paid for in the company‘s branch office in
the city. Those matches are regarded as sold in the city in accordance with Ordinace 279.
The sales in the instant case were finalized in the city and the matches sold were stored in the city. The fact that the
matches were delivered to customers, whose places of business were outside of the city, would not place those sales
beyond the city‘s taxing power. Those sales formed part of the merchandising business being carried on by the company
in the city. In essence, they are the same as sales of matches fully consummated in the city.
(2) NO. It is argued that the city treasurer refused and neglected without just cause to perform his duty and to act with
justice and good faith. The company faults the city treasurer for not following the opinion of the city fiscal, as legal
adviser of the city, that all out-of-town deliveries of matches are not subject to sales tax because such transactions
were effected outside of the city‘s territorial limits.
City Treasurer argues that in enforcing the tax ordinance in question, he was simply complying with his duty as
collector of taxes. Moreover, he had no choice but to enforce the ordinance because according to section 357 of the
Revised Manual of Instructions to Treasurer‘s, ―a tax ordinance will be enforced in accordance with its provisions‖ until
declared illegal or void by a competent court, or otherwise revoked by the council or board from which it originated.
Furthermore, the Secretary of Finance had reminded the city treasurer that a tax ordinance approved by the provincial board
is operative and must be enforced without prejudice to the right of any affected taxpayer to assail its legality in the
judicial forum. The fiscal‟s opinion on the legality of an ordinance is merely advisory and has no binding effect.
Article 27 of the provides that ―any person suffering material or moral loss because a public servant or employee refuses
or neglects, without just cause, to perform
his official duty may file an action for damages and other relief against the latter, without prejudice to any disciplinary
administrative action that may be taken.‖
Article 27 presupposes that the refusal or omission of a public official is attributable to MALICE or INEXCUSABLE
NEGLIGENCE. In this case, it cannot be said that the city treasurer acted wilfully or was grossly negligent in not refunding
to the plaintiff the taxes which it paid under protest on out-of-town sales of matches.
The record clearly reveals that the city treasurer honestly believed that he was justified under section 9 of the tax
ordinance in collecting the sales tax on out-of-town deliveries, considering that the company‘s branch office was located
in Cebu and that all out-of-town purchase orders for matches were filled up by the branch office and the sales were duly
reported to it.
The city treasurer acted within the scope of his authority and in consonance with his bona fide interpretation of the
tax ordinance. The fact that his action was not completely sustained by the courts would not render him liable for
damages.
Where an officer is invested with discretion and is empowered to exercise his judgment in matters brought before him,
he is sometimes called a quasi-judicial officer, and when so acting he is usually given immunity from liability to persons
who may be injured as the result of an erroneous or mistaken decision, however erroneous his judgment may be,
provided the acts complained of are done within the scope of the officer‘s authority, and without wilfulness, malice, or
corruption.
It has been held that an erroneous interpretation of an ordinance does not constitute nor does it amount to bad faith that
would entitle an aggrieved party to an award for damages.
2. Tuzon v. Court of Appeals, G.R. No. 90107, August 21, 1992

Facts: On 14 March 1977, Sangguniang Bayan of Camalaniugan, Cagayan, adopted Resolution No.9. Its pertinent
provisions include:
 A fundraising scheme of soliciting a 1% donation from the thresher operators who will apply for a permit to
thresh within the jurisdiction of this municipality, of all the palay threshed by them to help finance the
continuation of the construction of the Sports and Nutrition Center Building.
 The proceeds will fund the construction of the Sports and Nutrition Center Bldg of the municipality.
 To implement Resolution no.9, Petitioner Lope Mapagu (municipal treasurer) prepared a document for
signature of all thresher/ owner/ operators who applied for a mayor‘s permit.
Soon thereafter, private respondent Saturnino T. Jurado sent his agent to the municipal treasurer‘s office to pay the
license fee of P285.00 for thresher operators.
Mapagu (municipal treasurer) refused to accept the payment and required him to first secure a mayor‟s permit. For
his part, Mayor Domingo Tuzon, the herein other petitioner, said that Jurado should first comply with Resolution No. 9
and sign the agreement before the permit could be issued. Jurado ignored the requirement. Instead, he sent the P285.00
license fee by postal money order to the office of the municipal treasurer who, however, returned the said amount. The
reason given was the failure of the respondent to comply with Resolution No. 9.
Thus, Jurado filed for an action for mandamus with the CFI in Aparri, Cagayan to compel the issuance of the
mayor‟s permit and license. He filed another petition for declaratory judgment against resolution no.9 for being illegal
either as a donation or as a tax measure. Named defendants were the same respondents and all the members of the
Sangguniang Bayan of Camalaniugan.
The trial court upheld the challenged measure. Jurado appealed to the CA; but the CA affirmed the validity of Resolution
No. 9 and the implementing agreement.
Nevertheless, it found Tuzon and Mapagu liable to pay actual and moral damages for acting maliciously and in bad
faith when they denied Jurado's application for the mayor's permit and license. As for the Resolution, it was passed by
the Sanggunian in the lawful exercise of its legislative powers granted the Constitution which provided that each LGU
shall have the power to create its own source revenue and to levy taxes, subject to such limitation as may be provided by
law. And also under Article 4, Sec. 29, PD 231: The barrio council may solicit money, materials, and other contributions
from private agencies and individuals.
Issue: (1) Whether Res. No. 9 is a valid exercise of the taxing power of an LGU.
(2) Whether Mayor Tuzon and Treasurer Mapagu are liable for damages to Jurado for withholding the permit and license
for non-compliance with Res. No. 9.
Held: (1) NO. The implementing agency made the ―donation‖ obligatory. Although again the validity of the resolution
was not in issue, the SC observed that: it ―seems to make the donation obligatory and a condition precedent to the
issuance of the mayor's permit. This goes against the nature of a donation, which is an act of liberality and is never
obligatory. If it is to be considered as a tax ordinance, it must be shown: 1. to have been enacted in accordance with the
requirements of the Local Tax Code; 2. it would include the holding of a public hearing on the measure; and 3. its
subsequent approval by the Secretary of Finance, in addition to the requisites for publication of ordinances in general.
(2) NO. The private respondent anchors his claim for damages on Article 27 of the New Civil Code, which reads:
Art. 27. Any person suffering material or moral loss because a public servant or
employee refuses or neglects, without just cause, to perform his official duty may file an
action for damages and other relief against the latter, without prejudice to any
disciplinary administrative action that may be taken.
It has been remarked that one purpose of this article is to end the ―bribery system, where the public official, for some
flimsy excuse, delays or refuses the performance of his duty until he gets some kind of pabagsak.‖ Official inaction may
also be due to plain indolence or a cynical indifference to the responsibilities of public service.
It is no less significant that no evidence has been offered to show that the petitioners singled out the private
respondent for persecution. Neither does it appear that the petitioners stood to gain personally from refusing to issue to
Jurado the mayor‘s permit and license he needed. The petitioners were not Jurado‘s business competitors nor has it been
established that they intended to favor his competitors. On the contrary, the record discloses that the resolution was
uniformly applied to all the threshers in the municipality without discrimination or preference.
The Court is convinced that the petitioners acted within the scope of their authority and in consonance with their
honest interpretation of the resolution in question. We agree that it was not for them to rule on its validity. In the
absence of a judicial decision declaring it invalid, its legality would have to be presumed (in fact, both the trial court and
the appellate court said there was nothing wrong with it). As executive officials of the municipality, they had the duty to
enforce it as long as it had not been repealed by the Sangguniang Bayan or annulled by the courts.
As a rule, a public officer, whether judicial, quasi-judicial or executive, is not personally liable to one injured
in consequence of an act performed within the scope of his official authority, and in line of his official
duty.It has been held that an erroneous interpretation of an ordinance does not constitute nor does it amount to
bad faith, that would entitle an aggrieved party to an award for damages.
The private respondent complains that as a result of the petitioners‘ acts, he was prevented from operating his business all
this time and earning substantial profit therefrom, as he had in previous years. But as the petitioners correctly observed, he
could have taken the prudent course of signing the agreement under protest and later challenging it in court to
relieve him of the obligation to ―donate.‖ Pendente lite, he could have continued to operate his threshing business and
thus avoided the lucro cesante that he now says was the consequence of the petitioners‘ wrongful act. He could have opted
for the less obstinate but still dissentient action, without loss of face, or principle, or profit.
In view of the foregoing, we find that the petitioners, having acted in good faith in the discharge of their official
functions, should be absolved from liability.
3.Vital-Gozon v. Court of Appeals, G.R. No. 129132, July 8, 1998

Facts: EO No. 119 was issued on January 30, 1987 by President Aquino on the reorganization of the various offices of
the Ministry of Health; existing offices were abolished, transfers of personnel effected. At the time of the reorganization,
Dr. Alejandro S. de la Fuente was the Chief of Clinics of the National Children‟s Hospital. Dr. de la Fuente received
notice from the DOH that he would be reappointed ―Medical Specialist II.‖
Considering this to be a demotion by no less than two ranks from his post as Chief of Clinics, Dr. de la Fuente filed a
protest with the DOH Reorganization Board. When his protest was ignored, he brought his case to the Civil Service
Commission. In the meantime ―the duties and responsibilities pertaining to the position of Chief of Clinics were turned
over to and were allowed to be exercised by Dr. Jose D. Merencilla, Jr.
The CSC in a Resolution declared the demotion/transfer of appellant to Specialist II as null and void : hence, illegal.
Appellant dela Fuente, Jr.was ordered to be retained or considered as never having relinquished his position and paid back
salaries, transportation, representation and housing allowances and such other benefits withheld.
De la Fuente sent 2 letters to Dr. Vital-Gozon, the Medical Center Chief of the National Children‘s Hospital , demanding
implementation of the Commission‟s decision. Dr. Vital- Gozon referred ―de la Fuente‘s claims to the DOH Assistant
Secretary for Legal Affairs for appropriate advice and/or action x x (She did this allegedly because, according to the Solicitor
General, she was) unaware when and how a CSC Resolution becomes final and executory. She did not answer Dr. de la
Fuente‘s letters, but chose simply to await ―legal guidance from the DOH Legal Department.‖
On the other hand, no one in the DOH Legal Department bothered to reply to Dr. de la Fuente , or to take steps to
comply or otherwise advise compliance, with the final and executory Resolution of the Civil Service Commission. In fact,
de la Fuente claims that Vital-Gozon had ―actually threatened to stop paying x x (his) salary and allowances on the
pretext that he has as yet no ‗approved‘ appointment even as ‗Medical Specialist II‘
3 months having elapsed without any word, Dr. de la Fuente repaired to the CSC and asked it to enforce its judgment. He
was however ―told to file in court a petition for mandamus. So he instituted in the CA an action of ―mandamus
and damages with preliminary injunction‖ to compel Vital-Gozon, and the Administrative Officer, Budget Officer and
Cashier of the NCH to comply with the final and executory resolution of the CSC; to revert the funds of the NCH
corresponding to the amounts necessary to implement the final resolution.
About a month afterwards, de la Fuente filed a second petition described as one for ―quo warranto‖ and alleged inter
alia that he (de la Fuente) had ―clear title‖ to the position in question [by] virtue of the final and executory judgment of
the CSC; that even after the Commission‘s judgment had become final and executory and been communicated to Vital-
Gozon, the latter allowed ―Dr. Merencilla, Jr. as ‗OIC Professional Service‘ to further usurp,
CA declared that CSC Case No. 4 became final and declared petitioner as the lawful and de jure Chief of Clinics ; that
Dr. Jose D. Merencilla, Jr. is not legally entitled to the office; Dr. Isabelita Vital-Gozon, had no discretion or choice on the
matter; the resolution had to be complied with. It ordered Dr. Isabelita Vital-Gozon to forthwith comply with, obey and
implement the resolution in CSC Case; Dr. Jose D. Merencilla, Jr., who is not entitled to the office, x x to immediately
cease and desist from further performing and acting as OIC Professional Service.
But de la Fuente‘s prayer for damages—founded essentially on the refusal of Gozon, et al. to obey the final and
executory judgment of the CSC, which thus compelled him to litigate anew in a different forum—was denied on the
ground that the ―petitions (for mandamus) are not the vehicle nor is the Court the forum for x x (said) claim of damages.‖
Neither Vital-Gozon nor her co-party, Dr. Merencilla, Jr., moved for reconsideration of, or attempted to appeal. De la
Fuente sought to enforce the judgment
CA issued a writ of execution. The writ of execution notwithstanding, compliance with the June 9, 1989 judgment was
not effected.
Consequently, de la Fuente filed an ―Urgent Ex Parte Manifestation with Prayer to Cite Respondents for
Contempt,‖ complaining that although Gozon and her co-parties had been served with the writ of execution on July 14,
they had not complied therewith. At the hearing Gozon and Merencilla duly presented themselves, and explained that they
had no intention to defy the Court, they had simply referred the matter to their superiors in good faith; and they were
perfectly willing to comply with the judgment, undertaking to do so ―even in the after-noon‖ of that same day. The Court
consequently ordered them ―to comply with their undertaking x x without any further delay.
Gozon, as ―Medical Center Chief,‖ sent a letter to Associate Justice Pedro A. Ramirez, advising that under Hospital
Special Order No. 31 dated August 3, 1989, de la Fuente had been directed to assume the position of Chief of the
Medical Professional Staff, and that a voucher for the payment of his allowances had been prepared and was being
processed.
More than a month later, CA promulgated another Resolution, this time resolving de la Fuente‘s motion for
reconsideration by (a) deleting its last paragraph (disallowing the claim of damages), (b) consequently describing and
treating it as a ―PARTIAL DECISION,‖ and (c) scheduling ―further proceedings for the purpose of receiving evidence
(of damages)
CA promulgated a Resolution finding petitioner liable for moral and exemplary damages and attorney‘s fees.
Vital-Gozon was fully aware of the following acts and events: 1) the proceeding commenced by de la Fuente in the
Civil Service Commission; 2) the Commission‘s Resolution and direction therein that de la Fuente be reinstated and paid
all his back salaries and other monetary benefits otherwise due him; 3) (2) written demands of de la Fuente for
implementation of the CSC‘s aforesaid Resolution; 4) the petition filed by de la Fuente in the Court of Appeals for
enforcement of the CSC Resolution; 6) the ―supplemental/amended petition‖ subsequently presented by de la Fuente; 7)
the Decision and Amendatory Decision sent to her counsel
To all these, her reaction, and that of the officials of the DOH concerned, was a regrettably cavalier one. Neither she nor
the Health officials concerned accorded said acts and events any importance. She never bothered to find out what was
being done to contest or negate de la Fuente‘s petitions and actions, notwithstanding that as time went by, de la Fuente‘s
efforts were being met with success.. Nothing in the record even remotely suggests that Vital-Gozon merits relief from the
final and executory Resolution of the CSC.
CA then considered the evidence for private respondent and the applicable law
Upon respondent‘s continued refusal without justifiable cause to implement the final resolution of the Civil Service
Commission, petitioner is entitled to the damages he claims. Petitioner declared that he was greatly disturbed, shocked
and frustrated during the three months preceding the filing of his petition; that he had sleepless nights and suffered from
mental anxiety, mental anguish, worry, tension and humiliation when respondent ignored and disregarded the final
resolution of the Civil Service Commission; that he felt harassed by her refusal because he had to go to court to obtain
relief and had to incur additional expenses for litigation which he could hardly afford
All these respondent has not successfully rebutted by her evidence since she adduced none in her behalf. Petitioner,
therefore, is entitled to recover moral damages from Vital-Gozon for her refusal and neglect without just cause to
perform her official duty to reinstate de la Fuente to the position he was entitled , as ordered by the CSC in its
decision. While he was reinstated to his position, petitioner had to seek the aid of the courts for that purpose. Such award
of exemplary damages is by way of example or correction for the public good, in addition to moral damages.
Hence, this instant petition for review on certiorari.
Issue: (1) Whether Vita-Gozon was denied due process when her answer to the petition was not admitted.
(2) Whether the award of damages were proper.
Held: (1) NO. Petitioner‘s failure to file the answer to the petition was due to her fault or negligence. She was, by formal
resolutions of the Court of Appeals, required to file answers to both the original petition and the Supplemental/Amended
Petition; yet, she failed to heed both resolutions. Petitioner could have negated private respondent‘s claims by showing the
absence of legal or factual basis therefor. Court of Appeals explicitly allowed petitioner to present her evidence against
the claim for damages. However, petitioner again failed to take the opportunity to have herself heard.
(2) YES. Moral damages include physical suffering, mental anguish, fright, serious anxiety, besmirched reputation,
wounded feelings, moral shock, social humiliation, and similar injury. They may be recovered if they are the proximate
result of the defendant‘s wrongful act or omission. The instances when moral damages may be recovered are, inter alia,
―acts and actions referred to in Articles 21, 26, 27, 28, 29, 30, 32, 34 and 35 of the Civil Code,‖33 which, in turn, are
found in the Chapter on Human Relations
ART. 27. Any person suffering material or moral loss because a public servant or
employee refuses or neglects, without just cause, to perform his official duty may file an
action for damages and other relief against the latter, without prejudice to any
disciplinary administrative action that may be taken.
Section 1 of Article XI (Accountability of Public Officers) of the Constitution
Section 1. Public office is a public trust. Public officers and employees must at all times
be accountable to the people, serve them with utmost responsibility, integrity, loyalty,
and efficiency, act with patriotism and justice, and lead modest lives.
It is thus evident that under Article 27, in relation to Articles 2219 and 2217 of the Civil Code, a public officer, like
petitioner herein, may be liable for moral damages for as long as the moral damages suffered by private respondent
were the proximate result of petitioner‟s wrongful act or omission, i.e., refusal to perform an official duty or neglect
in the performance thereof. In fact, if only to underscore the vulnerability of public officials and employees to suits for
damages to answer for any form or degree of misfeasance, malfeasance or nonfeasance, this Court has had occasion to
rule that under Articles 19 and 27 of the Civil Code, a public official may be made to pay damages for performing a
perfectly legal act, albeit with bad faith or in violation of the ―abuse of right‖ doctrine embodied in the preliminary
articles of the Civil Code concerning Human Relations.
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. Attorney‘s fees and other expenses of litigation may be recovered as
actual or compensatory damages when exemplary damages are awarded; when the defendant acted in gross and evident
bad faith in refusing to satisfy the plaintiff‘s plainly valid, just and demandable claim, and in any other case where the
court deems it just and equitable that attorney‘s fees and expenses of litigation should be recovered.
de la Fuente was entitled to be restored to his position as Chief of Clinics by virtue of the final and executory
decision of the CSC. Petitioner, as head or chief of the National Children‘s Hospital, then had the duty to see to it that the
decision be obeyed and implemented. This she failed to do and private respondent‟s two official demands for
compliance with the CSC decision were merely referred by petitioner to the Legal Department of the Department of
Health. She did not answer [private respondent‘s] letters not even to inform him of the referral thereof to the Assistant
Secretary [for Legal Affairs]. She chose simply to await ‗legal guidance from the DOH Legal Department.
Petitioner‘s reaction, and that of the officials of the DOH concerned, was a regrettably cavalier one, to say the least.
Neither she nor the Health Department officials concerned accorded said acts and events any importance. She never
bothered to find out what was being done to contest or negate [private respondent‟s] petitions and actions,
notwithstanding that as time went by, [private respondent‘s] efforts were being met with success.
That petitioner then committed an actionable wrong for unjustifiably refusing or neglecting to perform an official
duty is undeniable. Private respondent declared that by reason of the ―unjust action‖ or ―refusal‖ of petitioner when she
did not recognize, ignored and disregarded the final and executory Civil Service Resolution, he: ―[W]as actually greatly
disturbed, shocked and frustrated during those three . . . months. [He] had sleepless nights and . . . suffered from mental
anxiety, worry, tension and humiliation . . .‖
Private respondent‘s anguish even continued during the 5 month period while the case was pending with the Court
of Appeals: ―During this period my sleepless nights and my moral sufferings continued. As a matter of fact, even
worsened. I just could not understand, actually I could not understand the action here of Dr. Gozon for having not
followed the decision of the Court of Appeals. And that is why I felt very much aggrieved during this period. I could not
sleep at all and this has weakened me.‖
While private respondent did not quantify the extent of his MORAL DAMAGES, the CA fixed the same at P50,000.00.
Since moral damages are incapable of pecuniary estimation,‖ courts have the discretion to fix the corresponding amount,
not being bound by any self-serving assessment by the claimants. On the other hand, a claima nt‘s failure to state the
monetary value of moral damages suffered presents no legal obstacle to a court‘s determination thereof, as long as there is
factual basis for the award such as the claimant‘s testimony as to his sufferings. As a matter of fact, it is not unusual for
claimants to leave the determination of the amount of the award to the discretion of the court.
EXEMPLARY DAMAGES cannot be recovered as a matter of right; the court will decide whether or not they should be
adjudicated. Considering that a public official is the culprit here, the propriety of such an award cannot be
questioned. It serves as an example or deterrent so that other public officials be always reminded that they are public
servants bound to adhere faithfully to the constitutional injunction that a public office is a public trust. That the
aggrieved party happened to be another public official will not serve to mitigate the effects of petitioner‘s having failed t o
observe the required degree of accountability and responsibility.
As to attorney‘s fees as actual damages, the CA determination of its propriety in this case and the extent thereof were
well within its discretion. The agreement between private respondent and his counsel as to the amount does not control.
Whether petitioner was impleaded as respondent in an official capacity, i.e., solely in her capacity as Chief of the National
Children‘s Hospital, is best determined from the Petition as well as the Supplemental/Amended Petition. For one, in the
captions in both, she is named as one of the respondents without any express mention that she was so sued in her
―capacity, as Chief of the National Children‘s Hospital.‖
The allegations in the body of the Petition clearly show that she was sued in both her official and private capacities.
As to the former, paragraphs 1 and 7 respectively allege petitioner‘s position as a public official, and specifically as
―Head of the Children‘s Hospital‖; her duty to restore private respondent to his position by virtue of the final decision of
the Civil Service Commission; and her refusal to allow private respondent to perform and discharge his duties and
responsibilities as Chief of Clinics. As to the latter, paragraph 16 of the Petition explicitly speaks of petitioner‘s personal
liability
For causing such mental suffering and anguish, etc. principal respondent [herein petitioner] ought to and must be, in
accordance with the Civil Code, held personally answerable and liable to the petitioner
4. Torio v. Fontanilla, G.R. No. L-29993, October 23, 1978

Facts: The Municipal Council of Malasiqui, Pangasinan, passed a RESOLUTION whereby ―it resolved to manage the
1959 Malasiqui town fiesta celebration.‖ ANOTHER RESOLUTION was also passed creating the ―1959 Malasiqui
Town Fiesta Executive Committee‖ which in turn organized a subcommittee on entertainment and stage, with Jose
Macaraeg as Chairman.
The council appropriated the amount of P100.00 for the construction of two stages, one for the zarzuela and another for
the cancionan. Jose Macaraeg supervised the construction of the stage and as constructed the stage for the zarzuela was 5
1/2 meters by eight meters in size, had a wooden floor high at the rear and was supported by 24 bamboo posts (four in a
row in front, four in the rear and five on each side) with bamboo braces.
The zarzuela entitled ―Midas Extravanganza‖ was donated by an association of Malasiqui employees of the Manila
Railroad Company in Caloocan, Rizal. The troupe arrived in the evening for the performance and one of the members
of the group was Vicente Fontanilla. The program started at about 10:15 PM with some speeches, and many persons
went up the stage. The zarzuela then began but before the dramatic part of the play was reached, the stage collapsed
and Vicente Fontanilla who was at the rear of the stage was pinned underneath. Fontanilla was taken to the San
Carlos General Hospital where he died in the afternoon of the following day.
The heirs of Vicente Fontanilla filed a complaint with the CFI of Manila to recover damages. Named party-defendants
were the Municipality of Malasiqui, the Municipal Council of Malasiqui and all the individual members of the
Municipal Council in 1959.
Answering the complaint the municipality invoked inter alia the principal defense that as a legally and duly organized
public corporation it performs sovereign functions and the molding of a town fiesta was an exercise of its governmental
functions from which no liability can arise to answer for the negligence of any of its agents.
The defendant councilors in turn maintained that they merely acted as agents of the municipality in carrying out the
municipal ordinance providing for the management of the town fiesta celebration and as such they are likewise not liable
for damages as the undertaking was not one for profit; furthermore, they had exercised due care and diligence in
implementing the municipal ordinance.
Issue: (1) Was the celebration o the fiesta an exercise of governmental function or proprietary and private in character?
(2) Are the councilors liable under Art. 27? NOT LIABLE.
Held:
1. Under Philippine laws municipalities are political bodies corporate and as such as endowed with the faculties of
municipal corporations to be exercised by and through their respective municipal governments in conformity with law,
and in their proper corporate name, they may, inter alia, sue and be sued, and contract and be contracted with.
As to when a certain activity is governmental and when proprietary or private, that is generally a difficult matter to
determine. The evolution of the municipal law in American Jurisprudence, for instance, has shown that none of the tests
which have evolved and are stated in textbooks have set down a conclusive principle or rule, so that each case will have to
be determined on the basis of attending circumstances.
The powers of a municipality are 2-fold in character – public, governmental, or political on the one hand, and corporate,
private, or proprietary on the other. GOVERNMENTAL POWERS are those exercised by the corporation in administering
the powers of the state and promoting the public welfare and they include the legislative, judicial, public, and political.
MUNICIPAL POWERS on the other hand are exercised for the special benefit and advantage of the community and
include those which are ministerial, private and corporate.
A MUNICIPAL CORPORATION proper has a public character as regards the state at large insofar as it is its agent in
government, and private insofar as it is to promote local necessities and conveniences for its own community.
According to Cooley, municipal corporations exist in a dual capacity, and their functions are twofold. In one they exercise
the right springing from sovereignty, and while in the performance of the duties pertaining thereto, their acts are political
and governmental. Their officers and agents in such capacity, though elected or appointed by them, are nevertheless
public functionaries performing a public service, and as such they are officers, agents, and servants of the state.
In the other capacity the municipalities exercise a private, proprietary or corporate right, arising from their existence as
legal persons and not as public agencies. Their officers and agents in the performance of such functions act in behalf of
the municipalities in their corporate or individual capacity, and not for the state or sovereign power.
2. This DISTINCTION OF POWERS BECOMES IMPORTANT for purposes of determining the liability of the municipality
for the acts of its agents which result in an injury to third persons.
Mendoza v. de Leon classified certain activities of the municipality as GOVERNMENTAL, e.g., regulations against fire,
disease, preservation of public peace, maintenance of municipal prisons, establishment of schools, post-offices, etc. while
the following are CORPORATE OR PROPRIETARY in character, viz: municipal waterwork, slaughterhouses, markets,
stables, bathing establishments, wharves, ferries, and fisheries. Maintenance of parks, golf courses, cemeteries and
airports among others, are also recognized as municipal or city activities of a proprietary character.
If the injury is caused in the course of the performance of a GOVERNMENTAL function or duty no recovery, as a rule,
can be had from the municipality unless there is an existing statute on the matter, nor from its officers, so long as they
performed their duties honestly and in good faith or that they did not act wantonly and maliciously.
In Palafox, et al. v. Province of Ilocos Norte, et al, a truck driver employed by the provincial government of Ilocos Norte
ran over Proceto Palafox in the course of his work at the construction of a road. The province could not be made liable
because its employee was in the performance of a governmental function – the construction and maintenance of roads –
and however tragic and deplorable it may be, the death of Palafox imposed on the province no duty to pay monetary
consideration,
With respect to PROPRIETARY functions, the settled rule is that a municipal corporation can be held liable to third
persons ex contractu or ex delicto. Municipal corporations are subject to be sued upon contracts and in tort.
The rule of law is a general one, that the superior or employer must answer civilly for the negligence or want of skill of its
agent or servant in the course or line of his employment, by which another, who is free from contributory fault, is injured.
Municipal corporations under the conditions herein stated, fall within the operation of this rule of law, and are liable,
accordingly, to civil actions for damages when the requisite elements of liability coexist.
3. In this case, the holding of the TOWN FIESTA IN 1959 by the municipality of Malasiqui, Pangasinan, was an
exercise of a PRIVATE OR PROPRIETARY FUNCTION OF THE MUNICIPALITY.
Section 2282 of the Chapter on Municipal of the Revised Administrative Code on the celebration of fiestas simply gives
authority to the municipality to celebrate a yearly fiesta but it does not impose upon it a duty to observe one. Holding
a fiesta even if the purpose is to commemorate a religious or historical event of the town is in essence an act for the
special benefit of the community and not for the general welfare of the public performed in pursuance of a policy of
the state. The mere fact that the celebration, as claimed, was not to secure profit or gain but merely to provide
entertainment to the town inhabitants is not a conclusive test. For instance, the maintenance of parks is not a source of
income for the town, nonetheless it is private undertaking as distinguished from the maintenance of public schools, jails,
and the like which are for public service.
As stated earlier, there can be no hard and fast rule for purposes of determining the true nature of an undertaking or
function of a municipality; the surrounding circumstances of a particular case are to be considered and will be decisive.
The basic element, however beneficial to the public the undertaking may be, is that it is governmental in essence,
otherwise, the function becomes private or proprietary in character. Easily, no governmental or public policy of the state is
involved in the celebration of a town fiesta.
4. It follows that under the DOCTRINE OF RESPONDENT SUPERIOR, petitioner-municipality is to be held liable for
damages for the death of Vicente Fontanilla if that was attributable to the negligence of the municipality‘s officers,
employees, or agents.
We find that there was negligence. The trial court gave credence to the testimony of Angel Novado, that a member of the
extravaganza troupe removed two principal braces located on the front portion of the stage and used them to hang the
screen or telon, and that when many people went up the stage the latter collapsed. This testimony was not believed
however by respondent appellate court, and rightly so.
According to said defendants, those two braces were mother or principal braces located semi-diagonally from the front
ends of the stage to the front posts of the ticket booth located at the rear of the stage and were fastened with a bamboo
twine. That being the case, it becomes incredible that any person in his right mind would remove those principal braces
and leave the front portion of the stage practically unsupported. Moreover, if that did happen, there was indeed
negligence as there was lack of supervision over the use of the stage to prevent such an occurrence.
At any rate, the guitarist who was pointed to by Novado as the person who removed the two bamboo braces denied having
done so. The CA said: ―Amor by himself alone could not have removed the two braces which must be about ten meters
long and fastened them on top of the stage for the curtain. The stage was only five and a half meters wide. Surely, it would
be impractical and unwieldy to use a ten meter bamboo pole, much more two poles, for the stage curtain.‖
The CA also found that the stage was not strong enough considering that only P100.00 was appropriate for the
construction of two stages and while the floor of the zarzuela stage was of wooden planks, the posts and braces used
were of bamboo material. We likewise observe that although the stage was described by the petitioners as being supported
by 24 posts, nevertheless there were only 4 in front, 4 at the rear, and 5 on each side.
The CA thus concluded: ―The court a quo itself attributed the collapse of the stage to the great number of onlookers
who mounted the stage. The municipality and/or its agents had the necessary means within its command to prevent such
an occurrence. Having failed to take the necessary steps to maintain the safety of the stage for the use of the participants
in the stage presentation prepared in connection with the celebration of the town fiesta, particularly, in preventing
nonparticipants or spectators from mounting and accumulating on the stage which was not constructed to meet the
additional weight, the defendants-appellees were negligent and are liable for the death of Vicente Fontanilla.‖
Thus, private respondents argue that the Midas Extravaganza which was to be performed during the town fiesta was a
donation offered by an association of Malasiqui employees of the Manila Railroad Co. in Caloocan, and that when the
Municipality of Malasiqui accepted the donation of services and constructed precisely a zarzuela stage for the
purpose, the participants in the stage show had the right to expect that the Municipality through its Committee on
entertainment and stage would build or put up a stage or platform strong enough to sustain the weight or burden of
the performance and take the necessary measures to insure the personal safety of the participants.
We agree. Sanders v. City of Long Beach was an action against the city for injuries sustained from a fall when plaintiff
was descending the steps of the city auditorium. The city was conducting a Know your City Week and one of the features
was the showing of a motion picture in the city auditorium to which the general public was invited and plaintiff Sanders
was one of those who attended. In sustaining the award for damages in favor of plaintiff, the District Court of Appeal,
Second district, California, held inter alia that the Know your City Week was a proprietary activity and not a
governmental one of the city, that defendant owed to plaintiff, an invitee, the duty of exercising ordinary care for her
safety, and plaintiff was entitled to assume that she would not be exposed to a danger (which in this case consisted of lack
of sufficient illumination of the premises) that would come to her through a violation of defendant‘s duty.
Fontanilla was similarly situated as Sanders. The Municipality of Malasiqui resolved to celebrate the town fiesta in
January of 1959; it created a committee in charge of the entertainment and stage; an association of Malasiqui residents
responded to the call for the festivities and volunteered to present a stage show; Vicente Fontanilla was one of the
participants who like Sanders had the right to expect that he would be exposed to danger on that occasion.
Lastly, petitioner or appellent Municipality cannot evade responsibility and/or liability under the claim that it was
Jose Macaraeg who constructed the stage. The municipality acting through its municipal council appointed Macaraeg
as chairman of the sub-committee on entertainment and in charge of the construction of the zarzuela stage. Macaraeg
acted merely as an agent of the Municipality. Under the doctrine of RESPONDENT SUPERIOR mentioned earlier,
petitioner is responsible or liable for the negligence of its agent acting within his assigned tasks.
5. The remaining question to be resolved centers on the LIABILITY OF THE MUNICIPAL COUNCILORS who enacted the
ordinance and created the fiesta committee.
We agree with petitioners that the CA erred in applying Article 27 of the Civil Code against them, for this particular
article covers a case of non-feasance or non- performance by a public officer of his official duty; it does not apply to a
case of negligence or misfeasance in carrying out an official duty.
The CA in its decision now under review held that the celebration of a town fiesta by the Municipality of Malasiqui was not a
governmental function. We upheld that ruling. The legal consequence thereof is that the Municipality stands on
the same footing as an with the municipal council acting as its board of directors.
ORDINARY PRIVATE CORPORATION
It is an elementary principle that a corporation has a

personality, separate and distinct from its officers, directors, or persons composing it and the latter are not as a rule co-
responsible in an action for damages for tort or negligence
(culpa aquiliana) committed by the corporation‟s employees or agents unless there is a showing of
BAD FAITH or gross or
WANTON NEGLIGENCE
on their part.
On these principles We absolve the municipal councilors from any liability for the death of Vicente Fontanilla. The
records do not show that said petitioners directly participated in the defective construction of the zarzuela stage or that
they personally permitted spectators to go up the platform.
H. Unfair Competition
- Civil Code
2.Calamba Medical Center, Inc., v. NLRC, G.R. No. 176484, November 25, 2008
Facts: CMC (petitioner) engaged the services of medical doctors-spouses Ronaldo Lanzanas (Dr. Lanzanas) and
Merceditha Lanzanas (Dr. Merceditha) as part of its team of resident physicians. They reported at the hospital twice a
week. They were also paid a retainer fee plus percentage shares out of patient treatments, billings, etc. Their work
schedules were fixed by the medical director of CMC, Dr. Raul Desipeda (Dr. Desipeda) The doctors were issued
identification cards and were enrolled in the SSS.
A certain Dr. Trinidad (another resident physician) overheard a phone conversation between Dr. Lanzanas with a
fellow employee wherein they were talking about the low ―census‖ or admission of patients in the hospital. This called
the attention of Dr. Desipeda who issued a memorandum against Dr. Lanzanas asking for an explanation and placing
him under preventive suspension while the investigation was on-going. Additionally, Dr. Merceditha (spouse of Dr.
Lanzanas) was not given any work schedule after the sending of the memorandum.
Dr. Lanzanas admitted talking with a fellow employee, but claimed that their conversation was out of context.
Subsequently the rank-and-file employees union of petitioner went on a strike due to unresolved grievances. Dr.
Lanzanas filed a case for illegal suspension while her spouse filed a case for illegal dismissal.
Meanwhile the Sec. of DOLE issued a return to work order to the striking union officers and employees of petitioner
which Dr. Desipeda echoed in a memorandum. Petitioner CMC later sent Dr. Lanzanas a notice of termination for his
failure to report for work despite the DOLE order and his supposed role in the striking union. Dr. Lanzanas thus
amended his complaint for illegal dismissal.
The LA & NLRC ruled against Dr. Lanzanas, holding that it has no jurisdiction since there is no employer-employee
relationship. The CA reversed finding that there was an employer-employee relationship. Petitioners argue that
respondents only reported to work twice a week, are free to practice their profession elsewhere for the rest of the week,
and are only entitled to ½ of other fees charged.
Issue: Whether Dr Lanzanas was illegally dismissed.
Held: YES. There was an employer-employee relationship. With respect to Article 28:
Adding insult to injury was the circulation by petitioner of a ―watchlist‖ or ―watch out list‖ including therein the
names of respondents. Consider the following portions of Dr. Merceditha‘s Memorandum of Appeal:
3. Moreover, to top it all, respondents have circulated a so called ―Watch List‖ to

other hospitals, one of which [was] procured from Foothills Hospital in Sto. Tomas,
Batangas [that] contains her name. The object of the said list is precisely to harass
Complainant and malign her good name and reputation. This is not only
unprofessional, but runs smack of oppression as CMC is trying permanently deprived
[sic] Complainant of her livelihood by ensuring that she is barred from practicing in other
hospitals.
4. Other co-professionals and brothers in the profession are fully aware of these ―watch
out‖ lists and as such, her reputation was not only besmirched, but was damaged, and
she suffered social humiliation as it is of public knowledge that she was dismissed from
work. Complainant came from a reputable and respected family, her father being a retired
full Colonel in the Army, Col. Romeo A. Vente, and her brothers and sisters are all
professionals, her brothers, Arnold and Romeo Jr., being engineers. The Complainant has
a family protection [sic] to protect. She likewise has a professional reputation to protect,
being a licensed physician. Both her personal and professional reputation were
damaged as a result of the unlawful acts of the respondents.
While petitioner does not deny the existence of such list, it pointed to the lack of any board action on its part to initiate
such listing and to circulate the same, viz:
20. The alleged watchlist or ―watch out list,‖ as termed by complainants, were merely
lists obtained by one Dr. Ernesto Naval of PAMANA Hospital. Said list was given by a
stockholder of respondent who was at the same time a stockholder of PAMAN[A]
Hospital. The giving of the list was not a Board action. (Emphasis and underscoring
supplied)
The circulation of such list containing names of alleged union members intended to prevent employment of workers for
union activities similarly constitutes unfair labor practice, thereby giving a right of action for damages by the employees
prejudiced.
(Reference by way of footnote at this point was made to Article 28: ―Article 28 of the Civil Code states ―Unfair
competition in agricultural, commercial, or industrial enterprises, or in labor through the use of force, intimidation,
deceit, machination or any other unjust, oppressive or highhanded method shall give rise to a right of action by the
person who thereby suffers damage.‖
I. Violation of Civil/Political Rights
- Civil Code
1. Lim v. De Leon, 66 SCRA 299 (1975)

Facts: On April 29, 1961, plaintiff-appellant Jikil Taha sold to a certain Alberto Timbangcaya of Brooke‘s Point, Palawan
a motor launch named M/L ―SAN RAFAEL‖. A year later, Alberto Timbangcaya filed a complaint with the Provincial
Fiscal of Palawan alleging that after the sale Jikil Taha forcibly took away the motor launch from him.
Fiscal Francisco Ponce de Leon, in his capacity as Acting Provincial Fiscal of Palawan, the filed with the CFI of Palawan
corresponding information for Robbery with Force and Intimidation upon Persons against Jikil Taha.
The fiscal, upon being informed that the motor launch was in Balabac, Palawan, wrote the Provincial Commander of
Palawan requesting him to direct the detachment commander in Balabac to impound and take custody of the motor
launch. The fiscal reiterated his request to the Provincial Commander to impound the motor launch, explaining that its
subsequent sale to a third party, plaintiff-appellant Delfin Lim, cannot prevent the court from taking custody of the
same. Upon order of the Provincial Commander, defendant-appellee Orlando Maddela, Detachment Commander of
Balabac, Palawan, seized the motor launch from Delfin Lim and impounded it.
Jikil Taha through his counsel made representations with the Fiscal to return the seized property to plaintiff-appellant
Delfin Lim but the fiscal refused, on the ground that the same was the subject of a criminal offense. Delfin Lim and Jikil
Taha thereafter filed with the CFI of Palawan a complaint for damages against defendants- appellees Fiscal Francisco
Ponce de Leon and Orlando Maddela, alleging Orlando Maddela entered the premises of Delfin Lim without a search
warrant and then and there took away the hull of the motor launch without his consent; that said motor launch was
purchased by Delfin Lim from Jikil Taha; that as a consequence of the unlawful seizure of the motor launch, its sale did
not materialize; and that since July 6, 1962, the said motor launch had been moored at the Balabac Bay, Palawan and
because of exposure to the elements it had become worthless and beyond repair.
For the ALLEGED VIOLATION OF THEIR CONSTITUTIONAL RIGHTS , plaintiffs-appellants prayed for actual, moral and
exemplary damages and attorney‘s fees.
Defendants-appellees denied the material allegations of the complaint and as affirmative defenses alleged that the motor
launch in question which was sold by Jikil Taha to Alberto Timbangcaya and was forcibly taken with violence upon
persons and with intent to gain by Jikil Taha from Alfredo Timbangcaya without the latter‘s knowledge and consent, thus
giving rise to the filing of a criminal charge of robbery against Jikil Taha. They further alleged that Fiscal Ponce de Leon,
in his capacity as Acting Provincial Fiscal of Palawan ordered Orlando Maddela to seize and impound the motor launch
for being the corpus delicti of the robbery and that Orlando Maddela merely obeyed the orders of his superior officer to
impound said launch.
Trial court rendered its decision, upholding the validity of the seizure of the motor launch. Hence, this appeal.
Issue: (1) Whether the fiscal has the power to order a search an seizure without a warrant.
(2) Whether defendants are civilly liable for the damages allegedly suffered by them granting that the seizure of the motor
launch was unlawful.
Held: (1) NO. Seizure was illegal. The gravamen of plaintiffs-appellants‘ argument is that the taking of the motor launch
was in violation of the constitutional guarantee against unreasonable searches and seizures since it was done without a
search warrant.
Defendants-appellees admitted that when Orlando Maddela entered the premises of Delfin Lim and impounded the
motor launch HE WAS NOT ARMED WITH A SEARCH WARRANT ; that he effected the seizure of the motor launch in the
absence of and without the consent of Delfin Lim. There can be no question that without the proper search warrant, no
public official has the right to enter the premises of another without his consent for the purpose of search and seizure .
And since in the present case defendants-appellees seized the motor launch without a warrant, they have violated
the constitutional right of plaintiffs-appellants against unreasonable search and seizure.
Defendants-appellees however would want to justify the seizure of the motor launch even without a warrant because of
Fiscal Ponce de Leon‟s alleged inherent power to order the seizure of a personal property which is the corpus delicti of
a crime, he being a quasi judicial officer who has the control of the prosecution and the presentation of the evidence in
the criminal case.
We cannot agree. Under the old Constitution the power to issue a search warrant is vested in a judge or magistrate and
in no other officer and no search and seizure can be made without a proper warrant. At the time the act complained of was
committed, there was no law or rule that recognized the authority of Provincial Fiscals to issue a search warrant.
Fiscal Ponce de Leon invoked the provisions of Republic Act No. 732, which amended Sections 1674 and 1687 of the
Revised Administrative Code, which has broadened the power of provincial fiscals to conduct preliminary investigations.
Nothing in said law which confers upon the provincial fiscals the authority to issue warrants, much less to order without
warrant the seizure of a personal property even if it is the corpus delicti of a crime. Said law did not divest the judge or
magistrate of its power to determine, before issuing the corresponding warrant, whether or not probable cause exists
therefor.
Moreover, under Sections 2 and 3 of Rule 122 of the Rules of Court which complement the constitutional provision
earlier cited, two principles are made clear, namely: (1) that in the seizure of a stolen property search warrant is still
necessary; and (2) that in issuing a search warrant the judge alone determines whether or not there is a probable cause.
The fact that a thing is a corpus delicti of a crime does not justify its seizure without a warrant.
Defendant-appellee Fiscal Ponce de Leon would also invoke lack of time to procure a search warrant as an excuse for
the seizure of the motor launch without one.
The claim cannot be sustained. The records show that on June 15, 1962 Fiscal Ponce de Leon made the first request to
the Provincial Commander for the impounding of the motor launch; and on June 26, 1962 another request was made.
The seizure was not effected until July 6, 1962. In short, Fiscal Ponce de Leon had all the time to procure a search
warrant had he wanted to and which he could have taken in less than a day, but he did not. Besides, there is no basis for
the apprehension that the motor launch might be moved out of Balabac because even prior to its seizure the motor launch
was already without its engine.
(2) YES. Even in the absence of bad faith, De Leon is liable. As to whether or not they are entitled to damages, plaintiffs-
appellants anchor their claim for damages on Articles 32 and 2219 of the New Civil Code which provide in part as
follows:
ART. 32. Any public officer or employee, or any private individual, who directly or indirectly obstructs,
defeats, violates or in any manner impedes or impairs any of the following rights and liberties of another
person shall be liable to the latter for damages. ―x x x x x ―(9) The rights to be secure in one‟s
person, house, papers, and effects against unreasonable searches and seizures. ―x x x x x ―The
idemnity shall include moral damages. Exemplary damages may also be adjudicated.‖
ART. 2219. Moral damages may be recovered in the following and analogous cases:
(6) Illegal search;
―x x x x x x
―(1) Acts and action referred to in Articles 21, 26, 27, 28, 29, 30, 32, 34 and 35.
Pursuant to the foregoing provisions, a person whose constitutional rights have been violated or impaired is entitled
to ACTUAL and MORAL damages from the public officer or employee responsible therefor.
In addition, EXEMPLARY damages may also be awarded. In the instant case, Delfin Lim claimed that he purchased the
motor launch from Jikil Taha in consideration of P3,000.00, having given P2,000.00 as advanced payment; that since its
seizure on July 6, 1962 the motor launch had been moored at Balabac Bay and because of exposure to the elements it has
become worthless at the time of the filing of the present action; that because of the illegality of the seizure of the motor
launch, he suffered moral damages in the sum of P1,000.00; and that because of the violation of their constitutional rights
they were constrained to engage the services of a lawyer whom they have paid P1,500.00 for attorney‘s fees. We find
these claims of Delfin Lim amply supported by the evidence and therefore should be awarded the sum of P3,000.00 as
actual damages; P1,000.00 as moral damages and P750.00 for attorney‘s fees.
However, with respect to plaintiff Jikil Taha, he is NOT ENTITLED TO RECOVER ANY DAMAGE which he alleged he had
suffered from the unlawful seizure of the motor launch inasmuch as he had already transferred the ownership and
possession of the motor launch to Delfin Lim at the time it was seized and therefore, he has no legal standing to
question the validity of the seizure.
Well settled is the rule that the legality of a seizure can be contested only by the party whose rights have been
impaired thereby, and that the objection to an unlawful search and seizure is purely personal and cannot be availed of
by third parties. Consequently, one who is not the owner, lessee, or lawful occupant of the premises searched cannot
raise the question of validity of the search and seizure.18 Jikil Taha is not without recourse though. He can still collect
from his co-plaintiff, Delfin Lim the unpaid balance of P1,000.00.
Defendant-appellee Fiscal Ponce de Leon wanted to wash his hands of the incident by claiming that he was in good faith.
We are not prepared to sustain his defense of good faith. To be liable under Article 32 of the New Civil Code it is
enough that there was a violation of the constitutional rights of the plaintiffs and it is not required that defendants
should have acted with malice or bad faith. Dr. Jorge Bocobo, Chairman of the Code Commission, gave the following
reasons during the public hearings of the Joint Senate and House Committees, why good faith on the part of the public
officer or employee is immaterial:
Attorney Cirilo Paredes proposed that Article 32 be so amended as to make a public

official liable for violation of another person‘s constitutional rights only if the public
official acted maliciously or in bad faith.
The Code Commission opposes this suggestion for these reasons:
1. The very nature of Article 32 is that the wrong may be civil or criminal. It is not
necessary therefore that there should be malice or bad faith. To make such a requisite
would defeat the main purpose of Article 32 which is the effective protection of
individual rights.
2. Public officials in the past have abused their powers on the pretext of justifiable
motives or good faith in the performance of their duties. Precisely, the object of the
Article is to put an end to official abuse by the plea of good faith, which is in
most cases the plea of officials abusing individual rights. In the United States this
remedy is in the nature of a tort.
3. This article is firmly one of the fundamental articles introduced in the New Civil
Code to implement democracy. There is no real democracy if a public official is
abusing, and we made the article so strong and so comprehensive that it concludes an
abuse of individual rights even if done in good faith, that official is liable.
But Orlando Maddela cannot be held accountable because he impounded the motor launch upon the order of his
superior officer. While a subordinate officer may be held liable for executing unlawful orders of his superior officer,
there are certain circumstances which would warrant Maddela‘s exculpation from liability.
Records show that after Fiscal Ponce de Leon made his first request to the Provincial Commander on June 15, 1962
Maddela was reluctant to impound the motor launch despite repeated orders from his superior officer. It was only
after he was furnished a copy of the reply of Fiscal Ponce de Leon, dated June 26, 1962, to the letter of the Provincial
Commander, justifying the necessity of the seizure of the motor launch on the ground that the subsequent sale of the
launch to Delfin Lim could not prevent the court from taking custody of the same, that he impounded the motor launch
on July 6, 1962.
With said letter coming from the legal officer of the province, Maddela was led to believe that there was a legal basis
and authority to impound the launch. Then came the order of his superior officer to explain for the delay in the seizure
of the motor launch. Faced with a possible disciplinary action from his commander, Maddela was left with no alternative
but to seize the vessel.
2. MHP Garments, Inc., v. Court of Appeals, 236 SCRA 227 (1994)

Facts: The constitutional protection of our people against unreasonable search and seizure is not merely a pleasing
platitude. It vouchsafes our right to privacy and dignity against undesirable intrusions committed by any public officer or
private individual. An infringement of this right justifies an award for damages.
MHP Garments, Inc., was awarded by the Boy Scouts of the Philippines, the exclusive franchise to sell and distribute
official Boy Scouts uniforms, supplies, badges, and insignias. In their Memorandum Agreement, MHP Garments was
given the authority to ―undertake or cause to be undertaken the prosecution in court of all illegal sources of scout
uniforms and other scouting supplies.‖ MHP Garments received information that private respondents Agnes Villa Cruz,
Mirasol Lugatiman, and Gertrudes Gonzales were selling Boy Scouts items and paraphernalia without any authority.
De Guzman, an employee of MHP Garments, was tasked to undertake the necessary surveillance and to make a
report to the Philippine Constabulary (PC).
On October 25, 1983, at about 10:30 A.M., petitioner de Guzman , Captain Renato M . Peñafiel, and two (2) other
constabulary men went to the stores of respondents at the Marikina Public Market. Without any warrant, they seized
the boy and girl scouts pants, dresses, and suits on display at respondents‟ stalls. The seizure caused a commotion and
embarrassed private respondents. Receipts were issued for the seized items. The items were then turned over by Captain
Peñafiel to MHP Garments for safekeeping.
A criminal complaint for unfair competition was then filed against private respondents. During its pendency,
petitioner de Guzman exacted from private respondent Lugatiman the sum of (P3,100.00) in order to be dropped from the
complaint. After a preliminary investigation, the Provincial Fiscal of Rizal dismissed the complaint against all the
private respondents. He also ordered the return of the seized items. The seized items were not immediately returned
despite demands. Private respondents had to go personally to petitioners‘ place of business to recover their goods. Even
then, not all the seized items were returned. The other items returned were of inferior quality.
Private respondents then filed a civil case against the petitioners for sums of money and damages. Trial court ruled
for the private respondents. CA affirmed.
Issue: Whether private respondents are entitled to damages.
Held: YES. Article III, section 2, of the Constitution protects our people from unreasonable search and seizure.This
provision protects not only those who appear to be innocent but also those who appear to be guilty but are
nevertheless to be presumed innocent until the contrary is proved.
Under the Rules of Court, a warrantless search can only be undertaken under the following circumstance:
SEC. 12. Search incident to a lawful arrest.—A person lawfully arrested may be
searched for dangerous weapons or anything which may be used as proof of the
commission of an offense, without a search warrant.
We hold that the evidence did not justify the warrantless search and seizure of private respondents‘ goods. MHP Garments
received information that private respondents were illegally selling Boy Scouts items and paraphernalia in October 1983.
The specific date and time are not established in the evidence adduced by the parties. Petitioner de Guzman then made a
surveillance of the stores of private respondents. They reported to the Philippine Constabulary and on October 25, 1983,
the raid was made on the stores of private respondents and the supposed illicit goods were seized. The progression of
time between the receipt of the information and the raid of the stores of private respondents shows there was
sufficient time for petitioners and the PC raiding party to apply for a judicial warrant. Despite the sufficiency of time,
they did not apply for a warrant and seized the goods of private respondents. The search and seizure were clearly illegal.
There was no probable cause for the seizure. PROBABLE CAUSE for a search has been defined as ―such facts and
circumstances which would lead a reasonably discreet and prudent man to believe that an offense has been committed
and that the objects sought in connection with the offense are in the place sought to be searched.‖ Indeed, after a
preliminary investigation, the Provincial Fiscal dismissed their complaint for unfair competition and later ordered the
return of the seized goods.
Petitioners would deflect their liability with the argument that it was the Philippine Constabulary that conducted the
raid and their participation was only to report the alleged illegal activity of private respondents. While undoubtedly, the
members of the PC raiding team should have been included in the complaint for violation of the private respondents‘
constitutional rights, still, the omission will not exculpate petitioners.
In the case of Lim vs. Ponce de Leon, we ruled for the recovery of damages for violation of constitutional rights and
liberties from public officer or private individual, to wit:
A person whose constitutional rights have been violated or impaired is entitled to actual
and moral damages from the public officer or employee responsible therefor. In addition,
exemplary damages may also be awarded.
The very nature of Article 32 is that the wrong may be civil or criminal. It is not
necessary therefore that there should be malice or bad faith. To make such a requisite
would defeat the main purpose of Article 32 which is the effective protection of individual
rights. Public officials in the past have abused their powers on the pretext of justifiable
motives or good faith in the performance of their duties. Precisely, the object of the
Article is to put an end to official abuse by plea of the good faith. In the United States
this remedy is in the nature of a tort.
In Aberca vs. Ver the SC held that the law speaks of an OFFICER or EMPLOYEE or PERSON ―directly or indirectly‖
responsible for the violation of the constitutional rights and liberties of another. Thus, it is not the actor alone (i.e.
the one directly responsible) who must answer for damages under Article 32; the person indirectly responsible has
also to answer for the damages or injury caused to the aggrieved party.
It would certainly be too naive to expect that violators of human rights would easily be deterred by the prospect of facing
damage suits, it should nonetheless be made clear in no uncertain terms that Article 32 of the Civil Code makes the
persons who are directly, as well as indirectly, responsible for the transgression joint tortfeasors.
Article 32 of the Civil Code encompasses within the ambit of its provisions those directly, as well as indirectly,
responsible for its violations. Applying the aforecited provisions and leading cases, the respondent court correctly
granted damages to private respondents. Petitioners were indirectly involved in transgressing the right of private
respondents against unreasonable search and seizure.
Firstly, THEY INSTIGATED THE RAID pursuant to their covenant in the Memorandum Agreement to undertake the
prosecution in court of all illegal sources of scouting supplies. The acts committed by the PC soldiers of unlawfully
seizing appellees‟ (respondents‟) merchandise and of filing the criminal complaint for unfair competition against
appellees (respondents) were for the protection and benefit of appellant (petitioner) corporation. Such being the case, it
is, thus, reasonably fair to infer from those acts that it was upon appellant (petitioner) corporation‘s instance that the
PC soldiers conducted the raid and effected the illegal seizure. The raid was conducted with the active participation of
their employee. Larry de Guzman did not lift a finger to stop the seizure of the boy and girl scouts items . By
standing by and apparently assenting thereto, he was liable to the same extent as the officers themselves. MHP Garments
even received for safekeeping the goods unreasonably seized by the PC raiding team and de Guzman, and refused to
surrender them for quite a time despite the dismissal of its complaint for unfair competition.
Secondly, Letter of Instruction No. 1299 was precisely crafted on March 9, 1983 to safeguard not only the privilege of
franchise holder of scouting items but also the citizen‘s constitutional rights. It directs all law enforcement agencies of the
Republic of the Philippines, to apprehend immediately unauthorized manufacturers and distributors of Scout
paraphernalia, upon proper application by the Boy Scouts of the Philippines and/or Girl Scouts of the Philippines for
warrant of arrest and/or search warrant with a judge, or such other responsible officer as may be authorized by law; and
to impound the said paraphernalia to be used as evidence in court or other appropriate administrative body.
Petitioners miserably failed to report the unlawful peddling of scouting goods to the Boy Scouts of the Philippines
for the proper application of a warrant. Private respondents‘ rights are immutable and cannot be sacrificed to transient
needs. Petitioners did not have the unbridled license to cause the seizure of respondents‘ goods without any
warrant.
Thirdly, if petitioners did not have a hand in the raid, they should have filed a third-party complaint against the
raiding team for contribution or any other relief, in respect of respondents‘ claim for Recovery of Sum of Money with
Damages. Again, they did not.
Moral damages are not awarded to penalize the defendant but to compensate the plaintiff for the injuries he may have
suffered. There can be no doubt that petitioners must have suffered sleepless nights, serious anxiety, and wounded
feelings due to the tortious raid caused by petitioners. Private respondents‘ avowals of embarrassment and humiliation
during the seizure of their merchandise were supported by their testimonies.
Wantonness of the wrongful seizure justifies the award of exemplary damages and to also serve as a stern reminder to all
and sundry that the constitutional protection against unreasonable search and seizure is a virile reality and not a mere burst
of rhetoric. The all encompassing protection extends against intrusions directly done both by government and indirectly
by private entities.
3. Newsweek v. Intermediate Appellate Court, 142 SCRA 141 (1986)

Facts: Private respondents filed a civil case in their own behalf and/or as a class suit in behalf of all sugarcane planters
in the province of Negros Occidental, against Newsweek and 2 of petitioners' non-resident correspondents/reporters
Fred Bruning and Barry Came.
They alleged that Newsweek and the other defendants committed libel against them by the publication of the article "AN
ISLAND OF FEAR" in the February 23, 1981 issue of petitioner's weekly news magazine Newsweek. The article supposedly
portrayed the island province of Negros Occidental as a place dominated by big landowners or sugarcane planters
who not only exploited the impoverished and underpaid sugarcane workers/laborers, but also brutalized and killed
them with imprunity.
They also alleged that said article, taken as a whole, showed a deliberate and malicious use of falsehood, slanted
presentation and/or misrepresentation of facts intended to put them (sugarcane planters) in bad light, expose them to
public ridicule, discredit and humiliation here in the Philippines and abroad, and make them objects of hatred, contempt
and hostility of their agricultural workers and of the public in general.
Newsweek filed a motion to dismiss on the grounds that (1) the printed article sued upon is not actionable in fact and in
law; and (2) the complaint is bereft of allegations that state, much less support a cause of action. It pointed out the non-
libelous nature of the article and, consequently, the failure of the complaint to state a cause of action.
First, petitioner argues that private respondents' complaint failed to state a cause of action because the complaint made no
allegation that anything contained in the article complained of regarding sugarcane planters referred specifically to
any one of the private respondents; that libel can be committed only against individual reputation; and that in cases
where libel is claimed to have been directed at a group, there is actionable defamation only if the libel can be said to
reach beyond the mere collectivity to do damage to a specific, individual group member's reputation.
The trial court denied the motion to dismiss. The CA affirmed.
Issue: Whether Newsweek‘s publication was libelous.
Held: NOT LIBELOUS. In order to maintain a libel suit, it is essential that the victim be identifiable, although it is not
necessary that he be named. Defamatory matter which does not reveal the identity of the person upon whom the
imputation is cast, affords no ground of action unless it be shown that the readers of the libel could have Identified the
personality of the individual defamed.
The case of Uy Tioco v. Yang Shu Wen explains that where the defamation is alleged to have been directed at a group or
class, it is essential that the statement must be so sweeping or all-embracing as to apply to every individual in that
group or class, or sufficiently specific so that each individual in the class or group can prove that the defamatory
statement specifically pointed to him, so that he can bring the action separately, if need be.
The case at bar is not a class suit. It is not a case where one or more may sue for the benefit of all or where the
representation of class interest affected by the judgment or decree is indispensable to make each member of the class an
actual party. What is present is a case where each of the plaintiffs has a separate and distinct reputation in the
community. They do not have a common or general interest in the subject matter of the controversy.
Petitioner's motion to dismiss is based on the ground that the complaint states no cause of action against it by pointing out
the non-libelous nature of the article sued upon. There is no need of a trial in view of the conclusion of this Court that
the article in question is not libelous. The specific allegation in the complaint, to the effect that the article attributed to
the sugarcane planters the deaths and brutalization of sugarcane workers, is not borne out by a perusal of the actual text.
The complaint contains a recital of the favorable working conditions of the agricultural workers in the sugar industry and
the various foundations and programs supported by planters' associations for the benefit of their workers. Undoubtedly,
the statements in the article in question are sweeping and exaggerated; but, paraphrasing the ruling in the Uy Tioco
case above quoted, it would be unreasonable and absurd to condemn the majority of the sugarcane planters, who have
at heart the welfare of their workers, because of the actions of a part. Nonetheless, articles such as the one in question
may also serve to prick the consciences of those who have but are not doing anything or enough for those who do not
have.
MVRS Publications, Inc., v. Islamic Da‟Wah Council of the Philippines, G.R. No. 135306, January 28, 2003
Facts: MVRS is the publisher of Bulgar, a local tabloid newspaper. One of its articles published in August 1, 1992, said:
ALAM BA NINYO?
Na ang mga baboy at kahit anong uri ng hayop sa Mindanao ay hindi kinakain ng mga
Muslim? Para sa kanila ang mga ito ay isang sagradong bagay. Hindi nila ito
kailangang kainin kahit na sila pa ay magutom at mawalan ng ulam sa tuwing sila ay
kakain. Ginagawa nila itong Diyos at sinasamba pa nila ito sa tuwing araw ng kanilang
pangingilin lalung-lalo na sa araw na tinatawag nilang „Ramadan‟.
Thus, Islamic Da‘Wah. a local federation of more than 70 Muslim religious organizations and certain individual Muslims
filed a complaint for damages before the RTC of Manila in their own behalf and as a class suit in behalf of Muslims
nationwide against MVRS, owner thereof, and author of the article.
The complaint alleged that the libelous statement was insulting and damaging to the Muslims; that these words alluding to
the pig as the God of the Muslims was not only published out of sheer ignorance but with intent to hurt the feelings, cast
insult and disparage the Muslims and Islam, as a religion in this country, in violation of law, public policy, good morals
and human relations; that on account of these libelous words Bulgar insulted not only the Muslims in the Philippines but
the entire Muslim world, especially every Muslim individual in non-Muslim countries.
In its defense, MVRS avers that since the plaintiffs were not specifically identified in the article, they have no cause of
action and thus, not entitled to damages.
RTC dismissed the case on June 1995. On appeal, CA reversed and said that it was clear that the article was directed
against adherents of the Islamic faith. Hence, this petition.
Issue: Whether MVRS is liable for damages.
Held: NOT LIABLE. In the present case, there was no fairly identifiable person who was allegedly injured by the
Bulgar article. Since the persons allegedly defamed could not be identifiable, private respondents have no individual
causes of action; hence, they cannot sue for a class allegedly disparaged. Private respondents must have a cause of action
in common with the class to which they belong to in order for the case to prosper.
An individual Muslim has a reputation that is personal, separate and distinct in the community. Each Muslim, as part
of the larger Muslim community in the Philippines of over 5 million people, belongs to a different trade and profession;
each has a varying interest and a divergent political and religious view — some may be conservative, others liberal. A
Muslim may find the article dishonorable, even blasphemous; others may find it as an opportunity to strengthen their faith
and educate the non-believers and the ―infidels.‖ There is no injury to the reputation of the individual Muslims who
constitute this community that can give rise to an action for group libel. Each reputation is personal in character to every
person. Together, the Muslims do not have a single common reputation that will give them a common or general interest
in the subject matter of the controversy.
Philip Wittenberg, in his book ―Dangerous Words: A Guide to the Law of Libel,‖ discusses the inappropriateness of any
action for tortious libel involving large groups, and provides a succinct illustration:
There are groupings which may be finite enough so that a description of the body is a
description of the members. Here the problem is merely one of evaluation. Is the
description of the member implicit in the description of the body, or is there a possibility
that a description of the body may consist of a variety of persons, those included within
the charge, and those excluded from it?
A general charge that the lawyers in the city are shysters would obviously not be a
charge that all of the lawyers were shysters. A charge that the lawyers in a local point in
a great city, such as Times Square in New York City, were shysters would obviously not
include all of the lawyers who practiced in that district; but a statement that all of the
lawyers who practiced in a particular building in that district were shysters would be
a specific charge, so that any lawyer having an office within that building could sue.
If the group is a very large one, then the alleged libellous statement is considered to
have no application to anyone in particular, since one might as well defame all
mankind. Not only does the group as such have no action; the plaintiff does not establish
any personal reference to himself.
At present, modern societal groups are both numerous and complex. The same principle
follows with these groups: as the size of these groups increases, the chances for
members of such groups to recover damages on tortious libel become elusive. This
principle is said to embrace 2 important public policies: FIRST, where the group referred
to is large, the courts presume that no reasonable reader would take the statements as so
literally applying to each individual member; and SECOND, the limitation on liability
would satisfactorily safeguard freedom of speech and expression, as well as of the press,
effecting a sound compromise between the conflicting fundamental interests involved in
libel cases.
In the instant case, the Muslim community is too vast as to readily ascertain who among the Muslims were particularly
defamed. The size of the group renders the reference as indeterminate and generic as a similar attack on Catholics,
Protestants, Buddhists or Mormons would do. The word ―Muslim‖ is descriptive of those who are believers of Islam, a
religion divided into varying sects, such as the Sunnites, the Shiites, the Kharijites, the Sufis and others based upon
political and theological distinctions. ―Muslim‖ is a name which describes only a general segment of the Philippine
population, comprising a heterogeneous body whose construction is not so well defined as to render it impossible for any
representative identification.
The Christian religion in the Philippines is likewise divided into different sects: Catholic, Baptist, Episcopalian,
Presbyterian, Lutheran, and other groups the essence of which may lie in an inspired charlatan, whose temple may be a
corner house in the fringes of the countryside. As with the Christian religion, so it is with other religions that represent the
nation‘s culturally diverse people and minister to each one‘s spiritual needs. The Muslim population may be divided
into smaller groups with varying agenda, from the prayerful conservative to the passionately radical. These divisions
in the Muslim population may still be too large and ambiguous to provide a reasonable inference to any personality
who can bring a case in an action for libel.
The foregoing are in essence the same view scholarly expressed by Mr. Justice Reynato S. Puno in the course of the
deliberations in this case. We extensively reproduce hereunder his comprehensive and penetrating discussion on group
libel —
DEFAMATION is made up of the twin torts of libel and slander — the one being, in general,
written, while the other in general is oral. In either form, defamation is an invasion of the
interest in reputation and good name. This is a ―relational interest‖ since it involves the
opinion others in the community may have, or tend to have of the plaintiff.
The law of defamation protects the interest in reputation — the interest in acquiring,
retaining and enjoying one‘s reputation as good as one‘s character and conduct warrant.
The mere fact that the plaintiff‟s feelings and sensibilities have been offended is not
enough to create a cause of action for defamation. Defamation requires that something
be, communicated to a third person that may affect the opinion others may have of the
plaintiff. The unprivileged communication must be shown of a statement that would
tend to hurt plaintiff‟s reputation, to impair plaintiff‟s standing in the community.
Although the gist of an action for defamation is an injury to reputation, the focus of a
defamation action is upon the allegedly defamatory statement itself and its predictable
effect upon third persons. A statement is ordinarily considered defamatory if it
―tend[s] to expose one to public hatred, shame, obloquy, contumely, odium,
contempt, ridicule, aversion, ostracism, degradation or disgrace . . .‖ The Restatement
of Torts defines a defamatory statement as one that ―tends to so harm the reputation of
another as to lower him in the estimation of the community or to deter third persons from
associating or dealing with him.‖
Consequently as a prerequisite to recovery, it is necessary for the plaintiff to prove as

part of his prima facie case that the defendant (1) published a statement that was (2)
defamatory (3) of and concerning the plaintiff.
The rule in libel is that the action must be brought by the person against whom the
defamatory charge has been made. In the American jurisdiction, no action lies by a third
person for damages suffered by reason of defamation of another person, even though the
plaintiff suffers some injury therefrom. For recovery in defamation cases, it is necessary
that the publication be ―of and concerning the plaintiff.‖ Even when a publication may
be clearly defamatory as to somebody, if the words have no personal application to the
plaintiff, they are not actionable by him. If no one is identified, there can be no libel
because no one‘s reputation has been injured.
In fine, in order for one to maintain an action for an alleged defamatory statement, it
must appear that the plaintiff is the person with reference to whom the statement was
made. This principle is of vital importance in cases where a group or class is defamed
since, usually, the larger the collective, the more difficult it is for an individual member
to show that he was the person at whom the defamation was directed.
If the defamatory statements were directed at a small, restricted group of persons,

they applied to any member of the group, and an individual member could maintain
an action for defamation. When the defamatory language was used toward a small
group or class, including every member, it has been held that the defamatory language
referred to each member so that each could maintain an action. This small group or class
may be a jury, persons engaged in certain businesses, professions or employments, a
restricted subdivision of a particular class, a society, a football team, a family, small
groups of union officials, a board of public officers, or engineers of a particular
company.
In contrast, if defamatory words are used broadly in respect to a large class or group of
persons, and there is nothing that points, or by proper colloquium or innuendo can be
made to apply, to a particular member of the class or group, no member has a right of
action for libel or slander. Where the defamatory matter had no special, personal
application and was so general that no individual damages could be presumed, and where
the class referred to was so numerous that great vexation and oppression might grow out
of the multiplicity of suits, no private action could be maintained. This rule has been
applied to defamatory publications concerning groups or classes of persons engaged in a
particular business, profession or employment, directed at associations or groups of
association officials, and to those directed at miscellaneous groups or classes of persons.
Distinguishing a small group — which if defamed entitles all its members to sue from a
large group — which if defamed entitles no one to sue—is not always so simple. Some
authorities have noted that in cases permitting recovery, the group generally has 25 or
fewer members. However, there is usually no articulated limit on size. Suits have been
permitted by members of fairly large groups when some distinguishing characteristic of
the individual or group increases the likelihood that the statement could be interpreted to
apply individually. For example, a single player on the 60 to 70 man Oklahoma
University football team was permitted to sue when a writer accused the entire team of
taking amphetamines to ―hop up‖ its performance; the individual was a full-back, i.e., a
significant position on the team and had played in all but two of the team‘s games.
A prime consideration, therefore, is the public perception of the size of the group and
whether a statement will be interpreted to refer to every member . The more
organized and cohesive a group, the easier it is to tar all its members with the same
brush and the more likely a court will permit a suit from an individual even if the
group includes more than 25 members. At some point, however, increasing size may
be seen to dilute the harm to individuals and any resulting injury will fall beneath
the threshold for a viable lawsuit. There are many other groupings of men than those
that are contained within the foregoing group classifications. There are all the religions
of the world, there are all the political and ideological beliefs; there are the many colors
of the human race. Group defamation has been a fertile and dangerous weapon of attack
on various racial, religious and political minorities. Some states, therefore, have passed
statutes to prevent concerted efforts to harass minority groups in the United States by
making it a crime to circulate insidious rumors against racial and religious groups. Thus
far, any civil remedy for such broadside defamation has been lacking.
There have been numerous attempts by individual members to seek redress in the courts
for libel on these groups, but very few have succeeded because it felt that the groups are
too large and poorly defined to support a finding that the plaintiff was singled out for
personal attack.
Our conclusion therefore is that the statements published by petitioners in the instant case did not specifically
identify nor refer to any particular individuals who were purportedly the subject of the alleged libelous
publication. Respondents can scarcely claim to having been singled out for social censure pointedly resulting in damages.
REBUTTAL TO THE CONTRARY OPINION (SEE CARPIO‘S DISSENT BELOW)

A contrary view is expressed that what is involved in the present case is an intentional tortious act causing mental
distress and not an action for libel. That opinion invokes Chaplinsky v. New Hampshire where the U.S. Supreme Court
held that words heaping extreme profanity, intended merely to incite hostility, hatred or violence, have no social value and
do not enjoy constitutional protection; and Beauharnais v. Illinois where it was also ruled that hate speech which
denigrates a group of persons identified by their religion, race or ethnic origin defames that group and the law may validly
prohibit such speech on the same.
We do not agree to the contrary view articulated in the immediately preceding paragraph. Primarily, an ― emotional
distress‖ tort action is personal in nature, i.e., it is a civil action filed by an individual to assuage the injuries to his
emotional tranquility due to personal attacks on his character. It has no application in the instant case since no
particular individual was identified in the disputed article of Bulgar. Also, the purported damage caused by the
article, assuming there was any, falls under the principle of RELATIONAL HARM — which includes harm to social
relationships in the community in the form of defamation; as distinguished from the principle of REACTIVE HARM —
which includes injuries to individual emotional tranquility in the form of an infliction of emotional distress . In their
complaint, respondents clearly asserted an alleged harm to the standing of Muslims in the community, especially to their
activities in propagating their faith in Metro Manila and in other non-Muslim communities in the country. It is thus
beyond cavil that the present case falls within the application of the relational harm principle of tort actions for
defamation, rather than the reactive harm principle on which the concept of emotional distress properly belongs.
Moreover, under the Second Restatement of the Law, to recover for the intentional infliction of emotional distress the
plaintiff must show that:
(a) The conduct of the defendant was intentional or in reckless disregard of the plain;
(b) The conduct was extreme and outrageous;
(c) There was a causal connection between the defendant‘s conduct and the plaintiff‘s mental distress; and
(d) The plaintiff‘s mental distress was extreme and severe.
―EXTREME AND OUTRAGEOUS CONDUCT‖ means conduct that is so outrageous in character, and so extreme in degree,
as to go beyond all possible bounds of decency, and to be regarded as atrocious, and utterly intolerable in civilized
society. The defendant‘s actions must have been so terrifying as naturally to humiliate, embarrass or frighten the
plaintiff. Generally, conduct will be found to be actionable where the recitation of the facts to an average member of the
community would arouse his resentment against the actor, and lead him or her to exclaim, ―Outrageous!‖ as his or her
reaction.
―EMOTIONAL DISTRESS‖ means any highly unpleasant mental reaction such as extreme grief, shame, humiliation,
embarrassment, anger, disappointment, worry, nausea, mental suffering and anguish, shock, fright, horror, and
chagrin.
―SEVERE EMOTIONAL DISTRESS,‖ in some jurisdictions, refers to any type of severe and disabling emotional or mental
condition which may be generally recognized and diagnosed by professionals trained to do so , including posttraumatic
stress disorder (PTSD), neurosis, psychosis, chronic depression, or phobia. The plaintiff is required to show, among
other things, that he or she has suffered emotional distress so severe that no reasonable person could be expected to endure
it; severity of the distress is an element of the cause of action, not simply a matter of damages.
Any party seeking recovery for mental anguish must prove more than mere worry, anxiety, vexation, embarrassment,
or anger. Liability does not arise from mere insults, indignities, threats, annoyances, petty expressions, or other
trivialities. In determining whether the tort of outrage had been committed, a plaintiff is necessarily expected and required
to be hardened to a certain amount of criticism, rough language, and to occasional acts and words that are definitely
inconsiderate and unkind; the mere fact that the actor knows that the other will regard the conduct as insulting, or
will have his feelings hurt, is not enough.
Hustler Magazine v. Falwell illustrates the test case of a civil action for damages on intentional infliction of emotional
distress. A parody appeared in Hustler magazine featuring the American fundamentalist preacher and evangelist Reverend
Jerry Falwell depicting him in an inebriated state having an incestuous sexual liaison with his mother in an outhouse.
Falwell sued Hustler and its publisher Larry Flynt for damages. The United States District Court for the Western District
of Virginia ruled that the parody was not libelous, because no reasonable reader would have understood it as a factual
assertion that Falwell engaged in the act described. The jury, however, awarded $200,000 in damages on a separate count
of ―intentional infliction of emotional distress,‖ a cause of action that did not require a false statement of fact to be made.
The U.S. Supreme Court in a unanimous decision overturned the jury verdict of the Virginia Court and held that
Reverend Falwell may not recover for intentional infliction of emotional distress. It was argued that the material might
be deemed outrageous and may have been intended to cause severe emotional distress, but these circumstances were
not sufficient to overcome the free speech rights guaranteed under the First Amendment of the United States
Constitution. Simply stated, an intentional tort causing emotional distress must necessarily give way to the fundamental
right to free speech.
It must be observed that although Falwell was regarded by the U.S. High Court as a ―public figure,‖ he was an individual
particularly singled out or identified in the parody appearing on Hustler magazine. Also, the emotional distress allegedly
suffered by Reverend Falwell involved a reactive interest — an emotional response to the parody which supposedly
injured his psychological well-being.
Verily, our position is clear that the conduct of petitioners was not extreme or outrageous. Neither was the emotional
distress allegedly suffered by respondents so severe that no reasonable person could be expected to endure it. There is no
evidence on record that points to that result.
Even American courts are reluctant to adopt a rule of recovery for emotional harm that would ―open up a wide vista of
litigation in the field of bad manners,‖ an area in which a ―toughening of the mental hide‖ was thought to be a more
appropriate remedy. Perhaps of greater concern were the questions of causation, proof, and the ability to accurately assess
damages for emotional harm, each of which continues to concern courts today.
American courts no longer accept the view that speech may be proscribed merely because it is ―lewd,‖ ―profane,‖
―insulting‖ or otherwise vulgar or offensive. Cohen v. California is illustrative: Paul Robert Cohen wore a jacket
bearing the words ―Fuck the Draft‖ in a Los Angeles courthouse in April 1968, which caused his eventual arrest. Cohen
was convicted for violating a California statute prohibiting any person from ―disturb[ing] the peace x x x by offensive
conduct.‖ The U.S. Supreme Court conceded that Cohen‘s expletive contained in his jacket was ―vulgar,‖ but it
concluded that his speech was nonetheless protected by the right to free speech. It was neither considered an
―incitement‖ to illegal action nor ―obscenity.‖ It did not constitute insulting or ―fighting‖ words for it had not been
directed at a person who was likely to retaliate or at someone who could not avoid the message. In other words, no one
was present in the Los Angeles courthouse who would have regarded Cohen‘s speech as a direct personal insult, nor was
their any danger of reactive violence against him.
PROPRIETY OF THE CLASS SUIT

In any case, respondents‘ lack of cause of action cannot be cured by the filing of a class suit. As correctly pointed out
by Mr. Justice Jose C. Vitug during the deliberations, ―an element of a class suit is the adequacy of representation. In
determining the question of fair and adequate representation of members of a class, the court must consider (a) whether
the interest of the named party is coextensive with the interest of the other members of the class; (b) the proportion of
those made parties as it so bears to the total membership of the class; and, (c) any other factor bearing on the ability of
the named party to speak for the rest of the class.
The rules require that courts must make sure that the persons intervening should be sufficiently numerous to fully
protect the interests of all concerned. In the present controversy, Islamic Da‟wah Council of the Philippines, Inc.,
seeks in effect to assert the interests not only of the Muslims in the Philippines but of the whole Muslim world as well.
Private respondents obviously lack the sufficiency of numbers to represent such a global group; neither have they
been able to demonstrate the identity of their interests with those they seek to represent. Unless it can be shown that there
can be a safe guaranty that those absent will be adequately represented by those present, a class suit, given its magnitude
in this instance, would be unavailing.
**Discussion on damages omitted.
CARPIO DISSENT
I dissent not because the newspaper article in question is libelous, but because it constitutes an intentional tortuous act
causing mental distress to those whom private respondent Islamic Da‟wah Council of the Philippines, Inc. represents.
Clearly, the instant case is not about libel which requires the identification of the plaintiff in the libelous statement. If this
were a libel case under Article 30 of the Civil Code, which authorizes a separate civil action to recover civil liability
arising from a criminal offense, I would agree that the instant case could not prosper for want of identification of the
private respondents as the libeled persons. But private respondents do not anchor their action on Article 30 of the Civil
Code.
Private respondents insist that this case is principally about tortious conduct under Article 26 of the Civil Code.
Unlike the action in Article 30 of the Civil Code which must arise from a ―criminal offense,‖ the action under Article
26 ―may not constitute a criminal offense.‖ Article 26, adopted from American jurisprudence, covers several kinds of
intentional torts. Paragraph 4 of Article 26, which refers to acts humiliating another for his religious beliefs, is
embraced in the tort known as intentional infliction of mental or emotional distress. This case must be decided on the
issue of whether there was such tortious conduct, and not whether there was defamation that satisfied the elements of the
crime of libel.
Private respondents have certainly suffered humiliation and mental distress because of their religious beliefs. The only
question is whether the wrongful act committed by petitioners, which does not constitute the crime of libel, is a case
of damnum absque injuria or an actionable tort under paragraph 4, Article 26 of the Civil Code.
RATIONALE BEHIND ARTICLE 26 ¶ 4

The Code Commission stated that —
The penal laws against defamation and unjust vexation are glaringly inadequate.
Religious freedom does not authorize anyone to heap obloquy and disrepute upon
another by reason of the latter‟s religion.
Not a few of the rich people treat the poor with contempt because of the latter‘s lowly
station in life. To a certain extent this is inevitable, from the nature of the social make-
up, but there ought to be a limit somewhere, even when the penal laws against
defamation and unjust vexation are not transgressed. In a democracy, such a limit must
be established. The courts will recognize it in each case. Social equality is not sought by
the legal provision under consideration, but due regard for decency and propriety.
Place of birth, of physical defect and other personal conditions are too often the pretext of
humiliation cast upon other persons. Such tampering with human personality, even
though the penal laws are not violated, should be the cause of civil action. The article
under study denounces ―similar acts‖ which could readily be named, for they occur with
unpleasant frequency.
The intent of the Code Commission is quite clear: Article 26 specifically applies to intentional acts which fall short of
being criminal offenses. Article 26 expressly refers to tortious conduct which ―may not constitute criminal offenses.‖
The purpose is precisely to fill a gap or lacuna in the law where a person who suffers injury because of a wrongful
act not constituting a crime is left without any redress. Under Article 26, the person responsible for such act becomes
liable for ―damages, prevention and other relief.‖ In short, to preserve peace and harmony in the family and in the
community, Article 26 seeks to eliminate cases of damnum absque injuria in human relations.
Consequently, the elements that qualify the same acts as criminal offenses do not apply in determining responsibility for
tortious conduct under Article 26. Where the tortious act humiliating another because of his religious beliefs is published
in a newspaper, the elements of the crime of libel need not be satisfied before the aggrieved person can recover
damages under Article 26. In intentional tort under Article 26, the offensive statements may not even be published or
broadcasted but merely hurled privately at the offended party.
In intentional infliction of mental distress, the gravamen of the tort is not the injury to plaintiff‘s reputation, but the harm
to plaintiff‘s mental and emotional state. In libel, the gist of the action is the injury to plaintiff‘s reputation. Reputation
is the community‘s opinion of what a person is. In intentional infliction of mental distress, the opinion of the community
is immaterial to the existence of the action although the court can consider it in awarding damages. What is material is the
disturbance on the mental or emotional state of the plaintiff who is entitled to peace of mind. The offensive act or
statement need not identify specifically the plaintiff as the object of the humiliation. What is important is that the
plaintiff actually suffers mental or emotional distress because he saw the act or read the statement and it alludes to an
identifiable group to which he clearly belongs.
If one of the petitioners, without specifically naming private respondents, hurled the same statement in private separately
to each of the private respondents, the act would be actionable under Article 26 because it would cause mental distress to
each private respondent. The fact that the statement was made publicly in fact makes matters worse because the mental
or emotional distress caused on private respondents would even be aggravated by the publicity . This merely illustrates
that the requirements of libel have no application in intentional torts under Article 26 where the impression of the
public is immaterial while the impact on the mind or emotion of the offended party is all important.
That is why in American jurisprudence the tort of intentional infliction of mental or emotional distress is completely
separate and distinct from the twin torts of libel and slander.
Paragraph 4, Article 26 of the Civil Code makes civilly liable any person who humiliates another because of his religious
beliefs. This is just a soft prohibition of advocacy of religious hatred that incites discrimination, hostility or
violence, the act the International Covenant on Civil and Political Rights (ICCPR) seeks to curb and which the
Philippine Government has undertaken to declare unlawful. Other countries that signed the ICCPR have criminalized
the acts prohibited under the ICCPR. Since our ratification of the ICCPR in 1986, the Philippines has not enacted any
special legislation to enforce the provisions of the ICCPR, on the ground that existing laws are adequate to meet the
requirements of the ICCPR. There is no other law, except paragraph 4, Article 26 of the Civil Code, which can provide
a sanction against intentional conduct, falling short of a criminal act, advocating religious hatred that incites hostility
between Muslims and Christians in this country.
Indeed, while democratic societies maintain a deep commitment to the principle that debate on public issues should be
uninhibited, robust and wide open, this free debate has never been meant to include libelous, obscene or profane
utterances against private individuals. Clearly, the newspaper article in question, dripping with extreme profanity, does
not enjoy the protection of the constitutional guarantee of freedom of speech.
CARPIO‘S CONCLUSION
Applying Article 26 will not undermine freedom of speech since the profane publication in question belongs to the
class of speech that clearly does not enjoy constitutional protection. Applying Article 26 demonstrates good faith
compliance with our treaty obligations under the ICCPR.
Applying Article 26 implements the constitutional policy that the ―State values the dignity of every human person and
guarantees full respect for human rights.‖ Applying Article 26 constitutes compliance by the Court of its constitutional
duty to protect and enforce constitutional rights. Applying Article 26 will help bind the wounds that mindless profanities
inflict on religious minorities in violation of their human rights.
4.Silahis International Hotel v. Soluta, G.R. No. 163087, February 20, 2006
Facts: Petitioner Panlilio was the VP for Finance of his co-petitioner Silahis International Hotel, Inc. (Silahis), while
respondents Soluta, Santos, Bernate, Delola, and Matilla were employees of the hotel and officers of the Glowhrain-
Silahis Union Chapter, the hotel employees union (the union).
Petitioners‘ version of the antecedents of the case are as follows:
In late 1987, as Maniego, GM of the Rapier Enforcement Professional Investigation and

Security Agency, Inc. (REPISA) which the hotel contracted to provide its security force,
had been receiving reports that sale and/or use of marijuana, dollar smuggling, and
prostitution were going on in the union office at the hotel and that there existed a theft
syndicate, he conducted a surveillance, with the approval of Panlilio, of suspected
members and officers of the union.
In the morning of January 11, 1988, Panlilio, Maniego and REPISA security guard Steve
Villanueva (Villanueva) entered the union office located at the hotel basement, with
the permission of union officer Henry Babay, who was apprised about the suspected
illegal activities, and searched the premises in the course of which Villanueva found a
plastic bag under a table. When opened, the plastic bag yielded dry leaves of marijuana.
Panlilio thereupon ordered Maniego to investigate and report the matter to the authorities.
On the other hand, respondents‘ version follows:
On January 10, 1988, Loida Somacera (Loida), a laundrywoman of the hotel, stayed
overnight at the female locker room at the basement of the hotel. At dawn of January 11,
1988, she heard pounding sounds outside, prompting her to open the door of the
locker room upon which she saw five men in barong tagalog whom she failed to
recognize but she was sure were not employees of the hotel, forcibly opening the door
of the union office. She even saw one of the men hid something behind his back. She
then closed the door and went back to bed. Soon after she heard the door of the union
office opened.
In the morning of January 11, 1988, as union officer Soluta was trying in vain to open
the door of the union office, Loida narrated to him what she had witnessed at dawn.
Soluta thus immediately lodged a complaint before the Security Officer. And he
fetched a locksmith, Efren Guevarra, who tried to assist him to open the door. At that
instant, men in barong tagalog armed with clubs arrived and started hitting Soluta and
his companions, drawing them to run to the female locker room, and to thereafter
proceed to the Engineering Office where they called for police assistance.
While awaiting the arrival of the police, Babay and Panlilio, on the latter‘s request, met.
At the meeting, Panlilio told Babay that they proceed to the union office where they
would settle the mauling incident, to which Babay replied that the door of the office
could not be opened. Panlilio thereupon instructed Villanueva to force open the door,
and the latter did. Once inside, Panlilio and his companions began searching the
office, over the objection of Babay who even asked them if they had a search warrant.
A plastic bag was found containing marijuana flowering tops.
As a result of the discovery of the presence of marijuana in the union office and after the police conducted an
investigation of the incident, a complaint against the 13 union officers was filed before the Fiscal‘s Office of Manila,
for violation of The Dangerous Drugs Act.
After trial, the RTC acquitted the accused:
WHEREFORE, with the specimen and/or the marijuana flowering tops allegedly found
inside the Union Office occupied by the accused not admissible in evidence, coupled by
the suspicious circumstance of confiscation thus they are ACQUITTED of the charge.
Soluta and his fellow union officers, together with the union, thereafter filed before the Manila RTC a Complaint against
petitioners et al. including prosecuting Fiscal Jose Bautista and Atty. Eduardo Tutaan who assisted in the prosecution of
the case against them, for malicious prosecution and violation of their constitutional right against illegal search.
After trial the RTC held the hotel, Panlilio, Maniego and Villanueva jointly and severally liable for damages as a result
of malicious prosecution and illegal search of the union office. The CA affirmed with modification the trial court‘s
decision.(only violation of consti rights against illegal search, but no malicious prosecution).
Hence, this case. Petitioners argue:

 People v. Aruta does not involve Article 32 as nowhere in the decision is there any reference to Article 32
 Being private persons, they are not covered by the standards set forth in Aruta as the constitutional protection
against illegal searches and seizures is not meant to be invoked against private individuals.
 The search of the union office was reasonable under the circumstances: given that the hotel owns the room where
the union holds office, there was probable cause, and it was done with the consent of Babay.
Issue: Whether the petitioners, as private persons, are liable under Art. 32 for illegal searches and seizures.
Held: YES.
(1) Article 32 APPLIES ALSO TO PRIVATE INDIVIDUALS, even in the absence of bad faith.
As the Code Commission noted,
Direct and open violations of the Penal Code trampling upon the freedoms named are not so frequent as those
subtle, clever and indirect ways which do not come within the pale of the penal law. It is in these cunning
devices of suppressing or curtailing freedom, which are not criminally punishable, where the greatest
danger to democracy lies. The injured citizen will always have, under the new Civil Code, adequate civil
remedies before the courts because of the independent civil action, even in those instances where the act or
omission complained of does not constitute a criminal offense.
The Code Commission thus deemed it necessary to hold not only public officers but also private individuals civilly
liable for violation of rights enumerated in Article 32 of the Civil Code. That is why it is not even necessary that the
defendant under this Article should have acted with malice or bad faith, otherwise, it would defeat its main purpose,
which is the effective protection of individual rights. It suffices that there is a violation of the constitutional right of the
plaintiff.
(2) They had AMPLE TIME TO PROCURE A SEARCH WARRANT, but they failed to do so.
In the present case, as prior stated, petitioners had, by their own claim, already received reports in late 1987 of illegal
activities allegedly undertaken in the union office and Maniego conducted surveillance of the union officers. Yet, in the
morning of January 11, 1988, petitioners and their companions barged into and searched the union office without a
search warrant, despite ample time for them to obtain one, and notwithstanding the objection of Babay.
The course taken by petitioners and company stinks in illegality, it not falling under any of the exceptional instances when
a warrantless search is allowed by law. Petitioners‘ violation of individual respondents‘ constitutional right against
unreasonable search thus furnishes the basis for the award of damages under Article 32 of the Civil Code.
(3) The ‗Property rights‘ defense – unmeritorious.

As for petitioners‘ contention that property rights justified the search of the union office, the same does not lie. For
respondents, being the lawful occupants of the office, had the right to raise the question of validity of the search and
seizure.
Neither does petitioners‘ claim that they were allowed by union officer Babay to enter the union office lie. Babay‘s
account of why petitioners and company went to the union office – to consider Panlilio‘s suggestion to settle the mauling
incident is more credible, as is his claim that he protested the search, and even asked if they were armed with a search
warrant.
(4) Respondents DID NOT WAIVE THEIR RIGHT against unreasonable searches and seizures.
While it is doctrinal that the right against unreasonable searches and seizures is a personal right which may be waived
expressly or impliedly, a waiver by implication cannot be presumed. There must be clear and convincing evidence of an
actual intention to relinquish it to constitute a waiver thereof. There must be PROOF OF THE FOLLOWING: (a) that the right
exists; (b) that the person involved had knowledge, either actual or constructive, of the existence of such right; and,
(c) that the said person had an actual intention to relinquish the right. In other words, the waiver must be
VOLUNTARILY, KNOWINGLY and INTELLIGENTLY made. The evidence shows otherwise, however.
(5) Soluta and Silahis are liable for actual, moral, and exemplary damages under art. 32.
That a violation of one‘s constitutional right against illegal search and seizure can be the basis for the recovery of
damages under Article 32 in relation to Article 2219(6) and (10) of the New Civil Code, there is no doubt. Since the
complaint filed before the trial court was for damages due to malicious prosecution and violation of constitutional right
against illegal search and seizure, the award by the trial court of actual damages to respondent union was correctly set
aside by the appellate court.
Article 32 speaks of an officer or employee or person "DIRECTLY OR INDIRECTLY" responsible for the violation of
the constitutional rights and liberties of another. Hence, it is not the actor alone who must answer for damages under
Article 32; the person indirectly responsible has also to answer for the damages or injury caused to the aggrieved party.
Such being the case, petitioners, together with Maniego and Villanueva, the ones who orchestrated the illegal search, are
jointly and severally liable for actual, moral and exemplary damages to herein individual respondents in accordance with
the following:
Art. 2219. Moral damages may be recovered in the following and analogous cases:
(6) Illegal search;
(10) Acts and action referred to in Articles 21, 26, 27, 28, 29, 30, 32, 34 and 35.
Petitioners assail the applicability of People v. Aruta in this case, citing People v. Marti to support their defense.
However:
 Aruta was cited by the appellate court, not to justify petitioners‘ liability but to rule out the legality of the search
in the union office as the search was not done as an incident of a lawful arrest.
 The ruling of this Court in Marti, a criminal case, bears on the issue of whether "an act of a private individual,
allegedly in violation of one‘s constitutional rights, may be invoked against the State." In other words, the issue in
that case was whether the evidence obtained by a private person, acting in a private capacity without the
participation of the State, is admissible.
The issue in the present civil case, however, is whether respondent individual can recover damages for violation of
constitutional rights. As reflected above, Article 32, in relation to Article 2219(6) and (10) of the Civil Code, allows so.
5.Radio Communications of the Philippines, Inc., v. Verchez, G.R. No. 164349, January 31, 2006
Facts: Editha was confined at the Sorsogon Provincial Hospital due to an ailment. Her daughter Grace immediately went
to the Sorsogon Branch of the Radio Communications whose services she engaged to send a telegram to her sister
Zenaida reading: “Send check money Mommy hospital.‖
As 3 days after RCPI was engaged to send the telegram to Zenaida no response was received from her, Grace sent a
letter to Zenaida, this time thru JRS Delivery reprimanding her for not sending any financial aid. Immediately after
she received Grace‘s letter, Zenaida left for Sorsogon and upon arrival she disclaimed having received any telegram.
The telegram was finally delivered to Zenaida 25 days later. On inquiry from RCPI why it took that long to deliver it, a
messenger of RCPI replied that he had nothing to do with the delivery thereof as it was another messenger who
previously was assigned to deliver the same but the address could not be located , hence, the telegram was resent.
Editha‘s husband demanded an explanation from the manager of RCPI who replied.
Our investigation on this matter disclosed that subject telegram was duly processed in
accordance with our standard operating procedure. However, delivery was not
immediately effected due to the occurrence of circumstances which were beyond the
control and foresight of RCPI. xxx During the transmission process, the radio link
connecting the points of communication involved encountered radio noise and
interferences such that subject telegram did not initially registered (sic) in the receiving
teleprinter machine. Our internal message monitoring led to the discovery of the above.
Thus, a repeat transmission was made and subsequent delivery was effected.
EDITHA DIED. Verchez, along with his daughters Grace and Zenaida and their respective spouses, filed a complaint
against RCPI for damages. Plaintiffs alleged that, inter alia, the delay in delivering the telegram contributed to the
early demise of the late Editha for which they prayed for the award of moral and exemplary damages and attorney‟s
fees.
RCPI filed its answer, alleging that the other plaintiffs had no privity of contract with it; any delay in the sending of the
telegram was due to force majeure, ―specifically, but not limited to, radio noise and interferences which adversely
affected the transmission and/or reception of the telegraphic message‖; the clause in the Telegram Transmission Form
signed by Grace absolved it from liability for any damage arising from the transmission other than the refund of telegram
tolls; it observed due diligence in the selection and supervision of its employees; and at all events, any cause of action had
been barred by laches.
TC ruled out the presence of force majeure. The obligation of the defendant to deliver the telegram to the addressee is of
an URGENT NATURE. Its essence is the early delivery of the telegram to the concerned person. Yet, due to the
negligence of its employees, the defendant failed to discharge of its obligation on time making it liable for damages
under Article 2176. The negligence on the part of the employees gives rise to the presumption of negligence on the part of
the employer.‖
CA affirmed
Hence, RCPI‘s present petition for review on certiorari
Issue: (1) Are moral damages proper even if the trial court found that there was no direct connection between the injury
and the alleged negligent acts.
(2) Whether the stipulations in the ―Telegram Transmission Form‖ is in the nature of a contract of adhesion.
Held: RCPI insists that respondents failed to prove any causal connection between its delay in transmitting the telegram
and Editha‘s death. Its liability is anchored on culpa contractual or breach of contract with regard to Grace, and on tort
with regard to her co-plaintiffs- herein-co-respondents.
RCPI‘s stand fails.
BREACH OF CONTRACT
Article 1170 of the Civil Code : Those who in the performance of their obligations are guilty of fraud, negligence, or
delay, and those who in any manner contravene the tenor thereof, are liable for damages.
In culpa contractual x x x the mere proof of the existence of the contract and the failure of its compliance justify, prima
facie, a corresponding right of relief. The law, recognizing the obligatory force of contracts, will not permit a party to be
set free from liability for any kind of misperformance of the contractual undertaking or a contravention of the tenor
thereof. A breach upon the contract confers upon the injured party a valid cause for recovering that which may have
been lost or suffered. The remedy serves to preserve the interests of the promissee that may include his ―expectation
interest,‖ which is his interest in having the benefit of his bargain by being put in as good a position as he would have
been in had the contract been performed, or his ―reliance interest,‖ which is his interest in being reimbursed for loss
caused by reliance on the contract by being put in as good a position as he would have been in had the contract not been
made; or his ―restitution interest,‖ which is his interest in having restored to him any benefit that he has conferred on the
other party. Indeed, agreements can accomplish little, either for their makers or for society, unless they are made the basis
for action. The effect of every infraction is to create a new duty, that is, to make recompense to the one who has been
injured by the failure of another to observe his contractual obligation unless he can show extenuating circumstances, like
proof of his exercise of due diligence x x x or of the attendance of fortuitous event, to excuse him from his ensuing
liability.
RCPI bound itself to deliver the telegram within the shortest possible time. It took 25 days, however, for RCPI to
deliver it.
NO FORCE MAJEURE
RCPI invokes force majeure, specifically, the alleged radio noise and interferences. Additionally, its messenger claimed
he could not locate the address of Zenaida. For the defense of force majeure to prosper, it is necessary that one has
committed no negligence or misconduct that may have occasioned the loss. An act of God cannot be invoked to
protect a person who has failed to take steps to forestall the possible adverse consequences of such a loss . One‘s
negligence may have concurred with an act of God in producing damage and injury to another; nonetheless, showing that
the immediate or proximate cause of the damage or injury was a fortuitous event would not exempt one from liability.
When the effect is found to be partly the result of a person‘s participation—whether by active intervention, neglect or
failure to act—the whole occurrence is humanized. Article 1174 of the Civil Code states that no person shall be
responsible for a fortuitous event that could not be foreseen or, though foreseen, was inevitable. In other words, there must
be an exclusion of human intervention.
Assuming arguendo that fortuitous circumstances prevented RCPI from delivering the telegram at the soonest possible
time, it should have at least informed Grace of the non-transmission and the non-delivery so that she could have
taken steps to remedy the situation. But it did not. There lies the fault or negligence.
Considering the public utility of RCPI‘s business and its contractual obligation to transmit messages, it should exercise
due diligence to ascertain that messages are delivered to the persons at the given address and should provide a
system whereby in cases of undelivered messages the sender is given notice of non-delivery . Messages sent by cable
or wireless means are usually more important and urgent than those which can wait for the mail.
People depend on telecommunications companies in times of deep emotional stress or pressing financial needs. Knowing
that messages about the illnesses or deaths of loved ones, births or marriages in a family, important business transactions,
and notices of conferences or meetings as in this case, are coursed through the petitioner and similar corporations, it is
incumbent upon them to exercise a greater amount of care and concern than that shown in this case. Every
reasonable effort to inform senders of the non- delivery of messages should be undertaken.
RCPI argues, however, against the presence of urgency. It argues that the request to send check as written in the
telegraphic text negates the existence of urgency that private respondents‘ allegations that ‗time was of the essence‘
imports. Requesting a check that would take 6 days before it could be withdrawn therefore contradicts plaintiff‟s claim
of urgency or need. And that any sense of urgency of the situation was met when Grace was able to communicate to
Manila via a letter that she sent to the same addressee in Manila thru JRS.
RCPI‘s arguments fail. For it is its breach of contract upon which its liability is, it bears repeating, anchored. Since RCPI
breached its contract, the presumption is that it was at fault or negligent. It failed to rebut this presumption. For breach
of contract then, RCPI is liable to Grace for damages. And for quasi-delict, RCPI is liable to Grace‘s corespondents
following Article 2176
RCPI‘s liability as an employer under Article 2180 could of course be avoided if it could prove that it observed the
diligence of a good father of a family to prevent damage. RCPI failed, however, to prove that it observed all the diligence
of a good father of a family to prevent damage.
ENTITLED TO MORAL DAMAGES

As for moral damages, the presence of the following requisites to justify the award is in order:
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 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.
First requisite, theres is evidence of suffering. The failure of RCPI to deliver the telegram containing the message of
appellees on time, disturbed their filial tranquillity. Family members blamed each other for failing to respond swiftly to an
emergency that involved the life of the late Mrs. Verchez, who suffered from diabetes.
The second and third requisites are present.

On the fourth requisite, Article 2220 of the Civil Code 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.
After RCPI‘s first attempt to deliver the telegram failed, it did not inform Grace of the non-delivery thereof and
waited for 12 days before trying to deliver it again, knowing—as it should know—that time is of the essence in the
delivery of telegrams. When its second long-delayed attempt to deliver the telegram again failed, it, again, waited for
another 12 days before making a third attempt. Such nonchalance in performing its urgent obligation indicates gross
negligence amounting to bad faith. The fourth requisite is thus also present.
In applying the above-quoted Article 2220, this Court has awarded moral damages in cases of breach of contract where
the defendant was guilty of gross negligence amounting to bad faith, or in wanton disregard of his contractual obligation.
As for RCPI‘s tort-based liability, Article 2219 provides that:
Moral damages may be recovered in the following and analogous cases: xxxx (10) Acts and actions referred to in Articles
21, 26, 27, 28, 29, 30, 32, 34, and 35.
Article 26 of the Civil Code, in turn, provides:
Every person shall respect the dignity, personality, privacy and peace of mind of his
neighbors and other persons. The following and similar acts, though they may not
constitute a criminal offense, shall produce a cause of action for damages, prevention,
and other relief: xxxx (2) Meddling with or disturbing the private life or family relations
of another.
RCPI‘s negligence in not promptly performing its obligation undoubtedly disturbed the peace of mind not only of Grace
but also her co-respondents. It disrupted the ―filial tranquillity‖ among them as they blamed each other ―for failing to
respond swiftly to an emergency.‖ The tortious acts and/or omissions complained of in this case are, therefore, analogous
to acts mentioned under Article 26
IT WAS A CONTRACT OF ADHESION

RCPI insists that the limited liability clause in the ―Telegram Transmission Form‖ is not a contract of adhesion and that
the fact that the stipulations were located in a particular space where they can easily be seen, is sufficient notice to any
sender (like Grace Verchez-Infante) where she could manifest her disapproval
A CONTRACT OF ADHESION is defined as one in which one of the parties imposes a ready-made form of contract, which
the other party may accept or reject, but which the latter cannot modify, giving no room for negotiation and depriving
the latter of the opportunity to bargain on equal footing. While a contract of adhesion is not necessarily void and
unenforceable, since it is construed strictly against the party who drafted it or gave rise to any ambiguity therein, it is
stricken down as void and unenforceable or subversive of public policy when the weaker party is imposed upon in
dealing with the dominant bargaining party and is reduced to the alternative of taking it or leaving it, completely
deprived of the opportunity to bargain on equal footing. This Court holds that the CA finding that the parties‘ contract is
one of adhesion which is void is, given the facts and circumstances of the case, thus well- taken.
VII. TORTIOUS INTERFERENCE WITH CONTRACTUAL RELATIONS
- Civil Code
2.Gilchrist v. Cuddy, 29 Phil. 542 (1915)

Facts: Cuddy was the owner of the film ZIGOMAR and that on the 24th of April he rented it to C. S. Gilchrist for a week
for P125, and it was to be delivered on the 26th of May, the week beginning that day. A few days prior to this Cuddy sent
the money back to Gilchrist, which he had forwarded to him in Manila, saying that he had made other arrangements
with his film. The other arrangements was the rental to these defendants Espejo and his partner, Zaldarriaga for
P350 for the week and the injunction was asked by Gilchrist against these parties from showing it for the week beginning
the 26th of May.
Issue: Whether the injunction was proper
Held: YES. The contract in question had been made. There is in the record not only the positive and detailed testimony of
Gilchrist to this effect, but there is also a letter of apology from Cuddy to Gilchrist in which the former enters into a
lengthy explanation of his reasons for leasing the film to another party. The latter could only have been called forth by a
broken contract with Gilchrist to lease the film to him.
Did the appellants know that they were inducing Cuddy to violate his contract with a third party when they induced him to
accept the P350?
Espejo admitted that he knew that Cuddy was the owner of the film. He received a letter from his agents in Manila,
assuring him that he could not get the film for about six weeks. The arrangements between Cuddy and the appellants for
the exhibition of the film by the latter on the 26th of May were perfected after April 26, so that the 6 weeks would include
and extend beyond May 26. The appellants must necessarily have known at the time they made their offer to Cuddy
that the latter had booked or contracted the film for six weeks from April 26.
Therefore, the inevitable conclusion is that the appellants knowingly induced Cuddy to violate his contract with another
person. But there is no specific finding that the appellants knew the identity of the other party, so we must assume
that they did not know that Gilchrist was the person who had contracted for the film.
The right on the part of Gilchrist to enter into a contract with Cuddy for the lease of the film must be fully recognized and
admitted by all. That Cuddy was liable in an action for damages for the breach of that contract, there can be no doubt.
Were the appellants likewise liable for interfering with the contract between Gilchrist and Cuddy , THEY NOT
KNOWING AT THE TIME THE IDENTITY OF ONE OF THE CONTRACTING PARTIES ?
The appellants claim that they had a right to do what they did. The ground upon which the appellants base this
contention is, that there was no valid and binding contract between Cuddy and Gilchrist and that, therefore, they had a
right to compete with Gilchrist for the lease of the film, the right to compete being a justification for their acts.
If there had been no contract between Cuddy and Gilchrist this defense would be tenable, but the mere right to
compete could not justify the appellants in intentionally inducing Cuddy to take away the appellee's contractual rights.
In Walker vs. Cronin: ―Everyone has a right to enjoy the fruits and advantages of his own enterprise, industry, skill and
credit. He has no right to be protected against competition; but he has a right to be free from malicious and wanton
interference, disturbance or annoyance. If disturbance or loss come as a result of competition, or the exercise of like
rights by others, it is damnum absque injuria, unless some superior right by contract or otherwise is interfered with.‖
In Read vs. Friendly Society of Operative Stonemasons, ―I think the plaintiff has a cause of action against the defendants,
unless the court is satisfied that, when they interfered with the contractual rights of plaintiff, the defendants had a
sufficient justification for their interference; for it is not a justification that ‗they acted bona fide in the best interests of the
society of masons,‘ i. e., in their own interests. Nor is it enough that ‗they were not actuated by improper motives.‘ I think
their sufficient justification for interference with plaintiff's right must be an EQUAL or SUPERIOR right in
themselves, and that no one can legally excuse himself to a man, of whose contract he has procured the breach, on the
ground that he acted on a wrong understanding of his own rights, or without malice, or bona fide, or in the best interests of
himself, or even that he acted as an altruist, seeking only the good of another and careless of his own advantage.‖
It is said that the ground on which the liability of a third party for interfering with a contract between others rests,
is that the INTERFERENCE WAS MALICIOUS.
The CONTRARY VIEW, however, is taken by the Supreme Court US in the case of Angle vs. Railway Co. The only motive
for interference by the third party in that case was the desire to make a profit to the injury of one of the parties of the
contract. There was no malice in the case beyond the desire to make an unlawful gain to the detriment of one of the
contracting parties.
In THE CASE AT BAR the only motive for the interference with the Gilchrist-Cuddy contract on the part of the
appellants was a desire to make a profit by exhibiting the film in their theater. There was no malice beyond this desire;
but this fact does not relieve them of the legal liability for interfering with that contract and causing its breach. It is,
therefore, clear, under the above authorities, that they were liable to Gilchrist for the damages caused by their acts,
unless they are relieved from such liability by reason of the fact that they did not know at the time the identity of the
original lessee (Gilchrist) of the film.
The liability of the appellants arises from UNLAWFUL ACTS and not from contractual obligations, as they were under
no such obligations to induce Cuddy to violate his contract with Gilchrist. So that if the action of Gilchrist had been one
for damages, it would be governed by [the present Article 2176]. There is nothing in this article which requires as a
condition precedent to the liability of a tortfeasor that he must know the identity of a person to whom he causes damage.
But the fact that the appellants‘ interference with the Gilchrist contract was actionable did not of itself entitle Gilchrist to
sue out an injunction against them. The allowance of this remedy must be justified under section 164 of the Code of Civil
Procedure, which specifies the circumstances under which an injunction may issue.
ON THE PROPRIETY OF THE INJUNCTION

Does the fact that the appellants did not know at the time the identity of the original lessee of the film militate against
Gilchrist's right to a preliminary injunction, although the appellants incurred civil liability for damages for such
interference?
There is nothing in section 164 of the Code of Civil Procedure which indicates, even remotely, that before an
injunction may issue restraining the wrongful interference with contracts by strangers, the strangers must know the
identity of both parties. It would seem that this is not essential, as injunctions frequently issue against municipal
corporations, public service corporations, public officers, and others to restrain the commission of acts which would tend
to injuriously affect the rights of persons whose identity the respondents could not possibly have known beforehand. In a
proper case injunction will issue at the instance of a private citizen to restrain ultra vires acts of public officials.
So we proceed to the determination of the main question of whether or not the preliminary injunction ought to have been
issued in this case. As a rule, injunctions are denied to those who have an adequate remedy at law. If the injury is
irreparable, the ordinary process is inadequate.
By 'IRREPARABLE INJURY' is not meant such injury as is beyond the possibility of repair, or beyond possible
compensation in damages, nor necessarily great injury or great damage, but that species of injury, whether great or small,
that ought not to be submitted to on the one hand or inflicted on the other; and, because it is so large on the one hand, or
so small on the other, is of such constant and frequent recurrence that no fair or reasonable redress can be had
therefor in a court of law.
The case at bar is somewhat novel, as the only contract which was broken was that between Cuddy and Gilchrist, and the
profits of the appellee depended upon the patronage of the public, for which it is conceded the appellants were at liberty to
compete by all fair and legitimate means.
This court takes judicial notice of the general character of a cinematograph or motion-picture theater. It is a quite
modern form of the play house, wherein, by means of an apparatus known as a cinematograph or kinematograph, a series
of views- representing closely successive phases of a moving object, are exhibited in rapid sequence, giving a picture
which, owing to the persistence of vision, appears to the observer to be in continuous motion.
The subjects which have lent themselves to the art of the photographer in this manner have increased enormously in recent
years, as well as have the places where such exhibitions are given. The attendance, and, consequently, the receipts, at one
of these cinematograph or motion-picture theaters depends in no small degree upon the excellence of the photographs, and
it is quite common for the proprietor of the theater to secure an especially attractive exhibit as his "feature film" and
advertise it as such in order to attract the public. This feature film is depended upon to secure a larger attendance
than if its place on the program were filled by other films of mediocre quality. It is evident that the failure to exhibit
the feature film will reduce the receipts of the theater.
Hence, Gilchrist was facing the Immediate prospect of diminished profits by reason of the fact that the appellants
had induced Cuddy to rent to them the film Gilchrist had counted upon as his feature film. It is quite apparent that to
estimate with any degree of accuracy the damages which Gilchrist would likely suffer from such an event would be quite
difficult if not impossible. If he allowed the appellants to exhibit the film in Iloilo, it would be useless for him to
exhibit it again, as the desire of the public to witness the production would have been already satisfied. In this extremity,
the appellee applied for and was granted, as we have indicated, a mandatory injunction against Cuddy requiring him to
deliver the Zigomar to Gilchrist, and a preliminary injunction against the appellants restraining them from exhibiting that
film in their theater during the week he (Gilchrist) had a right to exhibit it, These Injunctions saved the plaintiff
harmless from damages due to the unwarranted interference of the defendants, as well as the difficult task which
would have been set for the court of estimating them in case the appellants had been allowed to carry out their illegal
plans, As to whether or not the mandatory injunction should have been issued, we are not, as we have said, called upon to
determine.
So far as the preliminary injunction issued against the appellants is concerned, which prohibited them from exhibiting the
Zigomar during the week which Gilchrist desired to exhibit it, we are of the opinion that the circumstances justified the
issuance of that injunction in the discretion of the court.
COMMENTARY MADE BY THE SUPREME COURT ON Kindly take note of the GILCHRIST BY
THE NEXT cases:
1. Daywalt v. Recoletos
It there appeared that one Cuddy, the owner of a cinematographic film, let it under a rental contract to the plaintiff
Gilchrist for a specified period of time. In violation of the terms of this agreement, Cuddy proceeded to turn over the film
also under a rental contract, to the defendants Espejo and Zaldarriaga. Gilchrist thereupon restored to the Court of First.
Instance and procured an injunction restraining the defendants from exhibiting the film in question in their theater during
the period specified in the contract of Cuddy with Gilchrist.
Upon appeal to this court it was in effect held that the injunction was not improperly granted, although the defendants did
not, at the time their contract was made, know the identity of the plaintiff as the person holding the prior contract but did
know of the existence of a contract in favor of someone.
It was also said arguendo, that the defendants would have been liable in damages under article 1902 of the Civil Code, if
the action had been brought by the plaintiff to recover damages. The force of the opinion is, we think, somewhat
weakened by the criticism contained in the concurring opinion, wherein it is said that the question of breach of contract by
inducement was not really involved in the case.
Taking the decision upon the point which was really decided, it is authority for the proposition that one who buys
something which he knows has been sold to some other person can be restrained from using that thing to the
prejudice of the person having the prior and better right.
2. Tayag v. Lacson, So Ping Bun v. CA, Lagon v. CA, & Go v. Cordero
As early as Gilchrist vs. Cuddy, we held that where there was no malice in the interference of a contract, and the
impulse behind one‘s conduct lies in a proper business interest rather than in wrongful motives, a party cannot be a
malicious interferer. Where the alleged interferer is financially interested, and such interest motivates his conduct, it
cannot be said that he is an officious or malicious intermeddler.
2.Daywalt v. Corporacion de PP Agustinos Recoletos, 39 Phil. 587 (1919)

Facts: In 1902, Teodorica Endencia executed a contract whereby the obligated herself to convey to Daywalt a tract of
land in Mindoro. They agreed that a deed should be executed as soon as a Torrens Title was secured by Endencia. In
1906, Endencia was declared the owner, but a Certificate was not issued until later. The parties met after this decision and
made a new contract – a Deed of Conveyance - to carry out the original agreement – 452.5 hectares for P4,000.
Since the Certificate was not issued, the contract was not put into effect within the period contemplated therein. In
1908, they entered into another contract, wherein Endencia agreed that upon receipt of the Certificate, she would deliver it
to the Hongkong and Shanghai Bank upon payment of P3,100. The Certificate was in time issued, but the survey found
the land was about “1.248 of 452 hectares”. She became reluctant to transfer it, since she ―never intended to sell so
large an amount of land.‖ Daywalt filed an action for specific performance which was ruled in his favor by the SC in
1914. The 1908 contract was put into effect.
Recoletos is a religious corporation which owned a large tract of land called the San Jose Estate, which was
immediately adjacent to the one described above. They maintained large herds of cattle thereon, and the farms were
managed by Father Sanz. He exerted influence and ascendancy over Endencia as a religious leader and due to their
personal friendship. Endencia was a woman of little force, subject to influence, and sought Father Sanz‘s advice on all
important business matters. Father Sanz knew of all the above contracts. She delivered her Certificate to the Recoletos
for safekeeping until the SC decision ordering its conveyance.
The Recoletos in 1909 sold the San Jose Estate to the Government. In order to move its 2,638 heads of cattle, it entered
into an arrangement with Endencia whereby said cattle were pastured on the latter‘s land from 1909 to 1914.
Daywalt filed a complaint stating TWO CAUSES OF ACTION. (1) damages for the use and occupation of the land by
reason of the pasturing. The CFI held the Recoletos liable, and they did not appeal. (2) damages on the ground that the
corporation induced Endencia to refrain from performing the contract and from delivering the Certificate.
Daywalt submitted the FOLLOWING PROOF: In 1911, it appears, the plaintiff, as the owner of the land which he had
bought from Teodorica Endencia entered into a contract with S. B. Wakefield, of San Francisco, for the sale and
disposal of said lands to a sugar growing and milling enterprise, the successful launching of which depended on the
ability of Daywalt to get possession of the land and the Torrens certificate of title. In order to accomplish this end, the
plaintiff returned to the Philippine Islands, communicated his arrangement to the defendant, and made repeated efforts
to secure the registered title for delivery in compliance with said agreement with Wakefield. Teodorica Endencia
seems to have yielded her consent to the consummation of her contract, but the Torrens title was then in the possession of
Padre Juan Labarga in Manila, who refused to deliver the document. Teodorica also was in the end contract with the
plaintiff, with the result that the plaintiff was kept out of possession until the Wakefield project for the establishment of a
large sugar growing and milling enterprise fell through. In the light of what has happened in recent years in the sugar
industry, we feel justified in saying that the project above referred to, if carried into effect, must inevitably have proved a
great success.
Issue: (1) Whether a person (Recoletos) not a party to a contract for the sale of land makes himself liable for damages to
the vendee beyond the value of the use and occupation, by colluding with the vendor and maintaining him in the effort to
resist an action for specific performance.
Held: NO. As preliminary to a consideration of the first of these questions, we deem it well it dispose of the contention
that the members of the defendants corporation, in advising and prompting Teodorica Endencia not to comply with the
contract of sale, were actuated by improper and malicious motives. The trial court found that this contention was not
sustained, observing that while it was true that the circumstances pointed to an entire sympathy on the part of the
defendant corporation with the efforts of Teodorica Endencia to defeat the plaintiff's claim to the land, the fact that its
officials may have advised her not to carry the contract into effect would not constitute actionable interference
with such contract.
It may be added that when one considers the hardship that the ultimate performance of that contract entailed on the vendor,
and the doubt in which the issue was involved — to the extent that the decision of the Court of the First Instance was
unfavorable to the plaintiff and the Supreme Court itself was divided — the attitude of the defendant corporation, as
exhibited in the conduct of its procurador, Juan Labarga, and other members of the order of the Recollect Fathers, is not
difficult to understand. To our mind a fair conclusion on this feature of the case is that father Juan Labarga and his
associates believed in good faith that the contract cold not be enforced and that Teodorica would be wronged if it
should be carried into effect. Any advice or assistance which they may have given was, therefore, prompted by no mean
or improper motive. It is not, in our opinion, to be denied that Teodorica would have surrendered the documents of title
and given possession of the land but for the influence and promptings of members of the defendants corporation. But we
do not credit the idea that they were in any degree influenced to the giving of such advice by the desire to secure to
themselves the paltry privilege of grazing their cattle upon the land in question to the prejudice of the just rights of the
plaintiff.
The attorney for the plaintiff maintains that, by interfering in the performance of the contract in question and
obstructing the plaintiff in his efforts to secure the certificate of title to the land, the defendant corporation made
itself a co-participant with Teodorica Endencia in the breach of said contract; and inasmuch as father Juan Labarga,
at the time of said unlawful intervention between the contracting parties, was fully aware of the existence of the contract
which the plaintiff had made with S. B. Wakefield, of San Francisco, it is insisted that the defendant corporation is liable
for the loss consequent upon the failure of the project outlined in said contract.
In this connection reliance is placed by the plaintiff upon certain American and English decisions in which it is
held that a person who is a stranger to a contract may, by an unjustifiable interference in the performance thereof,
render himself liable for the damages consequent upon non-performance. It is said that the doctrine of these cases
was recognized by this court in Gilchrist vs. Cuddy and we have been earnestly pressed to extend the rule there enunciated
to the situation here presente.
Somewhat more than half a century ago the English Court saw its way clear to permit an action for damages to be
maintained against a stranger to a contract wrongfully interfering in its performance. The leading case on this subject is
Lumley vs. Gye. It there appeared that the plaintiff, as manager of a theatre, had entered into a contract with Miss
Johanna Wagner, an opera singer,, whereby she bound herself for a period to sing in the plaintiff's theatre and nowhere
else. The defendant, knowing of the existence of this contract, and, as the declaration alleged, "maliciously
intending to injure the plaintiff," enticed and produced Miss Wagner to leave the plaintiff's employment . It was
held that the plaintiff was entitled to recover damages. The right which was here recognized had its origin in a rule,
long familiar to the courts of the common law, to the effect that any person who entices a servant from his employment
is liable in damages to the master. The master's interest in the service rendered by his employee is here considered as a
distinct subject of juridical right. It being thus accepted that it is a legal wrong to break up a relation of personal service,
the question now arose whether it is illegal for one person to interfere with any contract relation subsisting between others.
Prior to the decision of Lumley vs. Gye [supra] it had been supposed that the liability here under consideration was limited
to the cases of the enticement of menial servants, apprentices, and others to whom the English Statutes of Laborers were
applicable. But in the case cited the majority of the judges concurred in the opinion that the principle extended to all cases
of hiring. This doctrine was followed by the Court of Appeal in Bowen vs. Hall and in Temperton vs. Russell , it was held
that the right of action for maliciously procuring a breach of contract is not confined to contracts for personal
services, but EXTENDS TO CONTRACTS IN GENERAL. In that case the contract which the defendant had procured to be
breached was a contract for the supply of building material.
Malice in some form is generally supposed to be an essential ingredient in cases of interference with contract relations.
But upon the authorities it is enough if the wrong-doer, having knowledge of the existence of the contract relations,
in bad faith sets about to break it up. Whether his motive is to benefit himself or gratify his spite by working
mischief to the employer is immaterial. Malice in the sense of ill-will or spite is not essential.
Upon the question as to what constitutes legal justification, a good illustration was put in the leading case. If a party enters
into contract to go for another upon a journey to a remote and unhealthful climate, and a third person, with a bona fide
purpose of benefiting the one who is under contract to go, dissuades him from the step, no action will lie. But if the
advice is not disinterested and the persuasion is used for "the indirect purpose of benefiting the defendant at the
expense of the plaintiff," the intermedler is liable if his advice is taken and the contract broken.
The doctrine embodied in the cases just cited has sometimes been found useful, in the complicated relations of
modern industry, as a means of restraining the activities of labor unions and industrial societies when improperly
engaged in the promotion of strikes. An illustration of the application of the doctrine in question in a case of this kind is
found in South Wales Miners Federation vs. Glamorgan Coal Co. It there appeared that certain miners employed in the
plaintiff's collieries, acting under the order of the executive council of the defendant federation, violated their contract
with the plaintiff by abstaining from work on certain days. The federation and council acted without any actual malice or
ill-will towards the plaintiff, and the only object of the order in question was that the price of coal might thereby be kept
up, a factor which affected the miner's wage scale. It was held that no sufficient justification was shown and that the
federation was liable.
It should be observed in this connection that, according to the English and American authorities, no question can be
made as to the liability to one who interferes with a contract existing between others by means which, under known
legal cannons, can be denominated an unlawful means. Thus, if performance is prevented by force, intimidation,
coercion, or threats, or by false or defamatory statements, or by nuisance or riot, the person using such unlawful means is,
under all the authorities, liable for the damage which ensues. And in jurisdictions where the doctrine of Lumley vs. Gye
[supra] is rejected, no liability can arise from a meddlesome and malicious interference with a contract relation unless
some such unlawful means as those just indicated are used.
GILCHRIST V. CUDDY
This brings us to the decision made by this court in Gilchrist. It there appeared that one Cuddy, the owner of a
cinematographic film, let it under a rental contract to the plaintiff Gilchrist for a specified period of time. In
violation of the terms of this agreement, Cuddy proceeded to turn over the film also under a rental contract, to the
defendants Espejo and Zaldarriaga. Gilchrist thereupon restored to the Court of First Instance and produced an
injunction restraining the defendants from exhibiting the film in question in their theater during the period specified in the
contract of Cuddy with Gilchrist. Upon appeal to this court it was in effect held that the injunction was not improperly
granted, although the defendants did not, at the time their contract was made, know the identity of the plaintiff as
the person holding the prior contract but did know of the existence of a contract in favor of someone. It was also said
arguendo, that the defendants would have been liable in damages under article 1902 of the Civil Code, if the action
had been brought by the plaintiff to recover damages. The force of the opinion is, we think, somewhat weakened by
the criticism contain in the concurring opinion, where it is said that the question of breach of contract by inducement was
not really involved in the case. Taking the decision upon the point which was really decided, it is authority for the
proposition that one who buys something which he knows has been sold to some other person can be restrained from
using that thing to the prejudice of the person having the prior and better right.
Translated into terms applicable to the case at bar, the decision in Gilchrist, indicates that the corporation, having
notice of the sale of the land in question to Daywalt, might have been enjoined by the latter from using the
property for grazing its cattle thereon. That the defendant corporation is also liable in this action for the damage
resulting to the plaintiff from the wrongful use and occupation of the property has also been already determined. But it
will be observed that in order to sustain this liability it is not necessary to resort to any subtle exegesis relative to the
liability of a stranger to a contract for unlawful interference in the performance thereof. It is enough that defendant
use the property with notice that the plaintiff had a prior and better right.
Article 1902 of the Civil Code declares that any person who by an act or omission, characterized by fault or negligence,
causes damage to another shall be liable for the damage so done. Ignoring so much of this article as relates to liability for
negligence, we take the rule to be that a person is liable for damage done to another by any culpable act; and by "culpable
act" we mean any act which is blameworthy when judged by accepted legal standards. The idea thus expressed is
undoubtedly broad enough to include any rational conception of liability for the tortious acts likely to be developed in any
society. Thus considered, it cannot be said that the doctrine of Lumley vs. Gye and related cases is repugnant to the
principles of the civil law.
Nevertheless, it must be admitted that the codes and jurisprudence of the civil law furnish a somewhat uncongenial
field in which to propagate the idea that a stranger to a contract may sued for the breach thereof. Article 1257 of the Civil
Code declares that contracts are binding only between the parties and their privies.
If the two antagonistic ideas which we have just brought into juxtaposition are capable of reconciliation, the process must
be accomplished by distinguishing clearly between the right of action arising from the improper interference with the
contract by a stranger thereto, considered as an independent act generate of civil liability, and the right of action ex
contractu against a party to the contract resulting from the breach thereof. However, we do not propose here to pursue
the matter further, inasmuch as, for reasons presently to be stated, we are of the opinion that neither the doctrine of
Lumley vs. Gye nor the application made of it by this court in Gilchrist vs. Cuddy, affords any basis for the recovery of
the damages which the plaintiff is supposed to have suffered by reason of his inability to comply with the terms of the
Wakefield contract.
Whatever may be the character of the liability which a stranger to a contract may incur by advising or assisting one of the
parties to evade performance, there is one proposition upon which all must agree. This is, that the stranger cannot
become more extensively liable in damages for the nonperformance of the contract than the party in whose behalf
he intermeddles. To hold the stranger liable for damages in excess of those that could be recovered against the immediate
party to the contract would lead to results at once grotesque and unjust. In the case at bar, as Teodorica Endencia was the
party directly bound by the contract, it is obvious that the liability of the defendant corporation, even admitting that it
has made itself coparticipant in the breach of the contract, can in no even exceed hers. This leads us to consider at this
point the extent of the liability of Teodorica Endencia to the plaintiff by reason of her failure to surrender the certificate of
title and to place the plaintiff in possession.
It should in the first place be noted that the liability of Teodorica Endencia for damages resulting from the breach
of her contract with Daywalt was a proper subject for adjudication in the action for specific performance which Daywalt
instituted against her in 1909 and which was litigated by him to a successful conclusion in this court, but without
obtaining any special adjudication with reference to damages. Indemnification for damages resulting from the breach
of a contract is a right inseparably annexed to every action for the fulfillment of the obligation (art. 1124, Civil Code); and
its is clear that if damages are not sought or recovered in the action to enforce performance they cannot be recovered in an
independent action. As to Teodorica Endencia, therefore, it should be considered that the right of action to recover
damages for the breach of the contract in question was exhausted in the prior suit. However, her attorneys have not
seen fit to interpose the defense of res judicata in her behalf; and as the defendant corporation was not a party to that
action, and such defense could not in any event be of any avail to it, we proceed to consider the question of the liability of
Teodorica Endencia for damages without refernce to this point.
The most that can be said with refernce to the conduct of Teodorica Endencia is that she refused to carry out a contract for
the sale of certain land and resisted to the last an action for specific performance in court. The result was that the plaintiff
was prevented during a period of several years from exerting that control over the property which he was entitled to exert
and was meanwhile unable to dispose of the property advantageously. Now, what is the measure of damages for the
wrongful detention of real property by the vender after the time has come for him to place the purchaser in possession?
The damages ordinarily and normally recoverable against a vendor for failure to deliver land which he has
contracted to deliver is the value of the use and occupation of the land for the time during which it is wrongfully
withheld. And of course where the purchaser has not paid the purchaser money, a deduction may be made in respect to
the interest on the money which constitutes the purchase price. Substantially the same rule holds with respect to the
liability of a landlord who fails to put his tenant in possession pursuant to contract of lease. The measure of damages is
the value of the leasehold interest, or use and occupation, less the stipulated rent, where this has not been paid . The
rule that the measure of damages for the wrongful detention of land is normally to be found in the value of use and
occupation is, we believe, one of the things that may be considered certain in the law (39 cyc., 1630; 24 Cyc., 1052
Sedgewick on Damages, Ninth ed., sec. 185.) — almost as wellsettled, indeed, as the rule that the measure of damages for
the wrongful detention of money is to be found in the interest.
We recognize the possibility that more extensive damages may be recovered where, at the time of the creation of
the contractual obligation, the vendor, or lessor, is aware of the use to which the purchaser or lessee desires to put
the property which is the subject of the contract, and the contract is made with the eyes of the vendor or lessor open to
the possibility of the damage which may result to the other party from his own failure to give possession. The case before
us is not this character, inasmuch as at the time when the rights of the parties under the contract were determined,
nothing was known to any to them about the San Francisco capitalist who would be willing to back the project
portrayed in Exhibit C.
The extent of the liability for the breach of a contract must be determined in the light of the situation in existence at the
time the contract is made; and the damages ordinarily recoverable are in all events limited to such as might be reasonable
are in all events limited to such as might be reasonably foreseen in the light of the facts then known to the contracting
parties. Where the purchaser desires to protect himself, in the contingency of the failure of the vendor promptly to give
possession, from the possibility of incurring other damages than such as the incident to the normal value of the use and
occupation, he should cause to be inserted in the contract a clause providing for stipulated amount to the paid upon failure
of the vendor to give possession; and not case has been called to our attention where, in the absence of such a stipulation,
damages have been held to be recoverable by the purchaser in excess of the normal value of use and occupation. On the
contrary, the most fundamental conceptions of the law relative to the assessment of damages are inconsistent with such
idea.
In the preceding discussion we have considered the plaintiff's right chiefly against Teodorica Endencia; and what has been
said suffices in our opinion to demonstrate that the damages laid under the second cause of action in the complaint could
not be recovered from her, first, because the damages laid under the second cause of action in the complaint could not be
recovered from her, first, because the damages in question are special damages which were not within contemplation of
the parties when the contract was made, and secondly, because said damages are too remote to be the subject of recovery.
This conclusion is also necessarily fatal to the right of the plaintiff to recover such damages from the defendant
corporation, for, as already suggested, by advising Teodorica not to perform the contract, said corporation could in no
event render itself more extensively liable than the principle in the contract.
Our conclusion is that the judgment of the trial court should be affirmed, and it is so ordered, with costs against the
appellant.
3. Tayag v. Lacson, 426 SCRA 282 (2004)

Facts: Respondents Angelica Tiotuyco Vda. de Lacson, and her children were the registered owners of 3 parcels of
land located in Mabalacat, Pampanga. The properties, which were tenanted agricultural lands, were administered by
Renato Espinosa for the owner.
On March 17, 1996, a group of original farmers/tillers, individually executed in favor of the Tayag, separate Deeds of
Assignment in which the assignees assigned to Tayag their respective rights as tenants/tillers of the landholdings
possessed and tilled by them for and in consideration of P50.00 per square meter.
Said amount was made payable ―when the legal impediments to the sale of the property to the petitioner no longer
existed.‖ The petitioner was also granted the exclusive right to buy the property if and when the respondents, with the
concurrence of the defendants- tenants, agreed to sell the property. In the interim, the petitioner gave varied sums of
money to the tenants as partial payments, and the latter issued receipts for the said amounts.
On July 24, 1996, the petitioner called a meeting of the defendants-tenants to work out the implementation of the terms of
their separate agreements. However, on August 8, 1996, the defendants-tenants, through Joven Mariano, wrote the Tayag
stating that they were not attending the meeting and instead gave notice of their collective decision to sell all their
rights and interests, as tenants/lessees, over the landholding to the respondents.
Tayag filed a complaint with RTC against the tenants, as well as Lacson, for the court to fix a period within which to
pay the agreed purchase price of P50.00 per square meter to the defendants, as provided for in the Deeds of Assignment.
Petitioner also prayed for a writ of preliminary injunction against the defendants and the respondents.
In his complaint, the petitioner alleged that the defendants TIAMSON, et al., have no right to deal with the defendants
LACSON or with any third persons while their contracts with the plaintiff are subsisting; defendants LACSONS are
inducing or have induced the defendants TIAMSON, et al., to violate their contracts with the plaintiff; Basically, Tayag
claims that Lacson induced the tenants to violate the deed of assignment executed by the tenants in favor of Tayag.
Also prayed that a Writ of Preliminary Injunction be issued prohibiting, enjoining and restraining defendants from
rescinding their contracts with the plaintiff and from alienating their rights and interest over the aforementioned properties
in favor of defendants LACSONS or any other third persons; and prohibiting the defendants LACSONS from
encumbering/alienating the property.
The tenants Tiamson, et al., alleged that the money each of them received from the petitioner were in the form of loans,
and that they were deceived into signing the deeds of assignment.
The Lacson, thereafter, filed a Comment/Motion to dismiss/deny the Tayag‘s plea for injunctive relief on the following
grounds:
1. The Deeds of Assignment executed by the defendants-tenants were contrary to public policy and P.D. No. 27 and
Rep. Act No. 6657;
2. Petitioner failed to prove that the respondents induced the defendants-tenants to renege on their obligations under
the ―Deeds of Assignment
3. Not being privy to the said deeds, the respondents are not bound by the said deeds
4. The respondents had the absolute right to sell and dispose of their property and to encumber the same and cannot
be enjoined from doing so by the trial court.
Trial court issued an Order denying the motion of the Lacson for being premature. It directed the hearing to proceed
for the respondents to adduce their evidence.
CA rendered its decision against the Tayag, annulling and setting aside the assailed orders of the trial court. CA ruled
that the Lacson could not be enjoined from alienating or even encumbering their property, especially so since they were
not privies to the deeds of assignment executed by the tenants. Defendants-tenants were not yet owners of the portions
of the landholdings respectively tilled by them; as such, they had nothing to assign to the petitioner. CA ruled that the
deeds of assignment executed by the defendants-tenants were contrary to P.D. No. 27 and Rep. Act No. 6657.
Hence, the petitioner filed his petition for review on certiorari before this Court,
Issues: (1) Whether or not the writ of injunction should be granted.
(2) Whether or not respondents are guilty of toritious interference. (See 4 th issue)
Held: NO. The very foundation of the jurisdiction to issue writ of injunction rests in the existence of a cause of action and
in the probability of irreparable injury, inadequacy of pecuniary compensation and the prevention of the multiplicity of
suits. Where facts are not shown to bring the case within these conditions, the relief of injunction should be refused. For
the court to issue a writ of preliminary injunction, the petitioner was burdened to establish the following: (1) a right in
esse or a clear and unmistakable right to be protected; (2) a violation of that right; (3) that there is an urgent and
permanent act and urgent necessity for the writ to prevent serious damage. The possibility of irreparable damage
without proof of adequate existing rights is not a ground for injunction.
Petitioner failed to establish the essential requisites for the issuance of a writ of preliminary injunction.
FIRST. The trial court cannot enjoin Lacson, at the instance of the Tayag, from selling, disposing of and encumbering
their property. As the registered owners of the property, the Lacson has the right to enjoy and dispose of their property
without any other limitations than those established by law, in accordance with Article 428 of the Civil Code.
Respondents cannot be enjoined from selling or encumbering their property simply and merely because they had executed
Deeds of Assignment in favor of the petitioner, obliging themselves to assign and transfer their rights or interests as
agricultural farmers/laborers/sub- tenants over the landholding, and granting the petitioner the exclusive right to buy the
property subject to the occurrence of certain conditions. The respondents were not parties to the said deeds. There was no
evidence that the respondents agreed, expressly or impliedly, to the said deeds or to the terms and conditions set forth
therein.
The petitioner even admitted when he testified that he did not know any of the respondents, and that he had not met any of
them before he filed his complaint in the RTC. He did not even know that one of those whom he had impleaded as
defendant, Angelica Vda. de Lacson, was already dead.
SECOND. A reading the averments of the complaint will show that the petitioner clearly has no cause of action against the
respondents for the principal relief prayed for therein, for the trial court to fix a period within which to pay to each of the
defendants-tenants the balance consideration under the Deeds of Assignment executed by the defendants-tenants. The
Lacsons are not parties or privies to the deeds of assignment. The matter of the period for the petitioner to pay the
balance of the said amount to each of the defendants-tenants is an issue between them, the parties to the deed.
THIRD. On the face of the complaint, the action of the petitioner against the respondents and the defendants- tenants has
no legal basis. Under the Deeds of Assignment, the obligation of the petitioner to pay to each of the defendants-tenants the
balance of the purchase price was conditioned on the occurrence of the following events: (a) the respondents agree to sell
their property to the petitioner; (b) the legal impediments to the sale of the landholding to the petitioner no longer exist;
and, (c) the petitioner decides to buy the property.
When he testified, the petitioner admitted that the legal impediments referred to in the deeds were (a) the respondents‘
refusal to sell their property; and, (b) the lack of approval of the Department of Agrarian Reform
It is only upon the occurrence of the foregoing conditions that the petitioner would be obliged to pay to the defendants-
tenants the balance of the P50.00 per square meter under the deeds of assignment. There is no showing in the petitioner‘s
complaint that the respondents had agreed to sell their property, and that the legal impediments to the agreement no longer
existed. The petitioner and the defendants-tenants had yet to submit the Deeds of Assignment to the Department of
Agrarian Reform which, in turn, had to act on and approve or disapprove the same. In fact, as alleged by the petitioner in
his complaint, he was yet to meet with the defendants-tenants to discuss the implementation of the deeds of assignment.
Unless and until the Department of Agrarian Reform approved the said deeds, if at all the petitioner had no right to
enforce the same in a court of law by asking the trial court to fix a period within which to pay the balance of the purchase
price and praying for injunctive relief.
We do not agree with the contention of the petitioner that the deeds of assignment executed by the defendants-tenants are
perfected option contracts, escpecially when not being the registered owners of the property, the defendants-tenants could
not legally grant to the petitioner the option, much less the ―exclusive right‖ to buy the property.
FOURTH. (RELEVANT ISSUE) Tayag impleaded the Lacson as parties-defendants solely on his allegation that the
latter induced or are inducing the defendants-tenants to violate the deeds of assignment, contrary to the provisions of
Article 1314 of the New Civil Code
Art. 1314. Any third person who induces another to violate his contract shall be liable
for damages to the other contracting party.
In So Ping Bun v. CA, we held that for the said law to apply, the pleader is BURDENED TO PROVE THE FOLLOWING:
(1) the existence of a valid contract;
(2) knowledge by the third person of the existence of the contract; and
(3) interference by the third person in the contractual relation without legal justification.
Where there was no malice in the interference of a contract, and the impulse behind one‘s conduct lies in a proper
business interest rather than in wrongful motives, a party cannot be a malicious interferer. Where the alleged
interferer is financially interested, and such interest motivates his conduct, it cannot be said that he is an officious or
malicious intermeddler
In fine, one who is not a party to a contract and who interferes thereon is not necessarily an officious or malicious
intermeddler. The only evidence adduced by the Tayag to prove his claim is the letter from the defendants-tenants
informing him that they had decided to sell their rights and interests over the landholding to the Lacsons , instead of
honoring their obligation under the deeds of assignment because, according to them, the petitioner harassed those tenants
who did not want to execute deeds of assignment in his favor, and because the said defendants-tenants did not want to
have any problem with the respondents who could cause their eviction for executing with the petitioner the deeds of
assignment as the said deeds are in violation of P.D. No. 27 and Rep. Act No. 6657.
The defendants-tenants did not allege therein that the Lacsons induced them to breach their contracts with the petitioner.
Tayag himself admitted when he testified that his claim that the Lacsons induced the defendants-assignees to violate
contracts with him was based merely on what “he heard.”
Even if the Lacsons received an offer from the defendants-tenants to assign and transfer their rights and interests on the
landholding, the Lacsons cannot be enjoined from entertaining the said offer, or even negotiating with the defendants-
tenants. respondents could not even be expected to warn the defendants-tenants for executing the said deeds in violation of
P.D. No. 27 and Rep. Act No. 6657. Under Section 22 of the latter law, beneficiaries under P.D. No. 27 who have
culpably sold, disposed of, or abandoned their land, are disqualified from becoming beneficiaries.
From the pleadings of the petitioner, it is quite evident that his purpose in having the defendants-tenants execute the
Deeds of Assignment in his favor was to acquire the landholding without any tenants thereon, in the event that the
respondents agreed to sell the property to him. The petitioner knew that under Section 11 of Rep. Act No. 3844, if the
respondents agreed to sell the property, the defendants-tenants shall have preferential right to buy the same under
reasonable terms and conditions:
Under Section 12 of the law, if the property was sold to a third person without the knowledge of the tenants thereon , the
latter shall have the right to redeem the same at a reasonable price and consideration. By assigning their rights and
interests on the landholding under the deeds of assignment in favor of the petitioner, the defendants-tenants thereby
waived, in favor of the petitioner, who is not a beneficiary under Section 22 of Rep. Act No. 6657, their rights of
preemption or redemption under Rep. Act No. 3844. The defendants- tenants would then have to vacate the property in
favor of the petitioner upon full payment of the purchase price. Instead of acquiring ownership of the portions of the
landholding respectively tilled by them, the defendants- tenants would again become landless for a measly sum of P50.00
per square meter.
The petitioner‘s scheme is subversive, not only of public policy, but also of the letter and spirit of the agrarian laws.
That the scheme of the petitioner had yet to take effect in the future or ten years hence is not a justification. The
respondents may well argue that the agrarian laws had been violated by the defendants- tenants and the petitioner by the
mere execution of the deeds of assignment. In fact, the petitioner has implemented the deeds by paying the defendants-
tenants amounts of money and even sought their immediate implementation by setting a meeting with the defendants-
tenants. In fine, the petitioner would not wait for ten years to evict the defendants-tenants. For him, time is of the essence.
4. Yu v. Court of Appeals, G.R. No. 86683, January 21, 1993

Facts: Petitioner, the exclusive distributor of the House of Mayfair wallcovering products in the Philippines, cried
foul when his former dealer of the same goods, Unisia Merchandising, purchased the merchandise from the House of
Mayfair in England through FNF Trading in West Germany and sold said merchandise in the Philippines. Both the
court of origin and the appellate court rejected petitioner‘s thesis that Unisia Merchandising was engaged in a sinister
form of unfair competition within the context of Article 28 of the New Civil Code. Hence, the petition at bar.
There is no dispute that petitioner has had an exclusive sales agency agreement with the House of Mayfair since 1987
to promote and procure orders for Mayfair wallcovering products from customers in the Philippines. Even as petitioner
was such exclusive distributor, Unisia Merchandising, which was then petitioner‟s dealer, imported the same goods via
FNF Trading which eventually sold the merchandise in the domestic market. Petitioner pressed the idea that he was
practically by-passed and that Unisia Merchandising acted in concert with FNF Trading in misleading Mayfair into
believing that the goods ordered by the trading firm were intended for shipment to Nigeria although they were actually
shipped to and sold in the Philippines.
Unisia Merchandising professed ignorance of the exclusive contract in favor of petitioner. Unisia Merchandising
responded by asserting that petitioner‘s understanding with Mayfair is binding only between the parties thereto.
Petitioner wanted to enjoin the sale and distribution by Unisia Merchandising of the same goods in the market but
Judge Alejandria, Presiding Judge of Branch 34 was unperturbed, thusly:
That there is no privity of contract between the plaintiff and the defendant; that the
controversy in this case arose from a breach of contract by the FNF Trading of
Germany, for having shipped goods it had purchased from The House of Mayfair to the
Philippine.
...to restrain the defendant from selling the goods it has ordered from the FNF Trading of
Germany, would be without legal justification...”
According to the appellate court, petitioner was not able to demonstrate the unequivocal right which he sought to protect
and that Unisia Merchandising is a complete stranger vis-a-vis the covenant between petitioner and Mayfair.
In the petition at hand, petitioner anchors his plea for redress on his perception that Unisia Merchandising has distributed
and continues to sell Mayfair covering products in contravention of petitioner‘s exclusive right conferred by the covenant
with the House of Mayfair. A TRO was issued to last until further notice from this Court directed against private
respondent. Notwithstanding such proscription, Unisia Merchandising persisted in the distribution and sale
Issue: Whether petitioner is entitled to an injunction.
Held: YES. That the exclusive sales contract which links petitioner and the House of Mayfair is solely the concern of the
privies thereto and cannot thus extend its chain as to bind private respondent herein is, We believe, beside the point.
Verily, injunction is the appropriate remedy to prevent a wrongful interference with contracts by strangers to such
contracts where the legal remedy is insufficient and the resulting injury is irreparable The liability of Unisia
Merchandising, if any, does not emanate from the four corners of the contract for undoubtedly, Unisia Merchandising Co.,
Inc. is not a party thereto but its accountability is ―an independent act generative of civil liability‖.
These observations, however, do not in the least convey the message that We have placed the cart ahead of the horse, so to
speak, by pronouncing private respondent‘s liability at this stage in view of the pendency of the main suit for injunction
below. We are simply rectifying certain misperceptions entertained by the appellate court as regards the feasibility of
requesting a preliminary injunction to enjoin a stranger to an agreement.
To Our mind, the right to perform an exclusive distributorship agreement and to reap the profits resulting from
such performance are proprietary rights which a party may protect which may otherwise not be diminished , nay,
rendered illusory by the expedient act of utilizing or interposing a person or firm to obtain goods from the supplier to
defeat the very purpose for which the exclusive distributorship was conceptualized, at the expense of the sole authorized
distributor.
Another circumstance which respondent court overlooked was petitioner‘s suggestion, which was not disputed by herein
private respondent in its comment, that the House of Mayfair in England was duped into believing that the goods
ordered through the FNF Trading were to be shipped to Nigeria only, but the goods were actually sent to and sold in the
Philippines. A ploy of this character is akin to the scenario of a third person who induces a party to renege on or
violate his undertaking under a contract, thereby entitling the other contracting party to relief therefrom breach caused
by private respondent was even aggravated by the consequent diversion of trade from the business of petitioner to that of
private respondent caused by the latter‘s species of unfair competition as demonstrated no less by the sales effected inspite
of this Court‘s restraining order.
This brings Us to the irreparable mischief which respondent court misappreciated when it refused to grant the relief
simply because of the observation that petitioner can be fully compensated for the damage. A contrario, the injury is
irreparable where it is continuous and repeated since from its constant and frequent recurrence , no fair and
reasonable redress can be had therefor by petitioner insofar as his goodwill and business reputation as sole
distributor are concerned. Withal, to expect petitioner to file a complaint for every sale effected by private respondent
will certainly court multiplicity of suits
5.So Ping Bun v. Court of Appeals, 314 SCRA 751 (1999)

Facts: Tek Hua Trading Co, through its managing partner, So Pek Giok, entered into lease agreements with lessor Dee
C. Chuan & Sons Inc. (DCCSI). Tek Hua used the areas to store its textiles. The contracts each had a one-year term.
They provided that should the lessee continue to occupy the premises after the term, the lease shall be on a month-to-
month basis.
When the contracts expired, the parties did not renew the contracts, but Tek Hua continued to occupy the premises.
Eventually Tek Hua Trading Co. was dissolved. Later, the original members of Tek Hua Trading Co. including
Manuel C. Tiong, formed Tek Hua Enterprising Corp., herein respondent corporation.
So Pek Giok, managing partner of Tek Hua Trading, died in 1986. So Pek Giok‘s GRANDSON, petitioner So Ping Bun,
occupied the warehouse for his OWN textile business, Trendsetter Marketing.
Lessor DCCSI sent letters addressed to Tek Hua Enterprises, informing the latter of the 25% increase in rent effective
September 1, 1989. The rent increase was later on reduced to 20% effective January 1, 1990, upon other lessees‘ demand.
Again on December 1, 1990, the lessor implemented a 30% rent increase. Enclosed in these letters were new lease
contracts for signing. DCCSI warned that failure of the lessee to accomplish the contracts shall be deemed as lack of
interest on the lessee‘s part, and agreement to the termination of the lease. Private respondents did not answer any of
these letters. Still, the lease contracts were not rescinded.
Eventually a letter was sent to So Ping Bun by Tiong, informing petitioner that he allowed him to temporarily use the
premises for his personal business. However, since Tiong decided to go back into textile business, he demanded that So
Ping Bun vacate the premises in order to use the same to store his stocks.
Petitioner refused to vacate. Petitioner requested formal contracts of lease with DCCSI in favor Trendsetter Marketing.
So Ping Bun claimed that after the death of his grandfather, So Pek Giok, he had been occupying the premises for his
textile business and religiously paid rent. DCCSI acceded to petitioner‘s request. The lease contracts in favor of
Trendsetter were executed.
Private respondent Tiong filed a case for the nullity of the lease contracts between So Ping Bun and DCCSI. The RTC
and the CA ruled for private respondents and nullified the contracts.
Issue: Whether So Ping Bun is guilty of tortuous interference of contract.
Held: YES. DAMAGE is the loss, hurt, or harm which results from injury, and DAMAGES are the recompense or
compensation awarded for the damage suffered. One becomes liable in an action for damages for a non-trespassory
invasion of another‟s interest in the private use and enjoyment of asset if (a) the other has property rights and privileges
with respect to the use or enjoyment interfered with, (b) the invasion is substantial, (c) the defendant‘s conduct is a legal
cause of the invasion, and (d) the invasion is either intentional and unreasonable or unintentional and actionable under
general negligence rules.
The ELEMENTS OF TORT INTERFERENCE are:

(1) Existence of a valid contract;
(2) Knowledge on the part of the third person of the existence of contract; and
(3) Interference of the third person is without legal justification or excuse.
A duty which the law of torts is concerned with is respect for the property of others, and a cause of action ex delicto
may be predicated upon an unlawful interference by one person of the enjoyment by the other of his private property. This
may pertain to a situation where a third person induces a party to renege on or violate his undertaking under a contract. In
the case before us, Bun‘s Trendsetter Marketing asked DCCSI to execute lease contracts in its favor, and as a result
petitioner deprived respondent corporation of the latter‟s property right. Clearly, and as correctly viewed by the
appellate court, the 3 elements of tort interference above-mentioned are present in the instant case.
Authorities debate on whether interference may be justified where the defendant acts for the sole purpose of furthering
his own financial or economic interest. ONE VIEW is that, as a general rule, justification for interfering with the business
relations of another exists where the actor‘s motive is to benefit himself. Such justification does not exist where his sole
motive is to cause harm to the other. Added to this, some authorities believe that it is not necessary that the interferer‘s
interest outweigh that of the party whose rights are invaded, and that an individual acts under an economic interest that is
substantial, not merely de minimis, such that wrongful and malicious motives are negatived, for he acts in self-protection.
Moreover, justification for protecting one‘s financial position should not be made to depend on a comparison of his
economic interest in the subject matter with that of others. It is sufficient if the impetus of his conduct lies in a proper
business interest rather than in wrongful motives.
As early as Gilchrist, we held that where there was NO MALICE in the interference of a contract, and the impulse
behind one‘s conduct lies in a PROPER BUSINESS INTEREST rather than in wrongful motives, a party cannot be a
malicious interferer. Where the alleged interferer is financially interested, and such interest motivates his conduct, it
cannot be said that he is an officious or malicious intermeddler.
In the instant case, it is clear that So Ping Bun prevailed upon DCCSI to lease the warehouse to his enterprise at the
expense of respondent corporation. Though petitioner took interest in the property of respondent corporation and
benefited from it, nothing on record imputes deliberate wrongful motives or malice on him.
The Civil Code categorically provides also that, ―Any third person who induces another to violate his contract shall be
liable for damages to the other contracting party.‖ Petitioner argues that damage is an essential element of tort interferenc e,
and since the trial court and the appellate court ruled that private respondents were not entitled to actual, moral or
exemplary damages, it follows that he ought to be absolved of any liability, including attorney‘s fees.
It is true that the lower courts did not award damages, but this was only because the extent of damages was not
quantifiable.
While the courts do not encourage tort interferers seeking their economic interest to intrude into existing contracts at the
expense of others, however, the court finds that the conduct herein complained of did not transcend the limits
forbidding an obligatory award for damages in the absence of any malice. The business desire is there to make some
gain to the detriment of the contracting parties. Lack of malice, however, precludes damages. But it does not relieve
petitioner of the legal liability for entering into contracts and causing breach of existing ones. The respondent appellate
court correctly confirmed the permanent injunction and nullification of the lease contracts between DCCSI and
Trendsetter Marketing, without awarding damages. The injunction saved the respondents from further damage or injury
caused by petitioner‘s interference.
6. Lagon v. Court of Appeals, G.R. No. 119107, March 18, 2005

Facts: Jose Lagon purchased 2 parcels of land in Sultan Kudarat from the estate of Bai Tonina Sepi. A few months
after the sale, he a complaint tortuous interference with contractual relations was filed against him by private respondent
Menandro Lapuz.
Lapuz claimed that he entered into a contract of lease with Bai Tonina Sepi over the Sultan Kudarat property
beginning 1964. It was stipulated that Lapuz was to put commercial buildings to be leased for tenants. The rent derived
from said tenants would answer for Lapuz‘s rental payments in favor of Bai Tonina Sepi.
The lease contract ended in 1974 but it was allegedly renewed on account of the fact that the commercials buildings were
not yet complete. When Sepi died, he remitted his rent to the administrator of her estate. When Lapuz was collecting rent
from the tenants, he discovered that Lagon, representing to be the owner of the property, had been collecting rentals also.
In other words, the complaint against Lagon by Lapuz alleged that Lagon induced the heirs of the decedent to sell him
the property thereby violating Lapuz‟s leasehold rights over the property.
Lagon, in his defense, denied that he induced the heirs to sell him the property. Rather, it was sold to him because of the
heirs‘ dire need of money to pay off the decedent‘s obligations. He also denied interfering with Lapuz‘s leasehold rights
as there was no lease contract covering the property when he purchased it. Moreover, based on his personal investigation
and inquiry, no encumbrances or claims were found in said property.
Before purchasing the property, he claimed that he went to the lawyer who notarized the lease contracts but the contracts
for renewal were unsigned.
TC ruled for Lapuz. On appeal, CA affirmed. Hence, this petition.
Issue: Whether the purchase by Lagon of the Sultan Kudarat property, during the supposed existence of Lapuz‘s lease
contract with the late Bai Tonina Sepi, constituted tortuous interference for which Lagon should be held liable for
damages.
Held: Article 1314 provides that any third person who induces another to violate his contract shall be liable for damages
to the other contracting party. The tort recognized in that provision is known as INTERFERENCE WITH CONTRACTUAL
RELATIONS. The interference is penalized because it violates the property rights of a party in a contract to reap the
benefits that should result therefrom.
The elements of tortuous interference with contractual relations according to So Ping Bun are as follows:
(1) Existence of a valid contract;

(2) Knowledge on the part of the third person of the existence of the contract; and
(3) Interference of the said third person without legal justification or excuse.
EXISTENCE OF VALID CONTRACT

The existence of a valid contract must be duly established. To prove this, Lapuz presented in court a notarized copy of the
purported lease renewal. While the contract appeared as duly notarized, the notarization thereof, only proved its due
execution and delivery but not the veracity of its contents.
Nonetheless, after undergoing the rigid scrutiny of petitioner‘s counsel and after the trial court declared it to be valid and
subsisting, the notarized copy of the lease contract presented in court appeared to be incontestable proof that Lapuz and
the late Bai Tonina Sepi actually renewed their lease contract.
Settled is the rule that until overcome by clear, strong and convincing evidence, a notarized document continues to be
prima facie evidence of the facts that gave rise to its execution and delivery.
KNOWLEDGE BY INTERFERER OF THE CONTRACT

Knowledge of the subsistence of the contract is an essential element to state a cause of action for tortuous interference. A
defendant in such a case cannot be made liable for interfering with a contract he is unaware of. While it is not necessary to
prove actual knowledge, he must nonetheless be aware of the facts which, if followed by a reasonable inquiry, will lead to
a complete disclosure of the contractual relations and rights of the parties in the contract.
In this case, Lagon claims that he had no knowledge of the lease contract. His sellers (the heirs of Bai Tonina Sepi)
likewise allegedly did not inform him of any existing lease contract. After a careful perusal of the records, we find the
contention of Lagon meritorious.
He conducted his own personal investigation and inquiry, and unearthed no suspicious circumstance that would have
made a cautious man probe deeper and watch out for any conflicting claim over the property. An examination of the
entire property‘s title bore no indication of the leasehold interest of private respondent. Even the registry of property had
no record of the same.
Assuming ex gratia argumenti that Lagon knew of the contract, such knowledge alone was not sufficient to make him
liable for tortuous interference.
INTERFERENCE WITH NO JUSTIFIABLE OR LEGAL CAUSE

To sustain a case for tortuous interference, the defendant must have acted with malice OR must have been driven by
purely impious reasons to injure the plaintiff. In other words, his act of interference cannot be justified.
Furthermore, the records do not support the allegation of Lapuz that Lagon induced the heirs of Bai Tonina Sepi to
sell the property to him. The word ―INDUCE‖ refers to situations where a person causes another to choose one course
of conduct by persuasion or intimidation.
The records show that the decision of the heirs of the late Bai Tonina Sepi to sell the property was completely of their
own volition and that Lagon did absolutely nothing to influence their judgment. Lapuz himself did not proffer any
evidence to support his claim. In short, even assuming that Lapuz was able to prove the renewal of his lease contract
with Bai Tonina Sepi, the fact was that he was unable to prove malice or bad faith on the part of Lagon in purchasing
the property. Therefore, the claim of tortuous interference was never established.
As a general rule, justification for interfering with the business relations of another exists where the actor‟s motive is to
benefit himself. Such justification does not exist where the actor‟s motive is to cause harm to the other. Added to this,
some authorities believe that it is not necessary that the interferer‘s interest outweigh that of the party whose rights
are invaded, and that an individual acts under an economic interest that is substantial, not merely de minimis, such
that wrongful and malicious motives are negatived, for he acts in self-protection. Moreover, justification for protecting
one‘s financial position should not be made to depend on a comparison of his economic interest in the subject matter with
that of the others. It is sufficient if the impetus of his conduct lies in a proper business interest rather than in wrongful
motives.
In our view, Lagon‘s purchase of the subject property was merely an advancement of his financial or economic
interests, absent any proof that he was enthused by improper motives. In the very early case of Gilchrist v. Cuddy, the
Court declared that a person is not a malicious interferer if his conduct is impelled by a proper business interest. In
other words, a financial or profit motivation will not necessarily make a person an officious interferer liable for damages
as long as there is no malice or bad faith involved.
Inasmuch as not all 3 elements to hold Lagon liable for tortuous interference are present, he cannot be made to answer for
Lapuz‘s losses.
This case is one of damnum absque injuria or damage without injury.
*Discussion on damages omitted.
7. Go v. Cordero, G.R. No. 164703, May 4, 2010

Facts: Persons involved:
 Cordero – businessman, VP of Pamana Marketing Corp. acquired exclusive dealearship from AFFA
 AFFA- fast ferry manufactuer
 Robinson – Managing director of AFFA
 Go – Cordero‘s first client as exclusive dealer
 Landicho and Tecson – lawyers of Go
Sometime in 1996, Mortimer F. Cordero, VP of Pamana Marketing Corporation (Pamana), ventured into the business of
marketing inter-island passenger vessels. After contacting various overseas fast ferry manufacturers from all over the
world, he came to meet Tony Robinson, an Australian national who is the Managing Director of Aluminium Fast
Ferries Australia (AFFA).
Robinson signed documents appointing Cordero as the exclusive distributor of AFFA catamaran and other fast ferry
vessels in the Philippines. As such exclusive distributor, Cordero offered for sale to prospective buyers the 25-meter
Aluminium Passenger catamaran known as the SEACAT 25
After negotiations with Felipe Landicho and Vincent Tecson, lawyers of Allan C. Go who is the owner/operator of
ACG Express Liner of Cebu City, a single proprietorship, Cordero was able to close a deal for the purchase of two (2)
SEACAT 25 as evidenced by the Memorandum of Agreement. Per agreement between Robinson and Cordero, the latter
shall receive commissions totalling US$328,742.00, or 22.43% of the purchase price, from the sale of each vessel.
Cordero made 2 trips to the AFFA Shipyard in Brisbane, Australia, and on 1 occasion even accompanied Go and his
family and Landicho, to monitor the progress of the building of the vessel. He shouldered all the expenses for airfare,
food, hotel accommodations, transportation and entertainment during these trips. He also spent for long distance
telephone calls to communicate regularly with Robinson, Go, Tecson and Landicho.
However, Cordero later discovered that Go was dealing directly with Robinson when he was informed by Dennis
Padua of Wartsila Philippines that Go was canvassing for a second catamaran engine from their company which
provided the ship engine for the first SEACAT 25. Thus Cordero tried to contact Go and Landicho to confirm the matter
but they were nowhere to be found, while Robinson refused to answer his calls. Cordero immediately flew to Brisbane to
clarify matters with Robinson, only to find out that Go and Landicho were already there in Brisbane negotiating for
the sale of the second SEACAT 25. Despite repeated follow-up calls, no explanation was given by Robinson, Go,
Landicho and Tecson who even made Cordero believe there would be no further sale between AFFA and ACG
Express Liner.
In a letter, Cordero informed Go that such act of dealing directly with Robinson violated his exclusive
distributorship and demanded that they respect the same. Cordero‘s lawyer, Atty. Ernesto A. Tabujara, Jr. of ACCRA
law firm, also wrote a letter of the same import to ACG Express Liner.
AFFA, through its lawyers, replied that the appointment of Cordero as distributor was for the purpose of one
transaction only; and that Cordero allegedly failed to return to AFFA within a reasonable time the draft agreement
sent to him, thus they have revoked the agreement.
Thereafter, Corder claimed that Landicho, acting on behalf of Go, talked to him over the telephone and offered to
amicably settle their dispute. Landicho, acting in behalf of Go, set up a meeting with Cordero on June 29, 1998. On said
date, however, only Landicho and Tecson came and no reason was given for Go‘s absence. Tecson and Landicho
proposed that they will convince Go to pay him US$1,500,000.00 on the condition that they will get a cut of 20%. And so
it was agreed between him, Landicho and Tecson that the latter would give him a weekly status report and that the matter
will be settled in 3-4 weeks. But, no such report was made by either Tecson or Landicho who, it turned out, had no
intention to do so and were just buying time as the catamaran vessel was due to arrive from Australia.
Cordero filed a case with the Bureau of Customs to stop the bleh bleh
On August 21, 1998, Cordero instituted a Civil seeking to hold Robinson, Go, Tecson and Landicho liable jointly
and solidarily for conniving and conspiring together in violating his exclusive distributorship in bad faith and
wanton disregard of his rights, thus depriving him of his due commissions (balance of unpaid commission from the sale
of the first vessel in the amount of US$31,522.01 and unpaid commission for the sale of the second vessel in the amount
of US$328,742.00) and causing him actual, moral and exemplary damages, includingP800,000.00 representing expenses
for airplane travel to Australia, telecommunications bills and entertainment, on account of AFFA‘s untimely cancellation
of the exclusive distributorship agreement. Cordero also prayed for the award of moral and exemplary damages, as well as
attorney‘s fees and litigation expenses.
Robinson filed a motion to dismiss grounded on lack of jurisdiction over his person and failure to state a cause of action.
Denied. Pre-trial was reset twice to afford the parties opportunity to reach a settlement. Plaintiff Cordero was allowed to
present his evidence ex parte.
Cordero‘s testimony regarding his transaction with Go, Landicho and Tecson, and the latter‘s offer of settlement, was
corroborated by his counsel who also took the witness stand. Further, he presented the following documentary evidence:
 photographs taken of the June 29, 1998 meeting with Landicho, Tecson and Atty. Tabujara at Shangri-la‘s
Mactan Island Resort,
 photographs taken in Brisbane showing Cordero, Go with his family, Robinson and Landicho, and
 also various documents, communications, vouchers and bank transmittals were presented to prove that: (1) Cordero
was properly authorized and actually transacted in behalf of AFFA as exclusive distributor in the Philippines; (2)
Cordero spent considerable sums of money in pursuance of the contract with Go and ACG Express Liner; and (3)
AFFA through Robinson paid Cordero his commissions from each scheduled payment made by Go for the first
SEACAT 25 purchased from AFFA pursuant to Shipbuilding Contract No. 7825.
Go, Robinson, Landicho and Tecson filed a motion for new trial. Denied. In the same order, Cordero‘s motion for
execution pending appeal was granted. They filed a certiorari case with the CA. The CA then issued a TRO at the instance
of defendants in the certiorari case they filed with said questioning the execution orders issued by the trial court. Finally,
the CA rendered judgment granting the petition for certiorari in setting aside the trial court‘s orders of execution
pending appeal. Cordero appealed the said judgment in a petition for review filed with this Court.
The case before us is a consolidation of the petitions for review under Rule 45 separately filed by Go (G.R. No. 164703)
and Cordero (G.R. No. 164747)
Issue: (1) Whether Cordero has the legal personality to sue the Go et al for breach of contract?
(2) Whether the Go et al may be held liable for damages to Cordero for his unpaid commissions and termination of his
exclusive distributorship appointment by the principal, AFFA.
Held: YES.
(1) Cordero is a real party in interest; jurisdiction over Robinson was also properly acquired. (civpro)
Go et al challenge the standing of Cordero since they claim that it was Pamana (the company wherein Cordero is VP)
which was granted the distributorship. On this issue, the SC agrees with the CA in ruling that it was Cordero and not
Pamana who is the exclusive distributor of AFFA in the Philippines as shown by the Certification dated June 1, 1997
issued by Robinson. Go mentions some documents which state that ―Pamana Marketing Corporation represented by Mr.
Mortimer F. Cordero‖ was actually the exclusive distributor. But, such apparent inconsistency in naming AFFA‘s exclusive
distributor in the Philippines is of no moment. For all intents and purposes, Robinson and AFFA dealt only with Cordero
who alone made decisions in the performance of the exclusive distributorship, as with other clients to whom he had similarly
offered AFFA‘s fast ferry vessels. Moreover, the stipulated commissions from each progress payments made by Go were
directly paid by Robinson to Cordero. Moreover, petitioner Go, Landicho and Tecson never raised petitioner Cordero‘s lack of
personality to sue on behalf of Pamana, and did so only before the CA when they contended that it is Pamana and not Cordero,
who was appointed and acted as exclusive distributor for AFFA.
(2) Even if there is that Go et al purchased the SEACAT directly
NO DIRECT PROOF from AFFA, nonetheless
EVIDENCE SHOWS THAT THEY ACTED IN BAD FAITH.

In Yu v. Court of Appeals, this Court ruled that the right to perform an exclusive distributorship agreement and to
reap the profits resulting from such performance are proprietary rights which a party may protect. Thus,
injunction is the appropriate remedy to prevent a wrongful interference with contracts by strangers to such contracts
where the legal remedy is insufficient and the resulting injury is irreparable.
In the case at bar, it was established that Cordero was not paid the balance of his commission by Robinson. From the
time Go and Landicho directly dealt with respondent Robinson in Brisbane Cordero had clearly been cut off from the
transaction until the arrival of the first SEACAT 25 which was sold through his efforts. When Cordero complained to
Go, Robinson, Landicho and Tecson about their acts prejudicial to his rights and demanded that they respect his exclusive
distributorship, Go simply let his lawyers led by Landicho and Tecson handle the matter and tried to settle it by
promising to pay a certain amount and to purchase high-speed catamarans through Cordero. However, Cordero was
not paid anything and worse, AFFA through its lawyer in Australia even terminated his exclusive dealership insisting
that his services were engaged for only one (1) transaction, that is, the purchase of the first SEACAT 25 in August
1997.
Go argues that unlike in Yu v. Court of Appeals there is no conclusive proof adduced by Cordero that they actually
purchased a second SEACAT 25 directly from AFFA and hence there was no violation of the exclusive distributorship
agreement.
We find that contrary to the claims of Cordero, there was indeed no sufficient evidence that respondents actually
purchased a second SEACAT 25 directly from AFFA. But this circumstance will not absolve respondents from
liability for invading Cordero‘s rights under the exclusive distributorship. Respondents CLEARLY ACTED IN BAD
FAITH in bypassing Cordero as they completed the remaining payments to AFFA without advising him and
furnishing him with copies of the bank transmittals as they previously did, and directly dealt with AFFA through
Robinson regarding arrangements for the arrival of the first SEACAT 25 in Manila and negotiations for the purchase of
the second vessel pursuant to the Memorandum of Agreement which Cordero signed in behalf of AFFA. As a result of
respondents‘ actuations, Cordero incurred losses as he was not paid the balance of his commission from the sale of the
first vessel and his exclusive distributorship revoked by AFFA.
(3) Go et al. are solidarily liable with AFFA, based on contractual interference.
Go contends that the trial and appellate courts erred in holding them solidarily liable for Cordero‘s unpaid commission,
which is the sole obligation of the principal AFFA. It was Robinson on behalf of AFFA who, in the letter dated August 5,
1997 addressed to Cordero, undertook to pay commission payments to Pamana. Petitioner Go further maintains that he
had not in any way violated or caused the termination of the exclusive distributorship agreement between Cordero and
AFFA; he had also paid in full the first and only vessel he purchased from AFFA.
(a) The elements of tort interference are present in this case.

While it is true that a third person cannot possibly be sued for breach of contract because only parties can breach
contractual provisions, a contracting party may sue a third person not for breach but for inducing another to
commit such breach.
The elements of tort interference are: (1) existence of a valid contract; (2) knowledge on the part of the third person of
the existence of a contract; and (3) interference of the third person is without legal justification.
FIRST & SECOND ELEMENTS

The presence of the first and second elements is not disputed. Through the LETTERS ISSUED BY ROBINSON attesting
that Cordero is the exclusive distributor of AFFA in the Philippines, respondents were clearly aware of the contract
between Cordero and AFFA. In fact, evidence on record showed that Go initially dealt with and recognized Cordero as
such exclusive dealer of AFFA high-speed catamaran vessels in the Philippines. In that capacity as exclusive
distributor, petitioner Go entered into the Memorandum of Agreement and Shipbuilding Contract No. 7825 with Cordero
in behalf of AFFA.
THIRD ELEMENT
As to the third element, our ruling in the case of So Ping Bun v. Court of Appeals is instructive, to wit:
Authorities debate on whether interference may be justified where the defendant acts for
the sole purpose of furthering his own financial or economic interest. One view is that, as
a general rule, justification for interfering with the business relations of another exists
where the actor‘s motive is to benefit himself. Such justification does not exist where
his sole motive is to cause harm to the other. Added to this, some authorities believe that
it is not necessary that the interferer‘s interest outweigh that of the party whose rights are
invaded, and that an individual acts under an economic interest that is substantial, not
merely de minimis, such that wrongful and malicious motives are negatived, for he acts in
self-protection. Moreover, justification for protecting one‘s financial position should not
be made to depend on a comparison of his economic interest in the subject matter with
that of others. It is sufficient if the impetus of his conduct lies in a proper business
interest rather than in wrongful motives.
As early as Gilchrist vs. Cuddy, we held that where there was no malice in the
interference of a contract, and the impulse behind one‘s conduct lies in a proper
business interest rather than in wrongful motives, a party cannot be a malicious
interferer. Where the alleged interferer is financially interested, and such interest
motivates his conduct, it cannot be said that he is an officious or malicious intermeddler.
While we do not encourage tort interferers seeking their economic interest to intrude into
existing contracts at the expense of others, however, we find that the conduct herein
complained of did not transcend the limits forbidding an obligatory award for damages in
the absence of any malice. Lack of malice, however, precludes damages. But it does
not relieve petitioner of the legal liability for entering into contracts and causing
breach of existing ones.
MALICE connotes ill will or spite, and speaks not in response to duty. It implies an intention to do ulterior and
unjustifiable harm. Malice is bad faith or bad motive. In the case of Lagon v. Court of Appeals, we held that to sustain a
case for tortuous interference, the defendant must have acted with malice or must have been driven by purely impure
reasons to injure the plaintiff; in other words, his act of interference cannot be justified. We further explained that the
word ―INDUCE‖ refers to situations where a person causes another to choose one course of conduct by persuasion or
intimidation. Furthermore, even if the defendant knew of the contract, this Court has held that such knowledge was not
sufficient to make him liable for tortuous interference.
In their Answer, Go et al denied having anything to do with the unpaid balance of the commission due to Cordero and the
eventual termination of his exclusive distributorship by AFFA. According to them, several builder-competitors still
entered the picture after the said contract for the purchase of one (1) SEACAT 25 was sent to AFFA in July 1997, and
that by mutual agreement, AFFA agreed to give them a discounted price. This led to the signing of another contract
superseding the first one. As to the cessation of communication with Cordero, Go averred it was Cordero who was
nowhere to be contacted at the time the shipbuilding progress did not turn good as promised, and it was always Landicho
and Tecson who, after several attempts, were able to locate him only to obtain unsatisfactory reports such that it was Go
who would still call up Robinson regarding any progress status report.
We find these allegations unconvincing and a mere afterthought. as these were the very same averments contained in the
Position Paper for the Importer dated October 9, 1998, which was submitted by Go in connection with the complaint-
affidavit filed by Cordero before the Bureau of Customs; it appears that the purported second contract superseding the
original Shipbuilding Contract and stating a lower price of US$1,150,000.00 (not US$1,465,512.00) was only presented
before the BOC to show that the vessel imported into the Philippines was not undervalued by almost US$500,000.00.
The act of Go, Landicho and Tecson in inducing Robinson and AFFA to enter into another contract directly with
ACG Express Liner to obtain a lower price for the second vessel resulted in AFFA‟s breach of its contractual
obligation to pay in full the commission due to Cordero and unceremonious termination of Cordero‘s appointment as
exclusive distributor. Following our pronouncement in Gilchrist v. Cuddy (supra), such act may not be deemed malicious
if impelled by a proper business interest rather than in wrongful motives.
The attendant circumstances, however, demonstrated that Go transgressed the bounds of permissible financial
interest to benefit themselves at the expense of Cordero. Respondents furtively went directly to Robinson after
Cordero had worked hard to close the deal for them to purchase from AFFA two (2) SEACAT 25, closely
monitored the progress of building the first vessel sold, attended to their concerns and spent no measly sum for the trip to
Australia with Go, Landicho and Go‘s family members. But what is appalling is the fact that even as Go, Landicho and
Tecson secretly negotiated with Robinson for the purchase of a second vessel, Landicho and Tecson continued to
demand and receive from Cordero their “commission” or “cut” from Cordero‟s earned commission from the sale of
the first SEACAT 25.
Cordero was practically excluded from the transaction when Go, Robinson, Tecson and Landicho suddenly ceased
communicating with him, without giving him any explanation. While there was nothing objectionable in negotiating
for a lower price in the second purchase of SEACAT 25, which is not prohibited by the Memorandum of Agreement,
Go, Robinson, Tecson and Landicho clearly connived not only in ensuring that Cordero would have no participation
in the contract for sale of the second SEACAT 25, but also that Cordero would not be paid the balance of his
commission from the sale of the first SEACAT 25. This, despite their knowledge that it was commission already earned
by and due to Cordero. Thus, the trial and appellate courts correctly ruled that the actuations of Go, Robinson, Tecson
and Landicho were without legal justification and intended solely to prejudice Cordero.
(b) The acts of Go, Tecson and Landico are further proscribed by Art. 19 of the NCC.
The failure of Robinson, Go, Tecson and Landico to act with fairness, honesty and good faith in securing better terms for
the purchase of high-speed catamarans from AFFA, to the prejudice of Cordero as the duly appointed exclusive
distributor, is further proscribed by Article 19 of the Civil Code:
As we have expounded in another case:

Elsewhere, we explained that when ―a right is exercised in a manner which does not
conform with the norms enshrined in Article 19 and results in damage to another, a legal
wrong is thereby committed for which the wrongdoer must be responsible.‖ The object of
this article, therefore, is to set certain standards which must be observed not only in the
exercise of one‘s rights but also in the performance of one‘s duties. These standards are
the following: act with justice, give everyone his due and observe honesty and good faith.
Its antithesis, necessarily, is any act evincing bad faith or intent to injure. Its elements are
the following: (1) There is a legal right or duty; (2) which is exercised in bad faith; (3) for
the sole intent of prejudicing or injuring another. When Article 19 is violated, an action
for damages is proper under Articles 20 or 21 of the Civil Code. Article 20 pertains to
damages arising from a violation of law x x x. Article 21, on the other hand, states:
Art. 21. Any person who willfully 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.
Article 21 refers to 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) it is done withintent to injure.
A common theme runs through Articles 19 and 21, and that is, the act complained of
must be intentional.
(c) Go et al are SOLIDARILY LIABLE WITH ROBINSON as joint tortfeasors.

Conformably with Article 2194 of the Civil Code, the responsibility of two or more persons who are liable for the
quasi-delict is solidary. In Lafarge Cement Philippines, Inc. v. Continental Cement Corporation, we held:
Obligations arising from tort are, by their nature, always solidary. We have
assiduously maintained this legal principle as early as 1912 in Worcester v. Ocampo,
in which we held:
It may be stated as a general rule that 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. They
are each liable as principals, to the same extent and in the same manner as if they
had performed the wrongful act themselves.
Joint tort feasors are jointly and severally liable for the tort which they commit. The
persons injured may sue all of them or any number less than all. Each is liable for the
whole damages caused by all, and all together are jointly liable for the whole damage. It
is no defense for one sued alone, that the others who participated in the wrongful act are
not joined with him as defendants; nor is it any excuse for him that his participation in the
tort was insignificant as compared to that of the others. x x x
Joint tort feasors are not liable pro rata. The damages can not be apportioned among
them, except among themselves. They cannot insist upon an apportionment, for the
purpose of each paying an aliquot part. They are jointly and severally liable for the whole
amount. x x x
A payment in full for the damage done, by one of the joint tort feasors, of course satisfies
any claim which might exist against the others. There can be but satisfaction. The release
of one of the joint tort feasors by agreement generally operates to discharge all.
Of course, the court during trial may find that some of the alleged tort feasors are liable
and that others are not liable. The courts may release some for lack of evidence while
condemning others of the alleged tort feasors. And this is true even though they are
charged jointly and severally
(4) The EXTENT OF LIABILITY OF GO ET AL: only up to the extent of AFFA/Robinson‘s liability.
The rule is that the defendant found guilty of interference with contractual relations cannot be held liable for
more than the amount for which the party who was inducted to break the contract can be held liable. Respondents
Go, Landicho and Tecson were therefore correctly held liable for the balance of petitioner Cordero‘s commission from
the sale of the first SEACAT 25, in the amount of US$31,522.09 or its peso equivalent, which AFFA/Robinson did not
pay in violation of the exclusive distributorship agreement, with interest at the rate of 6% per annum from June 24, 1998
until the same is fully paid.
VIII. CIVIL LIABILITY ARISING FROM CRIMES
- Rules of Court
o Rule 111
- Civil Code
o Articles 29 to 31, and 33 to 36 (Memorize)
- Cases
2.Banal v. Tadeo, G.R. No. L-78911-25, December 11, 1987

3.Lim v. Ping, G.R. No. 175256, August 23, 2012
4.Simon v. Chan, G.R. No. 157547, February 23, 2011
5.Cancio v. Isip, G.R. No. 133978, November 12, 2002
6.Casupanan v. Laroya, G.R. No. 145391, August 26, 2002
7.Rodriguez v. Ponferrada, G.R. Nos. 155531-34, July 29, 2005
7. DMPI Employees Credit Cooperative, Inc., v. Velez, G.R. No. 129282, November 29, 2001
Facts: On February 18, 1994, the prosecuting attorney filed with the RTC Misamis Oriental (Br. 37) an information for
estafa against Carmen Mandawe for alleged failure to account to respondent Eriberta Villegas the amount of P608,532.46.
Respondent Villegas entrusted this amount to Carmen Mandawe, an employee of petitioner DMPI-ECCI, for deposit
with the teller of petitioner.
Subsequently, on March 29, 1994, Villegas filed with the RTC Branch 20, a complaint3 against Carmen Mandawe and
petitioner DMPI-ECCI for a sum of money and damages with preliminary attachment arising out of the same
transaction.
In time, petitioner sought the dismissal of the civil case on the following grounds: (1) that there is a pending criminal
case in RTC Branch 37, arising from the same facts, and (2) that the complaint failed to contain a certification against
forum shopping.
On December 12, 1996, the RTC issued an order dismissing Civil Case No. CV-94-214. On January 21, 1997,
respondent filed an MR of the order. On February 21, 1997, the RTC issued an order granting respondent‟s MR, thereby
recalling the dismissal of the case. Hence, this petition.
Issue: (1) Whether plaintiff‘s failure to attach a certification against forum shopping is a ground to dismiss.
(2) Whether the civil case could proceed independently of the criminal case for estafa without having reserved the filing
of the civil action.
Held: (1) SC Circular 28-91 requires a certificate of non-forum shopping to be attached to petitions filed before the SC
and the CA. Respondent Villegas‘ failure to attach a certificate of nonforum shopping in her complaint did not violate
Circular
No. 28-91, because at the time of filing, the requirement applied only to petitions filed with the SC and the CA.
(2) As a general rule, an offense causes 2 classes of injuries. The first is the social injury produced by the criminal act
which is sought to be repaired thru the imposition of the corresponding penalty, and the second is the personal injury
caused to the victim of the crime which injury is sought to be compensated through indemnity which is civil in nature.
Thus, ―every person criminally liable for a felony is also civilly liable.‖ This is the law governing the recovery of civil
liability arising from the commission of an offense. C IVIL LIABILITY includes restitution, reparation for damage caused,
and indemnification of consequential damages.
The offended party may prove the civil liability of an accused arising from the commission of the offense in the
criminal case since the civil action is either deemed instituted with the criminal action or is separately instituted.
Rule 111 §§ 1 and 2 state that:
When a criminal action is instituted, the civil action for the recovery of civil liability
arising from the offense charged shall be deemed instituted with the criminal action
unless the offended party waives the civil action, reserves the right to institute it
separately or institutes the civil action prior to the criminal action.
After the criminal action has been commenced, the SEPARATE CIVIL ACTION ARISING
THEREFROM cannot be instituted until final judgment has been entered in the criminal
action.
INDEPENDENT CIVIL ACTIONS

However, with respect to civil actions for recovery of civil liability under Articles 32, 33, 34 and 2176 of the Civil Code
arising from the same act or omission, the rule has been changed.
Under the present rule, only the civil liability arising from the offense charged is deemed instituted with the criminal
action UNLESS the offended party waives the civil action, reserves his right to institute it separately, or institutes the
civil action prior to the criminal action.
There is NO MORE NEED FOR A RESERVATION of the right to file the independent civil actions under Articles 32, 33, 34
and 2176 of the Civil Code. ―The reservation and waiver referred to refers only to the civil action for the recovery of the
civil liability arising from the offense charged. This does not include recovery of civil liability under Articles 32, 33, 34
and 2176 of the Civil Code arising from the same act or omission which may be prosecuted separately even without a
reservation.
Rule 111 § 3 provides that —
Sec. 3. When civil action may proceed independently.—In the cases provided in Articles
32, 33, 34 and 2176 of the Civil Code of the Philippines, the independent civil action may
be brought by the offended party. It shall proceed independently of the criminal action
and shall require only a preponderance of evidence. In no case, however, may the
offended party recover damages twice for the same act or omission charged in the
criminal action.
Thus, Civil Case No. CV-94-214, an independent civil action for damages on account of the FRAUD committed against
respondent Villegas under Article 33 of the Civil Code, may proceed independently even if there was no reservation as to
its filing.
8.Padilla v. Court of Appeals, 129 SCRA 558 (1984)

9.Dominguez v. People, G.R. No. 167546, July 17, 2009
10. People v. Bayotas, G.R. No. 102007, September 2, 1994
11. Sanchez v. Far East Bank and Trust Company, G.R. No. 155309, November 15, 2005
12. Manliclic v. Calaunan, G.R. No. 150157, January 25, 2007
IX. DAMAGES
A. In General
- Civil Code
o Articles 2195, 2197, and 2198
 Memorize: Article 2197
- Case
1. Custodio v. Court of Appeals, G.R. No. 116100, February 9, 1996

2. Ong v. Court of Appeals, G.R. No. 117103, January 21, 1999
B. Actual Damages
- Civil Code
o Articles 2199 to 2202, 2204 to 2213
 Memorize: Articles 2199, 2200, 2201, 2202, 2204, 2205, and 2208
2. Algarra v. Sandejas, 27 Phil. 284 (1914)

Facts: This is an action for personal injuries by petitioner against respondent. Lucio Algarra sold products of a distillery
on a 10% commission and made an average of P50 per month. He had about twenty regular customers who, it seems,
purchased in small quantities, necessitating regular and frequent deliveries.
On day, he figured in an automobile accident caused by Sandejas‘ negligence. As a result of the injuries received, plaintiff
was obliged to spend 10 days in the hospital, during the first 4 or 5 of which he could not leave his bed. After being
discharged from the hospital, he received medical attention from a private practitioner for several days.
It is not clear at what time plaintiff became entirely well again, but as the doctor to whom he described himself as being
well stated that this was about the last of July, and the trial took place September 19, two months' pay would seem
sufficient for the actual time lost from his work. Plaintiff further testified that he paid the doctor P8 and expended P2
for medicines. This expense, amounting in all to P110, should also be allowed.
Since the accident his wife had done something in a small way to keep up this business but the total orders taken by her
would not net them over P15. He lost all his regular customers except for 4, other agents filling their orders since his
accident. It took him about 4 years to build up the business he had at the time of the accident, and he could not say how
long it would take him to get back the business he had lost.
The lower court, while recognizing the justness of his claim, refused to allow him anything for injury to his business due
to his enforced absence therefrom.
Issue: Whether Algarra is entitled to actual/compensatory damages despite absence of malicious intent on the part of
Sandejas who was merely negligent.
Held: YES. The Old Civil Code requires that the defendant repair the damage caused by his fault or negligence. No
distinction is made therein between damage caused maliciously and intentionally and damages caused through mere
negligence in so far as the civil liability of the wrongdoer is concerned. Nor is the defendant required to do more than
repair the damage done, or, in other words, to put the plaintiff in the same position, so far as pecuniary compensation can
do so, that he would have been in had the damage not been inflicted. In this respect there is a notable difference between
the 2 systems.
Under the Anglo-Saxon law, when malicious or willful intention to cause the damage is an element of the defendant's
act, it is quite generally regarded as an aggravating circumstance for which the plaintiff is entitled to more than mere
compensation for the injury inflicted. These are called exemplary or punitive damages, and no provision is made for
them in article 1902 of the Civil Code.
The PURPOSE OF THE LAW IN AWARDING ACTUAL DAMAGES is to repair the wrong that has been done, to compensate
for the injury inflicted, and not to impose a penalty. Actual damages are not dependent on nor graded by the intent with
which the wrongful act is done. In other words, actual damages are compensatory only. They proceed from a sense of
natural justice, and are designed to repair that of which one has been deprived by the wrong of another.
The party claiming damages must establish by competent evidence the amount of such damages, and courts can not give
judgment for a greater amount than those actually proven.
We are of the opinion that the requirements of article 1902 (old law on QD), that the defendant repair the damage done
can only mean what is set forth in the above definitions. Anything short of that would not repair the damages and anything
beyond that would be excessive. Actual compensatory damages are those allowed for tortious wrongs under the Civil
Code; nothing more, nothing less.
Actual damages include not only loss already suffered, but loss of profits which may not have been realized.
Plagiarizing from Sanchez Roman, he says that the indemnity comprises, not only the value of the loss suffered, but also
that of the prospective profit that was not realized, and the obligation of the debtor in GOOD FAITH is limited to such
losses and damages as were foreseen or might have been foreseen at the time the obligation was incurred and which
are a necessary consequence of his failure of fulfillment. Losses and damages under such limitations and frustrated profits
must, therefore, be proved directly by means of the evidence the law authorizes.
The case at bar involves actual incapacity of the plaintiff for 2 months, and loss of the greater portion of his business. As
to the damages resulting from the actual incapacity of the plaintiff to attend to his business there is no question. They are,
of course, to be allowed on the basis of his earning capacity, which in this case, is P50 per month. The difficult question in
the present case is to determine the damage which has resulted to his business through his enforced absence.
ELEMENTS TO BE CONSIDERED
While certainty is an essential element of an award of damages, it need not be a mathematical certainty. As to the
ELEMENTS TO BE CONSIDERED in "estimating the damage done to plaintiff's business by reason of his accident, this same
author, citing numerous authorities, has the following to say: It is proper to consider the business the plaintiff is engaged
in, the nature and extent of such business, the importance of his personal oversight and superintendence in conducting
it, and the consequent loss arising from his inability to prosecute it.
The business of the present plaintiff required his immediate supervision of all the profits derived therefrom were
wholly due to his own exertions. Nor are his damages confined to the actual time during which he was physically
incapacitated for work, as is the case of a person working for a stipulated daily or monthly or yearly salary. As to persons
whose labor is thus compensated and who completely recover from their injuries, the rule may be said to be that their
damages are confined to the duration of their enforced absence from their occupation.
But the present plaintiff could not resume his work at the same profit he was making when the accident occurred .
He had built up an established business which included some 20 regular customers. These customers represented to him a
regular income. In addition to this he made sales to other people who were not so regular in their purchases. But he could
figure on making at least some sales each month to others besides his regular customers.
Taken as a whole his average monthly income from his business was about P50. As a result of the accident, he lost all but
4 of his regular customers and his receipts dwindled down to practically nothing. Other agents had invaded his
territory, and upon becoming physically able to attend to his business, he found that it would be necessary to start with
practically no regular trade, and either win back his old customers from his competitors or else secure others. During this
process of re-establishing his patronage his income would necessarily be less than he was making at the time of the
accident and would continue to be so for some time. Of course, if it could be mathematically determined how much less
he will earn during this rebuilding process than he would have earned if the accident had not occurred, that would be the
amount he would be entitled to in this action. But manifestly this ideal compensation cannot be ascertained. The question
therefore resolves itself into whether this damage to his business can be so nearly ascertained as to justify a court in
awarding any amount whatever.
When it is shown that a plaintiff's business is a going concern with a fairly steady average profit on the investment, it
may be assumed that had the interruption to the business through defendant's wrongful act not occurred , it would
have continued producing this average income "so long as is usual with things of that nature.
When in addition to the previous average income of the business it is further shown what the reduced receipts of the
business are immediately after the cause of the interruption has been removed, there can be no manner of doubt that a
loss of profits has resulted from the wrongful act of the defendant.
In the present case, we not only have the value of plaintiff's business to him just prior to the accident, but we also have its
value to him after the accident. At the trial, he testified that his wife had earned about 15 pesos during the 2 months that
he was disabled. That this almost total destruction of his business was directly chargeable to defendant's wrongful act,
there can be no manner of doubt; and the mere fact that the loss can not be ascertained with absolute accuracy, is no
reason for denying plaintiff's claim altogether.
BUSINESS & ADVENTURE

A good example of a business not established for which loss of profits will not be allowed may be found in States vs.
Durkin. Plaintiffs formed a partnership and entered the plumbing business in the city of Topeka in April. In July of the
same year, they brought an action against a plumbers' association on the ground that the latter had formed an unlawful
combination in restraint of trade and prevented them from securing supplies for their business within a reasonable time.
The court said:
In the present case the plaintiffs had only been in business a short time — not so long
that it can be said that they had an established business. They had contracted three jobs of
plumbing, had finished two, and lost money on both; not, however, because of any
misconduct or wrongful acts on the part of the defendants or either of them. They carried
no stock in trade, and their manner of doing business was to secure a contract and then
purchase the material necessary for its completion. It is not shown that they had any
means or capital invested in the business other than their tools. Neither of them had
prior thereto managed or carried on a similar business. Nor was it shown that they were
capable of so managing this business as to make it earn a profit. There was little of that
class of business being done at that time, and little, if any, profit derived therefrom. The
plaintiffs' business lacked DURATION, PERMANENCY, and RECOGNITION. It was an
adventure, as distinguished from an established business. Its profits were speculative
and remote, existing only in anticipation. The law, with all its vigor and energy in its
effort to right wrongs and award damages for injuries sustained, may not enter into the
domain of speculation or conjecture.
We are of the opinion that the evidence presented as to the damage done to plaintiff's business is credible and that it is
sufficient and clear enough upon which to base a judgment for damages. Plaintiff having had four years' experience in
selling goods on commission, it must be presumed that he will be able to rebuild his business to its former proportions; so
that at some time in the future his commissions will equal those he was receiving when the accident occurred. Aided by
his experience, he should be able to rebuild this business to its former proportions in much less time than it took to
establish it as it stood just prior to the accident. One year should be sufficient time in which to do this. The profits which
plaintiff will receive from the business in the course of its reconstruction will gradually increase. The injury to plaintiff's
business begins where these profits leave off, and, as a corollary, there is where defendant's liability begins.
Upon this basis, we fix the damages to plaintiff's business at P250.
The judgment of the lower court is set aside, and the plaintiff is awarded the following damages:
10 pesos for medical expenses;
100 pesos for the two months of his enforced absence from his business;
and 250 pesos for the damage done to his business in the way of loss of
profits, TOTAL: P360.00
2. PNOC Shipping and Transport Corporation v. Court of Appeals, G.R. No. 107518, October 8, 1998
DOCTRINE: Under Article 2199, actual or compensatory damages are those awarded in satisfaction of, or in recompense
for, loss or injury sustained. They proceed from a sense of natural justice and are designed to repair the wrong that has
been done, to compensate for the injury inflicted and not to impose a penalty. In actions based on torts or quasi-delicts,
actual damages include all the natural and probable consequences of the act or omission complained of.
TWO KINDS OF ACTUAL DAMAGES

(1) Loss of what a person already possesses (daño emergente); and
(2) The failure to receive as a benefit that which would have pertained to him (lucro cesante)
To enable an injured party to recover actual or compensatory damages, he is required to prove the actual amount of loss
with reasonable degree of certainty premised upon competent proof and on the best evidence available. The burden of
proof is on the party who would be defeated if no evidence would be presented on either side. He must establish his case
by a PREPONDERANCE OF EVIDENCE which means that the evidence, as a whole, adduced by one side is superior to
that of the other. In other words, damages cannot be presumed and courts, in making an award must point out specific
facts that could afford a basis for measuring whatever compensatory or actual damages are borne.
PRICE QUOTATIONS
Price quotations are ordinary private writings which under the Revised Rules of Court should have been proffered
along with the testimony of the authors thereof. Del Rosario could not have testified on the veracity of the contents of
the writings even though he was the seasoned owner of a fishing fleet because he was not the one who issued the price
quotations. Section 36, Rule 130 of the Revised Rules of Court provides that a witness can testify only to those facts that
he knows of his personal knowledge.
The price quotations presented as exhibits partake of the nature of hearsay evidence considering that the persons
who issued them were not presented as witnesses. Any evidence, whether oral or documentary, is hearsay if its probative
value is not based on the personal knowledge of the witness but on the knowledge of another person who is not on the
witness stand.
NOMINAL DAMAGES
Nonetheless, the non-admissibility of said exhibits does not mean that it totally deprives private respondent of any redress
for the loss of its vessel. In Lufthansa German Airlines v. Court of Appeals, the Court said: ―In the absence of
competent proof on the actual damage suffered, private respondent is„entitled to nominal damages which, as the law
says, is adjudicated in order that a right of the plaintiff, which has been violated or invaded by defendant, may be
vindicated and recognized, and not for the purpose of indemnifying the plaintiff for any loss suffered.
Nominal damages are damages in name only and not in fact. Where these are allowed, they are not treated as an
equivalent of a wrong inflicted but simply in recognition of the existence of a technical injury. However, the amount to
be awarded as nominal damages shall be equal or at least commensurate to the injury sustained by private respondent
considering the concept and purpose of such damages. The amount of nominal damages to be awarded may also depend
on certain special reasons extant in the case.
3. People v. Mamaruncas, G.R. No. 179497, January 25, 2012

Facts: RTC decided —
WHEREFORE, the court finds the accused Renandang Mamaruncas and Pendatum
Ampuan GUILTY beyond reasonable doubt as principals of the crime of murder
qualified by treachery defined and penalized in Art. 248 of the Revised Penal Code as
amended, without the presence of any other aggravating circumstances and hereby
sentences each of them to suffer the penalty of RECLUSION PERPETUA with the
corresponding accessory penalties attached thereto by law and to indemnify the Heirs of
Baudelio Batoon the sums of:
1. P10,200,000.00 for and as loss of support;

2. P66,904.00 for and as actual damages;
3. P50,000.00 as death indemnity and
4. P100,000.00 for and as moral damages without subsidiary imprisonment in case of
insolvency.
Cost against the accused. Having been under preventive detention since February 1, 1996,
the period of such detention shall be credited in full in favor of said accused in the service
of their respective sentences.
CA ruled —
WHEREFORE, premises considered, the Appeal is hereby DISMISSED and the

questioned Judgment dated July 19, 1999 of the Regional Trial Court is AFFIRMED with
MODIFICATION. Appellants Renandang Mamaruncas and Pendatum Ampuan are
found GUILTY beyond reasonable doubt of murder as defined in Article 248 of the
Revised Penal Code, as amended by Republic Act No. 7659 and are hereby sentenced to
suffer the penalty of reclusion perpetua. The appellants are to pay, jointly and severally,
the heirs of Baudelio Batoon the amount of P50,000.00 by way of civil indemnity,
P50,000.00 as moral damages, and P25,000.00 as exemplary damages and P66,904.00
as actual damages.
Issue: Whether the damages awarded are proper.
Held: MODIFIED. The Court modifies the award of civil indemnity in the amount of P50,000.00. In line
with prevailing jurisprudence, said award is increased to P75,000.00.
Anent the award of moral damages, the CA correctly imposed the amount of P50,000.00. These ―awards are
mandatory without need of allegation and proof other than the death of the victim, owing to the fact of the commission
of murder or homicide.‖
ACTUAL DAMAGES
Anent the award of actual damages, the victim‘s widow testified that the family spent a total of P66,904.00 relative to the
wake and burial of the victim. However, the claim for said amount is supported merely by a list of expenses personally
prepared by the widow instead of official receipts. To be entitled to an award of actual damages, ―it is necessary to
prove the actual amount of loss with a REASONABLE DEGREE OF CERTAINTY, premised upon competent proof and on
the best evidence obtainable.
INDEMNITY FOR LOSS OF EARNING CAPACITY

Indemnity for loss of earning capacity cannot be awarded in the absence of documentary evidence EXCEPT where the
victim was either SELF-EMPLOYED or a DAILY WAGE WORKER earning less than the minimum wage under current
labor laws.
4. People v. Arellano, G.R. No. 122477, June 30, 2000

DOCTRINE: The amount of loss of earning capacity is based mainly on TWO FACTORS.
(1) The number of years of which the damages shall be computed; and
(2) The rate at which the losses sustained by the respondent should be fixed.
Factor NUMBER ONE in this ruling shall be computed by using the formula based on the American Expectancy Table of
Mortality or 2/3 x [80 - age of the victim at the time of death] = life expectancy in terms of years. Applying this
formula, Andres‘ life expectancy is 2/3 x (80 - 18) = 41.33.
Factor NUMBER TWO is arrived at by multiplying the life expectancy by the earning of the deceased. As has been settled in
the case of Villa Rey Transit, Inc. v. Court of Appeals, and a long list of cases the computation of the rate of loss of
earnings should be based on the net earnings.
Where the CRIME WAS COMMITTED ON A SUNDAY after the victim and his co-workers had finished their work for the
day, the victim should be presumed to have worked everyday including Sundays or rest days, special days and
regular holidays.
5. Adrian Wilson International Associates, Inc., v. TMX Philippines, Inc., G.R. No. 162608, July 26, 2010
DOCTRINE: Actual damages puts the claimant in the position in which he had been before he was injured. The award
thereof must be based on the evidence presented, not on the personal knowledge of the court; and certainly not on
flimsy, remote, speculative and nonsubstantial proof. Under the Civil Code, one is entitled to an adequate compensation
only for such pecuniary loss suffered by him as he has duly proved.
VOUCHERS & RECEIPTS

The documents it submitted were composed only of a master list of daily and monthly paid employees, summarized and
itemized lists and computations of payroll costs during the covered period of shoring installation, salary structures, and
vouchers prepared by the accounting department.
These pieces of evidence, as well as the bare assertion of the TMX President, do not show a reasonable degree of
certainty of actual payment to and actual receipt by its workers but only reflect the list of disbursements.
Vouchers are not receipts. A RECEIPT is a written and signed acknowledgment that money has been received or goods
have been delivered, while a VOUCHER is documentary record of a business transaction.
6. GQ Garments, Inc., v. Miranda, G.R. No. 161722, July 20, 2006

DOCTRINE: Under Article 2199 of the New Civil Code, actual damages include all the natural and probable
consequences of the act or omission complained of, classified as one (1) for the loss of what a person already
possesses (daño emergente) and the other, for the failure to receive, as a benefit, that which would have pertained to
him (lucro cesante).
The burden of proof is on the party who will be defeated if no evidence is presented on either side . His burden is to
establish his case by PREPONDERANCE OF EVIDENCE which means that the evidence, as whole, adduced by one side, is
superior to that of the other.
Actual damages are not presumed. The claimant must prove the actual amount of loss with a reasonable degree of
certainty premised upon competent proof and on the best evidence obtainable. He must point out specific facts that could
afford a basis for measuring whatever compensatory or actual damages are borne. Actual damages cannot be anchored on
mere surmises, speculations or conjectures.
ABSOLUTE CERTAINTY & REASONABLE CERTAINTY

The claimants are not mandated to prove damages in any specific or certain amount in order to recover damages for
a substantial amount. When the existence of a loss is established, absolute certainty as to its amount is not required.
The amount of the damages should be determined with reasonable certainty. The law does not require that the amount
fixed be absolute or beyond conjectural possibilities. The ascertainment of the amount of damages should be by the
plainest, easiest and most accurate measure which will do justice in the premises.
7. Justiva v. Gustilo, 7 SCRA 72 (1963)

DOCTRINE: Although GENERALLY, attorney‘s fees are not a proper element of damages, and no right to such fees can
accrue merely because of an adverse decision, they may be awarded in case of a clearly unfounded civil action OR
proceed ing or where the Court deems it just and equitable.
―SUCH FURTHER RELIEF AS THE COURT MAY DEEM JUST AND EQUITABLE‖
The prayer for ―such further re lief x x x as this Honorable Court may deem just and equit able,‖ may include actual
damages although not alleged in the answer, if and when they are proved.
MORAL DAMAGES may be imposed if the insincerity of the various amended complaints is patent.
8. De Guia v. The Manila Electric Railroad & Light Company, G.R. No. 14335, January 28, 1920
DOCTRINE: A person who is entitled to recover EXPENSES OF CURE as an item of damage in a civil action for physical
injuries cannot recover doctor's bills for services gratuitously rendered; and the claim must furthermore be limited
to medical services reasonably suited to the case.
Charges of professional experts retained merely with a view to promote the success of the action for damages should
not be allowed.
9. Lim v. Court of Appeals, G.R. No. 125817, January 16, 2002

Facts: Gonzales purchased an Isuzu passenger jeepney from Vallarta. Gonzales did not have the registration transferred in
his name nor did he secure a certificate of public convenience for its operation (ergo, kabit system ang peg).
On July 1990, the jeepney collided when a 10-wheeler truck owned by Lim suddenly lost its breaks. The impact cause
severe damage to the herein jeepney, to other cars, and caused the death of 1 person and injury to many others.
Lim shouldered the hospitalization of the wounded and compensated the heirs of the deceased and had the other vehicles
restored in good condition. However, Gonzales did neither accepted Lim‘s offer to have the jeepney repaired nor the cash
given by the latter. Instead, Gonzales demanded a new jeepney or the same amount of P236,000.
When the negotiations failed, Gonzales filed a complaint for recovery of damages against Lim.
On Oct 1993, trial court upheld Gonzales‘ claim and awarded him 236K with legal interest from July 1990 as
compensatory damages and 30K attorney‘s fees. On appeal, CA affirmed. Hence, this petition.
Lim argues that to to recognize an operator under the kabit system as the real party-in-interest and to countenance his
claim for damages is utterly subversive of public policy. Also, Lim contends that inasmuch as the passenger jeepney was
purchased by private respondent for only P30,000.00, an award of P236,000.00 is inconceivably large and would amount
to unjust enrichment.
Issue: (1) Whether the award to a party under the kabit system, as in this case, is against public policy.
(2) Whether the award of damages is proper.
Held: (1) NO. The thrust of the law in enjoining the kabit system is not so much as to penalize the parties but to identify
the person upon whom responsibility may be fixed in case of an accident with the end view of protecting the riding public.
The policy, therefore, loses its force if the public at large is not deceived, much less involved.
In the present case it is at once apparent that the evil sought to be prevented in enjoining the kabit system does not exist.
First, neither of the parties to the pernicious kabit system is being held liable for damages. Second, the case arose from the
negligence of another vehicle in using the public road to whom no representation, or misrepresentation, as regards the
ownership and operation of the passenger jeepney was made and to whom no such representation, or misrepresentation,
was necessary. Thus it cannot be said that private respondent Gonzales and the registered owner of the jeepney were in
estoppel for leading the public to believe that the jeepney belonged to the registered owner. Third, the riding public was
not bothered nor inconvenienced at the very least by the illegal arrangement. On the contrary, it was private respondent
himself who had been wronged and was seeking compensation for the damage done to him. Certainly, it would be the
height of inequity to deny him his right.
In light of the foregoing, it is evident that private respondent has the right to proceed against petitioners for the damage
caused on his passenger jeepney as well as on his business. Any effort then to frustrate his claim of damages by the
ingenuity with which petitioners framed the issue should be discouraged, if not repelled.
(2) NO. In AWARDING DAMAGES FOR TORTUOUS INJURY , it becomes the sole design of the courts to provide for
adequate compensation by putting the plaintiff in the same financial position he was in prior to the tort. It is a
fundamental principle in the law on damages that a defendant cannot be held liable in damages for more than the actual
loss which he has inflicted and that a plaintiff is entitled to no more than the just and adequate compensation for the
injury suffered. His recovery is, in the absence of circumstances giving rise to an allowance of punitive damages, limited
to a fair compensation for the harm done. The law will not put him in a position better than where he should be in had not
the wrong happened.
In the present case, petitioners insist that as the passenger jeepney was purchased for only P30,000.00 to award damages
considerably greater than this amount would be improper and unjustified. Petitioners are at best reminded that
indemnification for damages comprehends not only the value of the loss suffered but also that of the profits which
the obligee failed to obtain. In other words, indemnification for damages is not limited to damnum emergens or actual
loss but extends to lucrum cessans or the amount of profit lost.
Had Gonzales‘ jeepney not met an accident, it could reasonably be expected that it would have continued earning from
the business in which it was engaged. Gonzales avers that he derives an average income of P300.00 per day from his
passenger jeepney and this earning was included in the award of damages made by the trial court and upheld by the
appeals court.
The award therefore of P236,000.00 as compensatory damages is not beyond reason nor speculative as it is based
on a reasonable estimate of the total damage suffered by Gonzales, i.e. damage wrought upon his jeepney and the
income lost from his transportation business. Petitioners for their part did not offer any substantive evidence to refute the
estimate made by the courts a quo.
However, we are constrained to depart from the conclusion of the lower courts that upon the award of compensatory
damages legal interest should be imposed beginning 22 July 1990, i.e., the date of the accident.
Upon the provisions of Art. 2213, interest ―cannot be recovered upon unliquidated claims or damages, except when
the demand can be established with reasonable certainty.‖ It is axiomatic that if the suit were for damages, unliquidated
and not known until definitely ascertained, assessed and determined by the courts after proof, interest at the rate of six
percent (6%) per annum should be from the date the judgment of the court is made (at which time the quantification of
damages may be deemed to be reasonably ascertained).
In this case, the matter was not a liquidated obligation as the assessment of the damage on the vehicle was heavily
debated upon by the parties with Gonzales demand for P236,000.00 being refuted by Lim who argue that they could have
the vehicle repaired easily for P20,000.00. In fine, the amount due Gonzales was not a liquidated account that was already
demandable and payable.
DOCTRINE OF AVOIDABLE CONSEQUENCES

One last word. We have observed that Gonzales left his passenger jeepney by the roadside at the mercy of the
elements. Article 2203 exhorts parties suffering from loss or injury to exercise the diligence of a good father of a family
to minimize the damages resulting from the act or omission in question. One who is injured then by the wrongful or
negligent act of another should exercise reasonable care and diligence to minimize the resulting damage. Anyway, he
can recover from the wrongdoer money lost in reasonable efforts to preserve the property injured and for injuries incurred
in attempting to prevent damage to it.
However, we sadly note that in the present case Lim failed to offer in evidence the estimated amount of the damage
caused by Gonzales‘ unconcern towards the damaged vehicle. It is the burden of petitioners to show satisfactorily not
only that the injured party could have mitigated his damages but also the amount thereof; failing in this regard, the amount
of damages awarded cannot be proportionately reduced.
WHEREFORE, the questioned Decision awarding private respondent Donato Gonzales P236,000.00 with legal interest
from 22 July 1990 as compensatory damages and P30,000.00 as attorney‘s fees is MODIFIED. Interest at the rate of six
percent (6%) per annum shall be computed from the time the judgment of the lower court is made until the finality of
this Decision. If the adjudged principal and interest remain unpaid thereafter, the interest shall be twelve percent (12%)
per annum computed from the time judgment becomes final and executory until it is fully satisfied.
10. Talisay-Silay Milling Co., Inc., v. Gonzales, G.R. No. 91852, August 15, 1995
DOCTRINE: The familiar rule is that damages consisting of UNREALIZED PROFITS, frequently referred as ‗ganancias
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 experience or direct
inference from known circumstances.
Uncertainty as to whether or not a claimant suffered unrealized profits at all — i.e., uncertainty as to the very fact of
injury—will, of course, preclude recovery of this species of damages.
Where, however, it is reasonably certain that injury consisting of failure to realize otherwise reasonably expected
profits had been incurred, uncertainty as to the precise amount of such unrealized profits will not prevent recovery or
the award of damages. The problem then would be the ascertainment of the amount of such unrealized profits.
11. Coleman v. Hotel de France Company, G.R. No. 9185, January 25, 1915
DOCTRINE: Upon proof of the breach of a contract of employment by the employer, the employee is entitled to
recover the full amount which it appears he might have earned under the contract but for the breach, less such
compensation as he actually obtains or might obtain in some other employment during the term of the contract which had
not yet expired at the date of the breach, the burden of proof as to the amount by which the amount which might have
been earned under the contract may thus be reduced being upon the defendant.

12. Daywalt v. Corporacion de PP Agustinos Recoletos, 39 Phil. 587 (1919) Supra
Facts: In 1902, Teodorica Endencia executed a contract whereby she obligated herself to convey to Geo W. Daywalt a
452-hectare parcel of land for P 4000. They agreed that a deed should be executed as soon as Endencia‘s title to the
land was perfected in the Court of Land Registration and a Torrens title issued in her name.
When the Torrens title was issued, Endencia found out that the property measured 1248 hectares instead of 452 hectares,
as she initially believed. Because of this, she became reluctant to transfer the whole tract to Daywalt, claiming that she
never intended to sell so large an amount and that she had been misinformed as to its area.
Daywalt filed an action for specific performance. The SC ordered Endencia to convey the entire tract to Daywalt.
Meanwhile, La Corporacion de los Padres Agustinos Recoletos (Recoletos), was a religious corp., which owned an
estate immediately adjacent to the property sold by Endencia to Daywalt. It also happened that Fr. Sanz, the
representative of the Recoletos, exerted some influence and ascendancy over Endencia, who was a woman of little
force and easily subject to the influence of other people. Fr. Sanz knew of the existence of the contracts with Daywalt
and discouraged her from conveying the entire tract. Daywalt filed an action for damages against the Recoletos on the
ground that it unlawfully induced Endencia to refrain from the performance of her contract for the sale of the land in
question and to withhold delivery of the Torrens title.
Daywalt‘s claim for damages against Recoletos was for the huge sum of P 500,000 [in the year 1919], since he claims
that because of the interference of the Recoletos, he failed to consummate a contract with another person for the sale
of the property and its conversion into a sugar mill.
Issue: Whether Recoletos is liable for damages.
Held:
I. Under the FIRST CAUSE OF ACTION, the plaintiff seeks to recover from the defendant corporation the sum of P24,000,
as damages for the use and occupation of the land in question by reason of the pasturing of cattle thereon during
the period stated.
The trial court came to the conclusion that the defendant corporation was liable for damages by reason of the use and
occupation of the premises in the manner stated; and fixed the amount to be recovered at P2,497.
The plaintiff appealed and has assigned error to this part of the judgment of the court below, insisting that damages
should have been awarded in a much larger sum and at least to the full extent of P24,000, the amount claimed in the
complaint.
As the defendant did not appeal, the propriety of allowing damages for the use and occupation of the land to the extent of
P2,497, the mount awarded, is not now in question; and the only thing here to be considered, in connection with this
branch of the case, is whether the damages allowed under this head should be increased.
The trial court rightly ignored the fact that the defendant corporation had paid Teodorica Endencia for use and occupation
of the same land during the period in question at the rate of P425 per annum, inasmuch as the final decree of this court in
the action for specific performance is conclusive against her right, and as the defendant corporation had notice of the
rights of the plaintiff under his contract of purchase, it can not be permitted that the corporation should escape
liability in this action by proving payment of rent to a person other than, the true owner.
With reference to the rate at which compensation should be estimated the trial court came to the following conclusion:
As to the rate of the compensation, the plaintiff contends that the defendant corporation maintained at least
one thousand head of cattle on the land and that the pasturage was of the value of forty centavos per head
monthly, or P4,800 annually, for the whole tract.
The court cannot accept this view. It is rather improbable that 1,248 hectares of wild Mindoro land would
furnish sufficient pasturage for one thousand head of cattle during the entire year, and, considering the
locality, the rate of forty centavos per head monthly seems too high. The evidence shows that after having
recovered possession of the land the plaintiff rented it to the defendant corporation for fifty centavos per
hectare annually, the tenant to pay the taxes on the land, and this appears to be a reasonable rent. There is
no reason to suppose that the land was worth more for grazing purposes during the period from 1909 to
1913, than it was at the later period.
Upon this basis the plaintiff is entitled to damages in the sum of P2,497, and is under no obligation to
reimburse the defendants for the land taxes paid by either f them during the period the land was occupied by
the defendant corporation. It may be mentioned in this connection that the Lontok tract adjoining the land in
question and containing over three thousand hectares appears to have been leased for only P1,000 a year,
plus the taxes.
From this it will be seen that the trial court estimated the rental value of the land for grazing purposes at 50 centavos per
hectare per annum, and roughly adopted the period of four years as the time for which compensation at that rate should be
made. As the court had already found that the defendant was liable for these damages from June, 1, 1909, to May 1, 1914,
or a period of four years and eleven months, there seems some ground for the contention made in the appellant‘s first
assignment of error that the court‘s computation was erroneous, even accepting the rule upon which the damages were
assessed, as it is manifest that at the rate of 50 centavos per hectare per annum, the damages for four years and eleven
months would be P3,090.
Notwithstanding this circumstance, the damages assessed are sufficient to compensate the plaintiff for the use and
occupation of the land during the whole time it was used. There is evidence in the record strongly tending to show that
the wrongful use of the land by the defendant was not continuous throughout the year but was confined mostly to the
season when the forage obtainable on the land of the defendant corporation was not sufficient to maintain its cattle,
for which reason it became necessary to allow them to go over to pasture on the land in question; and it is not clear
that the whole of the land was used for pasturage at any time. Considerations of this character probably led the trial court
to adopt four years as roughly being the period during which compensation should be allowed. But whether this was
advertently done or not, we see no sufficient reason, in the uncertainty of the record with reference to the number of the
cattle grazed and the period when the land was used, for substituting our guess for the estimate made by the trial court.
II. TORTIOUS INTERFERENCE ISSUE

In the SECOND CAUSE OF ACTION stated in the complaint the plaintiff seeks to recover from the defendant corporation
the sum of P500,000, as damages.
The determination of the issue presented in this second cause of action requires a consideration of two points. The FIRST is
whether a person who is not a party to a contract for the sale of land makes himself liable for damages, to the vendee,
beyond the value of the use and occupation, by colluding with the vendor and maintaining him in the effort to resist an
action for specific performance. The SECOND is whether the damages which the plaintiff seeks to recover under this
head are too remote and speculative to be the subject of recovery.
The stranger cannot become more extensively liable in damages for the nonperformance of the contract than the
party in whose behalf he intermeddles.
In the case at bar, as Teodorica Endencia was the party directly bound by the contract , it is obvious that the liability of
the defendant corporation, even admitting that it has made itself co-participant in the breach of the contract, can in no
event exceed hers. This leads us to consider at this point the extent of the liability of Teodorica Endencia to the plaintiff
by reason of her failure to surrender the certificate of title and to place the plaintiff in possession.
It should in the first place be noted that the liability of Teodorica Endencia for damages resulting from the breach of her
contract with Daywalt was a proper subject for adjudication in the action for specific performance which Daywalt
instituted against her in 1909 and which was litigated by him to a successful conclusion in this court, but without
obtaining any special adjudication with reference to damages.
Indemnification for damages resulting from the breach of a contract is a right inseparably annexed to every action
for the fulfillment of the obligation; and it is clear that if damages are not sought or recovered in the action to enforce
performance they cannot be recovered in an independent action.
As to Teodorica Endencia, therefore, it should be considered that the right of action to recover damages for the breach of
the contract in question was exhausted in the prior suit. However, her attorneys have not seen fit to interpose the defense
of res judicata in her behalf; and as the defendant corporation was not a party to that action, and such defense could not in
any event be of any avail to it, we proceed to consider the question of the liability of Teodorica Endencia for damages
without reference to this point.
The most that can be said with reference to the conduct of Teodorica Endencia is that she refused to carry out a
contract for the sale of certain land and resisted to the last an action for specific performance in court. The result was
that the plaintiff was prevented during a period of several years from exerting that control over the property which he
was entitled to exert and was meanwhile unable to dispose of the property advantageously.
Now, what is the measure of damages for the wrongful detention of real property by the vender after the time has come
for him to place the purchaser in possession?
The damages ordinarily and normally recoverable against a vendor for failure to deliver land which he has
contracted to deliver is the value of the use and occupation of the land for the time during which it is wrongfully
withheld. And of course where the purchaser has not paid the purchase money, a deduction may be made in respect to the
interest on the money which constitutes the purchase price. Substantially the same rule holds with respect to the
liability of a landlord who fails to put his tenant in possession pursuant to a contract of lease . The measure of
damages is the value of the leasehold interest, or use and occupation, less the stipulated rent, where this has not been paid.
The rule that the measure of damages for the wrongful detention of land is normally to be found in the value of use and
occupation is, we believe, one of the things that may be considered certain in the law almost as wellsettled, indeed, as the
rule that the measure of damages for the wrongful detention of money is to be found in the interest.
We recognize the possibility that more extensive damages may be recovered where, at the time of the creation of the
contractual obligation, the vendor, or lessor, is aware of the use to which the purchaser or lessee desires to put the
property which is the subject of the contract, and the contract is made with the eyes of the vendor or lessor open to the
possibility of the damage which may result to the other party from his own failure to give possession.
The case before us is not of this character, inasmuch as at the time when the rights of the parties under the contract were
determined, nothing was known to any of them about the San Francisco capitalist who would be willing to back the
project.
The extent of the liability for the breach of a contract must be determined in the light of the situation in existence at the
time the contract is made; and the damages ordinarily recoverable are in all events limited to such as might be
reasonably foreseen in the light of the facts then known to the contracting parties. Where the purchaser desires to
protect himself, in the contingency of the failure of the vendor promptly to give possession, from the possibility of
incurring other damages than such as are incident to the normal value of the use and occupation, he should cause to be
inserted in the contract a clause providing f or stipulated amount to be paid upon failure of the vendor to give possession;
and no case has been called to our attention where, in the absence of such a stipulation, damages have been held to be
recoverable by the purchaser in excess of the normal value of use and occupation. On the contrary, the most fundamental
conceptions of the law relative to the assessment of damages are inconsistent with such idea.
The DAMAGES RECOVERABLE IN CASE OF THE BREACH OF A CONTRACT are two sorts, namely, (1) the ordinary,
natural, and in a sense necessary damage; and (2) special damages.
ORDINARY DAMAGES is found in all breaches of contract where there are no special circumstances to distinguish the
case specially from other contracts. The consideration paid for an unperformed promise is an instance of this sort of
damage. In all such cases the damages recoverable are such as naturally and generally would result from such a
breach, according to the usual course of things. In cases involving only ordinary damage no discussion is ever indulged
as to whether that damage was contemplated or not. This is conclusively presumed from the immediateness and
inevitableness of the damage, and the recovery of such damage follows as a necessary legal consequence of the breach.
Ordinary damage is assumed as a matter of law to be within the contemplation of the parties.
SPECIAL DAMAGE, on the other hand, is such as follows less directly from the breach than ordinary damage. It is only
found in case where some external condition, apart from the actual terms to the contract exists or intervenes, as it
were, to give a turn to affairs and to increase damage in a way that the promisor, without actual notice of that external
condition, could not reasonably be expected to foresee. Before such damage can be recovered the plaintiff must show
that the particular condition which made the damage possible and a likely consequence of the breach was known to
the defendant at the time the contract was made.
The statement that special damages may be recovered where the likelihood of such damages flowing from the breach of
the contract is contemplated and foreseen by the parties needs to be supplemented by that where the damage which a
plaintiff seeks to recover as special damage is so far speculative as to be in contemplation of law remote, notification
of the special conditions which make that damage possible cannot render the defendant liable therefor. To bring
damages which would ordinarily be treated as remote within the category of recoverable special damages, it is necessary
that the condition should be made the subject of contract in such sense as to become an express or implied term of the
engagement.
In the preceding discussion we have considered the plaintiff's right chiefly as against Teodorica Endencia; and what has
been said suffices in our opinion to demonstrate that the damages laid under the second cause of action in the
complaint could not be recovered from her, FIRST, because the damages in question are special damages which were
not within contemplation of the parties when the contract was made, and SECONDLY, because said damages are too
remote to be the subject of recovery. This conclusion is also necessarily fatal to the right of the plaintiff to recover such
damages from the defendant corporation, for, as already suggested, by advising Teodorica not to perform the contract,
said corporation could in no event render itself more extensively liable than the principal in the contract.
13. Cariaga v. Laguna Tayabas Bus Company, G.R. No. L-11037, December 29, 1960
Facts: 1 p.m., 18 June 1952 – a Laguna Tayabas (LTB) Bus driven by Moncada left Manila for Laguna, with petitioner
Cariaga – a 4th year UST med student – as a passenger. At 3 p.m., it reached a part of Laguna where a national
highway crossed a railroad track where it bumped a train which was passing by with such terrific force as to derail
the first six wheels of the train. The front part of the bus was wrecked. The driver died instantly, and Cariaga, among
many others, were injured. He was left unconscious for 35 days.
He was confined first at the San Pablo City Hospital, then at the De los Santos Clinic, and then at the UST hospital. He
was returned to the De los Santos Clinic. LTB paid for all expenses, and gave him a P10 daily convalescence allowance.
On 24 April 1953, an action was filed by the parents against LTB and the Manila Railroad Company for P312,000 of
actual, compensatory, moral, and exemplary damages.
LTB pointed to MRR‟s negligence in not putting up a crossing bar, while MRR pointed to LTB‘s driver. The CFI ruled
that the LTB driver‘s negligence was the cause, sentencing the LTB to pay. LTB and the Cariagas appeal, the latter
claiming that the court erred in awarding ONLY COMPENSATORY DAMAGES, and not actual and moral damages.
Issue: (1) Whether Manila Railroad is likewise negligent.

(2) Whether Cariagas are entitled to the damages claimed.
Held: The Cariagas, as appellants, claim that the award of P10,000.00 compensatory damages to Eduardo is inadequate
considering the nature and the after effects of the physical injuries suffered by him. After a careful consideration of the
evidence on this point we find their contentions to be well-founded.
From the deposition of Dr. Romeo Gustilo, a neurosurgeon, it appears that, as a result of the injuries suffered by Edgardo,
his right forehead was fractured necessitating the removal of practically all of the right frontal lobe of his brain. From
the testimony of Dr. Jose A. Fernandez, a psychiatrist, it may be gathered that, because of the physical injuries suffered
by Edgardo, his mentality has been so reduced that he can no longer finish his studies as a medical student ; that he has
become completely misfit for any kind of work; that he can hardly walk around without someone helping him, and has to
use a brace on his left leg and feet.
Upon the whole evidence on the matter, the lower court found that the removal of the right frontal lobe of the brain of
Edgardo reduced his intelligence by about 50%; that due to the replacement of the right frontal bone of his head with a
tantalum plate Edgardo has to lead a quite and retired life because "if the tantalum plate is pressed in or dented it would
cause his death."
The impression one gathers from this evidence is that, as a result of the physical injuries suffered by Edgardo Cariaga, he
is now in a helpless condition, virtually an invalid, both physically and mentally.
Appellant LTB admits that under Art. 2201 of the Civil Code the damages for which the obligor, guilty of a breach of
contract but who acted in good faith, is liable shall be those that are the natural and probable consequences of the
breach and which the parties had forseen or could have reasonably forseen at the time the obligation was constituted,
provided such damages, according to Art. 2199 of the same Code, have been duly proved. Upon this premise it claims that
only the actual damages suffered by Edgardo Cariaga consisting of medical, hospital and other expenses in the total sum
of P17,719.75 are within this category.
We are of the opinion, however, that the income which Edgardo Cariaga could earn if he should finish the medical
course and pass the corresponding board examinations must be deemed to be within the same category because
they could have reasonably been foreseen by the parties at the time he boarded the bus No. 133 owned and
operated by the LTB. At that time he was already a 4th year student in medicine in a reputable university. While his
scholastic may not be first rate, it is, nevertheless, sufficient to justify the assumption that he could have passed the
board test in due time. As regards the income that he could possibly earn as a medical practitioner, it appears that,
according to Dr. Amado Doria, a witness for the LTB, the amount of P300.00 could easily be expected as the minimum
monthly income of Edgardo had he finished his studies.
Upon consideration of all the facts mentioned heretofore this Court is of the opinion, and so holds, that the compensatory
damages awarded to Edgardo Cariaga should be increased to P25,000.00.
CLAIM FOR MORAL DAMAGES & ATTORNEY‘S FEES

Edgardo Cariaga's claim for moral damages and attorney's fees was denied by the trial court, the pertinent portion of its
decision reading as follows:
Plaintiffs' claim for moral damages cannot also be granted. Article 2219 of the Civil Code
enumerates the instances when moral damages may be covered and the case under
consideration does not fall under any one of them. The present action cannot come
under paragraph 2 of said article because it is not one of the quasi-delict and cannot
be considered as such because of the pre-existing contractual relation between the
Laguna Tayabas Bus Company and Edgardo Cariaga. Neither could defendant Laguna
Tayabas Bus Company be held liable to pay moral damages to Edgardo Cariaga under
Article 2220 of the Civil Code on account of breach of its contract of carriage because
said defendant did not act fraudulently or in bad faith in connection therewith.
Defendant Laguna Tayabas Bus Company had exercised due diligence in the selection
and supervision of its employees like the drivers of its buses in connection with the
discharge of their duties and so it must be considered an obligor in good faith.
The plaintiff Edgardo Cariaga is also not entitled to recover for attorney's fees,
because this case does not fall under any of the instances enumerated in Article 2208 of
the Civil Code.
We agree with the trial court and, to the reason given above, we add those given by this Court in Cachero vs. Manila
Yellow Taxicab Co., Inc:
A mere perusal of plaintiff's complaint will show that this action against the defendant
is predicated on an alleged breach of contract of carriage, i.e., the failure of the
defendants to bring him "safely and without mishaps" to his destination, and it is to be
noted that the chauffeur of defendant's taxicab that plaintiff used when he received the
injuries involved herein, Gregorio Mira, has not even made a party defendant to this case.
Considering, therefore, the nature of plaintiff's action in this case, is he entitled to

compensation for moral damages? Article 2219 of the Civil Code says the following:
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;
(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.
Of course enumerated in the just quoted Article 2219 only the first two may have any bearing on the case at bar. We find,
however, with regard to the first that the defendant herein has not committed in connection with this case any "criminal
offense resulting in physical injuries". The one that committed the offense against the plaintiff is Gregorio Mira, and that
is why he has been already prosecuted and punished therefor. Altho (a) owners and managers of an establishment and
enterprise are responsible for damages caused by their employees in the service of the branches in which the latter are
employed or on the occasion of their functions; (b) employers are likewise liable for damages caused by their
employees and household helpers acting within the scope of their assigned task (Article 218 of the Civil Code); and (c)
employers and corporations engaged in any kind of industry are subsidiary civilly liable for felonies committed by their
employees in the discharge of their duties (Art. 103, Revised Penal Code), plaintiff herein does not maintain this action
under the provisions of any of the articles of the codes just mentioned and against all the persons who might be liable for
the damages caused, but as a result of an admitted breach of contract of carriage and against the defendant employer
alone. We, therefore, hold that the case at bar does not come within the exception of paragraph 1, Article 2219 of the
Civil Code.
The present complaint is not based either on a "quasi-delict causing physical injuries" A question of nomenclature
confronted the Commission. After a careful deliberation, it was agreed to use the term "quasi-delict" for those obligations
which do not arise from law, contracts, quasi-contracts, or criminal offenses. They are known in Spanish legal treaties as
"culpa aquiliana", "culpa-extra-contractual" or "cuasi-delitos". The phrase "culpa-extra-contractual" or its translation
"extra-contractual-fault" was eliminated because it did not exclude quasi-contractual or penal obligations. "Aquilian fault"
might have been selected, but it was thought inadvisable to refer to so ancient a law as the "Lex Aquilia". So "quasi-
delict" was chosen, which more nearly corresponds to the Roman Law classification of the obligations and is in harmony
with the nature of this kind of liability.
The Commission also thought of the possibility of adopting the word "tort" from Anglo-American law. But "tort" under
that system is much broader than the Spanish-Philippine concept of obligations arising from non-contractual negligence.
"Tort" in Anglo-American jurisprudence includes not only negligence, but also intentional criminal act, such as assault
and battery, false imprisonment and deceit. In the general plan of the Philippine legal system, intentional and malicious
acts are governed by the Penal Code, although certain exceptions are made in the Project.
In the case of Cangco vs. Manila Railroad, We established the distinction between obligation derived from negligence
and obligation as a result of a breach of contract. Thus, we said:
It is important to note that the foundation of the legal liability of the defendant is the
contract of carriage, and that the obligation to respond for the damage which plaintiff has
suffered arises, if at all, from the breach of that contract by reason of the failure of
defendant to exercise due care in its performance. That is to say, its liability is direct and
immediate, differing essentially in the legal viewpoint from the presumptive
responsibility for the negligence of its servants, imposed by Article 1903 of the Civil
Code (Art. 2180 of the new), which can be rebutted by proof of the exercise of due care
in their selection of supervision. Article 1903 is not applicable to obligations arising EX
CONTRACTU, but only to extra-contractual obligations — or to use the technical form
of expression, that article relates only to CULPA AQUILIANA' and not to CULPA
CONTRACTUAL.
The decisions in the cases of Castro vs. Acro Taxicab Co., (82 Phil., 359; 46 Off. Gaz., No. 5, p. 2023); Lilius, et al. vs.
Manila Railroad, 59 Phil., 758) and others, wherein moral damages were awarded to the plaintiffs, are not applicable
to the case at bar because said decision were rendered before the effectivity of the new Civil Code (August 30, 1950)
and for the further reason that the complaints filed therein were based on different causes of action.
In view of the foregoing the sum of P2,000 was awarded as moral damages by the trial court has to be eliminated,
for under the law it is not a compensation awardable in a case like the one at bar.
What has been said heretofore relative to the moral damages claimed by Edgardo Cariaga obviously applies with greater
force to a similar claim (4th assignment of error) made by his parents.
The claim made by said spouses for actual and compensatory damages is likewise without merits. As held by the
trial court, in so far as the LTB is concerned, the present action is based upon a breach of contract of carriage to
which said spouses were not a party, and neither can they premise their claim upon the negligence or quasi-delict of
the LTB for the simple reason that they were not themselves injured as a result of the collision between the LTB bus
and train owned by the Manila Railroad Company.
14. OMC Carriers, Inc., v. Nabua, G.R. No. 148974, July 2, 2010
Facts: On August 4, 1995 an Isuzu private tanker owned by and registered in the name of petitioner OMC Carriers
and then being driven by its employee Jerry P . Añalucas was cruising along Quirino Highway when it hit a private
vehicle, an Isuzu Gemini which was making a left turn towards a nearby Caltex gasoline station.
The impact heavily damaged the right side portion of the latter motor and mortally injured its 18-year-old driver who
was later pronounced dead on arrival at the Fairview Polymedic Hospital.
Respondent spouses Berlino and Rosario Nabua, the parents of the victim, filed a Complaint for damages against
petitioners and the General Manager of OMC Carriers, Chito Calauag, before the RTC of Quezon City.
RTC rendered a Decision in favor of the plaintiffs as against defendants and ordering the latter to pay the plaintiffs, jointly
and solidarily:
1. P110,000.00 for actual damages, or for money spent during the funeral, wake and burial of the deceased Regie
Nabua;
2. P2,000,000.00 for compensatory damages and the amount of P60,000.00 as indemnity for the death of Reggie
Nabua;
3. P100,000.00 as moral damages and another P100,000.00 as exemplary damages; and
4. P50,000.00 as attorney‘s fees;
5. Costs of the suit.
On appeal, CA rendered a Decision, partially granting the petition:
1. Absolving appellant Chito Calauag from liability for the death of Regie Nabua; and
2. Deleting, for want of basis, the following damages awarded by the court a quo, viz:
a. P2,000,000.00 as lost earnings of the deceased; and
b. P100,000.00 as exemplary damages.
Petitioner‘s MR was denied. Hence, this petition.
Issue: Whether the award of damages was proper.
Held: MODIFIED.
NEGLIGENCE OF AÑALUCAS‘ AS THE PROXIMATE CAUSE

Both the RTC and CA had correctly found that the proximate cause of the accident was the negligence of petitioner
Añalucas. The testimony of eyewitness Betiranta shows that the victim, Reggie Nabua, was driving at a slow pace when
he was entering the Caltex station. Another eyewitness corroborated the testimony of Betiranta that the victim was slowly
driving his car towards the gas station. He also emphasized that the truck which bumped the Gemini car was very fast.
Even petitioners‘ own witness, PO3 Edgardo Talacay, testified that petitioners‘ truck left skid marks, which would not be
present if the truck was running in a normal speed.
PETITIONER OMC FAILED TO EXERCISE DILIGENCE IN THE SUPERVISION OF THEIR EMPLOYEES

While they were able to amply demonstrate the implantation of the company‘s hiring procedure insofar as appellant Jerry
Añalucas was concerned , the same witnesses failed to similarly individualize the company‘s purported supervisory
policies. The existence of hiring procedure and supervisory policies cannot be casually invoked to overturn the
presumption of negligence on the part of the employer.
In the case at bar, while this Court may be satisfied that petitioner company had exercised due diligence in the selection of
petitioner Añalucas , the focus now shifts as to whether or not petitioner company had satisfied the test of due
supervision . Petitioner company‘s attempt to prove that it had exercised due diligence of a good father of a family in the
supervision of petitioner Añalucas is summarized in its Memorandum : New employee was given formal/written papers as
to things expected from him as a driver; circulars and guidelines are placed in each of the tankers; every carbarn time, the
Chief Mechanic and Asst. Operations Manager check the tanker for any sign of damage to ascertain if the driver had been
involved in an accident; examine the licenses of the drivers to know if they had been issued Traffic Violation Tickets; if
the license has expired or a ticket had been issued and has expired, the driver is grounded and substitute driver is assigned
to the tanker to temporarily take the place of the grounded driver.
After a thorough and extensive review of the records, this Court is unconvinced that petitioner company had
satisfactorily discharged its burden. Memorandum alluded to by petitioner company amounts to nothing more than a
―reminder memo on offenses punishable by dismissal wherein specific offenses are spelled out to which erring
employees may be punished by the company. The alleged circulars do not, in any way, concern safety procedures to
prevent accident or damage to property or injury to people on the road. The testimonies relating to the checking of
damages during carbarn time, the inspection if drivers were given traffic violation tickets and inspection of the validity of
the drivers‘ licenses are all oral evidence without any object or documentary evidence to support them.
ISSUE OF DAMAGES
DEATH INDEMNITY
Petitioners contend that the CA erred when it affirmed the RTC‟s award of P60,000.00 as death indemnity and
P100,000.00 as moral damages. Petitioners contend that such an award was contrary to prevailing jurisprudence. In
addition, petitioners also argue that the award of attorney‟s fees was without legal basis. The same is meritorious. Death
indemnity has been fixed by jurisprudence at P50,000.00. Hence, the amount awarded by the RTC and the CA must be
reduced accordingly.
MORAL DAMAGES
On the issue of moral damages, prevailing jurisprudence fixes moral damages of P50,000.00 for death. It must be
stressed that moral damages are not intended to enrich a plaintiff at the expense of the defendant. They are awarded to
allow the plaintiff to obtain means, diversion or amusements that will serve to alleviate the moral suffering he/she has
undergone due to the defendant‘s culpable action and must, perforce, be proportional to the suffering inflicted. Thus,
given the circumstances of the case at bar, an award of P50,000.00 as moral damages is proper.
ATTORNEY‘S FEES
Next, the rule on the award of attorney‘s fees is that there must be a justification for the same. In the absence of a
statement why attorney‘s fees were awarded, the same should be disallowed. On this note, after reading through the
text of the CA decision, this Court finds that the same is bereft of any findings of fact and law to justify the award of
attorney‘s fees. While it may be safe to surmise that the RTC granted attorney‘s fees as a consequence of its grant of
exemplary damages, such cannot be said for the CA, since the same deleted the award of exemplary damages after finding
that petitioner Añalucas was not grossly negligent . The CA did not explain why it was still awarding attorney‘s fees to
respondents, therefore, such an award must be deleted.
ACTUAL DAMAGES
While petitioners did not put in error the award of actual damages, this Court feels that the same should nevertheless be
reviewed as an appellate court is clothed with ample authority to review rulings even if they are not assigned as errors .
This is especially so if the court finds that their consideration is necessary in arriving at a just decision of the case
before it.
For one to be entitled to actual damages, it is necessary to prove the actual amount of loss with a reasonable degree of
certainty, premised upon competent proof and the best evidence obtainable by the injured party. 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.
In the case at bar, respondents only submitted the following evidence to substantiate their claim for actual damages:
Based on the foregoing, the RTC erred when it awarded the amount of P110,000.00 as actual damages, as the said
amount was not duly substantiated with receipts. Hence, the amount of actual damages that can only be recovered is
P59,173.50.
Lastly, although respondents did not appeal the CA Decision, they now pray in their Memorandum that this Court
reinstate the RTC award of P2,000,000.00 as compensatory damages which was deleted by the CA. Respondents
point out that the victim, Reggie Nabua, was 18 years old and at the time of his death, a freshman taking up Industrial
Engineering.
On this point, Metro Manila Transit Corporation v. Court of Appeals is instructive, to wit:
Art. 2206 of the Civil Code provides that in addition to the indemnity for death caused by
a crime or quasi delict, 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; Compensation
of this nature is awarded not for loss of earnings but for loss of capacity to earn
money. Evidence must be presented that the victim, if not yet employed at the time of
death, was reasonably certain to complete training for a specific profession.
In People v. Teehankee, no award of compensation for loss of earning capacity was

granted to the heirs of a college freshman because there was no sufficient evidence on
record to show that the victim would eventually become a professional pilot. But
compensation should be allowed for loss of earning capacity resulting from the death of a
minor who has not yet commenced employment or training for a specific profession if
sufficient evidence is presented to establish the amount thereof
In sharp contrast with the situation obtaining in People v. Teehankee, where the
prosecution merely presented evidence to show the fact of the victim‘s graduation from
high school and the fact of his enrollment in a flying school, the spouses Rosales did not
content themselves with simply establishing Liza Rosalie‘s enrollment at UP Integrated
School. They presented evidence to show that Liza Rosalie was a good student,
promising artist, and obedient child. She consistently performed well in her studies since
grade school.
In the case at bar, respondents only testified to the fact that the victim, Reggie Nabua, was a freshman taking up
Industrial Engineering at the Technological Institute of the Philippines in Cubao. Unlike in Metro Transit where
evidence of good academic record, extra-curricular activities, and varied interests were presented in court, herein
respondents offered no such evidence. Hence, the CA was correct when it deleted the award of compensatory damages
amounting to P2,000,000.00, as the same is without any basis.
15. Continental Cement Corporation v. ASEA Brown Boveri, Inc., G.R. No. 171660, October 17, 2011
Facts: Continental Cement Corporation (CCC), a corporation engaged in the business of producing cement, obtained the
services of respondents Asea Brown Boveri, Inc. (ABB) and BBC Brown Boveri, Corp. to repair its 160 KW Kiln DC
Drive Motor (Kiln Drive Motor). Due to the repeated failure of respondents to repair the Kiln Drive Motor, petitioner
filed with RTC a Complaint for sum of money and damages, against respondent corporations and respondent Tord B.
Eriksson (Eriksson), Vice-President of the Service Division of the respondent ABB.
Petitioner alleged that:
Plaintiff delivered the 160 KW Kiln DC Drive Motor to the defendants to be repaired.
The defendant, Tord B. Eriksson, was personally directing the repair of the said Kiln
Drive Motor and that apparently, the defendant Asea Brown Boveri, Inc. has no separate
personality because of the 4,000 shares of stock, 3996 shares were subscribed by Honorio
Poblador, Jr. The four other stockholders subscribed for one share of stock each only.
After the first repair, the test failed. Plaintiff removed the DC Drive Motor and replaced it
with its old motor. It was only on October 9, 1990 that the plaintiff resumed
operation. The plaintiff lost 1,040 MTD per day from October 5 to October 9, 1990.
After the defendants had undertaken the second repair of the motor in question, it was
installed in the kiln. The test failed again. plaintiff suffered production losses for five
days at the rate of 1,040 MTD daily. The defendants were given a third chance to repair.
Again, the test failed.
RESPONDENTS CLAIMED that under Clause 7 of the General Conditions, attached to the letter of offer dated July 4, 1990
issued by respondent ABB to petitioner, the liability of respondent ABB ―does not extend to consequential damages
either direct or indirect.‖ Moreover, as to respondent Eriksson, there is no lawful and tenable reason for petitioner to
sue him in his personal capacity because he did not personally direct the repair of the Kiln Drive Motor.
Issue: Whether petitioner is entitled to damages/penalties
Held: YES. Petitioner and respondent ABB entered into a contract for the repair of petitioner‘s Kiln Drive Mot or,
evidenced by Purchase Order Nos. 17136-37. Respondent ABB, however, not only incurred delay in performing its
obligation but likewise failed to repair the Kiln Drive Motor; thus, prompting petitioner to sue for damages.
CLAUSE 7 NOT BINDING ON PETITIONER

Respondents contend that under Clause 7 of the General Conditions their liability ―does not extend to consequential
damages either direct or indirect.‖ This contention, however, is unavailing because respondents failed to show that
petitioner was duly furnished with a copy of said General Conditions. Hence, it is not binding on petitioner. Having
breached the contract it entered with petitioner, respondent ABB is liable for damages pursuant to Articles 1167, 1170,
and 2201 of the Civil Code, which state:
Art. 1167. If a person obliged to do something fails to do it, the same shall be executed at
his cost. This same rule shall be observed if he does it in contravention of the tenor of the
obligation. Furthermore, it may be decreed that what has been poorly done be undone.
Art. 1170. Those who in the performance of their obligations are guilty of fraud,
negligence, or delay, and those who in any manner contravene the tenor thereof, are
liable for damages.
Art. 2201. In contracts and quasi-contracts, the damages for which the obligor who acted
in good faith is liable shall be those that are the natural and probable consequences of the
breach of the obligation, and which the parties have foreseen or could have reasonably
foreseen at the time the obligation was constituted. In case of fraud, bad faith, malice or
wanton attitude, the obligor shall be responsible for all damages which may be
reasonably attributed to the non-performance of the obligation.
Though entitled, petitioner in this case is not claiming reimbursement for the repair allegedly done by Newton Contractor,
but is instead asking for damages for the delay caused by respondent ABB.
PETITIONER IS ENTITLED TO PENALTIES UNDER PURCHASE ORDER NOS. 17136-37.

As per Purchase Order Nos. 17136-37, petitioner is entitled to penalties in the amount of P987.25 per day from the
time of delay, August 30, 1990, up to the time the Kiln Drive Motor was finally returned to petitioner . Although the
testing of Kiln Drive Motor was done on March 13, 1991, the said motor was actually delivered to petitioner as early as
January 7, 1991. The installation and testing was done only on March 13, 1991 upon the request of petitioner because the
Kiln was under repair at the time the motor was delivered; hence, the load testing had to be postponed.
Under Article 1226 of the Civil Code, the PENALTY CLAUSE TAKES THE PLACE OF INDEMNITY FOR DAMAGES and the
PAYMENT OF INTERESTS in case of non-compliance with the obligation, unless there is a stipulation to the contrary.
Since there is no stipulation to the contrary, the penalty in the amount of P987.25 per day of delay covers all other
damages (i.e. production loss, labor cost, and rental of the crane) claimed by petitioner.
PETITIONER IS NOT ENTITLED TO RECOVER PRODUCTION LOSS, LABOR COST AND THE RENTAL OF CRANE.
Article 1226 of the Civil Code further provides that if the obligor refuses to pay the penalty, such as in the instant case,
damages and interests may still be recovered on top of the penalty. Damages claimed must be the natural and probable
consequences of the breach, which the parties have foreseen or could have reasonably foreseen at the time the obligation
was constituted. Thus, in addition to the penalties, petitioner seeks to recover as damages production loss, labor cost and
the rental of the crane.
Competent proof and a reasonable degree of certainty are needed to justify a grant of actual or compensatory
damages; speculations, conjectures, assertions or guesswork are not sufficient. Consequential damages, such as loss
of profits on account of delay or failure of delivery, may be recovered only if such damages were reasonably foreseen or
have been brought within the contemplation of the parties as the probable result of a breach at the time of or prior to
contracting respondent ABB, at the time it agreed to repair petitioner‘s Kiln Drive Motor, could not have reasonably
foreseen that it would be made liable for production loss, labor cost and rental of the crane in case it fails to repair
the motor or incurs delay in delivering the same, especially since the motor under repair was a SPARE MOTOR.
PETITIONER IS NOT ENTITLED TO ATTORNEY‘S FEES

Jurisprudence requires that the factual basis for the award of attorney‘s fees must be set forth in the body of the
decision and not in the dispositive portion only. No explanation was given by the RTC in awarding attorney‘s fees in
favor of petitioner.
RESPONDENT ERIKSSON CANNOT BE MADE JOINTLY AND SEVERALLY LIABLE FOR THE PENALTIES
There is no showing that Eriksson directed or participated in the repair of the Kiln Drive Motor or that he is guilty of
bad faith or gross negligence in directing the affairs of respondent ABB. A corporation has a personality separate and
distinct from the persons composing or representing it; hence, personal liability attaches only in exceptional cases, such as
when the director, trustee, or officer is guilty of bad faith or gross negligence in directing the affairs of the corporation.
In sum, petitioner is entitled to penalties in the amount of P987.25 per day from August 30, 1990 up to January 7,
1991 (131 days).
16. Mendoza v. Philippine Air Lines, 90 Phil. 836 (1952)

Facts: Plaintiff Jose Mendoza was the owner of the Cita Theater located in the City of Naga, Camarines Sur, where he
used to exhibit movie pictures booked from movie producers or film owners in Manila. Upcoming was the fiesta or town
holiday of the City of Naga on September 17 & 18. As a good businessman, appellant, taking advantage of these
circumstances, decided to exhibit a film which would fit the occasion and have a special attraction and significance
to the people attending said fiesta.
A month before the holiday, he contracted with the LVN pictures, Inc., a movie producer in Manila for him to show
during the town fiesta the Tagalog film entitled "HIMALA NG BIRHEN" or Miracle of the Virgin. He made extensive
preparations; he had 2000 posters printed and later distributed not only in the City of Naga but also in the neighboring
towns. He also advertised in a weekly of general circulation in the province.
In pursuance of the agreement between the LVN Pictures Inc. and Mendoza, LVN Pictures Inc. delivered to the
Philippine Airlines (PAL) whose planes carried passengers and cargo and made regular trips from Manila to the Pili Air
Port near Naga, Camarines Sur, a can containing the film "Himala ng Birhen" consigned to the Cita Theater. This
can of films was loaded on one flight of the defendant, wherein said shipment was scheduled to arrive on the afternoon
of the first day of the festival.
For reasons not explained by the defendant, but which would appear to be the fault of its employees or agents, this can of
film was not unloaded at Pili Air Port and it was brought back to Manila. Mendoza who had completed all
arrangements for the exhibition of the film beginning in the evening of September 17th, to exploit the presence of the big
crowd that came to attend the town fiesta, went to the Air Port and inquired from the defendant's station master
there about the can of film.
After investigation and search in the Manila office, the film was finally located the following day, September 18th, and
then shipped to the Pili Air Port on September 20th. Mendoza received it and exhibited the film but he had missed
his opportunity to realize a large profit as he expected for the people after the fiesta had already left for their towns.
To recoup his losses, Mendoza brought this action against the PAL.
The lower court found that because of his failure to exhibit the film "Himala ng Birhen" during the town fiesta,
Mendoza suffered damages or rather failed to earn profits in the amount of P3,000.00, but finding the PAL not liable
for said damages, dismissed the complaint.
To avoid liability, PAL, called the attention of the trial court to the terms and conditions of paragraph 6 of the Way Bill,
claiming that since there was no obligation on its part to carry the film in question on any specified time, it could not be
held accountable for the delay of about three days. The trial court, however, found and held that although the defendant
was not obligated to load the film on any specified plane or on any particular day, once said can film was loaded and
shipped on one of its planes making trip to Camarines, then it assumed the obligation to unload it at its point of
destination and deliver it to the consignee, and its unexplained failure to comply with this duty constituted negligence.
The trial court relied on the ruling in the case of Daywalt, wherein it held that not because plaintiff failed to realize
profits in the sum of P3,000.00 due to the negligence of the defendant, should the latter be made to reimburse him said
sum. Applying provisions of Art. 1107 of the Civil Code which provides that losses and those foreseen, or which might
have been foreseen, at the time of constituting the obligation, and which are a necessary consequence of the failure to
perform it, the trial court held that inasmuch as these damages suffered by Mendoza were not foreseen or could not have
been foreseen at the time that the defendant accepted the can of film for shipment, for the reason that neither the shipper
LVN Pictures Inc. nor the consignee Mendoza had called its attention to the special circumstances attending the
shipment and the showing of the film during the town fiesta of Naga, plaintiff may not recover the damages sought.
Issue: Whether PAL is liable for damages.
Held: NO. PAL contends that Art. 358 of the Code of Commerce should govern the award of the damages in his favor.
Said article provides that if there is no period fixed for the delivery of the goods, the carrier shall be bound to forward
them in the first shipment of the same or similar merchandise which he may make to the point of delivery , and that
upon failure to do so, the damages caused by the delay should be suffered by the carrier.
This is a general provision for ordinary damages and is no different from the provisions of the Civil Code, particularly
Art. 1101 thereof, providing for the payment of damages caused by the negligence or delay in the fulfillment of one's
obligation. Even applying the provisions of the Code of Commerce, as already stated, the pertinent provisions
regarding damages only treats of ordinary damages or damages in general, NOT SPECIAL DAMAGES like those
suffered by the plaintiff herein. Article 2 of the Code of Commerce provides that commercial transactions are to be
governed by the provisions of the Code of Commerce, but in the absence of applicable provisions, they will be governed
by the usages of commerce generally observed in each place; and in default of both, by those of the Civil Law.
The trial court correctly found that the defendant company could not have foreseen the damages that would be
suffered by Mendoza upon failure to deliver the can of film on the 17th of September, for the reason that the plans of
Mendoza to exhibit that film during the town fiesta and his preparations, specially the announcement of said exhibition
by posters and advertisement in the newspaper, were not called to the defendant's attention.
A similar case is at hand. In the case of Chapman vs. Fargo, the plaintiff in Troy, New York, delivered picture films to the
defendant Fargo, an express company, consigned and to be delivered to him in Utica. At the time of the shipment the
attention of the express company was called to the fact that the shipment involved motion picture films to be exhibited in
Utica, and that they should be sent to their destination, rush. There was delay in their delivery and it was found that the
plaintiff because of his failure to exhibit the film in Utica due to the delay suffered damages or loss of profits. But the
highest court in the State of New York refused to award him special damages. Said appellate court observed:
But before defendant could be held to special damages, such as the present alleged loss of
profits on account of delay or failure of delivery, it must have appeared that he had
notice at the time of delivery to him of the particular circumstances attending the
shipment, and which probably would lead to such special loss if he defaulted. Or, as the
rule has been stated in another form, in order to impose on the defaulting party further
liability than for damages naturally and directly, i.e., in the ordinary course of things,
arising from a breach of contract, such unusual or extraordinary damages must have
been brought within the contemplation of the parties as the probable result of a
breach at the time of or prior to contracting. Generally, notice then of any special
circumstances which will show that the damages to be anticipated from a breach would
be enhanced has been held sufficient for this effect.
As may be seen, that New York case is a stronger one than the present case for the reason that the attention of the common
carrier in said case was called to the nature of the articles shipped, the purpose of shipment, and the desire to rush the
shipment, circumstances and facts absent in the present case.
Here, the contract of carriage between the LVN Pictures Inc. and the defendant carrier contains the stipulations of
the delivery to Mendoza as consignee. His demand for the delivery of the can of film to him at the Pili Air Port may be
regarded as a notice of his acceptance of the stipulation of the delivery in his favor contained in the contract of carriage,
such demand being one of the fulfillment of the contract of carriage and delivery.
In this case he also made himself a party to the contract, or at least has come to court to enforce it. His cause of action
must necessarily be founded on its breach.
One can readily sympathize with the appellant herein for his loss of profits which he expected to realize. But he overlooked
the legal angle. In situations like the present where failure to exhibit films on a certain day would spell substantial
damages or considerable loss of profits, including waste of efforts on preparations and expenses incurred in
advertisements, exhibitors, for their security, may either get hold of the films well ahead of the time of exhibition in order
to make allowance for any hitch in the delivery, or else enter into a special contract or make a suitable arrangement with
the common carrier for the prompt delivery of the films, calling the attention of the carrier to the circumstances
surrounding the case and the approximate amount of damages to be suffered in case of delay.
17. Villa Rey Transit v. Court of Appeals, G.R. No. L-25499, February 18, 1970
Facts: VRT owns Izuzu First Class passenger bus driven by one Casim. Policronio Quintos, as a paying passenger, sat on
the first seat, second row, right side of the bus. While travelling, it hit the rear of a bullcart filled with hay and bamboo
poles. As a result, a pole went through the windshield of the bus and straight to the face of Quintos. He obviously died.
Private respondents herein are the sisters and onlysurviving heirs of Quintos. They filed an action against VRT for breach
of contract of carriage and for recovery of damages amounting to 63,750.
Trial court ruled that —
Although as elsewhere shown in this decision the damages for wake and burial expenses,
loss of income, death of the victim, and attorneys fee reach the aggregate of F79.615.95,
this Court finds it just that said damages be assessed at total of only P63,750.00 as prayed
for in plaintiffs‘ amended complaint.
WHEREFORE, judgment is hereby rendered ordering the defendant to pay to the

plaintiffs the amount of P63.750.00 as damages for breach of contract of carriage
resulting from the death of Policronio Quintos, Jr.
CA affirmed. Hence this petition.
Issue: Whether the amount of damages is proper.
Held: The determination of such amount depends, mainly upon TWO (2) FACTORS, namely: (1) the number of years on
the basis of which the damages shall be computed and (2) the rate at which the losses sustained by said respondents
should be fixed.
FIRST FACTOR: LIFE EXPECTANCY

The first factor was based by the trial court — the view of which was concurred in by the Court of Appeals — upon the
LIFE EXPECTANCY of Policronio Quintos, Jr., which was placed at 33-1/3 years — he being over 29 years of age (or
around 30 years for purposes of computation) at the time of his demise — by applying the formula (2/3 x [80-30] = life
expectancy) adopted in the American Expectancy Table of Mortality or the actuarial of Combined Experience Table of
Mortality.
Upon the other hand, petitioner maintains that the lower courts had erred in adopting said formula and in not acting in
accordance with Alcantara v. Surro in which the damages were computed on a four (4) year basis, despite the fact that the
victim therein was 39 years old, at the time of his death, and had a life expectancy of 28.90 years.
The case cited is not controlling in the one at bar. In the Alcantara case, none of the parties had questioned the propriety
of the 4-year basis adopted by the trial court in making its award of damages. Both parties appealed, but only as regards
the amount thereof. The plaintiffs assailed the non-inclusion, in its computation, of the bonus that the corporation, which
was the victim‘s employer, had awarded to deserving officers and employees, based upon the profits earned less than two
(2) months before the accident that resulted in his death. The defendants, in turn, objected to the sum awarded for the
fourth year, which was treble that of the previous years, based upon the increases given, in that fourth year, to other
employees of the same corporation. Neither this objection
Thus, life expectancy is, not only relevant, but, also, an important element in fixing the amount recoverable by private
respondents herein. Although it is not the sole element determinative of said amount, no cogent reason has been given to
warrant its disregard and the adoption, in the case at bar, of a purely arbitrary standard, such as a fouryear rule. In short,
the CA has not erred in basing the computation of petitioner‘s liability upon the life expectancy of Policronio
Quintos, Jr. nor said claim for inclusion of the bonus was sustained by this Court. Accordingly, the same had not thereby
laid down any rule on the length of time to be used in the computation of damages.
SECOND FACTOR: RATE AT WHICH DAMAGES ARE COMPUTED

Petitioner impugns the decision appealed from upon the ground that the damages awarded therein will have to be paid
now, whereas most of those sought to be indemnified will be suffered years later: This argument is basically true, and this
is, perhaps, one of the reasons why the Alcantara case points out the absence of a ‗‗fixed basis‖ for the ascertainment of
the damages recoverable in litigations like the one at bar.
Just the same, the force of the said argument of petitioner herein is offset by the fact that, although payment of the
award in the case at bar will have to take place upon the finality of the decision therein , the liability of petitioner
herein had been fixed at the rate only of P2,184.00 a year, which is the annual salary of Policronio Quintos, Jr. at the
time of his death, as a young ―training assistant‖ in the Bacnotan Cement Industries, Inc.
In other words, unlike the Alcantara case, on which petitioner relies, the lower courts did not consider, in the present
case, Policronio‘s potentiality and capacity to increase his future income. Indeed, upon the conclusion of his training
period, he was supposed to have a better job and be promoted from time to time, and, hence, to earn more, if not —
considering the growing importance of trade, commerce and industry and the concomitant rise in the income level of
officers and employees therein — much more.
At this juncture, it should be noted, also, that We are mainly concerned with the determination of the losses or damages
sustained by the private respondents, as dependents and intestate heirs of the deceased, and that said damages consist,
not of the full amount of his earnings, but of the support they received or would have received from him had he not
died in consequence of the negligence of petitioner‘s agent. In fixing the amount of that support, We must reckon with
the ―necessary expenses of his own living‖, which should be deducted from his earnings.
Thus, it has been consistently held that EARNING CAPACITY, as an element of damages to one‘s estate for his death by
wrongful act is necessarily his net earning capacity or his capacity to acquire money, “less the necessary expense for
his own living Stated otherwise, the amount recoverable is not loss of the entire earning, but rather the loss of that
portion of the earnings which the beneficiary would have received. In other words, only net earnings, not gross
earning, are to be considered that is, the total of the earnings less expenses necessary in the creation of such earnings or
income and less living and other incidental expenses.
ALL THINGS CONSIDERED, We are of the opinion that it is fair and reasonable to fix the deductible living and other
expenses of the deceased at the sum of Pl,184.00 a year, or about P100.00 a month, and that, consequently, the loss
sustained by his sisters may be roughly estimated at Pl,000.00 a year or P33,333.33 for the 33-1/3 years of his life
expectancy.
To this sum of F33,333.33, the following should be added: (a) P12,000.00, pursuant to Arts. 104 and 107 of the Revised
Penal Code, in relation to Article 2206 of our Civil Code, as construed and applied by this Court; (b) Pl,727.95, actually
spent by private respondents for medical and burial expenses; and (c) attorney‟s fee, which was fixed by the trial court,
at P500.00, but which, in view of the appeal taken by petitioner herein, first to the CA and later to this Court, should be
increased to P2,500.00.
In other words, the amount adjudged in the decision appealed from should be reduced to the aggregate sum of
P49,561.28, with interest thereon, at the legal rate, from December 29, 1961, date of the promulgation of the decision of
the trial court.
18. Cruz v. Sun Holidays, Inc., G.R. No. 186312, June 29, 2010
Facts: Spouses Dante and Leonora Cruz (petitioners) lodged a Complaint against Sun Holidays, Inc. (respondent) for
damages arising from the death of their son Ruelito C. Cruz (Ruelito) who perished with his wife on September 11,
2000 on board the boat M/B Coco Beach III that capsized en route to Batangas from Puerto Galera , Oriental Mindoro
where the couple had stayed at Coco Beach Island Resort (Resort) owned and operated by respondent.
The stay of the newly wed Ruelito and his wife at the Resort from September 9 to 11, 2000 was by virtue of a tour
package-contract with respondent that included transportation to and from the Resort and the point of departure in
Batangas.
Miguel C. Matute (Matute), a scuba diving instructor and one of the survivors, gave his account of the incident that led to
the filing of the complaint as follows:
Shortly after the boat sailed, it started to rain. As it moved farther away from Puerto
Galera and into the open seas, the rain and wind got stronger, causing the boat to tilt from
side to side and the captain to step forward to the front, leaving the wheel to one of the
crew members.
The waves got more unwieldy. After getting hit by two big waves which came one after
the other, M/B Coco Beach III capsized putting all passengers underwater.
The passengers, who had put on their life jackets, struggled to get out of the boat. Upon
seeing the captain, Matute and the other passengers who reached the surface asked
him what they could do to save the people who were still trapped under the boat.
The captain replied "Iligtas niyo na lang ang sarili niyo" (Just save yourselves).
Help came after about 45 minutes when two boats owned by Asia Divers in Sabang, Puerto Galera passed by the capsized
M/B Coco Beach III. Boarded on those two boats were 22 persons, consisting of 18 passengers and four crew members,
who were brought to Pisa Island. Eight passengers, including petitioners‘ son and his wife, died during the incident.
At the time of Ruelito‘s death, he was 28 years old and employed as a contractual worker for Mitsui Engineering &
Shipbuilding Arabia, Ltd. in Saudi Arabia, with a basic monthly salary of $900.
They filed the Complaint, as earlier reflected, alleging that respondent, as a common carrier, was guilty of negligence in
allowing M/B Coco Beach III to sail notwithstanding storm warning bulletins issued by the Philippine Atmospheric,
Geophysical and Astronomical Services Administration (PAGASA).
Issues: (1) Whether Sun Holidays is a common carrier. (YES, discussion omitted)
(2) Whether Sun Holidays was negligent. (YES, discussion omitted)
(3) Whether the amount of damages are proper.
Held: Article 1764 vis-à-vis Article 2206 of the Civil Code holds the common carrier in breach of its contract of
carriage that results in the death of a passenger liable to pay the following: (1) indemnity for death, (2) indemnity for
loss of earning capacity and (3) moral damages.
Petitioners are entitled to indemnity for the death of Ruelito which is fixed at P50,000.
As for DAMAGES REPRESENTING UNEARNED INCOME, the formula for its computation is:
Net Earning Capacity = life expectancy x (gross annual income - reasonable and necessary living expenses).
Life expectancy is determined in accordance with the formula: 2 / 3 x [80 — age of deceased at the time of death]
The FIRST FACTOR, i.e., life expectancy, is computed by applying the formula (2/3 x [80 — age at death]) adopted in the
American Expectancy Table of Mortality or the Actuarial of Combined Experience Table of Mortality.
The SECOND FACTOR is computed by multiplying the life expectancy by the net earnings of the deceased, i.e., the total
earnings less expenses necessary in the creation of such earnings or income and less living and other incidental expenses.
The loss is not equivalent to the entire earnings of the deceased, but only such portion as he would have used to
support his dependents or heirs. Hence, to be deducted from his gross earnings are the necessary expenses supposed
to be used by the deceased for his own needs.
In COMPUTING THE THIRD FACTOR – necessary living expense, Smith Bell Dodwell Shipping Agency Corp. v. Borja
teaches that when, as in this case, there is no showing that the living expenses constituted the smaller percentage of
the gross income, the living expenses are fixed at HALF OF THE GROSS INCOME.
Applying the above guidelines, the Court determines Ruelito's life expectancy as follows:
Life expectancy = 2/3 x [80 - age of deceased at the time of death]
2/3 x [80 - 28]
2/3 x [52]
Life expectancy = 35
Documentary evidence shows that Ruelito was earning a basic monthly salary of $900 which, when converted to
Philippine peso applying the annual average exchange rate of $1 = P44 in 2000, amounts to P39,600. Ruelito‘s net earning
capacity is thus computed as follows:
Net Earning Capacity = life expectancy x (gross annual income - reasonable and necessary living expenses).
= 35 x ( P475,200 - P 237,600)
= 35 x ( P237,600)
Net Earning Capacity = P 8,316,000
Respecting the award of moral damages, since respondent common carrier‟s breach of contract of carriage resulted in
the death of petitioners‟ son, following Article 1764 vis-à-vis Article 2206 of the Civil Code, petitioners are entitled to
moral damages.
Under the circumstances, it is reasonable to award petitioners the amount of P100,000 as moral damages and P100,000
as exemplary damages.
Pursuant to Article 2208 of the Civil Code, attorney's fees may also be awarded where exemplary damages are awarded.
The Court finds that 10% of the total amount adjudged against respondent is reasonable for the purpose.
Interest computation:
Finally, Eastern Shipping Lines, Inc. v. Court of Appeals teaches that 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 payment of
interest in the concept of actual and compensatory damages, subject to the following rules, to wit —
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 12% 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 12% per annum from such
finality until its satisfaction, this interim period being deemed to be by then an equivalent to a forbearance of
credit.
Since the amounts payable by respondent have been determined with certainty only in the present petition, the
interest due shall be computed upon the finality of this decision at the rate of 12% per annum until satisfaction, in
accordance with paragraph number 3 of the immediately cited guideline in Easter Shipping Lines, Inc.
19. De Caliston v. Court of Appeals, G.R. No. L-63135, June 24, 1983
Facts: While driving a passenger bus in Bacolod City, Geronimo Dalcamio ran over Juana Sonza Vda. de Darrocha
(a USVA pensioner) who died instantly, survived by her only child, Gloria Darrocha de Caliston. Prosecuted for
homicide thru reckless imprudence, Dalmacio was convicted by the CFI of Negros Occidental, sentenced to
imprisonment and ordered to pay the herein petitioner P15,000.00 for the death of the victim, P5,000.00 as moral damages,
P5,000.00 for burial expenses and P10,000.00 for loss of pension
CA modified by absolving Dalmacio from the payment of the P10,000.00 for loss of pension and credited him for the
amount of P5,000.00 previously paid to the herein petitioner under a vehicular insurance policy obtained by the bus
owner.
Issue: Whether the deletion of the 10,000 for loss of pension was proper.
Held: NO. The deletion of the P10,000.00 awarded for loss of pension is unjustified.
Article 2206 of the Civil Code : ―The amount of damages for death caused by a crime or quasidelict shall be at least
three thousand pesos, even though there may have been mitigating circumstances. In addition: (1) On 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.
. .‖
The pension of the decedent being a sure income that was cut short by her death for which Dalmacio was responsible,
the surviving heir of the former is entitled to the award of P10,000.00 which is just equivalent to the pension the
decedent would have received for one year if she did not die.
The P5,000.00 paid to the herein petitioner by the insurer of the passenger bus which figured in the accident may be
deemed to have come from the bus owner who procured the insurance. Since the civil liability (ex-delicto) of the latter
for the death caused by his driver is subsidiary and, at bottom, arises from the same culpa, the insurance proceeds
should be credited in favor of the errant driver.
The petition is hereby granted partially in that the P10,000.00 award for loss of pension deleted in the appealed Court
of Appeals decision is hereby reinstated.
20. Tamayo v. Señora, G.R. No. 176946, November 15, 2010

Facts: At about 11AM., Antonieto M . Señora, then 43 years old and a police chief inspector of the PNP, was riding a
motorcycle and crossing the intersection of Sucat Road towards Filipinas Avenue, when a tricycle allegedly bumped his
motorcycle from behind. As a result, the motorcycle was pushed into the path of an Isuzu Elf Van (delivery van),
which was cruising along Sucat Road and heading towards South Superhighway. The delivery van ran over Señora ,
while his motorcycle was thrown a few meters away. He was recovered underneath the delivery van and rushed to the
Medical Center of Parañaque, where he was pronounced dead on arrival.
The tricycle was driven by Leovino F. Amparo, who testified that it was the delivery van that bumped Señora‘s
motorcycle. He said that he did not see how the motorcycle could have been hit by his tricycle since he was looking at
his right side, but when he heard a sound , he looked to his left and saw Señora already underneath the delivery van . He
also said that when he was brought to the police station for investigation, he brought his tricycle to disprove the claim
of the delivery van driver by showing that his tricycle sustained no damage.
The delivery van, on the other hand, was driven by Elmer O. Polloso and registered in the name of Cirilo Tamayo.
While trial was ongoing, Cirilo was suffering from lung cancer and was bedridden. His wife, petitioner Constancia,
testified on his behalf. Constancia narrated that she and her husband were managing a single proprietorship known as
Tamayo and Sons Ice Dealer. She testified that it was Cirilo who hired their drivers. She claimed that, as employer, her
husband exercised the due diligence of a good father of a family in the selection, hiring, and supervision of his employees,
including driver Polloso. Cirilo would tell their drivers not to drive fast and not to be too strict with customers.
One of Cirilo‘s employees, Nora Pascual, also testified. She alleged that she was working as auditor and checker for
Tamayo and Sons Ice Dealer. She testified that she and another employee were with Polloso in the delivery van at the
time of the incident. She narrated that, while they were traversing Sucat Road, she saw a motorcycle going towards
Filipinas Avenue. Pascual said that, when they reached the intersection of Sucat Road and Filipinas Avenue, Polloso blew
the horn. She then saw a tricycle bump the rear of the motorcycle. She said that Polloso stopped the delivery van.
When they alighted, they saw the motorcycle already under the delivery van. Pascual further testified that Polloso
was a careful driver who drove the truck slowly and followed traffic rules. She also said that Cirilo called for a meeting
before the delivery trucks left and told his drivers to be careful in their driving and to be courteous to their customers.
Issue: (1) Whether Polloso was negligent.

(2) Whether Cirillo is solidarily liable as an employer.
(3) Whether the computation for net earning capacity is proper.
Held: The Court holds that the RTC and the CA correctly found Polloso negligent.
To be credible, testimonial evidence should not only come from the mouth of a credible witness but it should also be
credible, reasonable, and in accord with human experience. It should be positive and probable such that it is difficult for a
rational mind not to find it credible.
If, as Pascual testified, the truck stopped when the tricycle bumped the motorcycle from behind, then there would have
been no accident. Even if the motorcycle was nudged into the path of the truck, as she claimed, there would have been no
impact if the truck itself was not moving, and certainly not an impact that would pin the motorcycle‟s driver under the
truck and throw the motorcycle a few meters away.
The Court likewise finds that the CA did not err in upholding Cirilo‘s solidary liability for Señora‘s death . The RTC
correctly disregarded the testimonies of Cirilo‘s wife and his employee, leaving no other evidence to support the claim
that he had exercised the degree of diligence required in hiring and supervising his employees.
Finally, the Court SUSTAINS THE AWARD FOR LOSS OF EARNING CAPACITY by the CA.
The AWARD OF DAMAGES FOR LOSS OF EARNING CAPACITY is concerned with the determination of losses or damages
sustained by respondents, as dependents and intestate heirs of the deceased. This consists not of the full amount of his
earnings, but of the support which they received or would have received from him had he not died as a consequence
of the negligent act. Thus, the amount recoverable is not the loss of the victim‘s entire earnings, but rather the loss of that
portion of the earnings which the beneficiary would have received.
INDEMNITY FOR LOSS OF EARNING CAPACITY is determined by computing the net earning capacity of the victim.
The CA correctly modified the RTC‘s computation. The RTC had misapplied the formula generally used by the courts to
determine net earning capacity, which is, to wit:
LIFE EXPECTANCY shall be computed by applying the formula (2/3 x [80 - age at death]) adopted from the American
Expectancy Table of Mortality or the Actuarial of Combined Experience Table of Mortality.
Hence, the RTC erred in modifying the formula and using the retirement age of the members of the PNP (55) instead
of ―80.‖
On the other hand, GROSS ANNUAL INCOME requires the presentation of documentary evidence for the purpose of
proving the victim‘s annual income. The victim‘s heirs presented in evidence Señora‘s pay slip from the PNP, showing
him to have had a gross monthly salary of P12,754.00. Meanwhile, the victim‘s net income was correctly pegged at 50%
of his gross income in the absence of proof as regards the victim‘s living expenses. Consequently, the Court sustains the
award of P1,887,847.00 as damages for loss of earning capacity.
21. Philippine Hawk Corporation v. Lee, G.R. No. 166869, February 16, 2010
Facts: On 15 March 2005 Lee filed a complaint against PHC and Avila for damages based on quasi-delict arising
from a vehicular accident that occurred on 17 March 1991. It involved a bus belonging to PHC and driven by Avila, a
jeep, and a motorcycle which she was riding in tandem with her husband, Silvio Tan. They were stopped at the side of
the highway when the bus, running at fast speed, hit both their motorcycle and a jeep. He died thereat.
On 18 June 1992, she filed an amended complaint in the civil case for damages, seeking moral and exemplary damages,
funeral and interment expenses, medical and hospitalization expenses, the cost of the motorcycle‟s repair, attorney‘s
fees, and other just and equitable reliefs.
She alleged that her husband was operating a Caltex station yielding P1M a year, as well as a copra business
yielding P36k a year. PHC pointed to Tan‘s negligence, and that it exercised diligence in selection and supervision. The
jeepney driver said that the bus hit the motorcycle first, then his jeep. Avila said that a motorcycle ran from his left side
and crossed his path, and that he did not stop for fear for his life. He denied bumping it, only hearing a loud bang. He had
been involved in sideswiping incidents.
The conductor said that the motorcycle bumped the side of the bus. A kagawad said the same. The RTC found Avila
guilty of simple negligence, ordering him and PHC to pay P745,575 as lost earnings and actual damages plus P50,000
as moral damages. The CA affirmed with modification to the amounts, adding temperate damages.
Issue: (1) Whether Avila is negligent. (discussion omitted)

(2) Whether PHC is liable for damages.
(3) Whether the damages awarded are proper.
Held: As regards the issue on the damages awarded, petitioner contends that it was the only one that appealed the
decision of the trial court with respect to the award of actual and moral damages; hence, the CA erred in awarding
other kinds of damages in favor of respondent, who did not appeal from the trial court‟s decision.
Petitioner‘s contention is unmeritorious. Section 8, Rule 51 of the 1997 Rules of Civil Procedure provides:
SEC. 8. Questions that may be decided. -- No error which does not affect the jurisdiction
over the subject matter or the validity of the judgment appealed from or the
proceedings therein will be considered unless stated in the assignment of errors, or
closely related to or dependent on an assigned error and properly argued in the brief, save
as the court pass upon plain errors and clerical errors.
Philippine National Bank v. Rabat cited the book of Justice Florenz D. Regalado to explain the section above, thus:
In his book, Mr. Justice Florenz D. Regalado commented on this section, thus:
1. Sec. 8, which is an amendment of the former Sec. 7 of this Rule, now includes some
substantial changes in the rules on assignment of errors. The basic procedural rule is that
only errors claimed and assigned by a party will be considered by the court, except errors
affecting its jurisdiction over the subject matter. To this exception has now been added
errors affecting the validity of the judgment appealed from or the proceedings therein.
Also, even if the error complained of by a party is not expressly stated in his
assignment of errors but the same is closely related to or dependent on an assigned error
and properly argued in his brief, such error may now be considered by the court. These
changes are of jurisprudential origin.
2. The procedure in the Supreme Court being generally the same as that in the Court of
Appeals, unless otherwise indicated (see Secs. 2 and 4, Rule 56), it has been held that the
latter is clothed with ample authority to review matters, even if they are not assigned as
errors on appeal, if it finds that their consideration is necessary in arriving at a just
decision of the case. Also, an unassigned error closely related to an error properly
assigned (PCIB vs. CA, et al., L-34931, Mar. 18, 1988), or upon which the determination
of the question raised by error properly assigned is dependent, will be considered by the
appellate court notwithstanding the failure to assign it as error (Ortigas, Jr. vs. Lufthansa
German Airlines, L-28773, June 30, 1975; Soco vs. Militante, et al., G.R. No. 58961,
June 28, 1983).
It may also be observed that under Sec. 8 of this Rule, the CA is authorized to consider a plain error, although it was not
specifically assigned by the appellant (Dilag vs. Heirs of Resurreccion, 76 Phil. 649), otherwise it would be sacrificing
substance for technicalities.
In THIS CASE FOR DAMAGES BASED ON QUASI -DELICT, the trial court awarded respondent the sum of P745,575.00,
representing loss of earning capacity (P590,000.00) and actual damages (P155,575.00 for funeral expenses), plus
P50,000.00 as moral damages. On appeal to the CA, petitioner assigned as error the award of damages by the trial court
on the ground that it was based merely on suppositions and surmises, not the admissions made by respondent during the
trial.
In its Decision, the CA sustained the award by the trial court for loss of earning capacity of the deceased Silvino Tan,
moral damages for his death, and actual damages, although the amount of the latter award was modified.
The indemnity for loss of earning capacity of the deceased is provided for by Article 2206 of the Civil Code.
Compensation of this nature is awarded not for loss of earnings, but for loss of capacity to earn money.
As a rule, documentary evidence should be presented to substantiate the claim for damages for loss of earning
capacity. By way of exception, damages for loss of earning capacity may be awarded despite the absence of
documentary evidence when:
(1) the deceased is SELF-EMPLOYED and earning less than the minimum wage under current labor laws, in which
case, judicial notice may be taken of the fact that in the deceased's line of work no documentary evidence is
available; or
(2) the deceased is EMPLOYED AS A DAILY WAGE WORKER earning less than the minimum wage under current
labor laws.
In this case, the records show that respondent‘s husband was leasing and operating a Caltex gasoline station in
Gumaca, Quezon. Respondent testified that her husband earned an annual income of 1M. Respondent presented in
evidence a Certificate of Creditable Income Tax Withheld at Source for the Year 1990, which showed that
respondent‘s husband earned a gross income of P950,988.43 in 1990. It is reasonable to use the Certificate and
respondent‘s testimony as bases for fixing the gross annual income of the deceased at one million pesos before
respondent‘s husband died on March 17, 1999. However, no documentary evidence was presented regarding the
income derived from their copra business; hence, the testimony of respondent as regards such income cannot be
considered.
In the COMPUTATION OF LOSS OF EARNING CAPACITY, only net earnings, not gross earnings, are to be considered;
that is, the total of the earnings less expenses necessary for the creation of such earnings or income, less living and other
incidental expenses. In the absence of documentary evidence, it is reasonable to peg necessary expenses for the lease and
operation of the gasoline station at 80 percent of the gross income, and peg living expenses at 50 percent of the net income
(gross income less necessary expenses).
In this case, the computation for loss of earning capacity is as follows:
Net Earning = Life Expectancy x Gross Annual Income – Reasonable and

Capacity [2/3 (80-age at the (GAI) Necessary
time of death)] Expenses
(80% of GAI)
X = [2/3 (80-65)] x P1,000,000.00 - P800,000.00
X = 2/3 (15) x P200,000.00 - P100,000.00

(Living Expenses)
X = 30/3 x P100,000.00
X = 10 x P100,000.00
X = P1,000,000.00
The Court of Appeals also awarded actual damages for the expenses incurred in connection with the death, wake, and
interment of respondent‘s husband in the amount of P154,575.30, and the medical expenses of respondent in the amount
of P168,019.55.
Actual damages must be substantiated by documentary evidence, such as RECEIPTS, in order to prove expenses
incurred as a result of the death of the victim or the physical injuries sustained by the victim. A review of the valid
receipts submitted in evidence showed that the funeral and related expenses amounted only to P114,948.60, while the
medical expenses of respondent amounted only to P12,244.25, yielding a total of P127,192.85 in actual damages.
Moreover, the CA correctly sustained the award of moral damages in the amount of P50,000.00 for the death of
respondent‘s husband. Moral damages are not intended to enrich a plaintiff at the expense of the defendant. They are
awarded to allow the plaintiff to obtain means, diversions or amusements that will serve to alleviate the moral suffering
he/she has undergone due to the defendant‘s culpable action and must, perforce, be proportional to the suffering inflicted.
In addition, the CA correctly awarded TEMPERATE DAMAGES in the amount of P10,000.00 for the damage caused on
respondent‘s motorcycle. Under Art. 2224 of the Civil Code, temperate damages “may be recovered when the court
finds that some pecuniary loss has been suffered but its amount cannot, from the nature of the case, be proved with
certainty.” The cost of the repair of the motorcycle was prayed for by respondent in her Complaint. However, the
evidence presented was merely a job estimate of the cost of the motorcycle‘s repair amounting to P17, 829.00. The Court
of Appeals aptly held that there was no doubt that the damage caused on the motorcycle was due to the negligence of
petitioner‘s driver. In the absence of competent proof of the actual damage caused on the motorcycle or the actual cost of
its repair, the award of temperate damages by the appellate court in the amount of P10,000.00 was reasonable under the
circumstances.
The CA also correctly awarded respondent moral damages for the physical injuries she sustained due to the vehicular
accident. Under Art. 2219 of the Civil Code, moral damages may be recovered in quasi-delicts causing physical injuries.
However, the award of P50,000.00 should be reduced to P30,000.00 in accordance with prevailing jurisprudence.
Further, the CA correctly awarded respondent civil indemnity for the death of her husband, which has been fixed by
current jurisprudence at P50,000.00. The award is proper under Art. 2206 of the Civil Code.
In fine, the CA correctly awarded civil indemnity for the death of respondent‘s husband, temperate damages, and
moral damages for the physical injuries sustained by respondent in addition to the damages granted by the trial court to
respondent. The trial court overlooked awarding the additional damages, which were prayed for by respondent in her
Amended Complaint. The appellate court is clothed with ample authority to review matters, even if they are not assigned
as errors in the appeal, if it finds that their consideration is necessary in arriving at a just decision of the case.
22. Simex International (Manila), Incorporated v. Court of Appeals, G.R. No. 88013, March 19, 1990
Facts: We are concerned in this case with the question of damages, specifically moral and exemplary damages. The
negligence of the private respondent has already been established. All we have to ascertain is whether the petitioner is
entitled to the said damages and, if so, in what amounts.
Simex is a private corporation engaged in the exportation of food products. He buys these products from various local
suppliers and then sells them abroad. Most of the products are purchased by the petitioner on credit. Petitioner was a
depositor of the respondent Traders Royal bank and maintained a checking account in Cubao. Petitioner deposited
P100,000 to its account in the said bank, increasing its balance as of that date to P190,380. Subsequently, the Simex
issued several checks against its deposit but was suprised to learn later that they had been dishonored for insufficient
funds.
California Manufacturing Corporation sent a letter of demand to the Simex, threatening prosecution if the dishonored
check issued to it was not made good. It also withheld delivery of the order made by the petitioner. Similar letters were
sent to the petitioner by the Malabon Long Life Trading and by the G. and U. Enterprises. Malabon also canceled the
petitioner‘s credit line and demanded that future payments be made by it in cash or certified check. Action on the pending
orders of the petitioner with the other suppliers whose checks were dishonored was also deferred.
Investigation disclosed that the sum of P100,000 deposited by the petitioner on May 25, 1981, had not been credited
to it. The error was rectified on June 17, 1981, and the dishonored checks were paid after they were re-deposited.
Simex demanded reparation from the Traders Royal Bank for its ―gross and wanton negligence.‖ This demand was not
met. The petitioner then filed a complaint in the then CFI of Rizal claiming from the private respondent moral
damages in the sum of P1,000,000 and exemplary damages in the sum of P500,000, plus 25% attorney‘s fees, and
costs.
After trial, court held that moral and exemplary damages were not called for under the circumstances. However,
observing that the plaintiff‘s right had been violated, he ordered the defendant to pay nominal damages in the amount
of P20,000 plus P5,000 attorney‘s fees and costs. CA affirmed.
CA found that private respondent was guilty of negligence but agreed that Simex was nevertheless not entitled to moral
damages because the bank rectified its records. It credited the said amount in favor of plaintiff-appellant in less than a
month. The dishonored checks were eventually paid. These circumstances negate any imputation or insinuation of
malicious, fraudulent, wanton and gross bad faith and negligence on the part of the defendant-appellant.
Issue: Whether award for actual, moral, and exemplary damages is proper.
Held: YES but not for nominal damages. The negligence of the private respondent had been brushed off rather lightly as if
it were a minor infraction requiring no more than a slap on the wrist. The error should not have been committed in the
first place. The respondent bank has not even explained why it was committed at all. It is true that the dishonored
checks were ―eventually‖ paid. However, this took almost a month when, properly, the checks should have been paid
immediately upon presentment.
The initial carelessness of the TRB, aggravated by the lack of promptitude in repairing its error, justifies the grant of
moral damages. This rather lackadaisical attitude toward the complaining depositor constituted the gross negligence, if not
wanton bad faith, that the respondent court said had not been established by the petitioner.
ACTUAL DAMAGES
While stressing the rectification made by the respondent bank, the decision practically ignored the prejudice suffered by
the petitioner. This was simply glossed over if not, indeed, disbelieved. The fact is that the Simex‘s credit line was
canceled and its orders were not acted upon pending receipt of actual payment by the suppliers. Its business
declined. Its reputation was tarnished. Its standing was reduced in the business community. All this was due to the
fault of the respondent bank which was undeniably remiss in its duty to the petitioner.
Article 2205 of the Civil Code provides that actual or compensatory damages may be received “(2) for injury to the
plaintiff‟s business standing or commercial credit.”. There is no question that the petitioner did sustain actual injury
as a result of the dishonored checks and that the existence of the loss having been established ―absolute certainty as to
its amount is not required.‖ Such injury should bolster all the more the demand of the petitioner for moral damages and
justifies the examination by this Court of the validity and reasonableness of the said claim.
MORAL DAMAGES
We agree that moral damages are not awarded to penalize the defendant but to compensate the plaintiff for the injuries
he may have suffered. In the case at bar, Simex is seeking such damages for the prejudice sustained by it as a result of the
private respondent‘s fault. Respondent court said that the claimed losses are purely speculative and are not supported by
substantial evidence, but if failed to consider that the amount of such losses need not be established with exactitude,
precisely because of their nature.
Moral damages are not susceptible of pecuniary estimation. Article 2216 of the Civil Code specifically provides that
―no proof of pecuniary loss is necessary in order that moral, nominal, temperate, liquidated or exemplary damages may
be adjudicated.‖ That is why the determination of the amount to be awarded (except liquidated damages) is left to the
sound discretion of the court, according to ―the circumstances of each case.‖
From every viewpoint except that of the petitioner‘s, its claim of moral damages in the amount of P1,000,000 is
nothing short of preposterous. Its business certainly is not that big, or its name that prestigious, to sustain such an
extravagant pretense. Moreover, a corporation is not as a rule entitled to moral damages because, not being a natural
person, it cannot experience physical suffering or such sentiments as wounded feelings, serious anxiety, mental anguish
and moral shock. The ONLY EXCEPTION TO THIS RULE IS WHERE THE CORPORATION HAS A GOOD REPUTATION THAT IS
DEBASED, RESULTING IN ITS SOCIAL HUMILIATION. (OBITER LANG TO SABI NI DY!)
Simex did suffer injury because of the private respondent‘s negligence that caused the dishonor of the checks issued by
it. The immediate consequence was that its prestige was impaired because of the bouncing checks and confidence in it as
a reliable debtor was diminished.
Considering all this, we feel that the award of nominal damages in the sum of P20,000 was not the proper relief to
which the petitioner was entitled. Under Article 2221 of the Civil Code, ―nominal damages are adjudicated in order
that a right of the plaintiff, which has been violated or invaded by the defendant, may be vindicated or recognized, and not
for the purpose of indemnifying the plaintiff for any loss suffered by him.‖
As we have found that the petitioner has indeed incurred loss through the fault of the private respondent, the proper
remedy is the award to it of moral damages, which we impose, in our discretion, in the same amount of P20,000.
EXEMPLARY DAMAGES
Art. 2229. Exemplary or corrective damages are imposed, by way of example or correction for the public
good, in addition to the moral, temperate, liquidated or compensatory damages.
Art. 2232. In contracts and quasi-contracts, the court may award exemplary damages if the defendant
acted in a wanton, fraudulent, reckless, oppressive, or malevolent manner.
In every case, the depositor expects the bank to treat his account with the utmost fidelity, whether such account
consists only of a few hundred pesos or of millions. A blunder on the part of the bank, such as the dishonor of a check
without good reason, can cause the depositor not a little embarrassment if not also financial loss and perhaps even
civil and criminal litigation.
The point is that as a business affected with public interest and because of the nature of its functions, the bank is under
obligation to treat the accounts of its depositors with meticulous care, always having in mind the fiduciary nature of
their relationship. In the case at bar, it is obvious that TRB bank was remiss in that duty and violated that
relationship. What is especially deplorable is that, having been informed of its error in not crediting the deposit in
question to the petitioner, the respondent bank did not immediately correct it but did so only one week later or 23
days after the deposit was made. It bears repeating that the record does not contain any satisfactory explanation of why
the error was made in the first place and why it was not corrected immediately after its discovery.
Such ineptness comes under the concept of the wanton manner contemplated in the Civil Code that calls for the
imposition of exemplary damages. The Court hereby imposes upon the respondent bank exemplary damages in the
amount of P50,000, ―by way of example or correction for the public good,‖ in the words of the law to serve as a warning
and deterrent against the repetition of the ineptness and indefference that has been displayed here, lest the confidence of
the public in the banking system be further impaired.
ACCORDINGLY, the appealed judgment is hereby MODIFIED and the private respondent is ordered to pay the
petitioner, in lieu of nominal damages, MORAL DAMAGES in the amount of P20,000.00, and EXEMPLARY DAMAGES in
the amount of P50,000.00 plus the original award of ATTORNEY‘S FEES in the amount of P5,000.00, and costs.
23. National Power Corporation v. Court of Appeals, G.R. No. L-43814, April 16, 1982
Facts: NPC issued an invitation for bids for the clearing of the reservoir area of Angat River Hydroelectric Project.
Wilmag Iron Mines, Inc. (hereinafter referred to as WILMAG), among others, submitted its bid. NPC accepted. NPC
and WILMAG entered into a contract for the clearing project. The contract provided for the complete clearing of the
reservoir area of approximately 2,300 hectares at the unit price of P150.00 per hectare within 720 days from the date of
its signing by WILMAG, subject to any extension that may be granted by NPC.
WILMAG effected completion of the project. NPC, in a certification, cleared WILMAG of all money and property
responsibilities in connection with the project. About a year after the completion and turnover of the clearing project,
WILMAG filed with NPC its claims (1) for reimbursement of alleged increased labor cost in the amount of
P1,222,595.01 resulting from the statutory adjustment of minimum wage rates from P4.00 to P 6.00 a day upon the
effectivity of Republic Act No. 1480 on April 21, 1965; and (2.) for an alleged outstanding balance still due on the
clearing project contract in the amount of P146,152.88. WILMAG's claims were rejected by NPC.
WILMAG filed its complaint with the CFI of Manila, seeking to recover from NPC the total amount of P 40,572,689.41
broken down as follows:
1. The amount of P146,152.88 representing the outstanding balance of the clearing project contract price;
2. The amount of P1,222,595.01 representing the additional increased labor cost resulting from the adjustment of
minimum wages effected by Republic Act No. 4180;
3. The amount of P15,497,179.90 representing the value of felled logs and cut timber it failed to remove and haul away
from the clearing area due to the "restrictions and prohibitions" imposed by NPC Resolution No. 65-285;
4. The amount of P236,613.76 representing forest charges assessed by the Bureau of Forestry on the unhauled felled logs
and cut timber;
5. The amount of P2,459,828.07, exclusive of interests and other charges, representing the totality of various claims
against it by its creditors;
6. The amount of P21,005,119.79 representing consequential damages, itemized as follows:
a. The sum of P2,564,030.40 representing unrealized profits;
b. The sum of P2,750,000.00 representing damages arising from various court suits filed against it;
c. The sum of P2,824,350.34 representing its outstanding balance to the subcontractors it employed in the clearing
project; and
d. The sum of P12,866,739.05 representing actual investment spent in the clearing project;
7. The amount of P2,200.00 representing premium payments made by it on its performance bond;
8. The amount of P3,000,00 representing incidental expenses; and
9. A reasonable amount representing attorney's fees and other expenses of litigation, plus costs.
NPC specifically denied the averments of material facts on which WILMAG relied for its numerous claims. CFI
rendered its judgment in favor of WILMAG, ordering NPC to pay to WILMAG the following:
CA substantially affirmed the trial court's award (reducing the same by some P2-million to about P16.778 million by
decreasing the blatantly excessive damages allegedly suffered by respondent with reference to its commercial credit and
business reputation" in the some of P2-million to P500,000.00 and P100,000 — attorney's fees to P25,000.00 and
eliminating the P500,000 — award for "nominal damages" in the definitely not nominal amount of P500,000.00), which
award, as stated at the beginning would now reach a staggering sum of over P30-million with the accumulated 6%
interest per annum from the filing of the complaint in 1967, as follows
WHEREFORE, modified as above indicated, judgment is hereby rendered in favor of the appellee and against the
appellant, sentencing the latter to pay the former, as follows:
1. The sum of P54,325.89 as the unpaid balance of the contract price due the appellee, with interest at 6% per
annum from the date of the filing of the complaint
2. The sum of P622,662.50 as reimbursement for the same amount paid by the appellee to its laborers from April
21, 1965 to December 31, 1965, and the additional sum of P21,266.00 from January 1, 1966 to June 20, 1966 as
increased wages under the Minimum Wage Law, or the total sum of P643,928.50, with interest at 6% per annum
from the filing of the complaint
3. The amount of P15,497,179.50 for the value of commercial logs appellee failed to remove from the reservoir
area, with interest also at 6% per cent [sic] from the time of the filing of the complaint;
4. The amount of P500,000.00 as damages to the commercial credit and business reputation of the plaintiff (sic)
5. The amount of P25,000.00 as attorney's fees; and
6. The costs of this action.
Issue: Whether the award of damages was proper.
Held: NO. As will presently be seen, particularly on the huge P15.497-million damage award, both CA court and the trial
court grievously erred in granting the same and other amounts through gross misappreciation of the evidence or despite
the lack of supporting evidence to sustain their erroneous conclusions of fact.
CA leaned heavily upon two (2) considerations, the first of which was that "the NPC in paragraph 2 of its answer
admitted that the WILMAG completed 1,621.1534 hectares." However, paragraph 2 of NPC's answer actually reads:
That defendant admits the allegations contained in paragraph 5 of the complaint with the qualification that the
total work completed by plaintiff under the contract was 81.77% or 1,621.1534 hectares. (Emphasis supplied)
All the foregoing documents in evidence fix the reservoir area under clearing at 1,621.1534 hectares and the area actually
cleared by WILMAG at 1,325.6475 hectares. An arithmetical computation demonstrates easily that 1,325.6475
hectares constitute 81.77% of 1,621.1534 hectares and this result serves to clear the apparent incongruity between or
error in the figures cited by NPC in paragraph 2 of its answer. In short, the documents of record show that NPC's said
answer should read that "the total work completed by plaintiff under the contract was 81.77% of (not ―or‖)
1,621.1534 hectares"
The foregoing considerations relied upon by the appellate court in misappreciation of the facts having been shown to be
inconsistent and irreconcilable with the evidence on record, require the setting aside of its holding that NPC pay
WILMAG "for the entire 1,621.1534 hectares or the total amount of P243,173.01 at P150.00 a hectare." The Court holds
that there is no balance due on the contract to WILMAG, since it actually cleared only 1,325.6475 hectares of the
reservoir area for which it already received in full settlement and payment from NPC the total amount of
P198,847.12.
The Court holds that the CA reached an erroneous conclusion in not holding that the failure of WILMAG to comply with
the material terms and essential pre-conditions of the contractual provisions involved herein, wherein time was of the
essence, of submitting monthly the duplicates of its labor payrolls and certified lists of laborers (which failure WILMAG
attempted to justify by the untenable excuse that its "financial difficulties" engendered by its failure "to remove and avail
of the commercial products obtainable from the project incapacitated it to pay adequately its laborers" and, as a
consequence, it "did not obtain the signatures of its laborers on the payrolls until they were fully paid" 14 on April 10,
1967) relieves NPC of any and all liability for any increased labor cost resulting from the adjustment of minimum wage
rates effected by Republic Act No. 4180.
Damages must be shown by actual proof with a reasonable degree of certainty and cannot be based on speculation
and conjecture. Here, so many factors militate against the appellate and trial court's finding that the cleared area yielded a
treasure trove of commercial timber valued at P15,497 million. The appellate court's conclusion that when the Bureau of
Forestry issued a timber license to WILMAG to cut 185,199.00 cubic meters of timber from the area, the license "must
have been issued" by said bureau based on the existence of such amount of timber is pure conjecture. No positive proof
of the existence of such amount of timber was ever presented. It is a matter of judicial notice and public knowledge
that in the issuance of timber licenses, it is the applicant (WILMAG in this case) who states for his own purposes the
volume of timber for which he/it desires a license and pays the corresponding fees therefor. But such license is not proof
that there exists indeed such magnitude of commercial timber in the logging area covered by the application and license.
To allege that the clearing area was brimming with commercial timber worth at least 15 million pesos is to say that in
addition to the contract price of not more than P345,000.00 (based on a total area of 2,300 hectares), NPC would be giving
away an unstated consideration which is more than forty-three (43) times the stated value of the contract. Such an action
by NPC is unnatural and goes against the presumption that a person takes ordinary care of his concerns (Rule 131, sec. 5,
Revised Rules of Court)." And we may add, that if WILMAG's claim were true then the NPC officials would have been
guilty of gross negligence and would be subject to prosecution under the Anti-Graft Act.
The eighth and ninth assigned errors relate to the award by the appellate court in favor of WILMAG of the "amount of P
500,000.00 as damages to [its] commercial credit and business reputations" and the "amount of P25,000.00 as attorney's
fees."
The provisions allowing recovery of damages "[f]or injury to the plaintiff's business standing or commercial credit" fall
under the chapter on actual or compensatory damages of Title XVIII /n damages of the new Civil Code. And such actual
or compensatory damages must be established by clear evidence.
In justifying its award of damages in the amount of P 500,000.00 for alleged injury to WILMAG's business standing or
commercial credit, the CA merely took as good WILMAG's bare assertion that its "credit standing in the community
were [sic] completely shattered, its entire business destroyed and its mortgages lost" but cites no evidence whatsoever to
support the same. More importantly, these damages have no legal basis in view of our finding that WILMAG has no
cause of action against NPC.
As NPC submits in its brief, WILMAG has no business reputation or commercial credit standing in the community
(in its decision, the Court of Appeals did not even mention or discuss the business reputation or standing of WILMAG).
WILMAG's own evidence showed that multifarious complaints or charges have been filed against it and its officials
with the courts and other government agencies. This contradict any pretension of said corporation to probity and
integrity." The appellate court's awards of P500,000.00 damages and P25,000.00 attorney's fees to WILMAG must
accordingly be likewise set aside for lack of legal and factual basis.
WILMAG enumerated a litany of "34 civil and 2 criminal cases for estafa" filed against it and its controlling
stockholder Natividad M. Fajardo by third parties, seeking to justify the present action for damages against NPC
allegedly because it could not as a result pay its loans to banks and fulfill its obligations to their subdivision buyers.
Suffice it to state that NPC has nothing whatever to do with such suits and certainly cannot be held in any way liable
for WILMAGs (apparently known to its creditors also as RAMAWIL) failure to live up to their contractual undertakings
with them.
24. Tanay Recreation Center and Development Corp., v. Fausto, G.R. No. 140182, April 12, 2005
Facts: Petitioner Tanay Recreation Center and Development Corp. (TRCDC) is the lessee of a property located in Sitio
Gayas, Tanay, Rizal, owned by Catalina Matienzo Fausto, under a Contract of Lease. On this property stands the Tanay
Coliseum Cockpit operated by petitioner. The lease contract provided for a 20-year term, subject to renewal within 60
days prior to its expiration. The contract also provided that should Fausto decide to sell the property, petitioner shall have
the ―priority right‖ to purchase the same.
Petitioner wrote Fausto informing her of its intention to renew the lease. However, it was Fausto‘s daughter,
respondent Anunciacion F. Pacunayen, who replied, asking that petitioner remove the improvements built thereon, as
she is now the absolute owner of the property. It appears that Fausto had earlier sold the property to Pacunayen and
title has already been transferred in her name.
Petitioner filed a complaint for Annulment of Deed of Sale, Specific Performance with Damages. Respondent claimed
that petitioner is estopped from assailing the validity of the deed of sale as the latter acknowledged her ownership when it
merely asked for a renewal of the lease.
The RTC rendered judgment, extending the lease for 7 years and dismissed petitioner‟s claim for damages. The CA
affirmed.
Issue: (1) Whether Tanay had the right of first refusal over the property.
(2) Whether the award of damages was proper.
Held: YES. When a lease contract contains a right of first refusal, the lessor is under a legal duty to the lessee not to
sell to anybody at any price until after he has made an offer to sell to the latter at a certain price and the lessee has
failed to accept it. The lessee has a right that the lessor's first offer shall be in his favor. Petitioner‘s right of first refusal is
an integral and indivisible part of the contract of lease and is inseparable from the whole contract. The consideration for
the lease includes the consideration for the right of first refusal and is built into the reciprocal obligations of the parties.
It simply means that should Fausto decide to sell the leased property during the term of the lease, such sale should
first be offered to petitioner. The stipulation does not provide for the qualification that such right may be exercised only
when the sale is made to strangers or persons other than Fausto‘s kin. Thus, under the terms of petitioner‟s right of first
refusal, Fausto has the legal duty to petitioner not to sell the property to anybody, even her relatives, at any price until
after she has made an offer to sell to petitioner at a certain price and said offer was rejected by petitioner. Pursuant to their
contract, it was essential that Fausto should have first offered the property to petitioner before she sold it to respondent. It
was only after petitioner failed to exercise its right of first priority could Fausto then lawfully sell the property to
respondent.
The rule is that a sale made in violation of a right of first refusal is VALID. However, it may be rescinded, or, as in this
case, may be the subject of an action for specific performance. The prevailing doctrine is that a right of first refusal
means identity of terms and conditions to be offered to the lessee and all other prospective buyers and a contract of sale
entered into in violation of a right of first refusal of another person, while valid, is rescissible.
It was also incorrect for the CA to rule that it would be useless to annul the sale between Fausto and respondent
because the property would still remain with respondent after the death of her mother by virtue of succession , as in
fact, Fausto died in March 1996, and the property now belongs to respondent, being Fausto‘s heir.
With the death of Fausto, whatever rights and obligations she had over the property, including her obligation under the
lease contract, were transmitted to her heirs by way of succession, a mode of acquiring the property, rights and obligation
of the decedent to the extent of the value of the inheritance of the heirs.
(2) DAMAGES
Petitioner further seeks the award of the following damages in its favor: (1) P100,000.00 as actual damages;
(2) P1,100,000.00 as compensation for lost goodwill or reputation; (3)P100,000.00 as moral damages; (4) P100,000.00 as
exemplary damages; (5) P50,000.00 as attorney‘s fees; (6) P1,000.00 appearance fee per hearing; and (7) the costs of suit.
According to petitioner, respondent‘s act in fencing the property led to the closure of the Tanay Coliseum Cockpit and
petitioner was unable to conduct cockfights and generate income of not less than P100,000.00 until the end of September
1991, aside from the expected rentals from the cockpit space lessees in the amount of P11,000.00.
Under Article 2199 of the Civil Code, it is provided that:
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.
The rule is that actual or compensatory damages cannot be presumed, but must be proved with reasonable degree of
certainty. A court cannot rely on speculations, conjectures, or guesswork as to the fact and amount of damages, but
must depend upon competent proof that they have been suffered by the injured party and on the best obtainable evidence
of the actual amount thereof. It must point out specific facts, which could afford a basis for measuring whatever
compensatory or actual damages are borne.
In the present case, there is no question that the Tanay Coliseum Cockpit was closed for two months and TRCDC did
not gain any income during said period. But there is nothing on record to substantiate petitioner‟s claim that it was
bound to lose some P111,000.00 from such closure.
TRCDC‘s accountant, Merle Cruz, stated that based on the corporation‘s financial statement for the years 1990 and 1991,
they derived the amount of P120,000.00 as annual income from rent. From said financial statement, it is safe to presume
that TRCDC generated a monthly income of P10,000.00 a month (P120,000.00 annual income divided by 12 months). At
best therefore, whatever actual damages that petitioner suffered from the cockpit‟s closure for a period of two months
can be reasonably summed up only to P20,000.00.
Such award of damages shall earn interest at the legal rate of six percent (6%) per annum, which shall be computed
from the time of the filing of the Complaint on August 22, 1991, until the finality of this decision. After the present
decision becomes final and executory, the rate of interest shall increase to twelve percent (12%) per annum from
such finality until its satisfaction, this interim period being deemed to be equivalent to a forbearance of credit.
Petitioner also claims the amount of P1,100,000.00 as compensation for lost goodwill or reputation. It alleged that ―with
the unjust and wrongful conduct of the defendants as above-described, plaintiff stands to lose its goodwill and reputation
established for the past 20 years.
An award of damages for LOSS OF GOODWILL or REPUTATION falls under actual or compensatory damages as
provided in Article 2205 of the Civil Code, to wit:
Art. 2205. Damages may be recovered:

(1) For loss or impairment of earning capacity in cases of temporary or permanent personal injury;
(2) For injury to the plaintiff‘s business standing or commercial credit.
Even if it is not recoverable as compensatory damages, it may still be awarded in the concept of temperate or
moderate damages. In arriving at a reasonable level of temperate damages to be awarded, trial courts are guided by the
ruling that:
There are cases where from the nature of the case, definite proof of pecuniary loss cannot be offered,
although the court is convinced that there has been such loss. For instance, injury to one's commercial
credit or to the goodwill of a business firm is often hard to show certainty in terms of money. Should
damages be denied for that reason? The judge should be empowered to calculate moderate damages in
such cases, rather than that the plaintiff should suffer, without redress from the defendant's wrongful act.
In this case, aside from the nebulous allegation of petitioner in its amended complaint, there is no evidence on record,
whether testimonial or documentary, to adequately support such claim. Hence, it must be denied.
Petitioner‘s claim for moral damages must likewise be denied. 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 CAN BE EXPERIENCED ONLY BY ONE HAVING A NERVOUS SYSTEM . Petitioner being a corporation, the claim for
moral damages must be denied.
With regard to the claim for exemplary damages, it is a requisite in the grant thereof that the act of the offender must be
accompanied by bad faith or done in wanton, fraudulent or malevolent manner. Moreover, where a party is not
entitled to actual or moral damages, an award of exemplary damages is likewise baseless. In this case, petitioner failed to
show that respondent acted in bad faith, or in wanton, fraudulent or malevolent manner.
Petitioner likewise claims the amount of P50,000.00 as attorney‘s fees, the sum of P1,000.00 for every appearance of its
counsel, plus costs of suit. It is well settled that no premium should be placed on the right to litigate and not every winning
party is entitled to an automatic grant of attorney's fees. The party must show that he falls under one of the instances
enumerated in Article 2208 of the Civil Code. In this case, since petitioner was compelled to engage the services of a
lawyer and incurred expenses to protect its interest and right over the subject property, the award of attorney‟s
fees is proper. However there are CERTAIN STANDARDS IN FIXING ATTORNEY'S FEES, to wit:
(1) the amount and the character of the services rendered;

(2) labor, time and trouble involved;
(3) the nature and importance of the litigation and business in which the services were rendered;
(4) the responsibility imposed;
(5) the amount of money and the value of the property affected by the controversy or involved in the employment;
(6) the skill and the experience called for in the performance of the services;
(7) the professional character and the social standing of the attorney; and
(8) the results secured, it being a recognized rule that an attorney may properly charge a much larger fee when it is
contingent than when it is not.
Considering the foregoing, the award ofP10,000.00 as attorney‘s fees, including the costs of suit, is reasonable under the
circumstances.
25. Metro Manila Transit Corporation v. Court of Appeals, G.R. No. 116617, November 16, 1998
Facts: Liza Rosales, a third year HS student from UPIS, was hit by an MMTC bus when she was crossing Katipunan. An
eyewitness said the girl was already near the center of the street when the bus, then bound for the south, hit her. She fell to
the ground upon impact, rolled between the two front wheels of the bus, and was run over by the left rear tires thereof.
Her body was dragged several meters away from the point of impact. Liza Rosalie was taken to the Philippine Heart
Center, but efforts to revive her proved futile.
Musa, the driver was found guilty of reckless imprudence. Parents of Liza filed an independent civil action for damages
against MMTC, its GM, Musa, a dispatcher of MMTC, and the GSIS.
RTC of QC rendered its decision in 1990 and found MMTC and Musa negligence and thus liable damages as follows:
WHEREFORE, foregoing premises considered, judgment is hereby rendered ordering defendant
Metro Manila Transit Corporation primarily and defendant Pedro Musa subsidiarily liable to
plaintiffs spouses Rodolfo V. Rosales and Lily R. Rosales as
follows:
Actual damages in the amount of P150,000.00;

Moral damages in the amount of P500,000.00;
Exemplary damages in the amount of P100,000.00;
Attorney‘s fees in the amount of P50,000.00; and
Costs of suit
CA affirmed with modifications:
WHEREFORE, except for the modification deleting the award of P150,000.00 as

actual damages and awarding in lieu thereof the amount of P30,000.00 as death
indemnity, the decision appealed from is, in all other aspects, hereby AFFIRMED.
On MR, the death indemnity of Liza was increased to 50,000. Hence, these appeals.
Issue: Whether the award of damages were proper. (Skipped the finding of negligence)
Held: Having found both MMTC and its driver Pedro Musa liable for negligence for the death of Liza Rosalie on August
9, 1986, we now consider the question of damages which her parents, the spouses Rosales, are entitled to recover, which
is the subject of the appeal.
INDEMNITY FOR DEATH

Art. 2206 provides for the payment of indemnity for death caused by a crime or quasi-delict. Initially fixed in said article
of the Civil Code at P3,000.00, the amount of the indemnity has through the years been gradually increased based on
the value of the peso. At present, it is fixed at P50,000.00. To conform to this new ruling, the CA correctly increased the
indemnity.
ACTUAL DAMAGES
Art. 2199 provides that ―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.‖ The spouses Rosales are claiming actual damages in the
amount of P239,245.40.
However, during the trial, they submitted receipts showing that expenses for the funeral, wake, and interment of
Liza Rosalie amounted only to P60,226.65. Hence, apart from the indemnity for death, the spouses Rosales are entitled
to recover the above amount as actual damages.
MORAL DAMAGES
Under Art. 2206, 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 reason for the grant of moral damages has been
explained thus:
The award of moral damages is aimed at a restoration, within the limits of the possible,
of the spiritual status quo ante; and therefore, it must be proportionate to the suffering
inflicted. The intensity of the pain experienced by the relatives of the victim is
proportionate to the intensity of affection for him and bears no relation whatsoever with
the wealth or means of the offender.
In the instant case, the spouses Rosales presented evidence of the intense moral suffering they had gone through as a result
of the loss of Liza Rosalie who was their youngest child. Rodolfo Rosales recounted the place of Liza Rosalie in the
family and their relationship with her. (Omitted testimony of the parents in re loss of Liza)
The spouses Rosales claim moral damages in the amount of P5,000,000.00. In People v. Teehankee, Jr., this Court
awarded P1 million as moral damages to the heirs of a 17-year-old girl who was murdered. This amount seems
reasonable to us as moral damages for the loss of a minor child, whether he or she was a victim of a crime or a quasi-
delict. Hence, we hold that the MMTC and Musa are solidarily liable to the spouses Rosales in the amount of
P1,000,000.00 as moral damages for the death of Liza.
EXEMPLARY DAMAGES
Art. 2231 provides that exemplary damages may be recovered in cases involving quasi-delicts if ―the defendant acted
with GROSS negligence.‖ This obtains in the present case. The records indicate that at the time of the mishap, there was a
pending criminal case against Musa for reckless imprudence resulting in slight physical injuries with another branch of the
RTC, Quezon City. The evidence also shows that he failed to stop his vehicle at once even after eye witnesses shouted at
him. The spouses Rosales claim exemplary damages in the amount of P5,000,000.00. Under the circumstances, we deem
it reasonable to award the spouses Rosales exemplary damages in the amount of 500k.
ATTORNEY‘S FEES
Pursuant to Art. 2208, attorney‟s fees may be recovered when, as in the instant case, exemplary damages are awarded.
In the recent case of Sulpicio Lines, Inc. v. Court of Appeals, which involved the death of a minor child in the sinking of a
vessel, we held an award of P50,000.00 as attorney‟s fees to be reasonable. Hence, we affirm the award of attorney‘s
fees made by the CA to the spouses Rosales in that amount.
COMPENSTATION FOR LOSS OF EARNING CAPACITY

Art. 2206 of the Civil Code provides that in addition to the indemnity for death caused by a crime or quasi-delict, 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.
Compensation of this nature is awarded not for loss of earnings but for loss of capacity to earn money. Evidence must be
presented that the victim, if not yet employed at the time of death, was reasonably certain to complete training for a
specific profession.
In People v. Teehankee, no award of compensation for loss of earning capacity was granted to the heirs of a college
freshman because there was no sufficient evidence on record to show that the victim would eventually become a
professional pilot. But compensation should be allowed for loss of earning capacity resulting from the death of a minor
who has not yet commenced employment or training for a specific profession if sufficient evidence is presented to
establish the amount thereof. The argument for allowing compensation for loss of earning capacity of a minor is even
stronger if he or she was a student, whether already training for a specific profession or still engaged in general studies.
In sharp contrast with the situation obtaining in People v. Teehankee, where the prosecution merely presented evidence to
show the fact of the victim‘s graduation from high school and the fact of his enrollment in a flying school, the spouses
Rosales did not content themselves with simply establishing Liza Rosalie‟s enrollment at UP Integrated School. They
presented evidence to show that Liza Rosalie was a good student, promising artist, and obedient child. She consistently
performed well in her studies since grade school. A survey taken in 1984 when Liza Rosalie was 12 years old showed that
she had good study habits and attitudes. Cleofe Chi, guidance counselor of the University of the Philippines Integrated
School, described Liza Rosalie as personable, well-liked, and with a balanced personality.
Considering her good academic record, extracurricular activities, and varied interests, it is reasonable to assume that Liza
Rosalie would have enjoyed a successful professional career had it not been for her untimely death. Hence, it is proper
that compensation for loss of earning capacity should be awarded to her heirs in accordance with the formula established
in decided cases for computing net earning capacity.
LIFE EXPECTANCY
Life expectancy is equivalent to 2/3 multiplied by the difference of 80 and the age of the deceased.
Since Liza Rosalie was 16 at the time of her death, her life expectancy was 44 more years. Her projected gross annual income,
computed based on the minimum wage for workers in the non-agricultural sector in effect at the time of her death, then fixed at
P37.00, is P14,630.46. Allowing for necessary living expenses of 50% of her projected gross
annual income, her amounts to P321,870.12.
TOTAL NET EARNING CAPACITY
Wage Order (1984) = 37.00
37 x 365 = 13,505
13,505 / 12 = 1,125.42 (equivalent monthly rate)
1,125.42 x 13 (representing 13th month pay) = 14,630.46 (gross annual income)
14,630.46 x 50% = 7,315.23 (net annual income)
7,315.23 x 44 (life expectancy) = 321,870.12 (net earning capacity)
WHEREFORE, the decision of the Court of Appeals is SET ASIDE and another one is RENDERED holding the Metro
Manila Transit Corporation and Pedro Musa jointly and severally liable for the death of Liza Rosalie R. Rosales and
ORDERING them as such to pay to the spouses Rodolfo V. Rosales and Lily R. Rosales the following amounts:
1. death indemnity in the amount (P50,000.00);
2. actual damages in the amount of (P60,226.65);
3. moral damages in the amount of (P1,000,000.00);
4. exemplary damages in the amount of (P500,000.00);
5. attorney‘s fees in the amount of (P50,000.00);
6. compensation for loss of earning capacity in the amount of (P321,870.12); and
7. the costs of suit.
26. People v. Beduya, G.R. No. 175315, August 9, 2010

Facts: On May 6, 2002, at around 11:45 p.m., Roy Bughao (Bughao) was carrying a torch on his way home from the
birthday celebration of his cousin when Elizer and Ric suddenly appeared. Ric went around him while his brother
Elizer pointed a knife. He drew back and swung the torch at them and shouted, "Why do you hurt me, what is my fault?"
The Beduya brothers did not reply and continued their assault. Bughao then scrambled for safety and ran towards
the yard of victim Dominador S. Acope, Sr. (Acope, Sr.) and hid in a dark area.
At around 12:30 a.m. of May 7, 2002, the victim and his son, Dominador Acope, Jr. (Acope, Jr.), were roused from
their sleep by a voice coming from the road in front of their house. The victim went outside while his son peeped
through the window. The victim saw Bughao who readily identified himself and said that Elizer pointed a knife at
him. As the Beduya brothers entered the yard of the victim‘s house, Bughao hid himself. While in hiding, he saw the
Beduya brothers approach the victim after they were advised to go home since it was already late. The Beduya brothers
did not heed the advice and instead Ric slapped the victim while Elizer stabbed him. The victim retaliated by striking
them with a piece of wood he got hold of. Elizer and Ric ran away but one of them stumbled on the pile of firewood and
the clothesline in the yard before they succeeded in departing from the premises.
Acope, Jr. immediately proceeded to his uncle‘s house which was 40 meters away and sought his help. The incident
was also reported to their Barangay Captain, who responded by going to the residence of the victim. The Barangay
Captain took the victim to the Jimenez Medicare Hospital but was later advised to proceed to the MHARS General
Hospital in Ozamis City, where the police officer took the statement of the victim and Acope, Jr. On the next day, May 8,
2002, the victim died due to "septic and hypovolemic shock secondary to stabbed wound."
During the pendency of the appeal, appellant Ric died of cardio pulmonary arrest secondary to bleeding peptic ulcer as
shown by his certificate of death. Accordingly, we dismissed the appeal insofar as said appellant is concerned. However,
judgment shall be rendered as to Elizer.
Elizer was convicted of murder.
Issue: (1) Whether the Brothers Beduya killed the victim with the abuse of superior strength for which they were
convicted with murder.
(2) Whether the damages awarded was proper.
Held: (1) YES. Said qualifiying circumstance was present.
(2) NO. The trial court awarded, and the CA affirmed, actual damages to the heirs of the victim in the amounts of
P6,000.00 as funeral expenses and P9,411.85 as medical expenses incurred as a result of the incident.
However, our review of the records revealed that the award was not substantiated by any evidence. There was no
competent proof on the specific amounts of actual damages allegedly incurred and this omission cannot be supplied by a
broad and general stipulation during trial that the victim‘s wife would testify on the damages brought about by the
commission of the crime. The award of actual damages should consequently be deleted as there were no receipts
presented evidencing the expenses allegedly incurred.
However, as the heirs of the victim clearly incurred medical and funeral expenses, P25,000.00 by way of TEMPERATE
damages should be awarded. "This award is adjudicated so that a right which has been violated may be recognized or
vindicated, and not for the purpose of indemnification."
When death results as a consequence of the crime, the heirs of the deceased are entitled to the amount of P50,000.00
as indemnity for the death of the victim without need of any evidence or proof of damages. Accordingly, we award
said sum to the heirs of the victim, Acope, Sr.
"MORAL DAMAGES are mandatory in cases of murder and homicide without need of allegation and proof other than
the death of the victim. Consistent with this rule, we award the amount of P50,000.00 as moral damages in accordance
with prevailing jurisprudence."
The trial court was correct in awarding INDEMNITY FOR THE LOSS OF EARNING CAPACITY of the victim. However, the
computation for this award should be more accurate.
Acope, Sr., was 46 years old on the day he died. He earned an average of P3,000.00 a month as a farmer and barangay
tanod. This is equivalent to the sum of P36,000.00 per annum. Pursuant to the American Expectancy Table of Mortality,
which has been adopted in this jurisdiction, the formula for the computation of loss of earning capacity is provided as
follows:
Net Earning Capacity (X) = Life Expectancy x (Gross Annual Income – Living Expenses, e.g., 50% of Gross Annual
Income)
Life expectancy is determined in accordance with the following formula: Life Expectancy = 2/3 x (80 – age of deceased)
Accordingly, the unearned income of Acope, Sr., is:
X = [2 (80-46)/3] x (P36k-
P18k) = P408,006.00
In applying the formula and computation for net income stated above, the amount of loss of earning capacity is the
exact sum of P408,006.00.
27. People v. Anticamara, G.R. No. 178771, June 8, 2011

Facts: The accused are charged with the crimes of Murder and of Kidnapping/Serious Illegal Detention
The testimony of AAA had clearly established the following facts:

1. At about 3AM of May 7, 2002, while she and the victim Abad Sulpacio were sleeping inside the house of the
Estrella family in Barangay Carmen, Rosales, Pangasinan several persons entered to rob the place;
2. Inside the house, she saw and recognized the accused Lando Calaguas and Dick Tañedo , and heard the latter uttering
―somebody will die‖;
3. Bringing her outside the house, Lando pushed her into the Revo where she saw inside Abad Sulpacio who was
blindfolded and with his hands tied;
4. Inside the Revo , she recognized the accused Dick Tañedo , Lando Calaguas , Marvin Lim , Roberto Tañedo , Alberto
Anticamara and Fred;
5. The Revo then proceeded towards the fishpond owned by the Estrellas in Sitio Rosalia, Brgy. San Bartolome,
Rosales, Pangasinan;
6. The last time that she saw Abad Sulpacio was when he was dragged out from the vehicle by Lando , Fred, Marvin and
Al upon reaching Sitio Rosalia . At that, time Dick Tañedo stayed with her in the vehicle ;
7. Thereafter, when Fred returned to the vehicle, she heard him uttered (sic): ―Make a decision now. Abad has already
four (4) bullets in his body, and the one left is for this girl.
RTC
I. In Criminal Case No. 4498-R for MURDER:
A. Nicetas ―Cita‖ Tañedo is hereby a cquitted of the crime charged for insufficiency of evidence;
B. Lando Calaguas) and Al Camara) are hereby found guilty beyond reasonable doubt, as principal, of the crime of
Murder qualified by treachery.
Considering the presence of aggravating circumstance of premeditation, with no mitigating circumstance to offset the
same, the penalty of DEATH is hereby imposed upon the two (2) accused (Lando Calaguas) and Alberto Anticamara
(Al Camara). They are also ordered jointly and severally [to] pay the heirs of the victim Abad Sulpacio the following: 1)
Fifty Thousand Pesos (P50,000.00) as moral damages; 2) Seventy-Five Thousand Pesos (P75,000.00) as indemnity for
the death of the victim; 3) Fifty-Seven Thousand One Hundred Twenty-Two Pesos and Thirty Centavos (P57,122.30) as
actual damages; and 4) The cost of suit.
II. Criminal Case No. 4481-R for KIDNAPPING/SERIOUS ILLEGAL DETENTION:

A) Nicetas ―Cita‖ Tañedo is hereby acquitted of the crime charged for insufficiency of evidence ;
B) Lando Calaguas) and Alberto Anticamara (alyas Al Camara) are hereby found guilty beyond reasonable doubt, as
principal, of the crime of Kidnapping/Serious Illegal Detention.
Considering that the victim AAA was raped during her detention, the maximum penalty of DEATH is hereby imposed
upon the two accused, Fernando Calaguas Fernandez (Lando Calaguas) and Alberto Anticamara (Al Camara). The two
accused are also ordered to pay, jointly and severally, the victim AAA the amount of: 1) One Hundred Thousand Pesos
(P100,000.00) as moral damages; 2) Fifty Thousand Pesos (P50,000.00) as exemplary damages; and 3) Cost of suit
CA affirming the decision of the RTC; but in view of the abolition of the death penalty, the appellants were sentenced to
reclusion perpetua.
Issue: (1) Whether Anticamara et al are indeed guilty.

(2) Whether the award of damages is proper.
Held: In CRIMINAL CASE FOR MURDER: The trial court found that although there was no direct eyewitness in the
killing of Sulpacio, the prosecution adduced sufficient circumstantial evidence to establish with moral certainty the
identities and guilt of the perpetrators of the crime.
In the case at bar, although no one directly saw the actual killing of Sulpacio, the prosecution was able to paint a clear
picture that the appellants took Sulpacio away from the house of the Estrellas, tied and blindfolded him, and brought him
to another place where he was repeatedly shot and buried.
The killing of Sulpacio was part of their conspiracy. Prior to the commission of the crime, the group met at the landing
field in Carmen, Pangasinan and discussed their plan to rob the house of the Estrellas with the agreement that whoever
comes their way will be eliminated.
It was proven that when AAA boarded the vehicle, she saw Sulpacio tied and blindfolded. This situation of the victim
when found shows without doubt that he was killed while tied and blindfolded; hence, the qualifying aggravating
circumstance of treachery was present
The essence of premeditation is that the execution of the act was preceded by cool thought and reflection upon the
resolution to carry out the criminal intent during a space of time sufficient to arrive at a calm judgment. From the
time the group met at the landing field at around 6:30 p.m. of May 6, 2002, and discussed the possibility of killing anyone
who stands on their way, up to the time they took Sulpacio away from the Estrellas‘ house and eventually killed him
thereafter at around past 3:00 a.m., more than eight hours had elapsed—sufficient for the appellants to reflect on the
consequences of their actions and desist from carrying out their evil scheme, if they wished to.
In Criminal Case for KIDNAPPING and SERIOUS ILLEGAL DETENTION

The Court finds appellant Lando guilty of the special complex crime of kidnapping and serious illegal detention with
rape, defined in and penalized under Article 267 of the Revised Penal Code. Lando and Al forcibly took AAA, a female,
away from the house of the Estrellas and held her captive against her will. Lando brought AAA to his house whereby she
was deprived of her liberty for almost one month.
For there to be kidnapping, it is enough that the victim is restrained from going home. 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.
Although AAA was not confined in an enclosure, she was restrained and deprived of her liberty, because every time
appellant Lando and his wife went out of the house, they brought AAA with them. AAA was constantly guarded by
appellant Lando and his family.
The crime of rape was also established by the prosecution. Appellant Lando succeeded in having carnal knowledge of
AAA through the use of threat and intimidation. Lando brought her to a hotel to hide her from Fred and Bert, who
intended to kill her. While in the hotel, appellant Lando raped her. In rape cases, the credibility of the victim‟s testimony
is almost always the single most important factor. It may be the sole basis for the accused‘s conviction. Owing to the
nature of the offense, in many cases, the only evidence that can be given
Article 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.
THE DAMAGES
1. MURDER, the award of civil indemnity is mandatory and granted to the heirs of the victim without need of proof
other than the commission of the crime. In People v. Quiachon, even if the penalty of death is not to be imposed because
of the prohibition in R.A. 9346, the civil indemnity of P75,000.00 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, while R.A. No. 9346 prohibits the
imposition of the death penalty, the fact remains that the penalty provided for by law for a heinous offense is still death,
and the offense is still heinous. Accordingly, the award of civil indemnity in the amount of P75,000.00 is proper.
Anent MORAL DAMAGES, the same are mandatory in cases of murder, without need of allegation and proof other than
the death of the victim. However, consistent with recent jurisprudence on heinous crimes where the imposable penalty
is death but reduced to reclusion perpetua pursuant to R.A. No.9346, the award of moral damages should be increased
from P50,000.00 to P75,000.00.
The award of EXEMPLARY DAMAGES is in order, because of the presence of the aggravating circumstances of treachery
and evident premeditation in the commission of the crime. The Court awards the amount of P30,000.00, as exemplary
damages, in line with current jurisprudence on the matter.
ACTUAL DAMAGES is also warranted. Modesta Abad, the spouse of victim Sulpacio, incurred expenses in the amount
of P57,122.30, which was duly supported by receipts.
2. KIDNAPPING and SERIOUS ILLEGAL DETENTION, AAA is entitled to civil indemnity in line with prevailing
jurisprudence that civil indemnification is mandatory upon the finding of rape. Applying prevailing jurisprudence,
AAA is entitled to P75,000.00 as civil indemnity.
In addition, AAA is entitled to moral damages pursuant to Article 2219 of the Civil Code,71 without the necessity of additional
pleadings or proof other than the fact of rape. Moral damages is granted in recognition of the victim‘s injury necessarily
resulting from the odious crime of rape. Such award is separate and distinct from the civil indemnity. However, the amount of
P100,000.00 awarded as moral damages is reduced to P75,000.00, in line with current jurisprudence.
The award of exemplary damages to AAA in the amount of P50,000 is hereby reduced to P30,000.00 in accordance
with recent jurisprudence.
As to appellant Al. In the absence of conspiracy, the liability of the accused is individual and not collective. Since
appellant Al is liable only for the crime of serious illegal detention, he is jointly and severally liable only to pay the
amount of P50,000.00 as civil indemnity. For serious illegal detention, the award of civil indemnity is in the amount of
P50,000.00, in line with prevailing jurisprudence. Al‘s liability for moral damages is limited only to the amount of
P50,000.00.
Pursuant to Article 2219 of the Civil Code, moral damages may be recovered in cases of illegal detention. This is
predicated on AAA‘s having suffered serious anxiety and fright when she was detained for almost one (1) month.
28. People v. Rarugal, G.R. No. 188603, January 16, 2013

Facts: At around 9:45 p.m., while victim Arnel Florendo was cycling along Sampaguita Street, Novaliches, Quezon
City, Rarugal, with the use of a long double-bladed weapon, stabbed Florendo; thus, forcibly depriving him of his
bicycle. Immediately thereafter, appellant hurriedly fled the scene. This incident was witnessed by Roberto Sit-Jar, who
positively identified appellant in court.
Florendo arrived home bleeding. He was quickly attended to by his siblings, including his brother Renato. When Renato
recounted the events of that night to the court, he testified that Florendo told him and his other relatives that it was
appellant who had stabbed him. They then took Florendo to Tordesillas Hospital but had to transfer him to Quezon City
General Hospital, due to the unavailability of blood. It was there that Florendo died 7 days later with the family
spending about P2,896.007 for his hospitalization and P25,000.008 for his funeral.
In his defense, Rarugal denied that he stabbed Florendo since he was at that time working as a farm administrator for
the town mayor in Pangasinan. He said he was living with his cousin in Urbiztondo, Pangasinan where he had been
staying since 1997. He stated that during the period 1997 to 1998, he did not visit Manila at any point. On cross-
examination, appellant stated that he was arrested in front of his house in Novaliches, Quezon City.
The records are devoid of any indication that it was physically impossible for appellant to have been in the scene of the
crime at the time it was committed. Appellant‘s bare alibi that he was working as a farm administrator in Urbiztondo,
Pangasinan and was allegedly staying there at the time of the commission of the crime does not suffice to prove the
alleged physical impossibility that he committed the crime charged, more so in the face of positive identification by the
witness, who was not motivated by any improper motive to falsely testify against him.
Also, the victim was still alive after the stabbing incident. He had time to reach his house and confide in his brother,
witness Renato, that it was appellant who had stabbed him. The statement of Florendo made to his brother Renato has
complied with the requisites of a dying declaration. It is important to note that Florendo, after being stabbed by appellant
twice on the chest, went home and under labored breathing, told Renato that it was appellant who had stabbed him.
Clearly, the statement made was an expression of the cause and the surrounding circumstances of his death, and
under the consciousness of impending death. There being nothing in the records to show that Florendo was incompetent,
he would have been competent to testify had he survived. It is enough to state that the deceased was at the time competent
as a witness. Lastly, the dying declaration is offered in an inquiry the subject of which involves his death.
It is of no moment that the victim died 7 days from the stabbing incident and after receiving adequate care and
treatment, because the apparent proximate cause of his death, the punctures in his lungs, was a consequence of appellant‘s
stabbing him in the chest.
Appellant‘s act of suddenly stabbing Florendo while he was innocently cycling along Sampaguita Street, Barangay
Capari, Novaliches, Quezon City constituted the qualifying circumstance of treachery.
Treachery is present when the offender commits any of the crimes against persons, employing means, methods, or
forms in the execution, which tend directly and specially to insure its execution, without risk to the offender arising
from the defense which the offended party might make.
Article 248 of the Revised Penal Code, as amended by Republic Act No. 7659, provides for the penalty of reclusion
perpetua to death for the crime of murder. There being no aggravating or mitigating circumstance, the RTC, as
affirmed by the CA, properly imposed the penalty of reclusion perpetua, pursuant to Article 63, paragraph 2, of the
Revised Penal Code.
DAMAGES
However, to conform to existing jurisprudence, the Court must modify the amount of INDEMNITY FOR DEATH and
EXEMPLARY DAMAGES awarded by the courts below.
Anent the award of damages, WHEN DEATH OCCURS DUE TO A CRIME, the following may be
recovered:
(1) civil indemnity ex delicto for the death of the victim;
(2) actual or compensatory damages;
(3) moral damages;
(4) exemplary damages;
(5) attorney‟s fees and expenses of litigation; and
(6) interest, in proper cases.
The heirs were able to prove ACTUAL DAMAGES in the amount of P27,896.00 based on the receipts they submitted.
Moreover, we agree with the CA that the award of exemplary damages is proper in this case.
In fine, relative to the civil aspect of the case, an aggravating circumstance, whether ordinary or qualifying, should
entitle the offended party to an award of exemplary damages within the unbridled meaning of Article 2230 of the
Civil Code.‖
We, however, increase the award of exemplary damages to P30,000.00 and the award for mandatory civil indemnity
to P75,000.00 to conform to recent jurisprudence.
We sustain the RTC‘s award for moral damages in the amount of P50,000.00 even in the absence of proof of
mental and emotional suffering of the victim‘s heirs. 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. In addition, and in
conformity with current policy, we also impose on all the monetary awards for damages interest at the legal rate of 6% per
annum from date of finality of this Decision until fully paid.
29. Padilla Machine Shop v. Javilgas, G.R. No. 175960, February 19, 2008
Facts: 10 December 2002 – Javilgas filed a complaint for illegal dismissal, underpayment of 13th month pay, separation
pay, and non-remittance of SS contributions. He alleged that he was hired in January 1998 to recondition machines
until his dismissal in April 2002. He found in 2002 that his employer was not remitting SSS contributions, and thus
was not able to avail of SSS benefits when his wife gave birth. When he complained, he was transferred to the Novaliches
branch office. On April 2002, he was called up by Rodolfo Padilla, who told him to simply ― stop working‖. Hence, the
present suit.
Rodolfo, the proprietor, alleged that he voluntarily left the shop in 2000, and begged to be reemployed. He was
reemployed, but customers were not satisfied with his workl hence, the reassignment. He also incurred numerous
absences, and opened his own shop, ―pirating‖ the clients of petitioners. He alleged once more that he voluntarily left.
The LA found that he was illegally dismissed. It ruled—

WHEREFORE, judgment is hereby rendered finding Complainant to have been illegally
dismissed. Concomitantly, Respondents are ordered jointly and severally to pay
Complainant the following:
P232,065.92—representing backwages; 50,400.00—representing separation pay;
18,571.00—representing 13th month pay P301,036.92—Total
Ten percent of the total award as attorney‘s fees. The claim of non-remittance of SSS
contribution is dismissed for lack of jurisdiction.
The NLRC reversed. The CA, reinstated the LA ruling.
Issue: (1) Whether Javilgas was illegally dismissed.

(2) Whether attorneys fees were proper
Held: (1) YES. ILLEGALLY DISMISSED.

Petitioners did not offer any evidence to disprove the allegation that Rodolfo Padilla informed Javilgas by phone to
stop reporting to work. On the contrary, Rodolfo admitted that he ―advised‖ Javilgas to ―concentrate on his (Javilgas‘)
shop if he has no more time for the company (Padilla Machine Shop).‖ Moreover, it was only in the NLRC that the
documents and photographs purporting to show that Javilgas was conducting business inimical to the interests of Padilla
Machine Shop were submitted.
In illegal dismissal cases, the burden of proof is on the employer to show that the employee was dismissed for a valid
and just cause. Petitioners have failed to discharge themselves of the burden.
Petitioner Rodolfo, however, did not elaborate or show proof of the claimed abandonment. Instead, he concluded that
Javilgas “abandoned his corresponding duties and responsibilities x x x when he established and created his own
machine shop outfit x x x.‖
For abandonment to exist, it is essential (a) that the employee must have failed to report for work or must have been
absent without valid or justifiable reason; and, (b) that there must have been a clear intention to sever the employer-
employee relationship manifested by some overt acts. The establishment of his own shop is not enough proof that
Javilgas intended to sever his relationship with his employer.
Moreover, it was only in 2003 that Rodolfo allegedly confirmed his suspicion that Javilgas was operating his own
machine shop. Rodolfo admits that it was only when the case was on appeal to the NLRC that his suspicion was
confirmed.
This only proves that in April 2002, when Rodolfo allegedly “advised” Javilgas to “concentrate on his (Javilgas‟)
shop if he has no more time for the company (Padilla Machine Shop),” petitioners had nothing but unfounded
suspicions.
Petitioners consistently deny that Javilgas was dismissed from service; that he abandoned his employment when he
walked out after his conversation with Rodolfo and never returned to work again. But denial, in this case, does not suffice;
it should be coupled with evidence to support it.
In the instant case, petitioners failed to adduce evidence to rebut Javilgas‘ claim of dismissal and satisfy the burden
of proof required.
As regards the eight-month hiatus before Javilgas instituted the illegal dismissal case, we sustain the Court of Appeals‘
ruling that Javilgas filed the complaint within a reasonable period during the three-year period provided under Article 291
of the Labor Code.
ATTORNEY‘S FEES
Finally, there is no merit in petitioners‘ claim that attorney‘s fees may not be awarded to the respondent since his
case was being handled pro bono by the U.P. Office of Legal Aid, which provides free legal assistance to indigent
litigants. In this jurisdiction, there are TWO CONCEPTS OF ATTORNEY‘S FEES.
In the ORDINARY SENSE, attorney‘s fees represent the reasonable compensation paid to a lawyer by his client for the
legal services he has rendered to the latter.
On the other hand, in its EXTRAORDINARY CONCEPT, attorney‟s fees may be awarded by the court as indemnity for
damages to be paid by the losing party to the prevailing party, and not counsel. In its extraordinary sense, attorney‘s fees
as part of damages is awarded only in the instances specified in Article 2208 of the Civil Code, among which are the
following which obtain in the instant case:
(7) In actions for the recovery of wages of household helpers, laborers and skilled
workers;
(8) In actions for indemnity under workmen's compensation and employer's liability
laws;
(11) In any other case where the court deems it just and equitable that attorney's fees
and expenses of litigation should be recovered.
30. David v. Misamis Occidental II Electric Cooperative, Inc., G.R. No. 194785, July 11, 2012
Facts: Petitioner Virgilio S. David (David) was the owner or proprietor of VSD Electric Sales, a company engaged in
the business of supplying electrical hardware including transformers for rural electric cooperatives like respondent
Misamis Occidental II Electric Cooperative, Inc. (MOELCI). To solve its problem of power shortage affecting some
areas within its coverage, MOELCI expressed its intention to purchase a 10 MVA power transformer from David.
David agreed to supply the power transformer provided that MOELCI would secure a board resolution because the
item would still have to be imported.
Engr. Rada and Director Jose Jimenez who was in-charge of procurement, returned to Manila and presented to David
the requested board resolution which authorized the purchase of one 10 MVA power transformer. David presented his
proposal for the acquisition of said transformer. David instructed his then secretary and bookkeeper, Ellen M. Wong,
to type the names of Engr. Rada and Jimenez at the end of the proposal. Both signed the document under the word
―conforme.‖ The board resolution was thereafter attached to the proposal.
In the proposal, the subject transformer, together with the basic accessories, was valued at P5,200,000.00. It was also
stipulated therein that 50% of the purchase price should be paid as downpayment and the remaining balance to be paid
upon delivery and that the freight handling, insurance, customs duties, and incidental expenses were for the account of the
buyer. The Board Resolution, on the other hand, stated that the purchase of the said transformer was to be financed
through a loan from the National Electrification Administration (NEA).
As there was no immediate action on the loan application, Engr. Rada returned to Manila and requested David to
deliver the transformer to them even without the required downpayment. David granted the request provided that
MOELCI would pay interest at 24% per annum. Engr. Rada acquiesced
On December 17, 1992, the goods were shipped to Ozamiz City via William Lines. When nothing was heard from
MOELCI for sometime after the shipment, David‘s Marketing Manager, went to Ozamiz City to check on the shipment.
Medina was able to confer with Engr. Rada who told him that the loan was not yet released and asked if it was possible to
withdraw the shipped items. Medina agreed.
When no payment was made after several months, Medina was constrained to send a demand letter , which
MOELCI duly received. Engr. Rada replied in writing that the goods were still in the warehouse of William Lines again
reiterating that the loan had not been approved by NEA. This prompted Medina to head back to Ozamiz City where he
found out that the goods had already been released to MOELCI evidenced by the shipping company‘s copy of the
Bill of Lading which was stamped ―Released,‖ and with the notation that the arrastre charges in the amount of
P5,095.60 had been paid.
Subsequently, demand letters were sent to MOELCI demanding the payment of the whole amount plus the balance of
previous purchases of other electrical hardware. Aside from the formal demand letters, David added that several
statements of accounts were regularly sent through the mails by the company and these were never disputed by
MOELCI.
David filed a complaint for specific performance with damages with the RTC. MOECLI moved for its dismissal on the
ground that there was lack of cause of action as there was no contract of sale, to begin with, or in the alternative, the said
contract was unenforceable under the Statute of Frauds.
Trial ensued. RTC dismissed the complaint. It found that although a contract of sale was perfected, it was not
consummated because David failed to prove that there was indeed a delivery of the subject item and that MOELCI
received it. CA affirmed the ruling of the RTC ruling that although David was correct in saying that MOELCI was
deemed to have admitted the genuineness and due execution of the ―quotation letter‖ (Exhibit A), wherein the signatures
of the Chairman and the General Manager of MOELCI appeared, he failed to offer any textual support to his stand that it
was a contract of sale instead of a mere price quotation agreed to by MOELCI representatives.
Hence, this petition.
Issues: (1) Whether or not there was a perfected contract of sale – YES
(2) Whether or not there was delivery. – YES
(3) Whether or not stipulated interest is proper. – NO
(4) Whether or not award for attorney‘s fees is proper. – NO
Held: There was a perfected contract of sale.

First, there was meeting of minds as to the transfer of ownership of the subject matter. The letter, though appearing
to be a mere price quotation/proposal, was not what it seemed. It contained terms and conditions, so that, by the fact that
Jimenez, Chairman of the Committee on Management, and Engr. Rada, General Manager of MOELCI, had signed their
names under the word ―CONFORME,‖ they, in effect, agreed with the terms and conditions with respect to the purchase
of the subject Power Transformer. If their purpose was merely to acknowledge the receipt of the proposal, they
would not have signed their name under the word ―CONFORME.‖ Moreoever, a board resolution was issued
authorizing the purchase and top officials of MOELCI even visited David‘s office in Quezon City three times to discuss
the terms of the purchase. Second, the document specified a determinate subject matter. Third, the document stated
categorically the price certain in money which was P5,200,000.00 for one (1) unit
There was delivery.

There was delivery and release. Among the terms and conditions of the proposal to which MOELCI agreed stated ―C&F
Manila, freight, handling, insurance, custom duties and incidental expenses shall be for the account of MOELCI II.‖ Thus,
the delivery made by David to William Lines, Inc., as evidenced by the Bill of Lading, was deemed to be a delivery
to MOELCI. When David sent the item through the carrier, it amounted to a delivery to MOELCI. There being delivery
and release, said fact constitutes partial performance which takes the case out of the protection of the Statute of Frauds.
INTEREST REDUCED TO 12%

That being said, the Court now comes to David‘s prayer that MOELCI be made to pay the total sum of P5,472,722.27 plus
the stipulated interest at 24% per annum from the filing of the complaint. Although the Court agrees that MOELCI
should pay interest, the stipulated rate is, however, UNCONSCIONABLE and should be EQUITABLY REDUCED.
Accordingly, the excessive interest of 24% per annum stipulated in the sales invoice should be reduced to 12% per annum.
ENTITLEMENT TO ATTORNEY‟S FEES AS PART OF DAMAGES

Indeed, David was compelled to file an action against MOELCI but this reason alone will not warrant an award of
attorney‟s fees. It is settled that the AWARD OF ATTORNEY‘S FEES IS THE EXCEPTION RATHER THAN THE RULE.
Attorney‘s fees, as part of damages, are not necessarily equated to the amount paid by a litigant to a lawyer. In the
ordinary sense, attorney‘s fees represent the reasonable compensation paid to a lawyer by his client for the legal services
he has rendered to the latter; while in its extraordinary concept, they may be awarded by the court as indemnity for
damages to be paid by the losing party to the prevailing party.
Attorney‘s fees as part of damages are awarded only in the instances specified in Article 2208 of the Civil Code which
demands factual, legal, and equitable justification. Its basis cannot be left to speculation or conjecture. In this regard, none
was proven.
Moreover, in the absence of stipulation, a winning party may be awarded attorney‘s fees only in case plaintiff‘s
action or defendant‘s stand is so untenable as to amount to gross and evident bad faith. MOELCI‘s case cannot be
similarly classified.
Also, David‘s claim for the balance of P73,059.76 plus the stipulated interest is denied for being unsubstantiated.
Decision of the CA is REVERSED and SET ASIDE. Respondent Misamis Occidental II Electric Cooperative, Inc. is
ordered to pay petitioner Virgilio S. David the total sum of P5,472,722.27 with interest at the rate of 12% per
annum reckoned from the filing of the complaint until fully paid.
31. Lacson v. Reyes, 182 SCRA 729 (1990)

Facts: Ephraim Serquina, petitioned the respondent court for the probate of the last will and testament of Carmelita
Farlin. He also petitioned the court in his capacity as counsel for the heirs, the Lacsons, and as executor under the will.
Petition was not opposed. Respondent court issued a ―certificate of allowance‖. Atty. Ephraim Serquina filed a
―motion for attorney‘s fees‖ against the petitioners, alleging that the heirs had agreed to pay, as and for his legal
services rendered, the sum of P68,000.00. The heirs denied the claim for P68,000.00 alleging that the sum agreed upon
was only P7,000.00, a sum they had allegedly already paid.
Issue: Whether Atty. Sequina is entitled to attorney‘s fees.
Held: NO. It is pointed out that an attorney who is concurrently an executor of a will is barred from recovering
attorney‟s fees from the estate.
SEC. 7. ... If there are two or more executors or administrators, the compensation shall be
apportioned among them by the court according to the services actually rendered by them
respectively. When the executor or administrator is an attorney, he shall not charge
against the estate any professional fees for legal services rendered by him. When the
deceased by will makes some other provision for the compensation of his executor, that
provision shall be a full satisfaction for his services unless by a written instrument filed in
the court he renounces all claim to the compensation provided by the will.
The rule is therefore clear that an administrator or executor may be allowed fees for the necessary expenses he has
incurred as such, but he may not recover attorney‟s fees from the estate. Compensation is fixed by the rule but such
compensation is in the nature of executor‘s or administrator‘s commissions, and never as attorney‟s fees. A greater
sum other than that established by the rule may be allowed ‗in any special case, where the estate is large, and the
settlement has been attended with great difficulty, and has required a high degree of capacity on the part of the executor or
administrator.‘ It is left to the sound discretion of the court. With respect to attorney‟s fees, the rule, as we have seen,
disallows them.
Accordingly, to the extent that the trial court set aside the sum of P65,000.00 as and for Mr. Serquina‘s attorney‘s fees, to
operate as a ―lien on the subject properties,‖ the trial judge must be said to have gravely abused its discretion.
WHO SHOULDERS ATTORNEY‟S FEES?

We have held that a lawyer of an administrator or executor may not charge the estate for his fees, but rather, his client.
Mutatis mutandis, where the administrator is himself the counsel for the heirs, it is the latter who must pay therefor.
In that connection, attorney‘s fees are in the nature of actual damages, which must be duly proved. They are also
SUBJECT TO CERTAIN STANDARDS, to wit:
(1) they must be reasonable, that is to say, they must have a bearing on the importance of the subject matter in
controversy;
(2) the extent of the services rendered; and
(3) the professional standing of the lawyer.
In all cases, they must be addressed in a full-blown trial and not on the bare word of the parties. And always, they are
subject to the moderating hand of the courts.
Records show that Atty. Ephraim Serquina, as counsel for the heirs, performed the following:
That after the order of allowance for probate of the will, the undersigned counsel assisted the heirs to transfer
immediately the above-mentioned real estate in their respective names, from (sic) the payment of estate taxes in
the Bureau of Internal Revenue to the issuance by the Registry of Deeds of the titles, in order for the heirs to sell
the foregoing real estate of 10,683 sq. m. (which was also the subject of sale prior to the death of the testator) to
settle testator‘s obligations and day-to-day subsistence being (sic) that the heirs, except Zena F. Velasco, are not
employed neither doing any business
The Court is not persuaded from the facts above that Atty. Serquina is entitled to the sum claimed by him
(P68,000.00) or that awarded by the lower court (P65,000.00). Court observes that these are acts performed routinely
since they form part of what any lawyer worth his salt is expected to do. The will was furthermore not contested. They
are not, so Justice Pedro Tuason wrote, ―a case [where] the administrator was able to stop what appeared to be an
improvident disbursement of a substantial amount without having to employ outside legal help at an additional expense to
the estate,‖ to entitle him to a bigger compensation. He did not exactly achieve anything out of the ordinary.
32. Petron Corporation v. National College of Business and Arts, 516 SCRA 168 (2007)
Facts: Sometime in 1969, the V. Mapa properties, then owned by Felipe and Enrique Monserrat, Jr., were mortgaged to
DBP as part of the security for the P5.2 million loan of Manila Yellow Taxicab Co., Inc. (MYTC) and Monserrat
Enterprises Co. MYTC, for its part, mortgaged 4 parcels of land located in Quiapo, Manila.
On March 31, 1975, however, Felipe‘s ½ undivided interest in the V. Mapa properties was levied upon in execution
of a money judgment in the RTC of Manila (Manila case). DBP challenged the levy through a third-party claim
asserting that the V. Mapa properties were mortgaged to it and were, for that reason, exempt from levy or attachment. The
RTC quashed it.
MYTC and the Monserrats got DBP to accept a dacion en pago arrangement whereby MYTC conveyed to the bank
the four mortgaged Quiapo properties as full settlement of their loan obligation. But despite this agreement, DBP did
not release the V. Mapa properties from the mortgage.
Felipe, acting for himself and as Enrique‘s attorney-in-fact, sold the V. Mapa properties to respondent NCBA. Part
of the agreement was that Felipe and Enrique would secure the release of the titles to the properties free of all liens and
encumbrances including DBP‟s mortgage lien and Filoil‟s levy. But the Monserrats failed to comply with this
undertaking. NCBA caused the annotation of an affidavit of adverse claim on the TCTs covering the V. Mapa properties.
NCBA filed a complaint against Felipe and Enrique for specific performance with an alternative prayer for
rescission and damages in the RTC.
During the pendency of the civil case, Enrique‘s ½ undivided interest in the V. Mapa properties was levied on in
execution of a judgment of the RTC of Makati (Makati case), holding him liable to Petron on a promissory note.
Subsequently the V. Mapa properties were sold at public auction to satisfy the judgments in the Manila and Makati
cases. Petron, the highest bidder, acquired both Felipe‘s and Enrique‘s undivided interests in the property. The
final deeds of sale of Enrique‘s and Felipe‘s shares in the V. Mapa properties were awarded to Petron. the Monserrats‘
TCTs were cancelled and new ones were issued to Petron. Eventually, Petron intervened in NCBA‘s suit against Felipe,
Enrique and DBP to assert its right to the V. Mapa properties.
The RTC ruled that Petron never acquired valid title to the V. Mapa properties as the levy and sale thereof were
void and that NCBA was now the lawful owner of the properties. Moreover, the RTC held Petron, DBP, Felipe and
Enrique jointly and severally liable to NCBA for exemplary damages and attorney‘s fees. The CA affirmed.
Issue: Whether Petron is entitled to exemplary damages and attorney‘s fees/
Held: NO. Article 2208(5) contemplates a situation where one refuses unjustifiably and in evident bad faith to satisfy
another‘s plainly valid, just and demandable claim, compelling the latter needlessly to seek redress from the
courts. In such a case, the law allows recovery of money the plaintiff had to spend for a lawyer‘s assistance in suing the
defendant – expenses the plaintiff would not have incurred if not for the defendant‘s refusal to comply with the most basic
rules of fair dealing. It does not mean, however, that the losing party should be made to pay attorney‟s fees merely
because the court finds his legal position to be erroneous and upholds that of the other party, for that would be an
intolerable transgression of the policy that no one should be penalized for exercising the right to have contending
claims settled by a court of law. In fact, even a clearly untenable defense does not justify an award of attorney‘s fees
unless it amounts to gross and evident bad faith.
Petron‘s claim to the V. Mapa properties, founded as it was on final deeds of sale on execution, was far from
untenable. No gross and evident bad faith could be imputed to Petron merely for intervening in NCBA‘s suit against
DBP and the Monserrats in order to assert what it believed (and had good reason to believe) were its rights and to have the
disputed ownership of the V. Mapa properties settled decisively in a single lawsuit.
With respect to the award of EXEMPLARY DAMAGES, the rule in this jurisdiction is that the plaintiff must show that he is
entitled to moral, temperate or compensatory damages before the court may even consider the question of whether
exemplary damages should be awarded. In other words, no exemplary damages may be awarded without the
plaintiff‘s right to moral, temperate, liquidated or compensatory damages having first been established. Therefore,
in view of the ruling that Petron cannot be made liable to NCBA for compensatory damages (i.e., attorney‘s fees), Petron
cannot be held liable for exemplary damages either.
33. Buan v. Camaganacan, 16 SCRA 321 (1966)
Facts: Repsondent was a passenger of a Phil. Rabbit Bus belonging to the Estate of Buan. When said bus tried to overtake
a La Mallorca bus. Unfortunately, it hit a trailer travelling in the opposite side.
As a result, respondent suffered injuries (fractured right wrist, crushed left hand, lacerations on right leg. Defedants paid
for the medical expense.
On July 1955, respondent filed a suit for damages. The lower court ordered Buan to pay P2,680 as actual damages plus
P2,000 attorneys fees totaling 4680.
The trial court did not state in its decision why it was awarding attorney‘s fees against the defendants therein, the matter
of such fees was touched but once and appears already in the dispositive portion of the decision.
Issue: Whether the award of 2,000 as attorneys fees is appropriate.
Held NO. The text of the decision should state the reason why attorneys‘ fees are being awarded, otherwise, the award is
disallowed.
The very opening paragraph of Article 2208 reveals that the award of attorneys‟ fees remains exceptional in our law,
and it is up to the court to make an express finding of the facts that bring the case within the execution and justify the
grant of counsel fees. The GENERAL RULE being still that it is not sound public policy to place a penalty on the right to
litigate nor should counsel fees be awarded every time a party wins a lawsuit.
While under Art. 2208 it is allowed to recover counsel fees where the court deems it just and equitable that such
should be recovered, but even in such cases the conclusion must be borne out by findings of facts and law.
What is just and equitable in a given case is not a mere matter of feeling but of demonstration. This is especially
true since the last part of Article 2208 expressly adds that the ―attorneys‘ fees and expenses of litigation must be
reasonable‖.
In the present case, for the award of P2,680.00 in actual damages the appealed decisions awards no less than P2,000.00 in
counsel fees, which is hardly reasonable. Hence, the exercise of judicial discretion in the award of attorneys‟ fees
under Article 2208 (11) of the Civil Code demands a factual, legal, or equitable justification upon the basis of which
the court exercises its discretion. Without such justification, the award is a conclusion without a premise, as basis being
improperly left to speculation and conjecture.
For the foregoing reasons, the decision under review is hereby modified by deleting therefrom the award of attorney‘s
fees.
34. Villanueva v. Salvador, 480 SCRA 39 (2006)

Facts: On December 20, 1991, herein respondents, the spouses Alejo Salvador and Virginia Salvador (Salvadors,
collectively), secured a loan of P7,650.00 from petitioner Ever Pawnshop owned and managed by co-petitioner Enrico
B. Villanueva (Villanueva). On January 23, 1992, the Salvadors took out a second loan of P5,400.00 pledging, just like
in the first loan transaction, jewelry items. Pawnshop Ticket No. 29919, covering the first loan, indicated April 10,
1992 as the last day to redeem the jewelries pawned, whereas the redemption period for the items given as security for
the second loan under Pawnshop Ticket No. 30792 fell on May 22, 1992
The separate redemption periods came and went, but the Salvadors failed to redeem the pawned pieces of jewelry.
Nonetheless, on June 1, 1992, their son paid Ever Pawnshop P7,000.00, the amount to be applied against the first
loan of P7,650.00. On account of this development, Pawnshop Ticket No. 29919 was cancelled and replaced by
Pawnshop Ticket No. 34932. Vis-à-vis the second loan, Ever Pawnshop agreed to the extension of the maturity date
to June 30, 1992, provided the Salvadors pay 20% of their second loan obligation on or before June 4, 1992, failing
which the securing items shall be auctioned as scheduled. Unlike in the first loan, however, a new pawn ticket was not
issued for the second loan.
In the meantime, Ever Pawnshop issued a notice announcing the public auction sale on June 4, 1992 of all January 1
to 31, 1992 unredeemed pledges. The notice appeared in the Classified Ads Section of the Manila Bulletin on June 4,
1992, the very day of the auction itself.
On July 1, 1992, the Salvadors repaired to the pawnshop in a bid to renew the second loan by tendering the aforesaid
20% of the amount due thereon, only to be informed that the pledged jewelry had already been auctioned as
scheduled on June 4, 1992. As found by the CA, however, pieces of the pawned jewelry items were still in the shop ,
indicating that Ever Pawnshop either bought some of the unredeemed pledges or did not sell them.
A month after, Mrs. Salvador attempted to redeem the jewelry items pledged for the first loan, as renewed, but all
she got in response were unclear information as to their whereabouts.
On August 7, 1992, Mr. Salvador tendered payment of the amount due on both loans, with a demand for the return of the
jewelry thus pledged. Ever Pawnshop, however, refused to accept the tender.
Such was the state of things when, on August 11, 1992, at the RTC-Pasig City, the Salvadors filed a complaint for
damages against Villanueva and Ever Pawnshop arising from the sale without notice of the two (2) sets of jewelry
pledged as security for both loans. The complaint, docketed as Civil Case No. 62334, was eventually raffled to Branch
164 of the court.
Eventually, in a decisiondated January 25, 1995, the trial court, on its finding that the set of jewelry covered by the
renewed first and second loans were sold without the necessary notice, rendered judgment for the Salvadors. CA
affirmed.
Issue: (1) Whether the items under the first loan were actually sold by Ever Pawnshop & Villanueva
(2) Whether there was a valid notice of sale for the pledged jewelry was effected.
(3) Whether the award of 20K as moral damages and 5K as attorneys fees was proper.
Held: NO VALID NOTICE. Villanueva argues that the Salvadors were effectively put on notice of the sale of the pledged
jewelries, the maturity date and expiry date of redemption period of the two loans being indicated on the face of each
of the covering pawnshop tickets. Pressing the point, petitioners invite attention to the caveat printed on the dorsal
side of the tickets stating that the pledged items shall be auctioned off in the event they are not redeemed before the
expiry date of the redemption period.
Section 13 of the Pawnshop Regulation Act, and even the terms and conditions of the pledge itself, accord the pawner
a 90-day grace period from the date of maturity of the loan obligation within which to redeem the pawn . But even
before the lapse of the 90-day period, the same Decree requires the pawnbroker to notify the defaulting debtor of the
proposed auction sale.
However, over and above the foregoing prescription is the mandatory requirement for the publication of such notice
once in at least 2 daily newspapers during the week preceding the date of the auction sale.
The CA cannot really be faulted for making short shrift of petitioners‘ posture respecting their alleged compliance with
the notice requirement in question. As it were, Ever Pawnshop only caused publication of the auction in one
newspaper, i.e., the Manila Bulletin, and on the very day of the scheduled auction sale itself, instead of a week
preceding the sale as prescribed by Section 15 of P.D. 114. Verily, a notice of an auction sale made on the very scheduled
auction day itself defeats the purpose of the notice, which is to inform a pawner beforehand that a sale is to occur so that
he may have that last chance to redeem his pawned items.
DAMAGES
While proof of pecuniary loss is unnecessary to justify an award of MORAL DAMAGES, the amount of indemnity being
left to the sound discretion of the court, it is, nevertheless, essential that the claimant satisfactorily proves the existence
of the FACTUAL BASIS of the damages and its CAUSAL CONNECTION to defendant‘s wrongful act or omission. This is
so because moral damages, albeit incapable of pecuniary estimation, are designed to compensate the claimant for
actual injury suffered and not to impose a penalty on the wrongdoer.There is thus merit on petitioners‘ assertion that
proof of MORAL SUFFERING MUST PRECEDE A MORAL DAMAGE AWARD.
The CONDITIONS REQUIRED IN AWARDING MORAL DAMAGES are:

(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 must be 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.
While there need not be a showing that the defendant acted in a wanton or malevolent manner, as this is a
requirement for an award of exemplary damages, there must still be proof of fraudulent action or bad faith for a claim
for moral damages to succeed. Then, too, moral damages are generally not recoverable in culpa contractual except
when bad faith supervenes and is proven.
As aptly pointed out by petitioners, the trial court concluded that the respondents‘ ―cause of action arose merely from the
negligence of the herein [petitioners].‖ It may be that gross negligence may sometimes amount to bad faith. But what is
before us is a matter of simple negligence only, it being the trial court‘s categorical finding that the case came about
owing to petitioners‟ mistake in renewing the loan when the sale of the article to secure the loan had already been
effected.
The CA‘s reliance on Article 2220 of the Civil Code in affirming the award of moral damages is misplaced. Said article
provides:
Art. 2220. Willful injury to property may be a legal ground for awarding moral damages
if the court should find that, under the circumstances, such damages are justly due. The
same rule applies to breaches of contract where the defendant acted fraudulently or in
bad faith.
Clear it is from the above that before moral damages may be assessed thereunder, the defendant‟s act must be vitiated by bad faith or that there is willful intent to injure. Simply put,
MORAL DAMAGES CANNOT ARISE FROM SIMPLE

NEGLIGENCE.
The award of ATTORNEY‘S FEES should, likewise, be struck down. As a matter of sound practice, an award of
attorney‟s fee has always been regarded as the exception rather than the rule. Counsel‘s fees are, to be sure, not
awarded every time a party prevails in a suit because of the policy that no premium should be placed on the right to
litigate. Attorney‘s fees, as part of damages, are assessed only in the instances specified in Article 2208 of the Civil
Code. And it is necessary for the trial court to make express findings of fact and law that would bring the case within
the exception.
The final issue relating to the question of whether or not both respondents are liable for damages has, for all intent and
purposes, been rendered moot and academic by the disposition just made. We need not dwell on it any further. Besides,
this particular issue has only made its debut in the present recourse. And it is a well-entrenched rule that issues not raised
below cannot be resolved on review in higher courts.[24] A question that was never raised in the court below cannot be
allowed to be raised for the first time on appeal without offending basic rules of fair play, justice and due process.
35. Eastern Shipping v. Court of Appeals, 234 SCRA 78 (1994)

Facts: This is an action against defendants shipping company, arrastre operator and broker-forwarder for damages
sustained by a shipment while in defendants‘ custody, filed by the insurer-subrogee who paid the consignee the value
of such losses/damages.
Two fiber drums of riboflavin were shipped from Yokohama, Japan for delivery vessel ‗SS EASTERN COMET‘
owned by defendant Eastern Shipping Lines, Inc. under Bill of Lading. The shipment was insured under plaintiff‟s
Marine Insurance Policy. Upon arrival of the shipment in Manila, it was discharged unto the custody of defendant
Metro Port Service. The latter excepted to one drum, said to be in bad order, which damage was unknown to plaintiff.
Allied Brokerage Corporation received the shipment from defendant Metro Port Service, Inc., one drum opened and
without seal. Allied Brokerage Corporation made deliveries of the shipment to the consignee‘s warehouse. The latter
excepted to one drum which contained spillages, while the rest of the contents was adulterated/fake
Plaintiff contended that due to the losses/damage sustained by said drum, the consignee suffered losses totaling
P19,032.95, due to the fault and negligence of defendants. Claims were presented against defendants who failed and
refused to pay. Plaintiff was compelled to pay the consignee P19,032.95 under the aforestated marine insurance policy,
so that it became subrogated to all the rights of action of said consignee against defendants
Eastern Shipping alleged that the shipment was discharged in good order from the vessel unto the custody of Metro Port
Service so that any damage/losses incurred after the shipment was incurred after the shipment was turned over to the latter,
is no longer its liability. Metroport averred that although subject shipment was discharged unto its custody, portion of
the same was already in bad order. Allied Brokerage alleged that plaintiff has no cause of action against it, not having
negligent or at fault for the shipment was already in damage and bad order condition when received by it.
Lower court :
A.Ordering defendants to pay plaintiff, jointly and severally: 1. The amount of P19,032.95, with the present legal interest
of 12% per annum from October 1, 1982, the date of filing of this complaints, until fully paid (the liability of
defendant Eastern Shipping, Inc. shall not exceed US$500 per case or the CIF value of the loss, whichever is lesser, while
the liability of defendant Metro Port Service, Inc. shall be to the extent of the actual invoice value of each package, crate
box or container in no case to exceed P5,000.00 each, pursuant to Section 6.01 of the Management Contract);
2. P3,000.00 as attorney‘s fees, and 3. Costs.
There is sufficient evidence that the shipment sustained damage while in the successive possession of appellants, and
therefore they are liable
Court of Appeals thus affirmed in toto.
Issues:
(1) whether or not a claim for damage sustained on a shipment of goods can be a solidary, or joint and several, liability of
the common carrier, the arrastre operator and the customs broker;
(2) whether the payment of legal interest on an award for loss or damage is to be computed from the time the complaint is
filed or from the date the decision appealed from is rendered; and
(3) whether the applicable rate of interest, referred to above, is twelve percent (12%) or six percent (6%)
Held: The common carrier‘s duty to observe the requisite diligence in the shipment of goods lasts from the time the
articles are surrendered to or unconditionally placed in the possession of, and received by, the carrier for transportation
until delivered to, or until the lapse of a reasonable time for their acceptance by, the person entitled to receive them. When
the goods shipped either are lost or arrive in damaged condition, a presumption arises against the carrier of its failure to
observe that diligence, and there need not be an express finding of negligence to hold it liable. In Fireman‘s Fund
Insurance, Co. vs. Metro Port Service, Inc., we held that the relationship between the consignee and the common carrier is
similar to that of the consignee and the arrastre operator. Since it is the the goods that are in its custody and to deliver
them in good condition to the consignee, such responsibility also devolves upon the CARRIER. Both the ARRASTRE
and the CARRIER are therefore charged with the obligation to deliver the goods in good condition to the consignee.
We do not, of course, imply by the above pronouncement that the arrastre operator and the customs broker are themselves
always and necessarily liable solidarily with the carrier, or vice-versa. Eastern Shipping Lines which, being the carrier
and not having been able to rebut the presumption of fault, is, in any event, to be held liable in this particular case.
The factual finding of both the court a quo and the appellate court is that ―there is sufficient evidence that the shipment
sustained damage while in the successive possession of appellants‖
ON THE ISSUE OF LEGAL INTEREST
The basic issue focuses on the application of either the 6% (under the Civil Code) or 12% (under the Central Bank
Circular) interest per annum. There has been a consistent holding that the Central Bank Circular imposing the 12%
INTEREST PER ANNUM applies only to loans or forbearance of money, goods or credits, as well as to judgments
involving such loan or forbearance of money, goods or credits.
Also, the 6% INTEREST under the Civil Code governs when the transaction involves the payment of indemnities in the
concept of damage arising from the breach or a delay in the performance of obligations in general. Observe, too, that
in these cases, a common time frame in the computation of the 6% interest per annum has been applied, i.e., from the
time the complaint is filed until the adjudged amount is fully paid.
The following rules of thumb for future guidance:
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:
LOAN OR FOREBEARANCE OF MONEY

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 (12%) from the time it is judicially demanded.
In the absence of stipulation, the rate of interest shall be 12% PER ANNUM to be computed from default, i.e., from
judicial or extrajudicial demand under and subject to the provisions of Article 116923 of the Civil Code.
NOT A LOAN/FOREBEARANCE OF MONEY

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.
FINAL JUDGMENT
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 12% PER ANNUM from such finality until its
satisfaction, this interim period being deemed to be by then an equivalent to a forbearance of credit.
The appealed decision is AFFIRMED with the MODIFICATION that the legal interest to be paid is (6%) on the amount
due computed from the decision. A (12%) interest, in lieu of SIX PERCENT (6%), shall be imposed on such amount
upon finality of this decision until the payment thereof.
C. Moral Damages
- Civil Code
1. Mayo v. People, G.R. No. 91201, December 5, 1991

DOCTRINE: We agree that complainant Linda Navarette is entitled to moral damages. She suffered injuries as a result of
the criminal offense of the petitioner. Moreover, her injuries resulting in a permanent scar at her forehead and the loss
of her right eye undoubtedly gave her mental anguish, wounded feelings and shock. The psychological effect on her as
regards the scar on her forehead and her false eye must have devastated her considering that women in general are
fastidious on how they Iook.
Nevertheless, we find no justification to award moral damages in favor of Linda Navarette for the loss of her
boyfriend. No doubt, the loss of her boyfriend after the accident added to her mental and emotional sufferings and
psychologically affected and disturbed her. Moreover, there is no clear evidence on record to show that her boyfriend
left her after the accident due to her physical injuries. He may have left her even if she did not suffer the slightest
injury.
The reasons for the break-up of a courtship are too many and too complicated such that they should not form the
basis of damages arising from a vehicular accident Moreover, granting that her boyfriend left her due to her physical
injuries, we still find no legal basis for the award of moral damages in favor of complainant Navarette because of the loss
of a boyfriend.
Article 2719 quoted earlier enumerates cases wherein moral damages may be granted. Loss of a boyfriend as a result
of physical injuries suffered after an accident is not one of them. Neither can it be categorized as an analogous case.
This discretion is, however, conditioned in that the ―amount awarded should not be palpably and scandalously
excessive‖ so as to indicate that it was the result of prejudice or corruption on the part of the trial court.
In determining the amount of moral damages, the actual losses sustained by the aggrieved party and the gravity of the
injuries must be considered. Finally, ―moral damages are emphatically not intended to enrich a complainant at
theexpense of the defendant. They are awarded only to enable the injured party to obtain means, diversion or amusements
that will serve to alleviate the moral suffering he has undergone, by reason of the defendant‘s culpable action.‖
2. Samson v. Bank of the Philippine Islands, G.R. No. 150487, July 10, 2003
DOCTRINES: Moral damages are meant to compensate the claimant for any physical suffering, mental anguish, fright,
serious anxiety, besmirched reputation, wounded feelings, moral shock, social humiliation and similar injuries unjustly
caused. Although incapable of pecuniary estimation, the amount must somehow be proportional to and in approximation
of the suffering inflicted. Moral damages are not punitive in nature and were never intended to enrich the claimant at
the expense of the defendant.
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. Trial courts are given discretion in determining the amount, with the
limitation that it ―should not be palpably and scandalously excessive.‖ Indeed, it must be commensurate to the loss
or injury suffered.
The SOCIAL STANDING of the aggrieved party is essential to the determination of the proper amount of the award.
Otherwise, the goal of enabling him to obtain means, diversions, or amusements to restore him to the status quo ante
would not be achieved.
3. Villanueva v. Salvador, G.R. No. 139436, January 25, 2006

DOCTRINE: While proof of pecuniary loss is unnecessary to justify an award of moral damages, the amount of indemnity
being left to the sound discretion of the court, it is, nevertheless, essential that the claimant satisfactorily proves the
existence of the factual basis of the damages AND its causal connection to defendant‘s wrongful act or omission.
This is so because moral damages, albeit incapable of pecuniary estimation, are designed to compensate the claimant for
actual injury suffered and not to impose a penalty on the wrongdoer. There is thus merit on petitioners‘ assertion that
proof of moral suffering must precede a moral damage award.
CONDITIONS REQUIRED IN AWARDING MORAL DAMAGES:

(1) there must be an injury, whether physical, mental or psychological, clearly sustained by the claimant;
(3) the wrongful act or omission of the defendant must be 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.
While there need not be a showing that the defendant acted in a wanton or malevolent manner, as this is a requirement for
an award of exemplary damages, there must still be proof of fraudulent action or bad faith for a claim for moral
damages to succeed. Then, too, moral damages are generally not recoverable in culpa contractual EXCEPT when bad
faith supervenes and is proven.
4. Mahinay v. Velasquez, G.R. No. 152753, January 13, 2004

DOCTRINE: In order that moral damages may be awarded, there must be PLEADING and PROOF of moral suffering,
mental anguish, fright and the like. While respondent alleged in his complaint that he suffered mental anguish, serious
anxiety, wounded feelings and moral shock, he failed to prove them during the trial. Mere allegations do not suffice;
they must be substantiated by clear and convincing proof.
The award of moral damages must be anchored to a clear showing that respondent actually experienced mental anguish,
besmirched reputation, sleepless nights, wounded feelings or similar injury.
5. Mercury Drug Corporation v. Huang, G.R. No. 172122, June 22, 2007
Facts: The award of moral damages is aimed at a restoration, within the limits of the possible, of the spiritual status
quo ante.‖ Moral damages are designed to compensate and alleviate in some way the physical suffering, mental anguish,
fright, serious anxiety, besmirched reputation, wounded feelings, moral shock, bears no relation whatsoever with the
wealth or means of the offender.
6. Kierulf v. Court of Appeals, 269 SCRA 433 (1997)

Facts: On the evening of February 28, 1987, a Pantranco bus was travelling along EDSA towards Balintawak. Then, 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 Porfirio Legaspi.
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 QC 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 which 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.
The front portion of the pickup truck, owned by Spouses Kierulf was smashed to pieces. The cost of repair was
estimated at P107,583.50.
Sps Kierulf and their driver Legaspi filed an action to recover damages against Pantranco.
According to Pantranco, the bus 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 underchassis 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.
RTC awarded the ff:

(1) Actual, moral, and exemplary damages in favor of Lucila Kierulf.
(2) Indemnification in favor of Victor Kierulf for the damage to the Isuzu vehicle
(3) Moral damages in favor of driver Legaspi and also reimbursement to Sps. Kierulf for incurring medical expenses
for the treatment of Legaspi.
On appeal, CA modified the RTC decision 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.
The defendant is further ordered to pay the amount of P50,000.00 as fair and reasonable
attorney‘s fees. And to pay costs of suit.
Hence, this petition.
Essentially, Spouses Kierulf and Legaspi argue that the damages awarded were inadequate while Pantranco counters that
they were astronomical, bloated and not duly proved.
Issue: How much moral, exemplary, and actual damages are the victims entitled to. (Omitted the discussion on
negligence. Basta, Pantranco still disputed the finding of negligence against its driver but since the SC is not a trier of
facts... lam na.)
Held:
MORAL DAMAGES:
―LOSS OF RIGHT TO CONSORTIUM / IMPAIRMENT OF SEXUAL LIFE‖
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 their WOUNDED MORAL FEELINGS and PERSONAL PRIDE.
The Kierulf spouses add that the CA should have considered another factor: the LOSS OF THEIR CONJUGAL
FELLOWSHIP and the IMPAIRMENT OR DESTRUCTION OF THEIR SEXUAL LIFE.
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, is cited as authority for the claim of
damages by reason of loss of marital consortium, i.e. loss of conjugal fellowship and sexual relations.\
Pantranco rebuts that Victor‘s claim of moral damages on alleged loss of consortium is without legal basis. Article 2219
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.
Rodriguez v. Bethlehem DOES NOT APPLY

The Court notes that the Rodriguez case clearly reversed the original common law view first enunciated in the case of
Deshotel vs. Atchison, 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 the CA, 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 (pun
intended?) 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 CA. For lack of factual
basis, such claim cannot be ruled upon by this Court at this time.
―NO CONSIDERATION OF SOCIAL & FINANCIAL STANDING‖

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.
Be that as it may, it is still proper to award moral damages to 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 (wild). 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.
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.
You may jump to the Epilogue for further discussion on Moral Damages.
EXEMPLARY DAMAGES:
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. However, it cannot be
recovered as a matter of right. It is based entirely on the discretion of the court.
Jurisprudence sets certain REQUIREMENTS BEFORE EXEMPLARY DAMAGES MAY BE AWARDED, to wit:
(1) They 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 CA on the part of
Pantranco. Public utility operators like Pantranco, 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 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.
LOSS OF EARNINGS
Lost income in the amount of P16,500.00 is also claimed by Legaspi stating that his ―whole future has been
jeopardized.‖ This, in turn, is not rebutted by Pantranco. Thus, the claim of Legaspi that he had been incapacitated for 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 and is demandable under Article 2205.
CA 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
332 Agas, Anzures, Buan, Cusi,

Navarrete, Ongchuan, Reposo, & Roco 3B
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.
As for Lucila, her 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. These may not be presumed.
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, but 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.
REDUCTION OF ACTUAL DAMAGES ON THE ISUZU PICKUP BASED ON AN ESTIMATE

Kierulfs contend that the reduction of 10% from the written estimate of the cost of repairs by the trial court is pure
speculation. An ESTIMATE, as it is categorized, is not an actual expense incurred or to be incurred in the repair. The
reduction made by CA is reasonable considering that in this instance such estimate was secured by the complainants
themselves.
EPILOGUE
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, it is nevertheless essential that the claimant should
satisfactorily show the existence of the factual basis of damages 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.
In Francisco vs. GSIS, 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. NLRC, 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. 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.
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.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 P16,500.00 as actual or compensatory damages is also GRANTED to Legaspi. All
other awards of CA 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.
7. People v. Iroy, G.R. No. 187743, March 3, 2010

DOCTRINE: Moral damages are automatically granted in a rape case without need of further proof other than the fact of its
commission. For it is assumed that a rape victim has actually suffered moral injuries entitling her to such an award.
The appellate court correctly ruled when it modified that, in addition to the award of civil indemnity of Seventy-Five
Thousand Pesos (P75,000.00), appellant is likewise ordered to pay the victim, AAA, another Seventy-Five Thousand
Pesos (P75,000.00) as moral damages.
8. People v. Pareja, G.R. No. 188979, September 5, 2012

DOCTRINE: (1) we find appellant Christopher Pareja y Velasco GUILTY of the crime of ATTEMPTED RAPE;
(2) we SENTENCE him to suffer the indeterminate penalty of six (6) years of prision correccional, as minimum, to 10
years of prision mayor, as maximum; and
(3) we ORDER him to PAY the victim the amounts of P30,000.00 as civil indemnity; P25,000.00 as moral damages; and
P10,000.00 as exemplary damages.
9. People v. Rarugal, G.R. No. 188603, January 16, 2013

DOCTRINE: When death occurs due to a crime, the following may be recovered:
(1) civil indemnity ex delicto for the death of the victim;
(2) actual or compensatory damages;
(3) moral damages;
(4) exemplary damages;
(5) attorney‘s fees and expenses of litigation; and
(6) interest, in proper cases.
We sustain the RTC‘s award for moral damages in the amount of P50,000.00 even in the absence of proof of mental and
emotional suffering of the victim‘s heirs. 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.
10. Fores v. Miranda, G.R. No. L-12163, March 4, 1959

DOCTRINE: As ruled in Cachero v. Manila Yellow Taxicab, moral damages are not recoverable in damage actions
predicated on a breach of the contract of transportation, in view of
Articles 2219 and 2220.
By contrasting the provisions of these two articles it immediately becomes apparent that:
(a) In case of breach of contract (including one of transportation) proof of bad faith or fraud (dolus), i.e., wanton or
deliberately injurious conduct, is essential to justify an award of moral damages; and
(b) That a breach of contract cannot be considered included in the descriptive term "analogous cases" used in Art.
2219; not only because Art. 2220 specifically provides for the damages that are caused by contractual breach, but
because the definition of quasi-delict in Art. 2176 expressly excludes the cases where there is a "pre-existing
contractual relation between the parties."
The EXCEPTION TO THE BASIC RULE OF DAMAGES now under consideration is a mishap resulting in the death of a
passenger, in which case Article 1764 makes the common carrier expressly subject to the rule of Art. 2206, that entitles
the spouse, descendants and ascendants of the deceased passenger to "demand moral damages for mental anguish by
reason of the death of the deceased.
But the exceptional rule of Art. 1764 makes it all the more evident that where the injured passenger does NOT die,
moral damages are not recoverable unless it is proved that the carrier was guilty of malice or bad faith.
To award moral damages for BREACH OF CONTRACT, therefore, without proof of bad faith or malice on the part of the
defendant, as required by Art. 2220, would be to violate the clear provisions of the law, and constitute unwarranted
judicial legislation.
It is also suggested that a carrier's violation of its engagement to safely transport the passenger involves a breach of the
passenger's confidence, and therefore should be regarded as a breach of contract in bad faith, justifying recovery of moral
damages under Art. 2220. This THEORY IS UNTENABLE, for under it the carrier would always be deemed in bad faith, in
every case its obligation to the passenger is infringed, and it would be never accountable for simple negligence; while
under the law (Art. 1756). The presumption is that common carriers acted negligently (and not maliciously), and Art.
1762 speaks of negligence of the common carrier.
11. Sulpicio Lines, Inc., v. Curso, G.R. No. 157009, March 17, 2010
DOCTRINE: 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. As an EXCEPTION, moral damages may be awarded in case of breach of
contract of carriage that results in the death of a passenger, in accordance with Article 1764, in relation to Article 2206
(3).
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.
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.
To be entitled to moral damages, the respondents must have a right based upon law. It is true that under Article 1003,
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.
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
question following the ejusdem generis rule. Hence, Article
1003 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.
12. Bagumbayan v. Intermediate Appellate Court, 132 SCRA 441 (1984)

Facts: Spouses Lelisa Seña and Arturo Seña and their 4 children went to the Tropical Palace Hotel, Metro Manila to
see the Reycard Duet Show. They occupied a table and ordered drinks before the show started.
Lelisa‘s version was that when a waiter named Baez was going to serve them, the tray containing the drinks was
overturned and fell on her. She was drenched. Later, she felt some chill. The drinks and the splinters from the broken
glasses allegedly destroyed her dress which, with her handbag and shoes, cost 1K.
She sensed that some persons were laughing at or pitying her. Lawyer Gatchalian, who was at the same table,
commented that it was one of those unavoidable things. A waitress took Lelisa to the ladies‟ room. She had to remove
her dress and underwear which were wet. She was not given any towel to cover herself. She remained standing as there
was no chair. She returned to the hall after about 30 minutes later when the show had started. Lelisa testified that she was
claiming MORAL DAMAGES OF P100,000 for herself and her husband due to embarrassment and the fact that the
management did not even offer any apology on that night. She was claiming exemplary damages in the same amount
to teach the management a lesson. The husband, Arturo Seña , testified that the incident infuriated him. There was no
apology from the management.
Rudy Tanchanco, the food and beverage manager apologized in open court to the plaintiffs in behalf of the
management for the inconvenience caused to them.
The Señas sued the corporation, as employer of the waiter, for ACTUAL DAMAGES OF P200,000 plus attorney‘s fees
of P10,000 and such moral and exemplary damages as might be fixed by the court. Cause of action was QUASI-
DELICT based on articles 2176 and 2180 of the Civil Code.
The corporation in its answer alleged that it came to know of the incident only when it was served with summons and had
the incident been brought to its attention on that same night, it would have apologized immediately to the plaintiffs, made
appropriate amends and taken steps to discipline the waiter and his supervisor. In its answer it apologized to the plaintiffs
and labelled the incident as a fortuitous event. Corporation alleged that it observed diligentissimi patris-familias to
prevent the damage. It reiterated that it was sorry for what had happened. It manifested its desire to make the proper
amends in any reasonable manner or form.
Trial court awarded the Señas P1,540 as actual damages consisting of the value of Mrs. Seña‘s outfit and P 540, the
cost of the six tickets used by the Seña family which was considered a loss because of their alleged failure to enjoy the
show. It also awarded the Señas P50,000 as moral damages, P10,000 as exemplary damages and P5,000 as attorney‘s
fees. (The trial court sensibly noted that court action could have been avoided had the matter been taken up directly
with the corporation before the action was filed. No extrajudicial demand preceded the action.)
IAC affirmed the judgment with the modification that the moral and exemplary damages were reduced to P15,000 and
P5,000, respectively.
Issue: Whether the damages awarded were proper.
Held: NO BASIS FOR MORAL & EXEMPLARY DAMAGES.

While the award for actual damages has some basis, the grant of moral and exemplary damages is devoid of legal
justification because it was not predicated upon any of the cases enumerated in the Civil Code.
ART. 2217. Moral damages include physical suffering, mental anguish, fright, serious
anxiety, besmirched reputation, wounded feelings, moral shock, social humiliation, and
similar injury. Though incapable of pecuniary computation, moral damages may be
recovered if they are the proximate result of the defendant‘s wrongful act or omission.
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;
(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.
ART. 2220. Willful injury to property may be a legal ground for awarding moral
damages if the court should find that, under the circumstances, such damages are justly
due. The same rule applies to breaches of contract where the defendant acted fraudulently
or in bad faith.
The instant case is not specifically mentioned in article 2219 which refers to quasi-delicts causing physical injuries. IAC
erred in considering it as analogous to the cases mentioned therein without indicating what specific case the instant
case resembles or is analogous to. (SC cited an example: an unfounded complaint with a baseless imputation of forgery is
analogous to defamation mentioned in article 2219(7). It justified an award of P2,000 as moral damages.)
Generally, there can be no recovery of moral damages if the case is not mentioned in articles 2219 and 2220. What we call
moral damages are treated in American jurisprudence as compensatory damages awarded for mental pain and
suffering or mental anguish resulting from a wrong. ―MENTAL SUFFERING means distress or serious pain as
distinguished from annoyance, regret or vexation. MENTAL ANGUISH is intense mental suffering.‖ ―Generally,
damages for mental anguish are limited to cases in which there has been a personal physical injury or where the defendant
wilfully, wantonly, recklessly, or intentionally caused the mental anguish.‖ ―Nor will damages generally be awarded for
mental anguish which is not accompanied by a physical injury, at least where maliciousness, wantonness, or intentional
conduct is not involved.‖ ―Damages for mental anguish and suffering have been held recoverable where the act
complained of was done with such gross carelessness or recklessness as to show an utter indifference to the consequences.‖
―Under Ohio law, damages for emotional distress consisting of embarrassment and mental suffering and dire threats, are
not recoverable unless intentionally caused‖
We hold that the ―EMBARRASSMENT‖ to which Mrs . Seña was exposed by the incident is not the mental anguish
contemplated in article 2217 for which moral damages can be recovered. In the case of People vs. Plaza:
Genoveva de Soriano was a passenger in a riverboat which was bumped by another boat
manned by Berchman Plaza and caused the first boat to capsize and sink but did not
drown Genoveva. She did not know how to swim. Her life was endangered. She suffered
fright and mental anguish during those moments when her fate was uncertain. Her claim
for P500 as moral damages was not allowed.
In this case, it would not be just and proper to include moral damages in the corporation‘s vicarious liability as
employer. The award of P5,000 as exemplary or corrective damages cannot also be sustained because there was no gross
negligence in this case.
The petitioner is ordered to pay Lelisa Seña the sum of P 5,000 to cover her actual damages, litigation expenses and
attorney‘s fees. The award of moral and exemplary damages is eliminated.
13. United Coconut Planters Bank v. Ramos, 415 SCRA 596 (2003)
Facts: Teofilo Ramos Sr. was held liable for a loan with UCPB from a decision which became final. A writ of
execution was issued wherein in a twist of events, a notice of levy was issued on the property of Teofilo Ramos, someone
who was the namesake of Teofilo Ramos Sr., but a totally different person. Teofilo Ramos‘ company, Ramdustrial
Corporation intended to secure a loan with the UCPB, using the same property as collateral. Naturally, UCPB
denied the loan, because of the levy. Teofilo Ramos executed an affidavit, claiming that he and Teofilo Ramos Sr. were
not the same person. UCPB eventually granted the loan with the property as collateral.
Ramdustrial, facing difficulty to pay the loan, applied with the PDB for a loan (with the said property as collateral) to
pay the UCPB loan. PDB agreed on the condition that the mortgage on the property be cancelled. Pending negotiations
however, PDB noticed the notice of levy annotated on the title of the property, and thus refused to release the proceeds
of the loan. However, via a motion, the notice of levy was cancelled and PDB released the loan.
Despite the cancellation of the notice of levy, the Ramos filed a complaint for damages against petitioner UCPB and
Sheriff Villapaña.
While petitioner admitted that it made a mistake in causing the annotation of notice of levy on the TCT of the respondent,
denied that it was motivated by malice and bad faith. The petitioner alleged that after ascertaining that it indeed made a
mistake, it proposed that the respondent file a motion to cancel levy with a promise that it would not oppose the said
motion. However, the respondent dilly-dallied and failed to file the said motion; forthwith, if any damages were sustained
by the respondent, it was because it took him quite a long time to file the motion. The petitioner should not thus be made
to suffer for the consequences of the respondent‘s delay.
The RTC ruled in favor of respondent Ramos. The complaint against Sheriff Villapaña was dismissed. It awarded
P800,000.00 AS MORAL DAMAGES, P100,000.00 as exemplary damages and P100,000.00 as attorney‘s fees. The CA
affirmed ruling that the petitioner was negligent in causing the annotation of notice of levy on the title of the petitioner
for its failure to determine with certainty whether the defendant Teofilo Ramos, Sr. in Civil Case No. 16453 was the
registered owner of the property covered by TCT No. 275167, and to inform the sheriff that the registered owners of the
property were the respondent and his wife Rebecca Ramos, and thereafter request for the cancellation of the motion of
levy on the property.
Issue: Whether Ramos is entitled to moral, exemplary damages, and attorney‘s fees.
Held: UCPB, as a bank and a financial institution engaged in the grant of loans, is expected to ascertain and verify the
identities of the persons it transacts business with. In this case, UCPB knew that the sureties to the loan granted to ZDC
and the defendants in Civil Case No. 94-1822 were the Spouses Teofilo Ramos, Sr. and Amelita Ramos. The names of the
Spouses Teofilo Ramos, Sr. and Amelita Ramos were specified in the writ of execution issued by the trial court.
In determining whether or not the petitioner acted negligently, the constant test is: ―Did the defendant in doing the
negligent act use that reasonable care and caution which an ordinarily prudent person would have used in the
same situation?
The petitioner has access to more facilities in confirming the identity of their judgment debtors. It should have acted
more cautiously, especially since some uncertainty had been reported by the appraiser whom the petitioner had tasked to
make verifications. It appears that the petitioner treated the uncertainty raised by appraiser Eduardo C. Reniva as a flimsy
matter. It placed more importance on the information regarding the marketability and market value of the property, utterly
disregarding the identity of the registered owner thereof.
DAMAGES
For the award of MORAL DAMAGES TO BE GRANTED, the following must exist:
(1) there must be an injury clearly sustained by the claimant, whether physical, mental or psychological;
(3) the wrongful act or omission of the defendant is the proximate cause of the injury sustained by the claimant; and
(4) the award for damages is predicated on any of the cases stated in Article 2219 of the Civil Code.
IN THE CASE AT BAR, although the Ramos was not the loan applicant and the business opportunities lost were those
of Ramdustrial Corporation, all 4 requisites were established.
FIRST, the Ramos sustained injuries in that his physical health and cardio-vascular ailment were aggravated; his fear
that his one and only property would be foreclosed, hounded him endlessly; and his reputation as mortgagor had been
tarnished.
SECOND, the annotation of notice of levy on the TCT of the Ramos was wrongful, arising as it did from the
petitioner‘s negligent act of allowing the levy without verifying the identity of its judgment debtor.
THIRD, such wrongful levy was the proximate cause of the Ramos‘ misery.
FOURTH, the award for damages is predicated on Article 2219 (10)..
Although the respondent was able to establish the petitioner‘s negligence, we cannot, however, allow the award for
exemplary damages, absent the private respondent‟s failure to show that the petitioner acted with malice and bad
faith. It is a requisite in the grant of exemplary damages that the act of the offender must be accompanied by bad faith or
done in a wanton, fraudulent or malevolent manner.
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. In this case, Ramos was compelled to engage the services of counsel
and to incur expenses of litigation in order to protect his interest to the subject property against the petitioner‘s unlawful
levy. The award is reasonable in view of the time it has taken this case to be resolved.
In sum, we rule that the petitioner acted negligently in levying the property of the respondent despite doubts as to the
identity of the respondent vis-à-vis its judgment debtor. By reason of such negligent act, a wrongful levy was made,
causing physical, mental and psychological injuries on the person of the respondent. Such injuries entitle the
respondent to an award of moral damages in the amount of P800,000.00. No exemplary damages can be awarded
because the petitioner‘s negligent act was not tainted with malice and bad faith. By reason of such wrongful levy,
the respondent had to hire the services of counsel to cause the cancellation of the annotation; hence, the award of
attorney‘s fees.
14. Filipinas Broadcasting Network, Inc., v. AGO Medical and Educational Center, G.R. 141994, Jan.17,

2005 Supra
Facts: On 14 December 1992, the trial court rendered a Decision finding FBNI and Alegre liable for libel except Rima.
The trial court held that the broadcasts are libellous 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 (AMECBCCM) the amount of P300,000.00 moral
damages, plus P30,000.00 reimbursement of attorney‘s fees, and to pay the costs of
suit.
CA affirmed.
Issue: Whether AGO Medical is entitled to moral damages.
Held: YES. 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 CA 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.
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. 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 libelous per se. Thus, AMEC is entitled to moral damages. However, we find the award
of P300,000 moral damages unreasonable. The record shows that even though the broadcasts were libelous per se,
AMEC has not suffered any substantial or material damage to its reputation. Therefore, we reduce the award of moral
damages from P300,000 to P150,000.
ATTORNEY‘S FEES
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.
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 CA failed to point out any circumstance to justify the award.
15. Lagman v. Intermediate Appellate Court, G.R. No. 72281, October 28, 1988
Facts: Michael Lagman was employed as janitor of Puzon Building where private respondent Antonio Fernandez was a
tenant. On April 19, 1975, at about 10AM, Michael Lagman went down from the Puzon Building to the parking lot
behind it where he met Eduardo Liputan, driver of Fernandez. The latter offered for a valuable consideration to teach
him how to drive using private respondent's car. In the course of the instructions, Michael Lagman bumped two cars
parked on the parking lot causing damages thereto. Eduardo Liputan thereafter went up the building and reported the
incident to his employer. Antonio Fernandez in turn reported the matter to the QCPD Traffic Bureau which dispatched an
investigator to the scene of the accident.
Michael Lagman was requested by the investigator to go with him to the Traffic Bureau for investigation where his
written statements were taken. The matter was subsequently referred by the QCPD Investigation Division to the
Metrocom Staff Judge Advocate, Camp Crame, in a referral letter which denominated the offense committed as
"Qualified Theft" or "Carnapping." On the basis of such referral, Camp Crame authorities caused the detention of
Michael Lagman. He was later transferred to Sampaguita Station, Muntinlupa where he languished in jail for more than
4 months his whereabouts initially unknown to his father and co-petitioner, Macario Lagman who had to look for him at
different places until he was finally located at said place of confinement.
Upon referral of the case to the Fiscal's Office of QC for preliminary investigation, the qualified theft or carnapping aspect
of the case was dismissed on the ground that Michael Lagman could not commit carnapping because he cannot
even drive and that it was actually while trying to learn how to drive that he caused damage to the two cars. A case for
damage to property through reckless imprudence was instead filed against Michael Lagman by the Fiscal's office.
Because of Michael's detention for four months in jail, the anxiety suffered by his father and the expenses incurred in
trying to locate and have him released from detention, petitioners filed a Civil Case before the CFI against private
respondent for damages suffered by them as a consequence of the alleged malicious prosecution instituted against
Michael Lagman by private respondent Antonio Fernandez.
In the course of the trial, it was revealed that Atty. Pablito Roxas was INSTRUMENTAL in the preparation of the
affidavits as well as the referral of the case to the QCOD where a charge for carnapping was recommended against
Michael Lagman. Consequently, Atty. Pablito Roxas was impleaded as defendant in the damage suit.
The CFI rendered judgment exonerating Atty. Pablito Roxas but finding Fernandez liable for damages (P40,000.00 as
moral damages; Pl,600.00 to Macario Lagman as compensatory damages in looking for his son, unaware that he was
under detention; P960.00 as actual damages plus three (3) years salary at the rate of P240.00 a month and the sum of
P200.00 representing the loss of articles belonging to said plaintiff Michael Lagman while he was under detention plus
attorney's fees amounting to P5,000.00 and costs of this suit.
Fernandez asserts that not all the elements of MALICIOUS PROSECUTION are present in the instant case and its ruling
that the private respondent is not liable for damages to petitioners.
Issue: Whether there was malicious prosecution.
Held: NONE. Statutory recognition of an action for damages based on malicious prosecution (false accusation or denuncia
falsa) is found in article 2219(8) which allows recovery of moral damages for malicious prosecution. Articles 21 and
2176 of the same Code may also be invoked to justify the action.
To support such action, the PLAINTIFF MUST PROVE
1) the fact of prosecution

2) that the defendant was himself the prosecutor or that he instigated its commencement;
3) that it finally terminated in his acquittal;
4) that in bringing it the prosecutor acted without probable cause,
5) and that he was actuated by legal malice, that is, by improper and sinister motives.
Not all the elements of a malicious prosecution are present in this case. In its assailed resolution, the CA correctly found
that while it is not disputed that it was private respondent who complained to the authorities, such action was apparently
for purposes of investigation only. It was the investigating officer and not private respondent who charged petitioner
Michael Lagman with qualified theft.
The mere act of submitting a case to the authorities for prosecution does not make one liable for malicious
prosecution for generally, it is the Government or representative of the State that takes charge of the prosecution of the
offense. There must be proof that the prosecution was prompted by a sinister design to vex and humiliate a person for if
the rule were otherwise, every acquitted person can turn against the complainant in a civil action for damages.
The acquittal of Michael Lagman did not discount the presence of probable cause nor would it be a ground to impute
malice upon private respondent in filing charges against Michael because such acquittal was not based on his innocence of
any wrongdoing but on the erroneous charging of the offense of carnapping or qualified theft. As earlier stated, the fiscal
dismissed the complaint for carnapping or qualified theft and instead filed a case for damage to property thru
reckless imprudence. This goes to show that there was probable cause for private respondent to file charges against
Michael for the use of his car without his knowledge and permission resulting in damage not only to his car but also to
two more cars parked in the premises of the Puzon Building.
The foregoing facts show that in filing the criminal charge against petitioner Michael Lagman, private respondent was
not actuated by malice. He had been the victim of a wrong committed by Michael Lagman and whether such wrong
constituted qualified theft or carnapping was a legal question properly submitted to the police authorities and subsequently
referred to the fiscal for preliminary investigation. The very fact that a charge for damage to property thru reckless
imprudence was filed in place of the carnapping charge demonstrates that private respondent was justified in submitting
his grievance to the said authorities for ruling and possible redress.
The detention of petitioner Michael Lagman for more than four months is indeed lamentable. For this sad experience,
however, private respondent cannot be held accountable since his act in instituting a complaint against petitioner Michael
Lagman was done in the exercise of a right to seek redress for a wrong without any ill-motive on his part.
When an action is filed in good faith, there should be no penalty on the right to litigate. One may have erred but
error alone is not a ground for moral damages.
16. City Government of Tagaytay v. Guerrero, G.R. Nos. 140743 & 140745, September 17, 2009
Facts: Tagaytay-Taal Tourist Development Corporation (TTTDC) is the registered owner of (2) parcels of land. TTTDC
incurred real estate tax liabilities for failure of TTTDC to settle its delinquent real estate tax obligations, the City
Government of Tagaytay. City of Tagaytay offered the properties for sale at public auction. Being the only bidder, a
certificate of sale was executed in favor of the City of Tagaytay. New certificates of title in favor of the Tagaytay, the trial
court ratiocinated that whatever rights TTTDC had over the properties had been lost by laches for its failure to question
the validity of the auction sale. It also ruled that, as of April 30, 1989, the unpaid real estate tax obligations of TTTDC to
the Tagaytay amounted to P3,307,799.00. TTTDC appealed to the CA. The Melencios purchased the subject properties
pursuant to Section 8111 in relation to Section7812 of P.D. No. 464.
The Melencios bought the properties for 3.5m representing the total amount of taxes and penalties due on the same.
TTTDC filed a petition for nullification of the public auction involving the disputed properties on the ground that the
properties were not within the jurisdiction of the Tagaytay and, thus, beyond its taxing authority. The sole issue in Civil
Case No. TG1196 was whether the parcels of land were within the territorial jurisdiction of the City of Tagaytay. Despite
the fact that the Melencios had already purchased the subject properties, they were not impleaded in Civil Case No.
TG1196. They filed a Motion to Intervene. RTC denied the motion on the ground that the authority of the court to permit
a person to intervene is delimited by the provisions of Section 2, Rule 12 of the Rules of Court—‗before or during trial.‘ ‖
And, trial is here used in a restricted sense and refers to ‗the period for the introduction of evidence by both parties.‘ ‖ The
Melencios did not further pursue their cause. This was allegedly due to the assurances of Tagaytay that it would
file a motion for reconsideration and an appeal if the motion for reconsideration was denied. However, Tagaytay
filed a defective motion for reconsideration which was denied by the RTC and the City of Tagaytay did not file an
appeal from the decision of the trial court. The RTC rendered a Decision in Civil Case No. TG1196 wherein the trial court
directed the annulment of the public sale of the contested properties. Civil Case No. TG1196 became final and executory.
The Melencios filed before the CA a petition for annulment of judgment of the RTC Decision in Civil Case No. TG1196.
The Melencios questioned the final and executory decision of the trial court on the ground that Tagaytay allegedly
committed extrinsic fraud and that was the ultimate reason why they were deprived of property without due
process of law. Tagaytay also filed before the CA a petition for annulment of judgment of the RTC Decision in Civil
Case No. TG1196.
In the interregnum, the Supreme Court rendered a Decision in G.R. No. 106812 (G.R. No. 24933), ―The ―Petition for
Entry of New Certificates of Title‖ of respondent City of Tagaytay is DENIED. The RTC of Cavite, sitting as a land
registration or cadastral court, could not have ordered the issuance of new certificates of title over the properties in the
name of respondent City if the delinquency sale was invalid because said properties are actually located in the
municipality of Talisay, Batangas, not in Tagaytay City. Stated differently, respondent City could not have validly
collected real taxes over properties that are outside its territorial jurisdiction. The public auction sale of the properties of
the petitioner, both covered by TCT Nos. T9816 and T 9817 of the Registry of Deeds of Tagaytay City, as well as the
Certificates of Sale and the Final Bills of Sale of said properties in favor of the respondent Tagaytay City, and all
proceedings held in connection therewith are hereby annulled and set aside‖
Hence, the instant consolidated petitions

Issue: (1) Whether the RTC had jurisdiction to settle the boundary dispute.
(2) Whether Tagaytay committed extrinsic fraud against the Melencios.
Held: (1) JURISDICTION
There is no boundary dispute in the case at bar. The RTC did not amend the existing territorial limits of the City of
Tagaytay and the Province of Batangas. The entire Barrio Birinayan was transferred to the Municipality of Talisay,
Province of Batangas, by virtue of R.A. No. 1418. At present, Barrio Birinayan forms part of the Municipality of Laurel,
also in the Province of Batangas, pursuant to R.A. No. 5689. The RTC acted well within its powers when it passed
judgment on the nullification of the auction sale of the contested properties, considering that the City of Tagaytay
has no right to collect real estate taxes on properties that are not within its territorial jurisdiction.
Tagaytay acted in bad faith when it levied real estate taxes on the subject properties. R.A. No. 1418 became law as
early as 1956. Tagaytay is conclusively presumed to know the law that delineates its jurisdiction. The entire Barrio
Birinayan, not only portions thereof, was transferred to the Province of Batangas.
(2) EXTRINSIC FRAUD

Fraud is of two categories. It may either be:
(a) ACTUAL OR CONSTRUCTIVE
Actual or positive fraud proceeds from an intentional deception practiced by means of the misrepresentation or
concealment of a material fact.
Constructive fraud is construed as such because of its detrimental effect upon public interest and public or
private confidence, even though the act is not done with an actual design to commit positive fraud or injury
upon other persons.
(b) EXTRINSIC OR INTRINSIC.

There is intrinsic fraud where the fraudulent acts pertain to an issue involved in the original action, or where
the acts constituting the fraud were or could have been litigated therein.
Fraud is regarded as extrinsic where the act prevents a party from having a trial or from presenting his entire
case to the court, or where it operates upon matters pertaining not to the judgment itself but to the manner in
which it is procured, so that there is not a fair submission of the controversy. Extrinsic fraud is also actual
fraud, but collateral to the transaction sued upon.
The Melencios allege extrinsic fraud on the part of Tagaytay for its failure to implead them in Civil Case No. TG1196.
They allege that they are indispensable parties. This contention does not persuade.
Extrinsic fraud refers to any fraudulent act of the prevailing party in the litigation which is committed outside of
the trial whereby the unsuccessful party has been prevented from exhibiting fully his case, by fraud or deception
practiced on him by his opponent. The fraud or deceit cannot be of the losing party‘s own doing, nor must such party
contribute to it. The extrinsic fraud must be employed against it by the adverse party, who, because of some trick,
artifice, or device, naturally prevails in the suit. It affects not the judgment itself but the manner in which the said
judgment is obtained. Extrinsic fraud is also present where the unsuccessful party has been prevented by his opponent
from exhibiting fully his case by keeping the former away from court or giving him a false promise of a compromise; or
where the defendant never had knowledge of the suit, having been kept in ignorance by the acts of the plaintiff; or where
an attorney fraudulently or without authority assumed to represent a party and connived at his defeat; or where the
attorney regularly employed corruptly sold out his client‘s interest to the other side. The overriding consideration is that
the fraudulent scheme of the prevailing litigant prevented a party from having his day in court.
The action or inaction of Tagaytay does not amount to extrinsic fraud. Tagaytay is not the prevailing party in the
assailed decision. Moreover, the Melencios were not totally without fault in protecting their interest. They were aware of
the pendency of Civil Case No. TG1196, as shown by their filing of a motion to intervene in the case. When their motion
was denied by the trial court, they no longer pursued their cause. The alleged assurances and representations of certain
officials of the City of Tagaytay that they would file the necessary motion for reconsideration or appeal in case of an
unfavorable decision in Civil Case No. TG1196 was not an impediment to the Melencios protecting their rights over the
disputed properties. There is no allegation that the City of Tagaytay prevented them from, or induced them against, acting
on their own. Its failure to implead the Melencios did not prevent the latter from having their day in court.
Tagaytay acted in bad faith when it levied real estate taxes on the subject properties, and should be held
accountable for all the consequences including the void sale of the properties to the Melencios . The City of Tagaytay
is accountable for erroneously assessing taxes on properties outside its territorial jurisdiction. It is presumed to know
that Barrio Birinayan, in which the subject properties are situated, is no longer within its territorial jurisdiction and beyond
its taxing powers. Under the doctrine of respondeat superior, the principal is liable for the negligence of its agents
acting within the scope of their assigned tasks. Tagaytay is liable for all the necessary and natural consequences of the
negligent acts of its city officials. It is liable for the tortious acts committed by its agents who sold the subject lots to the
Melencios despite the clear mandate of R.A. No. 1418, separating Barrio Birinayan from its jurisdiction
The negligence of the officers of the City of Tagaytay in the performance of their official functions gives rise to an action
ex contractu and quasi ex delictu. However, the Melencios cannot recover twice for the same act or omission of the City
of Tagaytay. Negligence is the failure to observe protection of the interests of another person, that degree of care,
precaution, and vigilance which the circumstances justly demand, whereby such other person suffers injury. Thus,
negligence is the want of care required under circumstances. Before the City of Tagaytay may levy a certain property for
sale due to tax delinquency, the subject property should be under its territorial jurisdiction. The failure of the city officials
of Tagaytay to verify if the property is within its jurisdiction before levying taxes on the same constitutes gross negligence.
DAMAGES
Tagaytay is liable to return the full amount paid by the Melencios during the auction sale of the subject properties by
way of actual damages. The amount paid at the auction sale shall earn interest at the rate of six percent (6%) per annum
from the time of the finality of the RTC decision in Civil Case No. TG1196, when the claim was judicially demanded.
Thereafter, interest at the rate of twelve percent (12%), in lieu of the 6%, shall be imposed on such amount upon finality
of this decision until full payment thereof.
The gross negligence of the Tagaytay in levying taxes and auctioning properties to answer for real property tax
deficiencies outside its territorial jurisdiction amounts to bad faith that calls for the award of moral damages. Moral
damages are meant to compensate the claimant for any physical suffering, mental anguish, fright, serious anxiety,
besmirched reputation, wounded feelings, moral shock, social humiliation and similar injuries unjustly caused. Although
incapable of pecuniary estimation, the amount must somehow be proportional to and in approximation of the suffering
inflicted. Moral damages are awarded to enable the injured party to obtain means, diversions or amusements that
will serve to alleviate the moral suffering the person has undergone, by reason of defendant‘s culpable action. The
award is aimed at restoration, as much as possible, of the spiritual status quo ante. Thus, it must be proportionate to
the suffering inflicted. Since each case must be governed by its own peculiar circumstances, there is no hard and fast rule
in determining the proper amount. The social standing of the aggrieved party is essential to the determination of the
proper amount of the award. Otherwise, the goal of enabling him to obtain means, diversions, or amusements to restore
him to the status quo ante would not be achieved.
The Melencios are likewise entitled to exemplary damages. Exemplary or corrective damages are imposed by way of
example or correction for the public good, in addition to the moral, temperate, liquidated, or compensatory damages.
Article 2229 of the Civil Code grants the award of exemplary or corrective damages in order to deter the commission of
similar acts in the future and to allow the courts to mould behavior that can have grave and deleterious consequences to
society. In the instant case, the gross negligence of the City of Tagaytay in erroneously exacting taxes and selling
properties outside its jurisdiction, despite the clear mandate of statutory law, must be rectified.
D. Nominal Damages
- Civil Code
o Artic les 2221 to 2223 (Memorize)
1.Ventanilla v. Centeno, G.R. No. L-14333, January 28, 1961

Facts: In a civil case of the CFI of Manila, entitled ―Oscar Ventanilla vs. Edilberto Alejandrino and Aida G.
Alejandrino,‖ plaintiff retained the service of Atty. Gregorio Centeno to represent him and prosecute the case. This case
was an action for the recovery of P4,000.00 together with damages.
Decision unfavorable to the plaintiff was received by Atty. Gregorio Centeno on July 21, 1955, and a notice of appeal
was filed by Atty. Centeno on July 25, 1955. On July 30, 1955, Atty. Centeno wrote to the plaintiff the letter, enclosing
copies of the decision and that notice of appeal, and stating that he was not conformable to the decision and had not
hesitated to file the notice of appeal.
Plaintiff Oscar Ventanilla after receiving the letter and copy of the decision went to see Atty. Centeno in his Office in
Manila about August 5, 1955. Atty. Centeno informed him that he intended to appeal and plaintiff agreed. Plaintiff,
however, did not have with Atty. Centeno at that time the amount for the appeal bond.
About the middle of August 1955, Atty. Centeno wrote a letter to the plaintiff enclosing therein forms for an appeal
bond. The plaintiff Ventanilla, however, instead of executing an appeal bond, and because of his reluctance to pay the
premium on the appeal bond, decided to file a cash appeal bond of P60.00.
He went to the office of Atty. Centeno at about 4 o'clock on August 18, 1955, but was informed by the clerk, Leonardo
Sanchez, that Atty. Centeno was in Laguna campaigning for his candidacy as member of the Provincial Board.
Plaintiff then issued the check, for P60.00 as appeal bond, and delivered the same to Leonardo Sanchez with instruction to
give the same to Atty. Centeno upon his arrival.
Held: The Court does not believe plaintiff's testimony that Sanchez had contacted Atty. Centeno by telephone and that he
issued the check upon instruction of Atty. Centeno. Leonardo Sanchez had informed the plaintiff that Atty. Centeno was
in Laguna, and if he were in Manila, Sanchez could not have known the whereabouts of Atty. Centeno. It was, therefore
improbable that he could contact Atty. Centeno that afternoon.
On August 17, Atty. Centeno prepared the motion for extension of time to file the record on appeal, Exhibit D, which was
filed only on August 20, 1955. Atty. Centeno returned to Manila and went to his office at about 10 o'clock in the morning
of August 22. He cashed the check, with the Marvel Building Corporation, and then went to the office of the Clerk of
Court to file the appeal bond.
According to Atty. Centeno it was not accepted because the period of appeal had already expired, and that it was only at
that time he came to know that the period of appeal had expired.
The Court does not likewise believe the testimony of Atty. Centeno. Neither the Clerk of Court, or any of the employees
had the 'right to refuse an appeal bond that is being filed, for it is not in his power to determine whether or not the appeal
bond has been filed within the time prescribed by law. In fact the record on appeal was accepted and filed on September 5,
1955, but no appeal bond has been filed by Atty. Centeno. The fact that the record on appeal was admitted for filing is the
best evidence that Atty. Centeno had not in fact filed any appeal bond. The record on appeal was disapproved because it
was filed out of time and no appeal bond had been filed by the plaintiff.
The appellant claims that the trial court erred in not ordering the appellee to pay him actual or compensatory, moral,
temperate or moderate, and exemplary or corrective damages; in ordering the appellee to pay the appellant only the sum
of P200, and not P2,000 as nominal damages; and in not ordering the appellee to pay the appellant the sum of P500 as
attorney's fee.
Article 2199 of the new Civil Code provides: 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. He who claims actual or compensatory damages must establish and prove by competent
evidence actual pecuniary loss.
The appellant's bare allegation that by reason of the appellee's indifference, negligence and failure to perfect within the
reglementary period his appeal from an adverse judgment rendered in civil case No. 18833, by not paying the appeal bond
of P60, he lost his chance to recover from the defendants therein the sum of P4,000 and moral and actual damages, which
he could have recovered if the appeal had duly been perfected, indicates that his claim for actual or compensatory
damages is highly speculative. Hence he is not entitled to such damages.
The appellant claims that he suffered mental anguish upon learning that his appeal had not been perfected within the
reglementary period due to the appellee's negligence; serious anxiety upon learning that his adversary had won by a
mere technicality; besmirched reputation for losing the opportunity to substantiate his claim made while testifying in
open court that he was entitled to collect the sum of P4,000 and damages from the defendants in civil case No. 18833;
and wounded feelings for the appellee's failure to remain faithful to his client and worthy of his trust and confidence.
The provisions of the new Civil Code on moral damages state:
ART. 2217. Moral damages include physical suffering, mental anguish, fright, serious anxiety, besmirched reputation,
wounded feelings, moral shock, social humiliation, and similar injury. Though incapable of pecuniary computation, moral
damages may be recovered if they are the proximate result of the defendant's wrongful act or omission.
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; (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.
Art. 2220. Willful injury to property may be a legal ground for awarding moral damages if the court should find that,
under the circumstances, such damages are justly due. The same rule applies to breaches of contract where the defendant
acted fraudulently or in bad faith.
Moral damages are recoverable only when physical suffering, mental anguish, fright, serious anxiety, besmirched
reputation, wounded feelings, moral shock, social humiliation, and similar injury are the proximate result of a criminal
offense resulting in physical injuries, quasi-delicts causing physical injuries, seduction, abduction, rape, or other
lascivious acts, adultery or concubinage, illegal or arbitrary detention or arrest, illegal search, libel, slander or any other
form of defamation, malicious prosecution, disrespect for the dead or wrongful interference with funerals, violation of
specific provisions of the Civil Code on human relations, and willful injury to property. To this we may add that where a
mishap occurs resulting in the death of a passenger being transported by a common carrier, the spouse, descendants and
ascendants of the deceased passenger are entitled to demand moral damages for mental anguish by reason of the
passenger's death.
In Malonzo vs. Galang, this Court categorically stated that— Art. 2219 specifically mentions ―quasi-delicts causing
physical injuries,‖ as an instance when moral damages may be allowed. thereby implying that all other quasi-delicts not
resulting in physical injuries are excluded excepting of course, the special torts referred to in Art. 309 (par. 9, Art,
2219) and in Arts. 21, 26, 27, 28, 29, 30, 32, 34 and 35 on the chapter on human relations (par. 10, Art. 2219).
Since the appellant's cause of action for recovery of moral damages is not predicated upon any of those specifically
enumerated, the trial court did not err in declining to award moral damages to him.
Concerning temperate or moderate damages claimed by the appellant, considering that he is not entitled to actual or
compensatory damages but has been awarded nominal damages by the trial court, such award precludes the recovery of
temperate or moderate damages, and so the trial court did not err in refusing to award temperate or moderate damages to
the appellant.
As regards exemplary or corrective damages also claimed by the appellant, since it cannot be recovered as a matter of
right and the court will decide whether or not they should be adjudicated, if the defendant acted in a wanton, fraudulent,
reckless, oppressive or malevolent manner, the trial court has judiciously, wisely and correctly exercised its discretion in
not awarding them to the appellant.
NOMINAL DAMAGES
Relative to the sufficiency of the sum of P200 as nominal damages awarded by the trial court to the appellant, article 2221
of the new Civil Code provides: NOMINAL DAMAGES are adjudicated in order that a right of the plaintiff, which has
been violated or invaded by the defendant, may be vindicated or recognized, and not for the purpose of indemnifying
the plaintiff for any loss suffered by him. The assessment of nominal damages is left to the discretion of the court,
according to the circumstances of the case.
Considering the circumstances, as found by the trial court, and the degree of negligence committed by the appellee, a
lawyer, in not depositing on time the appeal bond and filing the record on appeal within the extension period granted
by the court, which brought about the refusal by the trial court to allow the record on appeal, the amount of P200
awarded by the trial court to the appellant as nominal damages may seem exiguous. Nevertheless, considering that
nominal damages are not for indemnification of loss suffered but for the vindication or recognition of a right violated
or invaded; and that even if the appeal in civil case No. 18833 had been duly perfected, it was not an assurance that the
appellant would succeed in recovering the amount he had claimed in his complaint, the amount of P2,000 the appellant
seeks to recover as nominal damages is excessive. After weighing carefully all the considerations, the amount awarded to
the appellant for nominal damages should not be disturbed.
As regards attorney's fees, since the appellant's claim does not fall under any of those enumerated in article 2208, new
Civil Code, the appellee may not be compelled to satisfy it.
2.China Airlines v. Court of Appeals, G.R. No. 129988, July 14, 2003
Facts: In June 1990, respondents Lao planned to travel to L.A., Cali to pursue a cable business deal concerning the
distribution of Filipino films in L.A. Morelia Travel Agency booked their flight with CAL for 13 June 1990, but their
services were dropped since they charged higher rates compared to American Express Travel Service (―Amexco‖).
They thus got Amexco, since Lao was an Amexco cardholder.
On 11 June, Lao called up Amexco, informing them of their CAL booking. Amexco called up CAL, which confirmed the
booking; they were then issued their confirmed tickets. Later that day, CAL called up Morelia to reconfirm the
reservations. Morelia cancelled the reservations. (Totes kups.) On 13 June, they were at the airport, but were expectedly
prevented from boarding; their reservations were cancelled by CAL. They were able to leave for L.A. only on the
following day on Northwest Airlines.
They sent a demand letter to CAL on 13 August for P500,000 of moral damages. CAL replied, explaining that
respondents failed to pick up their tickets from Amexco‟s office; CAL invoked respondents‘ negligence. Respondents
then replied, stating that they presented their tickets at the airport. CAL replied, stating that since Morelia booked it, CAL
accepted its cancellation.
On 13 December 1990, they then sent a demand letter to Amexco. On 11 June 1992, they filed with the RTC a complaint
for damages against CAL and Amexco for actual, moral, and exemplary damages. The RTC ruled in their favor, and the
CA affirmed.
Issue: (1) Whether laches had set in.

NO. 344 Agas, Anzures, Buan, Cusi, Navarrete, Ongchuan, Reposo, & Roco 3B
(2) Whether Lao‘s improper and abusive language in their Comment should result in its being stricken out. NO.
(3) Whether award of damages is proper. PARTLY NO,
Held: Breach of its Contract of Carriage

The confusion with the confirmation and cancellation of the reservations began when Lao gave to Amexco the record
locator number that CAL had already assigned to Morelia. A record locator number is a combination of letters and
numbers issued by an airline to a travel agency when the airline confirms the travel agency‘s booking. The record locator
number in question is No. 4RJ2CJ. Based on the testimonies of the witnesses of Amexco and CAL, industry practice
prohibits a travel agency to use the record locator number of another travel agency, as this will usurp the booking of
another travel agency.
Morelia was the assignee of the record locator number used by Amexco. CAL issued the record locator number to Morelia
when it confirmed the booking of Morelia for private respondents‘ reservations. However, since private respondents found
the rates of Morelia to be steeper than those offered by Amexco and Lao happened to be an Amexco card member, private
respondents decided instead to secure their reservations through Amexco. It would have been perfectly all right for private
respondents to switch to Amexco, until Lao gave to Amexco the record locator number CAL had already assigned to
Morelia. This now set into motion the events leading to the cancellation of private respondents‘ reservations.
Curiously, the trial and appellate courts failed to point out that prior to Amexco‘s confirmation with CAL, Amexco had
tried in vain to book private respondents‘ flight with CAL and the other airlines, as it was the peak season then. Amexco
was only able to book private respondents‘ flight with CAL when it used the record locator number of Morelia. In short,
on its own account, Amexco could not have successfully booked the reservations of private respondents with CAL. Thus,
Amexco had no recourse but to use Morelia‘s record locator number in booking private respondents with CAL.
The trial and appellate courts ruled that Amexco did not misrepresent itself to CAL when Amexco used the record locator
number of Morelia. Thus, Amexco was not liable to private respondents. There was also no categorical finding of Lao‘s
intention in giving the record locator number to Amexco, or if he indeed disclosed to Amexco that the record locator
number was already assigned to Morelia.
Lea, the booking agent of Amexco who dealt with Lao, testified that Lao did not inform her that the record locator number
was from Morelia. Lea further declared that had she known that the record locator number belonged to Morelia, she would
not have used the record locator number or she would have requested private respondents to ask Morelia to endorse the
same to Amexco. On the other hand, private respondents claimed in their answer to CAL‘s written interrogatories that
they informed Amexco that they made their original booking with Morelia and that Lea of Amexco checked this matter
with CAL. Private respondents also declared that they informed Morelia through Ms. Gavelino Gironella that they were
dropping Morelia‘s services.
The trial and appellate courts did not pass upon the two conflicting versions of Lao and Amexco. Nevertheless, Lao
should have made it known to Amexco that the record locator number belonged to another travel agency, Morelia. On the
other hand, Amexco should not have hastily presumed that private respondents themselves obtained the record locator
number from CAL and that they engaged the services of Amexco purely for ticketing purposes since Lao was an Amexco
card member. Amexco should have inquired how Lao got hold of the record locator number considering that it was
difficult for a travel agency at that time to secure reservations with the various airlines including CAL.
Lao and Amexco are not blameless. Lao‘s act in giving Morelia‘s record locator number to Amexco, after deciding to
terminate Morelia‘s services, amounted to accepting the benefit of Morelia‘s services without paying for it. Amexco used
Morelia‘s record locator number when Amexco found out it could no longer book private respondents without Morelia‘s
record locator number. However, the greater blame falls on CAL. When CAL confirmed the reservations of private
respondents, a contract of carriage arose between CAL and private respondents, even if Amexco, not Morelia, confirmed
the reservations of private respondents. Because of CAL‘s confirmation, Amexco issued to private respondents the
confirmed tickets.
The nature of an airline‘s contract of carriage partakes of two types, namely: (1) a contract to deliver a cargo or
merchandise to its destination, and (2) a contract to transport passengers to their destination. In this case, when CAL
confirmed the reservations, it bound itself to transport private respondents on its flight on 13 June 1990.
The airline business is intended to serve the traveling public primarily and is thus imbued with public interest. The law
governing common carriers consequently imposes an exacting standard. Thus, in an action based on a breach of contract
of carriage, the aggrieved party does not have to prove that the common carrier was at fault or was negligent. All that he
has to prove is the existence of the contract and the fact of its non-performance by the carrier.
CAL does not deny its confirmation of the reservations made by Amexco. The confirmed tickets issued by Amexco to
private respondents upon CAL‘s confirmation of the reservations are undeniable proof of the contract of carriage between
CAL and private respondents. In Alitalia Airways v. CA, et al., we held that when an airline issues a ticket to a passenger
confirmed for a particular flight on a certain date, a contract of carriage arises. The passenger then has every right to
expect that he would fly on that flight and on that date. If he does not, then the carrier opens itself to a suit for breach of
contract of carriage.
CAL did not allow private respondents, who were then in possession of the confirmed tickets, from boarding its airplane
because their names were not in the passengers‘ manifest. Clearly, CAL breached its contract of carriage with private
respondents. We, however, rule out bad faith by CAL.
ABSENCE OF BAD FAITH

Bad faith does not simply connote bad judgment or negligence. It imports a dishonest purpose or some moral obliquity
and conscious doing of a wrong. It means breach of a known duty through some motive, interest or ill will that partakes of
the nature of fraud. A finding of bad faith entitles the offended party to moral damages.
The trial and appellate courts believed that the confluence of the following circumstances proves that CAL cancelled
private respondents‘ reservations in bad faith: (1) Lea, the booking agent of Amexco identified herself as ―Lea-Amexco‖
when she called up CAL to confirm the reservations of private respondents; (2) Lea was not a familiar caller of Morelia
and yet CAL entertained her call; (3) CAL called up Morelia on the very same afternoon that CAL had already confirmed
the reservations of private respondents although the confirmation was made by another travel agent, Amexco; (4) CAL
called up Morelia looking for a certain Joel to re-confirm the reservations of private respondents; (5) CAL told Joel that it
was hesitant to cancel the reservations of private respondents because the seating arrangements had already been finalized
with Lea; and (6) CAL did not notify private respondents or Amexco that it was cancelling the reservations even though
―Lea-Amexco‖ left a telephone number with CAL.
As a rule, the factual findings of the trial and appellate courts are binding on the Court. However, there are recognized
exceptions to this rule. These are: (1) when the findings are grounded on speculation, surmises or conjectures; (2) when
the inference made is manifestly mistaken, absurd or impossible; (3) when there is grave abuse of discretion in the
appreciation of facts; (4) when the factual findings of the trial and appellate courts are conflicting; (5) when the Court of
Appeals, in making its findings, has gone beyond the issues of the case and such findings are contrary to the admissions of
both appellant and appellee; (6) when the judgment of the appellate court is premised on a misapprehension of facts or
when it has failed to consider certain relevant facts which, if properly taken into account, will justify a different
conclusion; (7) when the findings of fact are conclusions without citation of specific evidence upon which they are based;
and (8) when findings of fact of the Court of Appeals are premised on the absence of evidence but are contradicted by the
evidence on record.
The settled rule is bad faith should be established by clear and convincing evidence since the law always presumes good
faith. Thus, the person who seeks damages due to the acts of another has the burden of proving that the latter acted in bad
faith or with ill motive. Bad faith is in essence a question of intention. In ascertaining the intention of the person accused
of acting in bad faith, the courts must carefully examine the evidence as to the conduct and outward acts from which the
inward motive may be determined.
Since bad faith is a question of intention, a clear understanding of the confirmation and pre-flight checking procedure of
CAL is vital to determine if CAL indeed bumped off private respondents in favor of other passengers. The factual
findings of the trial and appellate courts are wanting in this regard. The two courts only made passing references to the
testimonies of CAL‘s witnesses who were CAL‘s former reservations officers. Their narration of their respective duties
and transactions with Amexco and Morelia is crucial in ascertaining the presence of bad faith in CAL‘s cancellation of the
reservations.
We have held that in a case for recovery of damages arising from a breach of contract, the trial court cannot totally
disregard the testimonies of the officers of an airline on the basis alone of the employment relationship. When the trial and
appellate courts commit this grievous error, their factual findings lose their binding effect on the Court, and we will again
weigh and evaluate the evidence presented by the parties. We were thus compelled to examine anew the testimonial
evidence in this case.
Based on the testimonies of the reservations officers of CAL, not one but two officers made the confirmation and pre-
flight checking of the airline. Amity Chang (―Chang‖), a reservation officer of CAL, received Amexco‘s call confirming
the reservations of private respondents. Melo, another reservation officer of CAL, was in charge of the pre-flight checking
of private respondents‘ reservations. Melo called up Morelia to reconfirm the reservations.
The trial and appellate courts accepted private respondents‘ theory that CAL cancelled their reservations under the pretext
that CAL had not authorized Amexco to use the record locator number of Morelia. Private respondents assert that in
reality CAL just wanted them bumped off to accommodate other passengers. However, private respondents failed to
substantiate this particular allegation. We will now point out why the circumstances mentioned by the trial and appellate
courts are inadequate to prove CAL‘s bad faith in cancelling private respondents‘ reservations.
First, the trial and appellate courts stress that Lea, the booking agent of Amexco, identified herself as ―Lea-Amexco‖
when she called up CAL to confirm the reservations of private respondents. However, the testimonies of Chang and Melo
do not show that they heard or recorded that ―Lea-Amexco‖ made the confirmation. Melo unequivocally stated in open
court that what the computer monitor recorded was the name Lea and not ―Lea-Amexco.‖ Accordingly, when Melo
called up Morelia to reconfirm the booking, she asked if there was a person named Lea in Morelia.
Second, we agree with the trial and appellate courts that CAL should not have accepted the confirmation of Lea who is
not a familiar caller from Morelia. CAL should have screened and verified the name of the person or travel agency
confirming the reservations. Assuming that Lea indeed identified herself as ―Lea-Amexco,‖ CAL all the more should not
have confirmed the reservations made by Amexco using the record locator number of another travel agency. CAL should
have informed Amexco to secure first the endorsement of Morelia. CAL‘s negligence at this stage of the confirmation
process is clear. However, both courts erred in readily imputing bad faith when CAL was only guilty of simple
negligence.
Third, it is the standard practice of CAL to re-confirm reservations by calling up the travel agency or passenger two days
or even as close as a day before the intended departure date. This is the pre-flight checking procedure of CAL. There is
therefore nothing unusual or suspicious in CAL‘s ―initiative‖ in calling up Morelia. Melo was not aware that ―Lea-
Amexco‖ made the confirmation. As far as Melo was concerned, a certain ―Lea‖ made the confirmation and Melo
assumed she was from Morelia because Lea used the record locator number that CAL had assigned to Morelia. Since
Morelia is the assignee of the record locator number, CAL dealt with Morelia.
The trial court termed the confirmation of Amexco as a ―final confirmation‖ of the reservations that should not have
required another re-confirmation from CAL. The trial court believed that CAL‘s re-confirmation of the reservation on the
same day that Amexco made the confirmation is suspicious. Suspicion, however, cannot take the place of evidence.
Obviously, CAL did not consider private respondents‘ confirmation through Amexco as a ―final confirmation.‖ CAL still
went on with its pre-confirmation procedure precisely because the name Lea registered on its computer was not a familiar
caller from Morelia. Thus, when Melo called up Morelia, she asked if there was a certain ―Lea‖ with Morelia.
Fourth, Melo testified that she assumed that a certain telephone number was the contact number of private respondents.
Melo dialed the number and a certain Gemma answered the phone.] Gemma denied any knowledge of the booking made
by private respondents or by Lea. Melo then decided to call up Morelia.
Melo indeed looked for a certain Joel when she called up Morelia. Melo admitted that Joel has been with Morelia ―ever
since.‖] Melo‘s admission indicates that Joel is the familiar caller from Morelia with whom CAL regularly transacted in
confirming the bookings of Morelia. Understandably, it was Joel whom Melo looked for when Melo called up Morelia.
Melo first tried to contact private respondents, showing CAL‘s lack of malice. Since the number was not the contact
number of private respondents and Lea, Melo had no recourse but to check with Joel of Morelia.
Fifth, Melo did express to Joel her reluctance to cancel the reservations because a certain Lea had already ended the
seating arrangements. Despite Melo‘s hesitation, the cancellation still pushed through for three reasons: (1) Joel insisted
on it; (2) Lea was not from Morelia; and (3) Melo failed to contact private respondents and Lea. The Court of Appeals
took Melo‘s reluctance to cancel the reservations as an indication of CAL‘s bad faith when such fact is a badge of good
faith. CAL cancelled the reservations with trepidation. CAL, therefore, did not make the cancellation wantonly and
recklessly.
Lastly, CAL did not have the addresses of private respondents. Melo first tried to notify private respondents through a
telephone number presumably given by Lea. However, the telephone number turned out to be a wrong number.
To its credit, CAL still exerted its best efforts to notify private respondents. In reconfirming the reservations, Melo called
up Morelia twice. The first time was two days before the scheduled flight of CAL. In that first telephone call, Joel told
Melo that he would first check if private respondents were definite in taking the 13 June 1990 flight. Melo called up
Morelia the next day or a day before the scheduled flight. Joel informed Melo that Morelia was cancelling the reservations
because private respondents did not return to Morelia. Melo then asked Joel if he was sure of the cancellation because a
certain Lea had finalized the reservations. Joel said that he did not know of a certain Lea and had no knowledge of Lea‘s
booking. Melo then accepted Morelia‘s cancellation because Joel seemed confident that there was basis in cancelling the
reservations.
CAL did not deliberately bump off private respondents to accommodate other passengers. Amexco‘s unauthorized use of
the record locator number of Morelia was not just a convenient excuse that CAL used to conceal a supposed malicious
intent. There were three reasons CAL cancelled the reservations and did not notify private respondents of the cancellation.
First was Amexco‘s unauthorized use of the record locator number. Second was CAL‘s negligence in confirming the
reservations of Amexco. Third was the absence of the correct contact numbers of private respondents and Lea.
There was no concerted effort on the part of CAL‘s employees to cancel private respondents‘ reservations in favor of
other passengers. In fact, Melo testified that while she knew that the 13 June 1990 flight was fully booked, she was not
aware if there were other prospective passengers who wanted to get booked for that flight because of the computerized
booking. Melo also had no way of knowing if the cancelled reservations of private respondents were given to other
passengers since another officer was in charge of this function.
The peculiar circumstances in this case set it apart from Zalamea v. Court of Appeals, the case lengthily quoted by the
Court of Appeals in justifying the award of moral damages. The petitioners in Zalamea were passengers of TransWorld
Airlines, Inc. (―TWA‖) who held confirmed discounted tickets. Petitioners were, however, wait-listed and eventually
prevented from boarding the airplane because TWA had overbooked the flight and gave preference to other passengers
who were holders of full-fare tickets. TWA observed the practice of overbooking and the system of boarding priorities.
We held TWA liable for moral damages because TWA did not stipulate these policies in the contract and did not inform
the petitioners of the overbooked condition of the flight or of the hierarchy of priorities in booking passengers. TWA was
in bad faith when, failing to thus inform petitioners when it could have easily done so, TWA kept them as passengers up
to the last minute. TWA‘s conscious disregard of petitioners‘ rights made it liable not only for actual but moral damages
as well.
Unlike in Zalamea, bad faith is not evident in this case. It was CAL‘s hasty confirmation of the reservations of Amexco
that established the contract of carriage between CAL and private respondents as evidenced by the tickets issued by
Amexco to private respondents. CAL failed to honor its contract of carriage. However, CAL was not wanton or reckless
in cancelling private respondents‘ reservations. CAL made the cancellation in conformity with its usual procedure, which
was neither unreasonable nor arbitrary considering that CAL cancelled the reservations at the behest of Morelia. While
Morelia did not issue any ticket to private respondents, on record Morelia still stood as the travel agent that booked the
reservations of private respondents since neither CAL nor Morelia endorsed the booking to Amexco. Thus, when Morelia
cancelled the reservations, CAL had to accede as if private respondents themselves had asked for the cancellation. Private
respondents‘ names were consequently not included in the passenger‘s manifest.
DAMAGES
CAL‘s negligence caused it to breach its contract of carriage. CAL‘s negligence is, however, not so gross to amount
to bad faith. Mere negligence, even if it causes the plaintiff to suffer mental anguish or serious fright, is not a ground for
awarding moral damages.
The law distinguishes a contractual breach effected in good faith from one attended by bad faith. Absent fraud or bad faith
on defendant‘s part in breaching his contract, his liability for damages is limited to the natural and probable consequences
of the breach of the obligation, which the parties had foreseen or could have reasonably foreseen. In such a case, the
liability would not include moral damages. For this reason, not every case of mental anguish, fright or serious anxiety
calls for the award of moral damages.
As for exemplary damages, Article 2232 of the Civil Code provides that in a contractual or quasi-contractual relationship,
exemplary damages may be awarded only if the defendant had acted in ―a wanton, fraudulent, reckless, oppressive or
malevolent manner." CAL was not in bad faith and its employees did not act in a wanton, fraudulent, reckless, oppressive
or malevolent manner. The award of exemplary damages is therefore unwarranted in this case.
Private respondents‘ remaining claim is for actual damages. However, private respondents did not shell out any money for
their CAL tickets. Amexco voided the CAL tickets when private respondents requested Amexco to book them in another
airline. Amexco eventually booked their flight with Northwest. Private respondents would have been entitled to the price
difference between the tickets of CAL and Northwest had the latter cost more than the former. The price difference would
have been a damage reasonably attributed to CAL‘s breach of its contract of carriage because private respondents would
not have flown via Northwest were it not for CAL‘s non-performance of its obligation. The evidence, however, shows that
the Northwest tickets at US$625 each cost less than the CAL tickets priced at US$629 each. We cannot also order a
reimbursement of the Northwest tickets because this would have enabled private respondents to fly to Los Angeles
without paying any fare. As correctly pointed out by the trial and appellate courts, the costs of the airplane tickets were a
necessary expense that private respondents could not pass on to CAL.
Undeniably, however, private respondents suffered some form of injury. CAL confirmed the reservations of private
respondents carelessly. Private respondents relied on this confirmation. Private respondents went through the trouble of
going to the airport at the appointed time expecting that they would be able to board CAL Flight 632. To their
consternation, CAL personnel prevented them from boarding because Morelia cancelled their reservations. When
plaintiff suffers some species of injury not enough to warrant an award of actual damages , the court may award
nominal damages. The court may award nominal damages PURELY TO VINDICATE a right of a plaintiff which
defendant has violated and not to indemnify any loss the plaintiff has suffered. The court may award nominal
damages in every obligation arising from any source enumerated in Article 1157 of the Civil Code, or in any case
where there is an invasion of any property right. We find P5,000 as a reasonable award of nominal damages to each of
the private respondents.
The fact that private respondents were compelled to litigate and incur expenses to protect and enforce their claim does not
justify the award of attorney‘s fees. The court may award attorney‘s fees only in the instances mentioned in Article 2208
of the Civil Code, and this case is not one of them. Moreover, when there is no basis to award moral and exemplary
damages, there is also no basis to award attorney‘s fees.
3.Sang-An v. Equator Knights Detective and Security Agency, Inc., G.R. No. 173189, February 13, 2013
Facts: Jonathan was the Assistant Operation Manager of Equator. He was tasked, among others, with the duty of
assisting in the operations of the security services; he was also in charge of safekeeping Equator‟s firearms.
Equator discovered that two firearms were missing from its inventory. The investigation revealed that it was
Jonathan who might have been responsible for the loss. Jonathan was temporarily suspended from work pending
further investigation.
While Jonathan was under suspension, a security guard from Equator was apprehended by policemen for violating
the Commission on Elections‘ gun ban rule. The security guard stated in his affidavit that the unlicensed firearm had
been issued to him by Jonathan.
Jonathan filed with the NLRC a complaint for illegal suspension with prayer for reinstatement. In his position paper,
however, he treated his case as one for illegal dismissal and alleged that he had been denied due process when he was
dismissed.
Equator, on the other hand, argued that Jonathan‟s dismissal was not illegal but was instead for a just cause under
Article 282 of the Labor Code.
LA: Valid dismissal

NLRC: Illegal dismissal – Just cause present but no procedural due process.
CA: Valid dismissal
Issue: Whether Jonathan Sang-An was validly dismissed.
Held: NO. Jonathan was not merely suspended but was dismissed from the service. While Jonathan initially filed an
action for illegal suspension, the position papers both parties filed treated the case as one for illegal dismissal.
Jonathan did not file his complaint for illegal suspension on May 2, 2001. The records of the case disclose that the
receiving date stamped on the complaint is May 24, 2001. The date relied upon by the CA, May 2, 2001, was the date
when the complaint was subscribed and sworn to before a notary public. Due to the second offense committed by
Jonathan on May 8, 2001, Equator decided to dismiss him. Therefore, when the LA tried the case, Jonathan had already
been dismissed.
b. EQUATOR FAILED TO COMPLY WITH THE PROCEDURAL DUE PROCESS.

To validly dismiss an employee, it is fundamental that the employer observe both substantive and procedural due
process – the termination of employment must be based on a just or authorized cause and the dismissal can only be
effected, after due notice and hearing.
EQUATOR COMPLIED WITH THE SUBSTANTIVE REQUIREMENTS of due process when Jonathan committed the two
offenses.
Article 282(A) of the Labor Code provides that an employee may be dismissed on the ground of SERIOUS MISCONDUCT
or of the lawful orders of his employer or representative in connection with his work.
WILLFUL DISOBEDIENCE
Misconduct is improper or wrongful conduct; it is the transgression of some established and

definite rule of action, a forbidden act, a dereliction of duty, willful in character, and implies wrongful intent and not mere
error of judgment. The misconduct, to be serious within the meaning of the Labor Code, must be of such grave and
aggravated character and not merely trivial or unimportant. It is also important that the misconduct be in connection
with the employee's work to constitute just cause for his separation.
By losing two firearms and issuing an unlicensed firearm, Jonathan committed serious misconduct. He did not merely
violate a company policy; he violated the law itself and placed Equator and its employees at risk of being made legally
liable. Thus, Equator had a valid reason that warranted Jonathan‘s dismissal from employment as Assistant
Operation Manager.
HOWEVER, Equator FAILED TO OBSERVE THE PROPER PROCEDURE in terminating Jonathan‘s services.
Section 2, Rule XXIII, Book V of the Omnibus Rules Implementing the Labor Code provides that:
Section 2. Standard of due process: requirements of notice. – In all cases of termination
of employment, the following standards of due process shall be substantially observed.
I. For termination of employment based on just causes as defined in Article 282 of the
Labor Code:
(a)A written notice served on the employee specifying the ground or grounds for
termination, and giving to said employee reasonable opportunity within which to
explain his side;
(b) A hearing or conference during which the employee concerned, with the assistance
of counsel if the employee so desires, is given opportunity to respond to the charge,
present his evidence, or rebut the evidence presented against him; and
(c)A written notice of termination served on the employee indicating that upon due
consideration of all the circumstances, grounds have been established to justify his
termination.
Jurisprudence has expounded on the guarantee of due process, requiring the employer to furnish the employee with two
written notices before termination of employment can be effected: a FIRST WRITTEN NOTICE that informs the employee
of the particular acts or omissions for which his or her dismissal is sought, and a SECOND WRITTEN NOTICE which
informs the employee of the employer's decision to dismiss him. In considering whether the charge in the first notice is
sufficient to warrant dismissal under the second notice, the employer must afford the employee ample opportunity to be
heard.
Jonathan was not furnished with any written notice that informed him of the acts he committed justifying his dismissal
from employment. The notice of suspension given to Jonathan only pertained to the first offense, i.e., the loss of
Equator‘s firearms under Jonathan‘s watch. With respect to his second offense (i.e., the issuance of an unlicensed firearm
to Equator‘s security guard – that became the basis for his dismissal), Jonathan was never given any notice that allowed
him to air his side and to avail of the guaranteed opportunity to be heard. That Equator brought the second offense before
the LA does not serve as notice because by then, Jonathan had already been dismissed.
In order to validly dismiss an employee, the observance of both substantive and procedural due process by the employer is
a condition sine qua non. Procedural due process requires that the employee be given a notice of the charge against him,
an ample opportunity to be heard, and a notice of termination.
Since Jonathan had been dismissed in violation of his right to procedural due process but for a JUST CAUSE,
Equator should pay him NOMINAL DAMAGES of P30,000.00, in accordance with Agabon v. NLRC.
4. De Jesus v. Aquino, G.R. No. 164662, February 18, 2013

Facts: Ma. Lourdes De Jesus (De Jesus for brevity) filed with the LA a complaint for illegal dismissal against private
respondents Supersonic Services Inc., Pakistan Airlines, Gil Puyat, Jr. and Divina Abad Santos praying for the
payment of separation pay, full backwages, moral and exemplary damages, etc.
De Jesus alleged that: she was employed by Supersonic from 1976 to 1992, she held the position of reservation staff,
and from 1992 until her illegal dismissal on March 15, 2001, she held the position of Sales Promotion Officer where she
solicited clients for Supersonic and sold plane tickets to various travel agencies on credit; she had an emergency
hysterectomy operation preceded by continuous bleeding; she stayed at the Makati Medical Center for 3 days and
applied for a (60) day leave in the meantime; on June 1, 2001, she went to Supersonic and found the drawers of her desk
opened and her personal belongings packed, without her knowledge and consent; while there, Divina Abad Santos (Santos
for brevity), the company‘s general manager, forced her to execute a promissory note which she merely copied from a
prepared draft; was also forced to indorse to Supersonic her SSS check in the amount of P25,000.00 which represents
her benefits from the hysterectomy operation; there was no notice and hearing nor any opportunity given her to explain
her side prior to the termination of her employment; Supersonic even filed a case for Estafa against her for her alleged
failure to remit collections despite the fact that she had completely remitted all her collections; and the termination was
done in bad faith and in violation of due process.
Supersonic countered that: as Sales Promotion Officer, De Jesus was fully authorized to solicit clients and receive
payments for and in its behalf, and as such, she occupied a highly confidential and financially sensitive position in the
company; De Jesus was able to solicit several ticket purchases for Pakistan International Airlines (PIA) routed from
Manila to various destinations abroad and received all payments for the PIA tickets in its behalf; for the period starting
May 30, 2000 until September 28, 2000, De Jesus issued PIA tickets to Monaliza Placement Agency, a client under her
special solicitation and account, in the amount of U.S.$15,085.00; on January 24, 2001, the company‘s general manager
sent a memorandum to De Jesus informing her of the official endorsement from clients under her account; in March 2001,
another memorandum was issued to De Jesus reminding her to collect payments of accounts guaranteed by her and which
had been past due since the year 2000; based on the company records, an outstanding balance of U.S.$36,168.39
accumulated under the account of De Jesus; after verifications with its clients, it discovered that the amount of
U.S.$36,168.39 were already paid to De Jesus but this was not turned over and duly accounted for by her ; hence,
another memorandum was issued to De Jesus directing her to explain in writing why she should not be dismissed for
cause for failure to account for the total amount of U.S.$36,168.39; De Jesus was informed that her failure to explain in
writing shall be construed that she misappropriated said amount for her own use and benefit to the damage of the
company; De Jesus was likewise verbally notified of the company‘s intention to dismiss her for cause; after due
investigation and confrontation, De Jesus admitted that she received the U.S.$36,168.39 from their clients and even
executed a promissory note in her own handwriting acknowledging her obligation; she was fully aware of her dismissal
and even obligated herself to offset her obligation with any amount she would receive from her retirement; when De
Jesus failed to comply with her promise to settle her obligation, a demand letter was sent to her; because of her
persistent failure to settle the unremitted collections, it was constrained to suspend her as a precautionary measure and to
protect its interests; despite demands, De Jesus failed to fulfill her promise, hence, a cri minal case for estafa was filed
against her; and in retaliation to the criminal case filed against her, she filed this illegal dismissal case.
Labor Arbiter ruled against De Jesus, declaring her dismissal to be for just cause. NLRC affirmed the Labor Arbiter‘s
Decision. CA held that while the dismissal was valid, the same must be declared ineffectual and as a consequence thereof,
Supersonic is hereby required to pay petitioner Maria Lourdes De Jesus full backwages from the time her employment
was terminated up to the finality of this decision.
Issue: (1) Whether or not Supersonic was justified in terminating De Jesus‘ employment; YES.
(2) Whether or not Supersonic complied with the two-written notice rule; and
(3) Whether or not De Jesus was entitled to full backwages and damages.
Held: (1) Anent the FIRST ISSUE, Supersonic substantially proved that De Jesus had failed to remit and had
misappropriated the amounts she had collected in behalf of Supersonic. In that regard, the factual findings of the Labor
Arbiter and NLRC on the presence of the just cause for terminating her employment, being already affirmed by the CA,
are binding if not conclusive upon this Court.
(2) A careful consideration of the records persuades us to affirm the decision of the CA holding that Supersonic had not
complied with the two written notice rule. She was still entitled to due process in order to effectively safeguard her
security of tenure. The law affording to her due process as an employee imposed on Supersonic as the employer the
obligation to send to her two written notices before finally dismissing her. Contrary to Supersonic‘s contention, however,
the aforequoted memoranda did not satisfy the requirement for the two written notices under the law.
The March 26, 2001 memorandum did not specify the grounds for which her dismissal would be sought, and for that
reason was at best a mere reminder to De Jesus to submit her report on the status of her accounts. The May 12, 2001
memorandum did not provide the notice of dismissal under the law because it only directed her to explain why she should
not be dismissed for cause. The latter memorandum was apparently only the first written notice under the requirement.
CA ruled:
As the Supreme Court held in Serrano, the violation of the notice requirement is not strictly a denial of due process.
This is because such notice is precisely intended to enable the employee not only to prepare himself for the legal battle to
protect his tenure of employment, but also to find other means of employment and ease the impact of the loss of his job
and, necessarily, his income. Conformably with the doctrine laid down in Serrano vs. NLRC, the dismissal of De Jesus
should therefore be struck (down) as ineffectual. In Serrano, the Court pronounced as follows:
―x x x, with respect to dismissals for cause under Art. 282, if it is shown that the employee was dismissed for
any of the just causes mentioned in said Art. 282, then, in accordance with that article, he should not be reinstated.
However, he must be paid backwages from the time his employment was terminated until it is determined that the
termination of employment is for a just cause because the failure to hear him before he is dismissed renders the
termination of his employment without legal effect. ―
The violation by Supersonic of the two-written notice requirement rendered ineffectual the dismissal of De Jesus
for just cause under Article 282 of the Labor Code, and entitled her to be paid full backwages from the time of her
dismissal until the finality of its decision.
The Court cannot ignore that the applicable case law when the CA promulgated its decision on July 23, 2004, and when it
denied Supersonic‘s motion for reconsideration on October 21, 2004 was still Serrano.
As a rule, a judicial interpretation becomes a part of the law as of the date that the law was originally passed ,
subject only to the qualification that when a doctrine of the Court is overruled and the Court adopts a different view, and
more so when there is a reversal of the doctrine, the new doctrine should be applied prospectively and should not apply to
parties who relied on the old doctrine and acted in good faith. To hold otherwise would be to deprive the law of its quality
of fairness and justice, for, then, there is no recognition of what had transpired prior to such adjudication.
Although Agabon, being promulgated only on November 17, 2004, ought to be prospective, not retroactive, in its
operation because its language did not expressly state that it would also operate retroactively, the Court has already
deemed it to be the wise judicial course to let its abandonment of Serrano be retroactive as its means of giving effect to its
recognition of the unfairness of declaring illegal or ineffectual dismissals for valid or authorized causes but not complying
with statutory due process.
Under Agabon, the NEW DOCTRINE is that the failure of the employer to observe the requirements of due process in
favor of the dismissed employee (that is, the two-written notices rule) SHOULD NOT INVALIDATE or render ineffectual
the dismissal for just or authorized cause. The Agabon Court plainly saw the likelihood of Serrano producing unfair but
far-reaching consequences, such as, but not limited to, encouraging frivolous suits where even the most notorious
violators of company policies would be rewarded by invoking due process; to having the constitutional policy of
providing protection to labor be used as a sword to oppress the employers; and to compelling the employers to continue
employing persons who were admittedly guilty of misfeasance or malfeasance and whose continued employment would
be patently inimical to the interest of employers.
The Agabon Court still deplored the employer‘s violation of the employee‘s right to statutory due process by
directing the payment of indemnity in the form of nominal damages, the amount of which would be addressed to the
sound discretion of the labor tribunal upon taking into account the relevant circumstances. Thus, the Agabon Court
designed such form of damages as a deterrent to employers from committing in the future violations of the statutory due
process rights of employees, and, at the same time, as at the very least a vindication or recognition of the fundamental
right granted to the employees under the Labor Code and its implementing rules. Accordingly, consistent with precedent
the amount of P50,000.00 as nominal damages is hereby fixed for the purpose of indemnifying De Jesus for the
violation of her right to due process.
E. Temperate Damages
- Civil Code
1.Equitable PCI Bank v. Tan, G.R. No. 165339, August 23, 2010
Facts: Respondent Arcelito B.Tan maintained a current and savings account with Philippine Commercial International
Bank (PCIB), now petitioner Equitable PCI Bank.
On May 13, 1992, respondent Tan issued a check, postdated May 30, 1992 in favor of Sulpicio Lines Inc. in the
amount of P34,588.72. As of May 14, 1992, respondent's balance with PCI was P35,147.59. On May 14, 1992, Sulpicio
Lines, Inc. deposited the aforesaid check. After clearing, the amount of the check was immediately debited by petitioner
from respondent's account thereby leaving him with a balance of only P558.87.
Meanwhile, Tan issued 3 checks from May 9 to May 16, 1992, payable to Agusan Del Sur Electric Cooperative Inc.
(ASELCO) & Agusan Del Norte Electric Cooperative Inc. (ANECO). However, when presented for payment, were
dishonored for being drawn against insufficient funds.
As a result of the dishonour, the electric power supply for the two mini-sawmills owned and operated by
respondent, located in Talacogon, Agusan del Sur; and in Golden Ribbon, Butuan City, was cut off.
Respondent filed with the RTC a complaint against PCI, praying for payment of losses consisting of unrealized
income in the amount of P1,864,500.00. He also prayed for payment of moral damages, exemplary damages, attorney's
fees and litigation expenses.
Tan contended that the check issued to Sulpicio Lines Inc. was a postdated check, and that his account with
petitioner would have had sufficient funds to cover payment of the three other checks were it not for the negligence of
petitioner in immediately debiting from his account the amount under the postdated check. As a consequence of
petitioner's error, which brought about the dishonor of the two checks paid to ASELCO and ANECO, the electric supply
to his two mini-sawmills was cut off, the business operations thereof were stopped, and purchase orders were not duly
served causing tremendous losses to him.
PCI, in its defense, denied that the questioned check was postdated May 30, 1992 and claimed that it was a current
check dated May 3, 1992. It alleged further that the disconnection of the electric supply to respondent's sawmills was not
due to the dishonor of the checks, but for other reasons not attributable to the bank.
The RTC ruled in favor of PCI. Naturally the CA reversed, wherein it directed PCI to pay Tan the sum
of P 1,864,500.00 as actual damages, P 50,000.00 by way of moral damages, P50,000.00 as exemplary damages and
attorney's fees in the amount of P30,000.00.
Issue: (1) Whether the check issued to Sulpicio Lines was indeed a post-dated
check (2) Whether the award of damages was proper.
Held: (1) YES. Negotiable Instruments mumbo jumbo.

(2) AWARD OF DAMAGES NOT PROPER
ACTUAL DAMAGES
Actual or compensatory damages are those awarded in order to compensate a party for an injury or loss he suffered. 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's claim for damages was based on purchase orders from various customers which were allegedly not met due
to the disruption of the operation of his sawmills. However, aside from the purchase orders and his testimony, respondent
failed to present competent proof on the specific amount of actual damages he suffered during the entire period his
power was cut off. No other evidence was provided by respondent to show that the foregoing purchase orders were not
met or were canceled by his various customers. The Court cannot simply rely on speculation, conjecture or guesswork in
determining the amount of damages.
Moreover, an examination of the purchase orders and job orders reveal that the orders were due for delivery prior to
the period when the power supply of respondent's two sawmills was cut off.
Given the dearth of respondent's evidence on the matter, the Court resolves to delete the award of actual damages
rendered by the CA in favor of respondent for his unrealized income.
TEMPERATE DAMAGES
Nonetheless, in the absence of competent proof on the actual damages suffered, respondent is entitled to temperate
damages. Under Article 2224, temperate or moderate damages, which are more than nominal but less than
compensatory damages, may be recovered when the court finds that some pecuniary loss has been suffered but its
amount cannot, from the nature of the case, be proved with certainty. 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.
It is apparent that respondent suffered pecuniary loss. The negligence of petitioner triggered the disconnection of his
electrical supply, which temporarily halted his business operations and the consequent loss of business opportunity.
However, due to the insufficiency of evidence before Us, We cannot place its amount with certainty. Article 2216 of the
Civil Code instructs that assessment of damages is left to the discretion of the court according to the circumstances of
each case. Under the circumstances, the sum of P50,000.00 as temperate damages is reasonable.
MORAL DAMAGES
Anent the award of moral damages, it is settled that moral damages are meant to compensate the claimant for any physical
suffering, mental anguish, fright, serious anxiety, besmirched reputation, wounded feelings, moral shock, social
humiliation and similar injuries unjustly caused. In Philippine National Bank v. Court of Appeals, the Court held that a
bank is under obligation to treat the accounts of its depositors with meticulous care whether such account consists only of
a few hundred pesos or of millions of pesos. Responsibility arising from negligence in the performance of every kind of
obligation is demandable. While petitioner's negligence in that case may not have been attended with malice and bad faith,
the banks' negligence caused respondent to suffer mental anguish, serious anxiety, embarrassment and humiliation. In that
case, it was ruled that respondent therein was entitled to recover reasonable moral damages.
In this case, the unexpected cutting off of respondent's electricity, which resulted in the stoppage of his business
operations, had caused him to suffer humiliation, mental anguish and serious anxiety. The award of P50,000.00 is
reasonable, considering the reputation and social standing of respondent. As found by the CA, as an accredited
supplier, respondent had been reposed with a certain degree of trust by various reputable and well- established
corporations.
EXEMPLARY DAMAGES
On the award of exemplary damages, Article 2229 of the Civil Code states:
Art. 2229. Exemplary or corrective damages are imposed, by way of example or correction for
the public good, in addition to the moral, temperate, liquidated or compensatory damages.
The law allows the grant of exemplary damages to set an example for the public good. The banking system has
become an indispensable institution in the modern world and plays a vital role in the economic life of every civilized
society. Whether as mere passive entities for the safekeeping and saving of money or as active instruments of business
and commerce, banks have attained an ubiquitous presence among the people, who have come to regard them with respect
and even gratitude and most of all, confidence. For this reason, banks should guard against injury attributable to
negligence or bad faith on its part. Without a doubt, it has been repeatedly emphasized that since the banking business
is impressed with public interest, of paramount importance thereto is the trust and confidence of the public in general.
Consequently, the highest degree of diligence is expected, and high standards of integrity and performance are
even required of it. Petitioner, having failed in this respect, the award of exemplary damages in the amount of
P50,000.00 is in order.
ATTORNEY‘S FEES
As to the award of attorney's fees, Article 2208 of the Civil Code provides, among others, that attorney's fees may be
recovered when exemplary damages are awarded or when the defendant's act or omission has compelled the plaintiff to
litigate with third persons or to incur expenses to protect his interest. Respondent has been forced to undergo
unnecessary trouble and expense to protect his interest. The Court affirms the appellate court‘s award of
attorney‘s fees in the amount of P30,000.00.
2. People v. Murcia, G.R. No. 182460, March 9, 2010

Facts: Eulogio Quilates owns a 2-storey house in La Union. It is occupied by his sisters Felicidad and Alicia, nephew
Herminio, and Murcia who was Felicidad‘s adopted son.
On March 24, 2004, Murcia was having a drinking spree with Herminio and other relatives in front of their house.
Murcia and Herminio had an argument over who would take care of Felicidad. Thereafer, Murcia went inside the house to
get a bolo and emerged 10 minutes later to chase Herminio who was able to escape. After Murcia was pacified by his
other drinking buddies, he went inside the house.
Then, smoke was seen building up from the Murcia‘s room. Awitness testified that Murcia started burning his clothes.
When the occupants outside the house went inside to save their belongings from the fire, they found Felicidad and Alicia
bloodied from stab wounds.
The fire spread quickly and 8 neighboring houses were razed. Alicia survived but Felicidad died due to the burns
sustained from the fire as indidcated by her autopsy.
Two informations were filed. One for ARSON and one for FRUSTRATED HOMICIDE as regards Alicia.
On May 2006, RTC ruled that Murcia was guilty beyond reasonable doubt for both. Thus:
WHEREFORE, in Crim. Case No. 2979-Bg., the Court FINDS and DECLARES the
accused JESSIE VILLEGAS MURCIA, guilty beyond reasonable doubt of the crime
of arson as charged and defined under Art. 320 of the Revised Penal Code, as amended
by R.A. No. 7659, and he is hereby sentenced to suffer the extreme penalty of death; to
indemnify the heirs of the victim Felicidad Quilates, the amount of Php50,000.00 as
moral damages; Php50,000.00 as death indemnity; Php10,000.00 as actual damages
and another Php10,000.00 as temperate damages.
Further, the accused is ordered to indemnify Eulogio Quilates the amount of

P250,000.00, representing the value of the burned house.
The Court likewise FINDS and DECLARES the accused JESSIE VILLEGAS MURCIA
guilty beyond reasonable doubt of the crime of frustrated homicide as charged and he
is hereby sentenced to suffer the indeterminate penalty of FOUR (4) YEARS of prision
correccional as minimum, to TEN (10) YEARS of prision mayor as maximum; to pay the
victim Alicia Q. Manlupig the amount of Php10,000.00 as temperate damages; and to
pay the costs.
The trial court found that the corpus delicti in arson, as well as the identity of the perpetrator, were established beyond
reasonable doubt by the prosecution. While there was no evidence to directly link appellant to the crime, the trial court
relied on circumstantial evidence.
In view of the penalty imposed, the case was forwarded to the CA for automatic review and judgment. The CA
affirmed the trial court‘s findings but reduced the penalty from death to reclusion perpetua.
Hence, this appeal which is only limited to the crime of arson since Murcia already admitted to the frustrated homicide.
Issue: (1) Whether the conviction for arson was proper considering there was no direct evidence presented.
(2) Whether the amount of damages are proper. (Relevant portion)
Held: (1) YES. Direct evidence is not the sole means of establishing guilt beyond reasonable doubt. Established facts
that form a chain of circumstances can lead the mind intuitively or impel a conscious process of reasoning towards a
conviction. Indeed, rules on evidence and principles in jurisprudence have long recognized that the accused may be
convicted through circumstantial evidence.
In order to justify a conviction upon circumstantial evidence, the combination of circumstances must be such as to
leave no reasonable doubt in the mind as to the criminal responsibility of the accused.
Indeed, Murcia was last seen inside the house before the fire started. Eulogio and Ricky saw smoke emanating from the
room of appellant. Herminio testified that he saw appellant burning clothes in his room. Murcia then went on a stabbing
rampage while the house was on fire. While nobody directly saw appellant burn the house, these circumstances would
yield to a logical conclusion that the fire that gutted 8 houses was authored by Murcia.
Thus, the conviction and the penalty imposed is sustained.
(2) NO. With respect to the heirs of Felicidad, We modify the amount of TEMPERATE DAMAGES from P10,000.00 to
P25,000.00, and accordingly delete the amount of actual damages, in line with the ruling in People v. Villanueva.
In said case, the Court held that when actual damages proven by receipts during the trial amount to less than
P25,000.00, the award of temperate damages for P25,000.00 is justified in lieu of actual damages of a lesser amount.
Anent the actual damages awarded to Eulogio amounting to P250,000.00, as indemnification for the burned house, We
note that said amount representing the value of the burned house was merely given by Eulogio as an estimate. It was not
substantiated by any document or receipt. For one to be entitled to actual damages, it is necessary to prove the actual
amount of loss with a reasonable degree of certainty, premised upon competent proof and the best evidence obtainable
by the injured party.
Instead, We award TEMPERATE DAMAGES in accordance with Art. 2224 of the Civil Code, providing that temperate
damages may be recovered when the court finds that some pecuniary loss has been suffered but its amount cannot,
from the nature of the case, be proven with certainty. It is thus reasonable to expect that the value of the house burned
down amounted to at least P200,000.00.
WHEREFORE, the appealed decision finding appellant JESSIE VILLEGAS MURCIA guilty beyond reasonable doubt of
the crime of arson and sentencing him to reclusion perpetua is AFFIRMED with MODIFICATIONS:
(1) Appellant is ordered to indemnify the heirs of Felicidad Quilates the amount of P50,000.00 as moral damages;
P50,000.00 as death indemnity; and P25,000.00 as temperate damages.
(2) The award of P10,000.00 as actual damages in favor of the heirs of Felicidad Quilates is deleted.
(3) Appellant is ordered to pay Eulogio Quilates the amount of P200,000.00 as temperate damages.
The award of P250,000.00 as actual damages in favor of Eulogio Quilates is deleted.
3. People v. Gutierrez, G.R. No. 188602, February 4, 2010

Facts: On August 15, 2003, 5 separate Informations for murder, frustrated murder and 3 counts of attempted murder were
filed against appellant. When arraigned, appellant, with the assistance of counsel de oficio, entered a plea of not guilty to
the charges. Trial on the merits then ensued.
Prosecution‘s version as follows:
On May 17, 2003 at nine o‘clock in the evening, the deceased Leo Salvador Regis,
private complainants Randy Marcelo, Jefferson Gallemit, Jaypee Boneo and Alexis Dalit
were talking to each other in front of the house of the deceased at 477 Narra St., Cembo,
Makati City. They noticed the presence of appellant along the street and thought that
appellant would just pass by. However, when appellant was two (2) arms length away in
front of them, appellant suddenly raised his arm and shot the deceased Regis with a .
45 caliber pistol. After he was hit on the chest, Regis said ―ARAY!,‖ embraced Randy
Marcelo who was seated on his left, and fell off his chair to the ground.
Jefferson Gallemit, Jaypee Boneo and Alexis Dalit stood from their seats. Appellant fired
several shots thereafter, one of which hit Dalit‘s arm. Boneo and Gallemit ran up the
street while Dalit ran in the opposite direction and hid behind a car. In the meantime, the
deceased Leo Salvador Regis and Randy Marcelo were still huddled together at the spot
where the deceased fell. Appellant stayed at the same spot where he fired the first shot
even after the three ran away
.
Appellant then pursued Dalit down the street but did not catch him, prompting appellant
to say: ―Pagnaabutan ko kayo, pagpapatayin ko kayo!‖ Dalit then sought refuge at
BLISS Makati and contacted the police from there.
The police arrived at the scene after twenty (20) minutes. Dalit was brought to the Ospital
ng Makati where his wound was dressed. He was operated on at the Philippine
Orthopedic Hospital. Regis was brought to the Ospital ng Makati by Randy Marcelo
where he died that night.
Appellant for his part asserted self-defense. He testified that:
At around 8 o‘clock p.m. of May 17, 2003, he went to an ihaw-ihaw restaurant with live
band in Guadalupe in order to relax. After taking two (2) bottles of beer, he decided to go
home, took a jeepney ride and alighted in front of a bakery owned by Barangay Captain
Leo Magbantay, one hundred twenty (120) meters away from his house. While passing
by, he noticed a group of five youngsters who were at the right side of the street. Among
them, he only knew Loloy (Jaypee) Boneo, whom he used to babysit when the latter was
still young.
While walking, one in the group cursed him and shouted ―TANG INA MO!‖ Since he
was the only passerby, he stopped and looked at them, but two (2) from the group
approached him. He was suddenly boxed by Regis Ado, while Dalit was just beside Ado.
When he fell on the ground, Ado continuously beat him, then suddenly, a gun fell from
Leo Regis. He immediately got hold of it, and when Leo Regis was supposed to attack
him again, he kicked Leo which made him [to fall] down. When he stood up and saw
Regis standing up, he fired a shot at him. He continuously fired the gun, which was
directed towards the ground so as to warn the others.
Thereafter, he fled the scene, and threw the gun on a vacant lot. Since he did not know
what to do, and confused, he took a jeepney going to Pateros, but since, he had no money,
he alighted somewhere, and rested. When he finally regained his senses, he went to
Cubao and borrowed money from one of their retailers.
Not finding credence in appellant's claim of self-defense, the RTC convicted him of murder, frustrated murder and
attempted murder on three (3) counts:
1) in murder case 1: for murder of Leo Salvador E. Regis, the court hereby sentences him to suffer the
penalty of imprisonment reclusion perpetua, to pay the heirs of the victim the sum of P50,000.00 as
civil indemnity and the amount of Php 102,337.25 as actual damages;
2) in case 2: for the frustrated murder committed against Alexis B. Dalit, the [c]ourt hereby sentences him
to suffer the penalty of imprisonment of 8 years and 20 days as minimum to 14 years, 10 months and
20 days as maximum and to indemnify the sum of Php 22,596.50, representing the victim‘s expenses
for medical services and medicine;
(di ko na sinama ung decision sa case 3-5)
Appeal.
On March 12, 2009, the CA rendered the assailed Decision, affirming, but with modifications, the RTC decision, viz.:
WHEREFORE, premises considered, the 7 August 2006 decision of the Regional Trial
Court of Makati City (Branch 62) in Criminal Case No. 03-3639 for murder is AFFIRMED with
MODIFICATION as to the award of damages. The award of actual damages in favor of the heirs
of Leo Salvador E. Regis is reduced to P42,337.25. Moral damages of P50,000.00, temperate
damages of P10,000.00, and exemplary damages of P10,000.00 are additionally awarded to the heirs
of Leo Salvador E. Regis.
The 7 August 2006 decision of the Regional Trial Court of Makati City (Branch 62) in Criminal
Case No. 03-3640 for frustrated murder is MODIFIED. Accused-appellant Ford D. Gutierrez is
found GUILTY of committing the crime of ATTEMPTED MURDER and sentenced to suffer the
indeterminate imprisonment of two (2) years, four (4) months and one (1) day of prision
correccional, as minimum, to eight (8) years and one (1) day of prision mayor, as maximum. The
award of actual damages in favor of the victim Alexis B. Dalit is AFFIRMED.
Issue: Whether the conviction was proper and whether the damages awarded was proper.
Held: CRIM PART

Appellant assails the trial court and the CA for giving credence to the prosecution‘s evidence. He admits having killed
Regis and wounding Dalit, but insists that he did so in self-defense.
Self-defense is an affirmative allegation and offers exculpation from liability for crimes only if satisfactorily proved. It
requires (a) unlawful aggression on the part of the victim; (b) reasonable necessity of the means employed by the accused
to repel it; and (c) lack of sufficient provocation on his part. By invoking self-defense, the burden is placed on the accused
to prove its elements clearly and convincingly. While all three elements must concur, self-defense relies first and foremost
on proof of unlawful aggression on the part of the victim. If no unlawful aggression is proved, no self-defense may be
successfully pleaded.
In this case, appellant utterly failed to discharge the burden of proving unlawful aggression. His version of the events
was uncorroborated, and his testimony was found to be less credible by the trial court. On the other hand, the surviving
victims were unanimous that appellant suddenly fired at them, without any provocation on their part. The credibility of the
prosecution witnesses had been weighed by the trial court, and it found their testimonies to be more convincing.
The trial court and the CA cannot, therefore, be faulted for rejecting appellant‘s plea of self-defense.
This Court also agrees with the trial court in appreciating treachery as a qualifying circumstance. The pieces of evidence
gleaned by the trial court, the facts, are enough to show that treachery was employed by appellant. The attack was
sudden, as testified to by the witnesses, and unexpected. Provocation on the part of the victims was not proven, and
appellant‘s testimony that the victims were about to attack him cannot be given credence. The victims had no inkling that
an attack was forthcoming and had no opportunity to mount a defense. Thus, treachery was correctly appreciated as a
circumstance to qualify the crime to murder.
We also affirm the CA ruling that appellant is guilty of attempted murder, not of frustrated murder, in Criminal Case No.
03-3640 for the injury sustained by Dalit. No convincing proof was offered to show that the wound inflicted on Dalit was
fatal and would have caused his death had medical help not been provided. It is well settled that where the wounds
inflicted on the victim are not sufficient to cause his death, the crime is only attempted murder, as the accused had not
performed all the acts of execution that would have brought about the victim's death.
DAMAGES PART
And now, the award of damages. When death occurs due to a crime, the following may be recovered: (1) civil indemnity
ex delicto for the death of the victim; (2) actual or compensatory damages; (3) moral damages; (4) exemplary damages;
(5) attorney's fees and expenses of litigation; and (6) interest, in proper cases.
The CA awarded P42,337.25 as actual damages and P10,000.00 as temperate damages to the heirs of Regis. In People v.
Villanueva and People v. Abrazaldo, we ruled that temperate and actual damages are mutually exclusive in that BOTH
MAY NOT BE AWARDED AT THE SAME TIME . Hence, no temperate damages may be awarded if actual damages have
already been granted. The award of P10,000.00 as temperate damages must, therefore, be deleted.
The grant of P50,000.00 as civil indemnity and P50,000.00 as moral damages is proper, and thus, we sustain the same. In
murder, the grant of civil indemnity, which has been fixed by jurisprudence at P50,000.00, requires no proof other than
the fact of death as a result of the crime and proof of the accused's responsibility therefor. Moral damages, on the other
hand, are awarded in view of the violent death of the victim. There is no need for any allegation or proof of the emotional
sufferings of the heirs.
Likewise, the award of exemplary damages is warranted when the commission of the offense is attended by an
aggravating circumstance, whether ordinary or qualifying, as in this case. Accordingly, we sustain the CA‘s award of
exemplary damages to the heirs of Regis, but we increase the award to P30,000.00.
Similarly, we affirm the award of P22,596.50 as actual damages to Dalit, who is, likewise, entitled to moral damages,
which this Court fixes in the amount of P40,000.00. Ordinary human experience and common sense dictate that the
wounds inflicted on the surviving victims would naturally cause physical suffering, fright, serious anxiety, moral shock,
and similar injuries. Finally, the award in the amount of P20,000.00, as exemplary damages to Dalit, is also in order
considering that the crime was attended by the qualifying circumstance of treachery.
4. Ramos v. Court of Appeals, 321 SCRA 584 (1999)

I ASSUME THAT YOU KNOW THE FACTS.
DAMAGES
Petitioners seek the reversal of the decision of the Court of Appeals. Finding private respondents liable for damages
arising from negligence in the performance of their professional duties towards petitioner Erlinda Ramos resulting in her
comatose condition. Petitioners filed a civil case for damages with the Regional Trial Court of Quezon City against herein
private respondents alleging negligence in the management and care of Erlinda Ramos. Regional Trial Court rendered
judgment in favor of petitioners. The defendants were guilty of, at the very least, negligence in the performance of their
duty to plaintiffpatient Erlinda Ramos.
Accordingly, the latter are ordered to pay, jointly and severally, the former the following sums of money, to wit: 1) the
sum of P8,000.00 as actual monthly expenses for the plaintiff Erlinda Ramos reckoned from November 15, 1985 or in the
total sum of P632,000.00 as of April 15, 1992, subject to its being updated; 2)
thesumofP100,000.00asreasonableattorney‘sfees; 3) the sum of P800,000.00 by way of moral damages and the further
sum of P200,000.00 by way of exemplary damages; and, 4) the costs of the suit.
Court of Appeals reversing amount of damages due petitioners.
WHEREFORE, for the foregoing premises the appealed decision is hereby REVERSED, and the complaint below against
the appellants is hereby ordered DISMISSED. The counterclaim of appellant De Los Santos Medical Center is
GRANTED but only insofar as appellees are hereby ordered to pay the unpaid hospital bills amounting to P93,542.25,
plus legal interest for justice must be tempered with mercy.
Held:
The trial court awarded a total of P632,000.00 pesos (should be P616,000.00) in compensatory damages to the plaintiff,
―subject to its being updated‖ covering the period from 15 November 1985 up to 15 April 1992, based on monthly
expenses for the care of the patient estimated at P8,000.00.
At current levels, the P8,000/monthly amount established by the trial court at the time of its decision would be grossly
inadequate to cover the actual costs of homebased care for a comatose individual. The calculated amount was not even
arrived at by looking at the actual cost of proper hospice care for the patient. What it reflected were the actual expenses
incurred and proved by the petitioners after they were forced to bring home the patient to avoid mounting hospital bills.
And yet ideally, a comatose patient should remain in a hospital or be transferred to a hospice specializing in the care of the
chronically ill for the purpose of providing a proper milieu adequate to meet minimum standards of care. In the instant
case for instance, Erlinda has to be constantly turned from side to side to prevent bedsores and hypostatic pneumonia.
Feeding is done by nasogastric tube. Food preparation should be normally made by a dietitian. She has to be seen on a
regular basis by a physical therapist to avoid muscle atrophy, and by a pulmonary therapist to prevent the accumulation of
secretions which can lead to respiratory complications.
The amount of actual damages recoverable in suits arising from negligence should at least reflect the correct minimum
cost of proper care, not the cost of the care the family is usually compelled to undertake at home to avoid bankruptcy.
However, the provisions of the Civil Code on actual or compensatory damages present us with some difficulties.
Actual damages which may be claimed by the plaintiff are those suffered by him as he has duly proved.
Art. 2199.—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.
Our rules on actual or compensatory damages generally assume that at the time of litigation, the injury suffered as a
consequence of an act of negligence has been completed and that the cost can be liquidated. However, these provisions
neglect to take into account those situations, as in this case, where the resulting injury might be continuing and
possible future complications directly arising from the injury, while certain to occur, are difficult to predict. In these
cases, the amount of damages which should be awarded, if they are to adequately and correctly respond to the injury
caused, should be one which compensates for pecuniary loss incurred and proved, up to the time of trial; and one which
would meet pecuniary loss certain to be suffered but which could not, from the nature of the case, be made with certainty.
In other words, temperate damages can and should be awarded on top of actual or compensatory damages in instances
WHERE THE INJURY IS CHRONIC AND CONTINUING . And because of the unique nature of such cases, no incompatibility
arises when both actual and temperate damages are provided for. The reason is that these damages cover two distinct
phases.
As it would not be equitable for the victim in such cases to constantly come before the courts and invoke their aid in
seeking adjustments to the compensatory damages previously awarded — temperate damages are appropriate. The
amount given as temperate damages, though to a certain extent speculative, should take into account the cost of proper
care.
Petitioners were able to provide only homebased nursing care for a comatose patient who has remained in that condition
for over a decade. Having premised our award for compensatory damages on the amount provided by petitioners at the
onset of litigation, it would be now much more in step with the interests of justice if the value awarded for temperate
damages would allow petitioners to provide optimal care for their loved one in a facility which generally specializes in
such care. They should not be compelled by dire circumstances to provide substandard care at home without the aid of
professionals, for anything less would be grossly inadequate. Under the circumstances, an award of P1,500,000.00 in
temperate damages would therefore be reasonable.
In Valenzuela vs. Court of Appeals, the injury suffered by the plaintiff would have led to expenses which were difficult to
estimate because while they would have been a direct result of the injury (amputation), and were certain to be incurred,
they were likely to arise only in the future. We awarded P1,000,000.00 in moral damages. She will be required to undergo
adjustments in her prosthetic devise due to the shrinkage of the stump from the process of healing. These adjustments
entail costs, prosthetic replacements and months of physical and occupational rehabilitation and therapy. During her
lifetime, the prosthetic devise will have to be replaced and readjusted. In other words, the damage done to her would not
only be permanent and lasting, it would also be permanently changing and adjusting to the physiologic changes which her
body would normally undergo through the years.
The injury suffered by Erlinda as a consequence of private respondents‘ negligence is certainly much more serious than
the amputation in the Valenzuela case. Ramos was in her midforties when the incident occurred. She has been in a
comatose state for over fourteen years now. The burden of care has so far been heroically shouldered by her husband and
children. The actual physical, emotional and financial cost of the care of petitioner would be virtually impossible to
quantify. Even the temperate damages herein awarded would be inadequate if petitioner‘s condition remains unchanged
for the next ten years.
We recognized, in Valenzuela that a discussion of the victim‘s actual injury would not even scratch the surface of the
resulting moral damage because it would be highly speculative to estimate the amount of emotional and moral pain,
psychological damage and injury suffered by the victim or those actually affected by the victim‘s condition. They have
fashioned their daily lives around the nursing care of petitioner, altering their long term goals to take into account their life
with a comatose patient. They, not the respondents, are charged with the moral responsibility of the care of the victim.
For the foregoing reasons, an award of P2,000,000.00 in moral damages would be appropriate. Finally, by way of
example, exemplary damages in the amount of P100,000.00 are hereby awarded. Attorney‘s fees valued at P100,000.00
are likewise proper.
WHEREFORE, the decision and resolution of the appellate court appealed from are hereby modified so as to award in
favor of petitioners, and solidarily against private respondents the following:
1) P1,352,000.00 as actual damages computed as of the date of promulgation of this decision plus a monthly payment of
P8,000.00 up to the time that petitioner Erlinda Ramos expires or miraculously survives;
2) P2,000,000.00 as moral damages;
3) P1,500,000.00 as temperate damages;
4) P100,000.00 each as exemplary damages and attorney‘s fees; and,
5) the costs of the suit.
Liquidated Damages
- Civil Code
1.Azcuna v. Court of Appeals, G.R. No. 116665, March 20, 1996

DOCTRINE: The rule that ―the only damages that can be recovered in an ejectment suit are the fair rental value or the
reasonable compensation for the use and occupation of the real property‖ does not apply where the additional award
consists of stipulated liquidated damages.
The freedom of the contracting parties to make stipulations in their contract provided they are not contrary to law, morals,
good customs, public order or public policy is settled.
F. Exemplary Damages
- Civil Code
1.Makabali v. Court of Appeals, G.R. No. L-46877, January 22, 1988

DOCTRINE: While exemplary damages cannot be recovered as a matter of right, they need not be proved, although
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.
MORAL V. EXEMPLARY DAMAGES
While moral damages have to do with injury personal to the awardee, such as physical suffering and the like, exemplary
damages are imposed by way of example or correction for the public good.
In the award of damages that the claimant must have SATISFACTORILY PROVEN during the trial the existence of the
factual basis of the damages and its causal connection to defendant‘s acts.
2. People v. Catubig, 363 SCRA 62 (2001)

DOCTRINE: Also known as ―punitive‖ or ―vindictive‖ damages, exemplary or corrective damages are intended to serve
as a deterrent to serious wrongdoings and as a vindication of undue sufferings and wanton invasion of the rights of an
injured or a punishment for those guilty of outrageous conduct. These terms are generally, but not always, used
interchangeably.
In COMMON LAW, there is preference in the use of exemplary damages when the award is to account for injury to
feelings and for the sense of indignity and humiliation suffered by a person as a result of an injury that has been
maliciously and wantonly inflicted, the theory being that there should be compensation for the hurt caused by the highly
reprehensible conduct of the defendant — associated with such circumstances as willfulness, wantonness, malice, gross
negligence or recklessness, oppression, insult or fraud or gross fraud — that intensifies the injury. The terms punitive or
vindictive damages are often used to refer to those species of damages that may be awarded against a person to
punish him for his outrageous conduct.
In either case, these damages are intended in good measure to deter the wrongdoer and others like him from similar
conduct in the future.
CIVIL LAW CONCEPT OF ―AGGRAVATING CIRCUMSTANCES‖

The term ―aggravating circumstances‖ used by the Civil Code, the law not having specified otherwise, is to be
understood in its broad or generic sense.
Unlike the criminal liability which is basically a State concern, the award of damages, however, is likewise, if not
primarily, intended for the offended party who suffers thereby. It would make little sense for an award of exemplary
damages to be due the private offended party when the aggravating circumstance is ordinary but to be withheld when it is
qualifying. Withal, the ordinary or qualifying nature of an aggravating circumstance is a distinction that should
only be of consequence to the criminal, rather than to the civil, liability of the offender.
In fine, relative to the civil aspect of the case, an aggravating circumstance, whether ordinary or qualifying, should
entitle the offended party to an award of exemplary damages within the unbridled meaning of Article 2230 of the
Civil Code.
3. People v. Dalisay, G.R. No. 188106, November 25, 2009

DOCTRINE: Prior to the effectivity of the Revised Rules of Criminal Procedure, courts generally awarded exemplary
damages in criminal cases when an aggravating circumstance, whether ordinary or qualifying, had been proven to have
attended the commission of the crime, EVEN IF THE SAME WAS NOT ALLEGED IN THE INFORMATION . This is in
accordance with the aforesaid Article 2230.
HOWEVER, with the promulgation of the Revised Rules, courts no longer consider the aggravating circumstances not
alleged and proven in the determination of the penalty and in the award of damages. Thus, even if an aggravating
circumstance has been proven, but was not alleged, courts will not award exemplary damages.
Being corrective in nature, exemplary damages, therefore, can be awarded, not only in the presence of an aggravating
circumstance, but also where the circumstances of the case show the HIGHLY REPREHENSIBLE or OUTRAGEOUS
CONDUCT OF THE OFFENDER. In much the same way as Article 2230 prescribes an instance when exemplary damages
may be awarded, Article 2229, the main provision, lays down the very basis of the award.
Examples:
(1) To deter other fathers with perverse tendencies or aberrant sexual behavior from sexually abusing their own
daughters.
(2) Moral corruption, perversity and wickedness of the accused in sexually assaulting a pregnant married woman.
(3) To set a public example, to serve as deterrent to elders who abuse and corrupt the youth, and to protect the latter
from sexual abuse.
4. Mecenas v. Court of Appeals, 180 SCRA 83, December 14, 1989

DOCTRINE: Exemplary damages are designed by our civil law to permit the courts to reshape behaviour that is socially
deleterious in its consequence by creating negative incentives or deterrents against such behaviour.
In requiring compliance with the standard of extraordinary diligence, a standard which is in fact that of the highest
possible degree of diligence, from common carriers and in creating a presumption of negligence against them, the law
seeks to compel them to control their employees, to tame their reckless instincts and to force them to take adequate care of
human beings and their property.
5. Munsayac v. De Lara, G.R. No. L-21151, June 26, 1968

Facts: As a result of injuries suffered by the Munsayac while riding as a passenger on a jeepney owned and operated by
the De Lara, this action for recovery of damages was filed in the CFI of Rizal (Pasig).
The trial Judge found the driver recklessly negligent: he drove at an excessive speed, unmindful of the fact that the road
was under repair and heedless of the passengers‘ pleas that he go more slowly. Besides the award of compensatory
damages for actual expenses incurred and loss of income, the defendant was ordered to pay P1,000.00 as exemplary
damages and P500.00 as attorney‟s fees.
On these last 2 items the De Lara appealed to the CA, which rendered a judgment of affirmance, quoting the trial Court‘s
justification for the award as follows:
The defendant‘s admission that the accident happened and the plaintiff‘s extensive
injuries as a result thereof, despite which the defendant failed, or even refused, to
placate the sufferings of plaintiff, necessitating the filing of this action, entitled plaintiff
to exemplary damages — to set an example to others — and attorney‘s fees.
DE LARA POINTS OUT that the act referred to in Article 2232 must be one which is coetaneous with and characterizes the
breach of the contract on which the suit is based, and not one which is subsequent to such breach and therefore has no
causal relation thereto, such as the failure of De Lara to placate the sufferings of the plaintiff.
De Lara relies on the case of Rotea vs. Halili, where this Court held:
According to the rule adopted by many courts, a principal or master can be held liable
for exemplary or punitive damages based upon the wrongful act of his agent or
servant ONLY where he participated in the doing of such wrongful act or has
previously authorized or subsequently ratified it with full knowledge of the facts.
Reasons given for this rule are that since damages are penal in character, the motive
authorizing their infliction will not be imputed by presumption to the principal when the
act is committed by an agent or servant, and that since they are awarded not by way of
compensation, but as a warning to others, they can only be awarded against one who has
participated in the offense, and the principal therefore cannot be held liable for them
merely by reason of wanton, oppressive or malicious intent on the part of the agent.
Issue: Whether the award of exemplary damages and attorney‘s fees are proper.
Held: As regards exemplary damages, NO. We believe the point of the De Lara is well-taken.
EXEMPLARY DAMAGES
The Civil Code provides that ―exemplary or corrective damages are imposed, by way of example or correction for the
public good‖ and that IN CONTRACTS ―the Court may award exemplary damages if the defendant acted in wanton,
fraudulent, reckless, oppressive or malevolent manner.‖
It is difficult to conceive how De Lara, in a breach of contract case, could be held to have acted in a wanton,
fraudulent, reckless, oppressive or malevolent manner within the meaning of Article 2232 for something he did or did
not do after the breach, which had no causal connection therewith.
The law does not contemplate a vicarious liability on his part: the breach is his as party to the contract, and so if he is
to be held liable at all for exemplary damages by reason of the wrongful act of his agent, it must be shown that he had
previously authorized or knowingly ratified it thereafter, in effect making him a co-participant. From the decision
under review, however, there is nothing to show previous authority or subsequent ratification by De Lara insofar as
the recklessness of the driver was concerned.
The mere statement that the defendant failed, even refused, to placate the suffering of the plaintiff, necessitating the
filing of the action, is too tenuous a basis to warrant the conclusion that the defendant approved of the wrongful act of his
servant with full knowledge of the facts.
It is NOT ENOUGH TO SAY THAT AN EXAMPLE SHOULD BE MADE , or corrective measures employed, for the public good,
especially in accident cases where public carriers are involved. For the causative negligence in such cases is PERSONAL
TO THE EMPLOYEES ACTUALLY IN CHARGE OF THE VEHICLES, and it is they who should be made to pay this kind of
damages by way of example or correction, unless by the demonstrated tolerance or approval of the owners they
themselves can be held at fault and their fault is of the character described in Article 2232 of the Civil Code.
Otherwise there would be practically no difference between their liability for exemplary damages and their liability
for compensatory damages, which needs no proof of their negligence since the suit is predicated on breach of contract
and due diligence on their part does not constitute a defense.
6. Kapalaran Bus Line v. Coronado, G.R. No. 85331, August 25, 1989
DOCTRINE: In requiring the highest possible degree of diligence from common carriers and creating a presumption of
negligence against them, the law compels them to curb the recklessness of their drivers. The law seeks to stop and prevent
the slaughter and maiming of people (whether passengers or not) and the destruction of property (whether freight or not)
on our highways by buses, the very size and power of which seem often to inflame the minds of their drivers. Article 2231
of the Civil Code explicitly authorizes the imposition of exemplary damages in cases of quasi-delicts ―if the defendant
acted with gross negligence.‖ Thus we believe that the award of exemplary damages by the trial court was quite proper,
although granted for the wrong reason, and should not only be restored but augmented in the present case.

7.Quezon City Government v. Dacara, G.R. No. 150304, June 15, 2005 Supra
DOCTRINE: Article 2231 of the Civil Code mandates that in cases of quasi-delicts, exemplary damages may be recovered
if the defendant acted with gross negligence. Gross negligence means such utter want of care as to raise a presumption
that the persons at fault must have been conscious of the probable consequences of their carelessness , and that they
must have nevertheless been indifferent (or worse) to the danger of injury to the person or property of others. The
negligence must amount to a reckless disregard for the safety of persons or property.
EXEMPLARY DAMAGES MAY BE AWARDED TO LGUS

Article 2229 of the Civil Code provides that exemplary damages may be imposed by way of example or correction for the
public good. The award of these damages is meant to be a deterrent to socially deleterious actions. Public policy
requires such imposition to suppress wanton acts of an offender. It must be emphasized that local governments and their
employees should be responsible not only for the maintenance of roads and streets, but also for the safety of the
public. Thus, they must secure construction areas with adequate precautionary measures. Not only is the work of
petitioners impressed with public interest; their very existence is justified only by public service.
Hence, local governments have the paramount responsibility of keeping the interests of the public foremost in their
agenda. For these reasons, it is most disturbing to note that the present petitioners are the very parties responsible
for endangering the public through such a rash and reckless act.
G. Mitigation of Damages
- Civil Code
o Articles 2203 to 2204, and 2214 to 2215 (Memorize)
1.Velasco v. Manila Electric Co., G.R. No. L-18390, August 6, 1971

DOCTRINE: The general rule is that everyone is bound to bear the habitual or customary inconveniences that result from
the proximity of others, and so long as this level is not surpassed, he may not complain against them. But if the prejudice
exceeds the inconveniences that such proximity habitually brings, the neighbor who causes such disturbance is held
responsible for the resulting damage, being guilty of causing nuisance.
NOISE AS ACTIONABLE NUISANCE

A noise may constitute an actionable nuisance, but it must be a noise which affects injuriously the health or comfort of
ordinary people in the vicinity to an unreasonable extent. Injury to a particular person in a peculiar position or of
specially sensitive characteristics will not render the noise an actionable nuisance.
In the conditions of present living noise seems inseparable from the conduct of many necessary occupations. Its presence
is a nuisance in the popular sense in which that word is used, but in the absence of statute noise becomes actionable
only when it passes the limits of reasonable adjustment to the conditions of the locality and of the needs of the
listener. What those limits are cannot be fixed by any definite measure of quantity or quality. They depend upon the
circumstances of the particular case. They may be affected, but are not controlled, by zoning ordinances. The delimitation
of designated areas to use for manufacturing, industry or general business is not a license to emit every noise profitably
attending the conduct of any one of them.
Commercial and industrial activities which are lawful in themselves may become nuisances if they are so offensive to
the senses that they render the enjoyment of life and property uncomfortable.
The DETERMINING FACTOR when noise alone is the cause of complaint is not its intensity or volume. It is that the noise
is of such character as to produce actual physical discomfort and annoyance to a person of ordinary sensibilities,
rendering adjacent property less comfortable and valuable. If the noise does that it can well be said to be substantial and
unreasonable in degree; and reasonableness is a question of fact dependent upon the circumstances and conditions. There
can be no fixed standard as to what kind of noise constitutes a nuisance.
CASE AT BAR
The noise continuously emitted by a Meralco substation, day and night, constitutes an actionable nuisance for which the
appellant is entitled to relief, by requiring the appellee company to adopt the necessary measures to deaden or reduce
the sound at the plaintiff‟s house, by replacing the interlink wire fence with a partition made of sound absorbent
material, since the relocation of the substation is manifestly impracticable and would be prejudicial to the cus tomers of
the Electric Company who are being serviced from the substation.
MITIGATION OF DAMAGES
Article 2203 of the Civil Code clearly obligates the INJURED PARTY to undertake measures that will alleviate and not
aggravate his condition after the infliction of the injury, and places upon him the burden of explaining why he could
not do so.
There are several factors that mitigate defendant‘s liability in damages. The first is that the noise from the substation
does not appear to be an exclusive causative factor of plaintiff-appellant‟s illnesses. Financial worries can affect
unfavorably the debtor‘s disposition and mentality.
The other factor militating against full recovery by the petitioner Velasco is his passivity in the fact of the damage
caused to him by the noise of the substation. Realizing as a physician that the latter was disturbing or depriving him of
sleep and affecting both his physical and mental well being, he did not take any steps to bring action to abate the
nuisance or to remove himself from the affected area as soon as the deleterious effects became noticeable.
2. Cerrano v. Tan Chuoco, G.R. No. 12907, August 1, 1918

DOCTRINE: It is a well recognized principle of law that damages resulting from AVOIDABLE CONSEQUENCES of the
breach of a contract or other legal duty are not recoverable.
It is the duty of one injured by the unlawful act of another to take such measures as prudent men usually take under
such circumstances to reduce the damages as much as possible. It is equally well settled, however, that the burden
of proof rests upon the defendant to show that the plaintiff might have reduced the damages.
3. Lim v. Court of Appeals, G.R. No. 125817, January 16, 2002

DOCTRINE: We have observed that private respondent left his passenger jeepney by the roadside at the mercy of the
elements. Article 2203 of the Civil Code exhorts parties suffering from loss or injury to exercise the diligence of a good
father of a family to minimize the damages resulting from the act or omission in question.
One who is injured then by the wrongful or negligent act of another should exercise reasonable care and diligence to
minimize the resulting damage. Anyway, he can recover from the wrongdoer MONEY LOST IN REASONABLE EFFORTS
TO PRESERVE THE PROPERTY INJURED and FOR INJURIES INCURRED IN ATTEMPTING TO PREVENT DAMAGE TO IT.
4. Sotelo v. Behn, Meyer & Co., G.R. No. 35489, December 29, 1932
DOCTRINE: An employee who is improperly discharged is under an obligation to use reasonable diligence to obtain
other suitable employment and that in assessing the damages for the period which is still to run after the breach, the court
may properly take into account the probability that the discharged employee will be able to earn money in other
employment.
5. Lemoine v. Alkan, G.R. No. 10422, January 11, 1916

DOCTRINE: The fact that the plaintiff in such an action could have obtained by the use of reasonable diligence like
employment under similar conditions in the same locality, or that the employer who wrongfully discharged him offered to
permit him to return to his employment under substantially the same conditions as formerly and at the same rate of wages,
does not constitute a defense to the action but are MATTERS IN MITIGATION.
In order that the defendant in such an action may take advantage of the fact that the plaintiff could have obtained
like employment under similar conditions in the same locality, he must show the rate of wages which plaintiff would
have received if he had obtained such employment. Defendant cannot be allowed a sum to reduce plaintiff's damages
unless he has proved what that sum is.
Where, under such circumstances, the plaintiff refused to return to the employ of the defendant, the latter is entitled
to offset plaintiff's damages with the wages which he would have received if he had returned, from the time when the
offer was made.
X. GRADING
Recitation and Quizzes* 40%

Midterm exam 20%
Final exam** 40%
Total 100%
* Recitation will be conducted every session. Expect quizzes covering assigned and/or previously-discussed
lessons to be given every session.
* The Final exam will cover all topics and cases identified above.

Torts Midterms To Finals Cases

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IV.

A. Parents and Guardians

- Family Code (as amended by RA

2.Exconde v. Capuno, 101 Phil. 843 (1957)

Head of school/school not liable

REYES, J. B. L., J., dissenting:

2.Tamargo v. Court of Appeals, 209 SCRA 518 (1992)

Issue: Whether Sps. Bundoc are indispensible parties to the case.

3.Libi v. Intermediate Appellate Court, 214 SCRA 16 (1992)

B.Owners and Managers of Enterprises/Employers

1.Bahia v. Litonjua, 30 Phil. 624 (1915)

3.Martin v. Court of Appeals, 205 SCRA 591 (1992)

Issue: Whether the employer of the driver is liable.

Testimony of Dr. Castillo on cross exam. by Atty. Flores

Testimony of Dr. Lazaro on cross examination:

Testimony of Luisito Vinas on cross examination,

Testimony of Tirso de Chavez on direct examination

Issue: Whether Mercury & Del Rosario are solidarily liable.

Mercury Drug‘s liability

8. Carticiano v. Nuval, G.R. No. 138054, September 28, 2000

Issue: Whether the complaint states a cause of action.

Sec. 14. Working scholars. — There is no employer-employee relationship between

The following are ways of showing diligence in the supervision of broadcasters:

14. Jayme v. Apostol, G.R. No. 163609, November 27, 2008

Issue: Whether the mayor should be held vicariously liable

An Act authorizing E. Merritt to bring suit against the Government of the

SECTION 1. E. Merritt is hereby authorized to bring suit in the Court of

Enacted, February 3, 1915.

SECTION 1. Authority is hereby given to George Apfelbacher, of the town of

In determining the scope of this act, the court said:

2. Fontanilla v. Maliaman, G.R. No. 55963, December 1, 1989

Paragraphs 5 and 6 of Art. 2180 read as follows:

The liability of the State has two aspects, namely:

D. Teachers and Heads of Establishments

2.Mercado v. Court of Appeals, 108 Phil. 414 (1960)

Issue: Whether Lourdes Catholic School is liable.

2.Palisoc v. Brillantes, 41 SCRA 557 (1971)

3. Amadora v. Court of Appeals, 160 SCRA 315 (1988)

(1) Discussion on past jurisprudence on the matter.

(2) Based on the foregoing, Art. 2180 applies to ALL schools.

4. Cuadra v. Monfort, G.R. No. L-24101, September 30, 1970

BARREDO, J., dissenting:

5. Ylarde v. Aquino, G.R. No. L-33722, July 29, 1988

6.Salvosa v. Intermediate Appellate Court, G.R. No. 70458, October 5, 1988

Issue: Whether or not Art. 2180 applies in this case.

Issue: Whether FEU is liable.

On the FEU president‟s liability

On the applicability of Art. 2180

On the liability of Galaxy and its president

F. Distinguished from subsidiary liability under the Revised Penal Code

- Revised Penal Code

2.Carpio v. Doroja, 180 SCRA 1 (1989)

TC denied petitioner‘s motion.

(a) the convicted employee is in truth in the employ of the employer;

Subsidiary liability of an employer under Article 103 of the RPC requires:

1. Vestil v. Intermediate Appellate Court, 179 SCRA 47 (1989)

B. Owners of Motor Vehicles

- See Section III(D)(iii)(a) above.

C.Manufacturers and Processors

Issue: Whether the action was a breach of implied warranty or quasi-delict.

- Republic Act No. 7160, Section 24

Article 2189 of the Civil Code provides that: