Set 6 Torts Digest Compilation Damages

(1) Sps Santos v CA and Heirs of Mabasa
FACTS
The plaintiff owns a parcel of land with a two-door apartment erected thereon situated at Interior P. Burgos St.,
Palingon, Tipas, Taguig, Metro Manila. The plaintiff was able to acquire said property through a contract of sale
with spouses Mamerto Rayos and Teodora Quintero as vendors last September 1981.
Taking P. Burgos Street as the point of reference, on the left side, going to plaintiff's property, the row of houses
will be as follows:
1. That of defendants Cristino and Brigido Custodio;

2. then that of Lito and Maria Cristina Santos;
3. and then that of Ofelia Mabasa.
On the right side:
1. that of defendant Rosalina Morato; and

2. then a Septic Tank
As an access to P. Burgos Street from plaintiff's property, there are two possible passageways.
a) The first passageway is approximately one meter wide and is about 20 meters distant from Mabasa's residence
to P. Burgos Street. Such path is passing in between the previously mentioned row of houses.
b) The second passageway is about 3 meters in width and length from plaintiff Mabasa's residence to P. Burgos
Street; it is about 26 meters. In passing thru said passageway, a less than a meter wide path through the septic
tank and with 5-6 meters in length, has to be traversed.
When said property was purchased by Mabasa, there were tenants occupying the remises and who were
acknowledged by plaintiff Mabasa as tenants. However, sometime in February, 1982, one of said tenants
vacated the apartment and when plaintiff Mabasa went to see the premises, he saw that there had been built an
adobe fence in the first passageway making it narrower in width.
Said adobe fence was first constructed by defendants Santoses along their property which is also along the first
passageway. Defendant Morato constructed her adobe fence and even extended said fence in such a way that the
entire passageway was enclosed.
Defendant Ma. Cristina Santos testified that she constructed said fence because there was an incident when her
daughter was dragged by a bicycle pedalled by a son of one of the tenants in said apartment along the first
passageway. She also mentioned some other inconveniences of having at the front of her house a pathway such
as when some of the tenants were drunk and would bang their doors and windows. Some of their footwear were
even lost.
RTC Decision:
1) Ordered defendants Custodios and Santoses to give plaintiff permanent access ingress and egress, to the
public street;
2) Ordered the plaintiff to pay defendants Custodios and Santoses the sum of Eight Thousand Pesos (P8,000) as
indemnity for the permanent use of the passageway.
CA Decision: Affirmed.
ISSUES
1. whether or not the grant of right of way to herein private respondents is proper; and
2. whether or not the award of damages is in order.
HELD
a) With respect to the first issue, herein petitioners are already barred from raising the same. Petitioners did not
appeal from the decision of the court a quo granting private respondents the right of way, hence they are
presumed to be satisfied with the adjudication therein. With the finality of the judgment of the trial court as to
petitioners, the issue of propriety of the grant of right of way has already been laid to rest.
That decision of the court below has become final as against them and can no longer be reviewed, much less
reversed, by the Court.
b) However, with respect to the second issue, the Court agreed with petitioners that the Court of Appeals erred
in awarding damages in favor of private respondents. The award of damages has no substantial legal basis. A
reading of the decision of the Court of Appeals will show that the award of damages was based solely on the
fact that the original plaintiff, Pacifico Mabasa, incurred losses in the form of unrealized rentals when the
tenants vacated the leased premises by reason of the closure of the passageway.
However, the mere fact that the plaintiff suffered losses does not give rise to a right to recover damages. To
warrant the recovery of damages, there must be both a right of action for a legal wrong inflicted by the
defendant, and damage resulting to the plaintiff therefrom. Wrong without damage, or damage without wrong,
does not constitute a cause of action, since damages are merely part of the remedy allowed for the injury caused
by a breach or wrong.
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
(damnum absque injuria).
The underlying basis for the award of tort damages is the premise that an individual was injured in
contemplation of law. Thus, there must first be the breach of some duty and the imposition of liability for
that breach before damages may be awarded; it is not sufficient to state that there should be tort liability
merely because the plaintiff suffered some pain and suffering.
In order that the law will give redress for an act causing damage, that act must be not only hurtful, but wrongful.
There must be damnum et injuria. If, as may happen in many cases, a person sustains actual damage, that is,
harm or loss to his person or property, without sustaining any legal injury, that is, an act or omission which the
law does not deem an injury, the damage is regarded as damnum absque injuria.
In the case at bar, although there was damage, there was no legal injury. Contrary to the claim of private
respondents, petitioners could not be said to have violated the principle of abuse of right. In order that the
principle of abuse of right provided in Article 21 of the Civil Code can be applied, it is essential that the
following requisites concur:
1. The defendant should have acted in a manner that is contrary to morals, good customs or public policy;
2. The acts should be willful; and
3. There was damage or injury to the plaintiff.
The act of petitioners in constructing a fence within their lot is a valid exercise of their right as owners, hence
not contrary to morals, good customs or public policy. The law recognizes in the owner the right to enjoy and
dispose of a thing, without other limitations than those established by law.
It is within the right of petitioners, as owners, to enclose and fence their property. Article 430 of the Civil Code
provides that "(e)very owner may enclose or fence his land or tenements by means of walls, ditches, live or dead
hedges, or by any other means without detriment to servitudes constituted thereon."
At the time of the construction of the fence, the lot was not subject to any servitudes. There was no easement of
way existing in favor of private respondents, either by law or by contract. The fact that private respondents had
no existing right over the said passageway is confirmed by the very decision of the trial court granting a
compulsory right of way in their favor after payment of just compensation.
Hence, prior to said decision, petitioners had an absolute right over their property and their act of fencing and
enclosing the same was an act which they may lawfully perform in the employment and exercise of said right.
A person has a right to the natural use and enjoyment of his own property, according to his pleasure, for all the
purposes to which such property is usually applied. As a general rule, therefore, there is no cause of action for
acts done by one person upon his own property in a lawful and proper manner, although such acts incidentally
cause damage or an unavoidable loss to another, as such damage or loss is damnum absque injuria.
The proper exercise of a lawful right cannot constitute a legal wrong for which an action will lie, although the
act may result in damage to another, for no legal right has been invaded. The courts can give no redress for
hardship to an individual resulting from action reasonably calculated to achieve a lawful means.
(2) ESTOLAS and SALVADOR v. Acena
GR. No. 157070; January 14, 2005
FACTS:
Raymundo Acena is appointed ADMINISTRATIVE OFFICER WITH PERMANENT STATUS, of the Rizal
Technological College (RTC) by Dr. Lydia Profeta, President of said college. Such appointment is approved by
the Civil Service Commission (CSC); Respondent Acena is extended a promotional appointment as
ASSOCIATE PROFESSOR effective; in view of his promotion to Associate Professor, respondent Acena is
designated ACTING ADMINISTRATIVE OFFICER by President Profeta; Respondent Acena assumes his
position as Associate Professor; Respondent Acena, thru a letter addressed to President Profeta, rejects his
appointment as Associate Professor because of the provisions of Memorandum Circular No. 4 of the CSC which
requires a masteral degree to qualify for permanent appointment as Associate Professor; President Profeta
accepts the "rejection";
Dr. Josefina Estolas is designated as Officer-in-charge of RTC in place of Dr. Profeta; Petitioner Estolas issues
Memorandum Order No. 30, Series of 1986, revoking the designation of respondent Acena as Acting
Administrative Officer and designating Ricardo Salvador in his stead; The CSC receives a copy of the letter of
respondent Acena rejecting his appointment as Associate Professor; Acena institutes Civil Case No. 53327 for
Injunction and Damages enjoining petitioner Estolas from implementing and enforcing Memorandum Order No.
30 claiming that the same violated his rights to security of tenure; Acena likewise files a letter-complaint with
the Merit Systems Protection Board (MSPB) for alleged illegal termination of his services as Acting
Administrative Officer;
Chairperson of the CSC, Celerina Gotladera, issues an opinion in favor of respondent Acena holding that the
latter is still the administrative officer as he was appointed thereto under permanent status and as his
appointment as Associate Professor had been withdrawn; The trial court issues an Order for the issuance of a
writ of preliminary mandatory injunction enjoining petitioner Estolas from implementing Memorandum Order
No. 30. The basis for said Order is the 23 March 1987 opinion of CSC Chairperson Gotladera;The MSPB
dismisses respondent Acena’s complaint for illegal termination; Respondent Acena demands for the withdrawal
of the MSPB order considering that Commissioner Gotladera had already ruled on the case -MSPB complied;
Estolas goes to the Office of the President on Petition for Review and the same is indorsed for disposition to the
CSC; CSC issues Resolution No. 89-748 declaring that the action of petitioner Estolas in revoking the
designation of respondent Acena as Acting Administrative Officer is in order;
The trial court renders the assailed Decision, the decretal portion of which reads: "Premises considered,
defendants are hereby ordered to jointly and severally pay plaintiff the amount of P75,000.00 as moral damages
and P10,000.00 as exemplary damages with costs against defendants."
the Court of Appeals affirmed in toto the Decision of the trial court.
——
Case Doctrine: The law on damages prescribes that in order that one can have redress for an act which caused
him damage, the act must not only be hurtful, it must also be wrongful. There must be damnum et enjuria. All in
all, in order to recover moral damages, the claimant must prove the following:
(1) there must be an injury, whether physical, mental or psychological, clearly sustained by the claimant;
(2) there must be a culpable act or omission factually established;
(3) the wrongful act or omission of the defendant is the proximate cause of the injury sustained by the
claimant; and
(4) the award of damages is predicated on any of the cases stated in Article 2219 of the Civil Code
——
Issue 1: Whether or not petitioner Estolas, in conspiracy with petitioner Salvador, issued the said memorandum
in bad faith.
Held:
AS TO SALVADOR= no bad faith
It is reversible error on the part of the trial court and the Court of Appeals to have concluded that petitioner
Salvador acted in bad faith as such conclusion is completely bereft of any rational basis. The evidence before us
simply does not support such valuation.
Respondent Acena, grasping at straws, tried to establish during the direct examination of petitioner Salvador that
despite the preliminary injunction issued by the trial court for the petitioners to refrain from enforcing
Memorandum Order No. 30, petitioner Salvador continued to perform the duties of Acting Administrative
Officer through the signing of "payrolls, vouchers, requisitions."
Petitioner Salvador denied the allegation which prompted respondent Acena, through his lawyer, to remark that
he will have these papers subpoenaed.The records, however, do not reveal if, indeed, respondent Acena
followed through with his plan for subpoena.
What is more, no other matters were hurled at petitioner Salvador that could establish acts of bad faith and
conspiracy with petitioner Estolas to illegally deprive petitioner Acena of his position as Administrative Officer.
This being a civil case, it was incumbent upon respondent Acena, as complainant in the lower court, to prove
that which he alleged. To this burden, respondent Acena fell short. Thus, the presumption of good faith holds.
AS TO ESTOLAS
The complaint for damages against petitioner Estolas was actually for the single act of having issued
Memorandum Order No. 30, allegedly in bad faith, on 08 April 1986. This complaint, it should be stressed, was
filed the same day as the issuance of Memorandum Order No. 30. Thus, acts of bad faith on the part of
petitioner Estolas committed after the filing of the complaint necessarily are extraneous matters that do not form
part of respondent’s cause of action.
Respondent Acena, however, went on to introduce acts, purportedly constituting bad faith, which transpired
days, months and even years after the filing of the complaint.
Utilizing the Trial court’s finding:

Records indeed showed that Estolas displayed lack of good faith when they tried to remove Acena as Acting
Administrative Officer. In fact, despite the refusal of Acena to accept the position of Associate Professor,
Estolas ignored the same but instead continued on removing Acena’s appointment as Associate Professor.
Moreover, there has been a request from two members of the Board of Trustees for a meeting of the Board of
Trustees to resolve the issues surrounding the controversy on Acena’s promotion. However, Estolas simply
disregarded such request instead proceeded on implementing the questioned Memorandum and continually
placed Acena in the payroll as Associate Professor.
Estolas’ demonstration of bad faith remained even during the pendency of this case. After a restraining order
was issued by this Court, Estolas’ persisted on enforcing Memo. Order No. 30. Estolas acted similarly when an
injunction was issued by this Court. This contemptuous attitude of Estolas cannot be viewed with favor.
Moreover, we find inexcusable and laden with bad faith the actuation of petitioner Estolas in resubmitting to the
CSC for its approval the appointment papers of respondent Acena as Associate Professor despite the latter’s
vehement rejection of said position and despite the pendency of the case in the trial court. Worse still, petitioner
Estolas conveniently did not inform the CSC of the real picture of respondent Acena’s appointment.
Issue2: WON CA erred in awarding moral and exemplary damages to respondent Acena
Held: No
The lower court, as well as the Court of Appeals, missed out one very crucial fact, i.e., damages are not
presumed; the first requisite for the recovery of moral damages is that there must be an injury, whether
physical, mental or psychological, clearly sustained by the claimant. There must be proof of physical suffering,
mental anguish, fright, serious anxiety, etc. The claimant must satisfactorily prove the factual basis and causal
connection thereof with the defendant’s acts.
Thus, the ultimate question that must be asked is:
1. did respondent Acena suffer damages from petitioner Estolas’s wrongful act of issuing Memorandum
Order No. 30 and from her acts of bad faith as discussed above? YES
2. Parenthetically, is petitioner Salvador liable for damages considering that there is no adequate proof of
conspiracy with petitioner Estolas nor is there evidence of bad faith on his part? NO
The evidence supports respondent Acena’s claim for moral damages against petitioner Estolas. The actuations of
petitioner Estolas in booting-out respondent Acena as Administrative Officer, which the latter held in a
permanent capacity, and in forcing the position of Associate Professor – undisputedly a temporary position –
down his throat, fall squarely within Article 21 of the Civil Code on human relations.
On the witness stand, respondent Acena testified that as a direct result of petitioner Estolas’s actuations, he felt
insulted, embarrassed and humiliated. He suffered "serious anxiety, moral shock, sleepness nights" and even had
to resort to "minimum tanquilizer."
Considering respondent Acena’s high position in the RTC community and the long drawn out feud between him
and the president of the college, we find his claim of having suffered moral damages credible. The award of
exemplary damages in the amount of P10,000 is likewise justified to set an example for the public good and as a
form of deterrent to the repetition of the same act by others.
Quite the contrary, petitioner Salvador cannot be made liable for moral damages as it was not proved that he
conspired with petitioner Estolas in issuing Memorandum Order No. 30. Neither was it proved that he acted in
bad faith during all time material to the case.
Invariably, in order that a plaintiff (respondent Acena herein) 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.
Considering that petitioner Salvador cannot be made liable for moral damages, neither can he answer for
exemplary damages, the latter being allowed only in addition to moral, temperate, liquidated or compensatory
damages.
(3) BPI EXPRESS CARD CORPORATION v. COURT OF APPEALS
G.R. No. 120639. September 25, 1998
KAPUNAN, J.
FACTS:
The case arose from the dishonor of the credit card of the plaintiff Atty. Ricardo J. Marasigan by Cafe
Adriatico, a business establishment accredited with the defendant-appellant BPI Express Card Corporation
(BECC for brevity) on December 8, 1989 when the plaintiff entertained some guests thereat.
Plaintiff, who is a lawyer by profession was a complimentary member of BECC from February 1988 to
February 1989 and was issued Credit Card No. 100-012-5534 with a credit limit of P3,000.00 and with a
monthly billing every 27th of the month. His membership was renewed for another year or until February 1990
and the credit limit was increased to P5,000.00. The plaintiff oftentimes exceeded his credit limits but this was
never taken against him by the defendant and even his mode of paying his monthly bills in check was tolerated.
Their contractual relations went on smoothly until his statement of account for October, 1989 amounting to
P8,987.84 was not paid in due time. The plaintiff admitted having inadvertently failed to pay his account for the
said month because he was in Quezon province attending to some professional and personal commitments. He
was informed by his secretary that defendant was demanding immediate payment of his outstanding account,
was requiring him to issue a check for P15,000.00 which would include his future bills, and was threatening to
suspend his credit card. Plaintiff issued Far East Bank and Trust Co. Check No. 494675 in the amount of
P15,000.00, postdated December 15, 1989 which was received on November 23, 1989 by Tess Lorenzo, an
employee of the defendant, who in turn gave the said check to Jeng Angeles, a co-employee who handles the
account of the plaintiff. The check remained in the custody of Jeng Angeles. Mr. Roberto Maniquiz, head of the
collection department of defendant was formally informed of the postdated check about a week later. On
November 28, 1989, defendant served plaintiff a letter by ordinary mail informing him of the temporary
suspension of the privileges of his credit card and the inclusion of his account number in their Caution List. He
was also told to refrain from further use of his credit card to avoid any inconvenience/embarrassment and that
unless he settles his outstanding account with the defendant within 5 days from receipt of the letter, his
membership will be permanently cancelled. There is no showing that the plaintiff received this letter before
December 8, 1989. Confident that he had settled his account with the issuance of the postdated check, plaintiff
invited some guests on December 8, 1989 and entertained them at Caf Adriatico. When he presented his credit
card to Caf Adriatico for the bill amounting to P735.32, said card was dishonored. One of his guests, Mary Ellen
Ringler, paid the bill by using her own credit card, a Unibankard.
In a letter addressed to the defendant dated December 12, 1989, plaintiff requested that he be sent the
exact billing due him as of December 15, 1989, to withhold the deposit of his postdated check and that said
check be returned to him because he had already instructed his bank to stop the payment thereof as the
defendant violated their agreement that the plaintiff issue the check to the defendant to cover his account
amounting to only P8,987.84 on the condition that the defendant will not suspend the effectivity of the card. No
reply was received by plaintiff from the defendant to his letter dated December 12, 1989. Plaintiff sent
defendant another letter dated March 12, 1990 reminding the latter that he had long rescinded and cancelled
whatever arrangement he entered into with defendant and requesting for his correct billing, less the improper
charges and penalties, and for an explanation within five (5) days from receipt thereof why his card was
dishonored on December 8, 1989 despite assurance to the contrary by defendant's personnel-in-charge,
otherwise the necessary court action shall be filed to hold defendant responsible for the humiliation and
embarrassment suffered by him. The defendant served its final demand to the plaintiff dated March 21, 1990
requiring him to pay in full his overdue account, including stipulated fees and charges, within 5 days from
receipt thereof or face court action also to replace the postdated check with cash within the same period or face
criminal suit for violation of the Bouncing Check Law. The plaintiff, in a reply letter dated April 5, 1990,
demanded defendant's compliance with his request in his first letter dated March 12, 1990 within three (3) days
from receipt, otherwise the plaintiff will file a case against them.
Thus, on May 7, 1990 private respondent filed a complaint for damages against petitioner before the
Regional Trial Court of Makati. The trial court ruled for private respondent, finding that herein petitioner abused
its right in contravention of Article 19 of the Civil Code. On the other hand, plaintiff is ordered to pay defendant
its outstanding obligation in the amount of P14,439.41, amount due as of December 15, 1989. The trial court's
ruling was based on its findings and conclusions, to wit:
There is no question that plaintiff had been in default in the payment of his billings for more than two
months, prompting defendant to call him and reminded him of his obligation. Unable to personally talk
with him, this Court is convinced that somehow one or another employee of defendant called him up more
than once.
However, while it is true that, as indicated in the terms and conditions of the application for BPI credit
card, upon failure of the cardholder to pay his outstanding obligation for more than thirty (30) days, the
defendant can automatically suspend or cancel the credit card, that reserved right should not have been
abused, as it was in fact abused, in plaintiff's case.
Nowhere in any of these communications was there ever a hint given to plaintiff that his card had
already been suspended or cancelled. There is reason to believe that plaintiff was indeed assured by
defendant of the continued honoring of his credit card so long as he pays his obligation of P15,000.00.
Worst, upon receipt of the postdated check, defendant kept the same until a few days before it became due
and said check was presented to the head of the collection department, Mr. Maniquiz, to take steps
thereon, resulting to the embarrassing situation plaintiff found himself in on December 8, 1989. Moreover,
Mr. Maniquiz himself admitted that his request for plaintiff to replace the check with cash was not because
it was a postdated check but merely to tally the payment with the account due.
Despite the many instances that defendant could have informed plaintiff over the phone of the
cancellation or suspension of his credit card, it did not do so, which could have prevented the incident of
December 8, 1989, the notice allegedly sent thru ordinary mail is not only unreliable but takes a long time.
Such action as suspension of credit card must be immediately relayed to the person affected so as to avoid
embarrassing situations.
ISSUES:
1. Whether or not petitioner had the right to suspend the credit card of the private respondent
2. Whether or not prior to the suspension of private respondent's credit card on 28 November 1989, the
parties entered into an agreement whereby the card could still be used and would be duly honored by
duly accredited establishments
RULING:
On Issue No. 1
Under the terms and conditions of the credit card, signed by the private respondent, any card with
outstanding balances after thirty (30) days from original billing/statement shall automatically be suspended.
Any CARD with outstanding balances unpaid after thirty (30) days from original
billing/statement date shall automatically be suspended, and those with accounts unpaid after sixty (60)
days from said original billing/statement date shall automatically be cancelled, without prejudice to
BECC's right to suspend or cancel any CARD any time and for whatever reason.
By his own admission, private respondent made no payment within thirty days for his original
billing/statement dated 27 September 1989. Neither did he make payment for his original billing/statement dated
27 October 1989. Consequently, as early as 28 October 1989, thirty days from the non-payment of his billing
dated 27 September 1989, petitioner corporation could automatically suspend his credit card.
On Issue No. 2
We agree with the findings of the respondent court, that there was an arrangement between the parties,
wherein the petitioner required the private respondent to issue a check worth P15,000 as payment for the latter's
billings. However, we find that the private respondent was not able to comply with his obligation. As the
testimony of private respondent himself bears out, the agreement was for the immediate payment of the
outstanding account.
Clearly, the purpose of the arrangement between the parties on November 22, 1989, was for the
immediate payment of the private respondent's outstanding account, in order that his credit card would not be
suspended.
As agreed upon by the parties, on the following day, private respondent did issue a check for P15,000. However,
the check was postdated 15 December 1989. Settled is the doctrine that a check is only a substitute for money
and not money, the delivery of such an instrument does not, by itself operate as payment. This is especially true
in the case of a postdated check.
Thus, the issuance by the private respondent of the postdated check was not effective payment. It did
not comply with his obligation under the arrangement with Miss Lorenzo. Petitioner corporation was therefore
justified in suspending his credit card.
Finally, we find no legal and factual basis for private respondent's assertion that in canceling the credit
card of the private respondent, petitioner abused its right under the terms and conditions of the contract. To find
the existence of an abuse of right under Article 19 the following elements must be present: (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.
The action of the petitioner belies the existence of bad faith. As early as 28 October 1989, petitioner
could have suspended private respondent's card outright. Instead, petitioner allowed private respondent to use
his card for several weeks. Petitioner had even notified private respondent of the impending suspension of his
credit card and made special accommodations for him for settling his outstanding account. As such, petitioner
cannot be said to have capriciously and arbitrarily canceled the private respondent's credit card.
We do not dispute the findings of the lower court that private respondent suffered damages as a result
of the cancellation of his credit card. 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 other words, 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 an 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.
We therefore disagree with the ruling of the respondent court that the dishonor of the credit card of the
private respondent by Caf Adriatico is attributable to petitioner for its willful or gross neglect to inform the
private respondent of the suspension of his credit card, the unfortunate consequence of which brought social
humiliation and embarrassment to the private respondent. It was petitioner's failure to settle his obligation which
caused the suspension of his credit card and subsequent dishonor at Caf Adriatico. He cannot now pass the
blame to the petitioner for not notifying him of the suspension of his card. As quoted earlier, the application
contained the stipulation that the petitioner could automatically suspend a card whose billing has not been paid
for more than thirty days. Nowhere is it stated in the terms and conditions of the application that there is a need
of notice before suspension may be effected as private respondent claims.
As it was private respondent's own negligence which was the proximate cause of his embarrassing and
humiliating experience, we find the award of damages by the respondent court clearly unjustified. We take note
of the fact that private respondent has not yet paid his outstanding account with petitioner.
(4) PEOPLE vs. IRENEO JUGUETA

G.R. No. 202124
Facts:
Appellant was charged with Double Murder, defined and penalized under Article 248 for attacking and
shooting, with Estores and San Miguel, the house (one-room nipa hut) occupied by the family of Norberto
Divina, his brother-in-law causing injury and killing the children of the Norberto, Mary Grace and Claudine. In
answer to questions of what could have prompted such an attack from appellant, Norberto replied that he had a
previous altercation with appellant who was angered by the fact that Norberto filed a case against appellant's
two other brothers for molesting his daughter. Accused was found guilty of 2 counts of murder (Art. 248) and
Multiple Attempted Murder(Art. 248 in relation to Article 51) with the aggravating circumstance of dwelling.
Anent the award of damages, the Court deems it proper to address the matter in detail as regards criminal cases
where the imposable penalty is reclusion perpetua to death. Generally, in these types of criminal cases, there are
three kinds of damages awarded by the Court; namely: civil indemnity, moral, and exemplary damages.
Likewise, actual damages may be awarded or temperate damages in some instances.
Issue:
Whether or not it is proper for the Court to modify civil indemnity.
Held:
Yes. Civil indemnity is, technically, not a penalty or a fine; hence, it can be increased by the Court when
appropriate. First, civil indemnity ex delicto is the indemnity authorized in our criminal law for the offended
party, in the amount authorized by the prevailing judicial policy and apart from other proven actual damages,
which itself is equivalent to actual or compensatory damages in civil law. This award stems from Article 100 of
the RPC which states, "Every person criminally liable for a felony is also civilly liable."
It is to be noted that civil indemnity is, technically, not a penalty or a fine; hence, it can be increased by the
Court when appropriate. Article 2206 of the Civil Code provides:
Art. 2206. The amount of damages for death caused by a crime or quasi-delict shall be at least P3,000, even
though there may have been mitigating circumstances. In addition:
(1) The defendant shall be liable for the loss of the earning capacity of the deceased, and the indemnity
shall be paid to the heirs of the latter; such indemnity shall in every case be assessed and awarded by
the court, unless the deceased on account of permanent physical disability not caused by the defendant,
had no earning capacity at the time of his death;
(2) If the deceased was obliged to give support according to the provisions of Article 291, the recipient
who is not an heir called to the decedent's inheritance by the law of testate or intestate succession, may
demand support from the person causing the death, for a period not exceeding five years, the exact
duration to be fixed by the court;
(3) The spouse, legitimate and illegitimate descendants and ascendants of the deceased may demand
moral damages for mental anguish by reason of the death of the deceased.
In our jurisdiction, civil indemnity is awarded to the offended party as a kind of monetary restitution or
compensation to the victim for the damage or infraction that was done to the latter by the accused, which in a
sense only covers the civil aspect. It is apparent from Article 2206 that the law only imposes a minimum
amount for awards of civil indemnity, which is ₱3,000.00. The law did not provide for a ceiling. Thus, although
the minimum amount for the award cannot be changed, increasing the amount awarded as civil indemnity can be
validly modified and increased.
The 2nd type of damages the Court awards are moral damages, which are also compensatory in nature. Del
Mundo v. Court of Appeals expounded on the nature and purpose of moral damages, viz.:
Moral damages may be awarded to compensate one for manifold injuries such as physical suffering, mental
anguish, serious anxiety, besmirched reputation, wounded feelings and social humiliation. These damages must
be understood to be in the concept of grants, not punitive or corrective in nature, calculated to compensate the
claimant for the injury suffered. The amount of indemnity is left to the discretion of the court but it is
imperative, nevertheless, that (1) injury must have been suffered by the claimant, and (2) such injury must have
sprung from any of the cases expressed in Article 2219 and Article 2220 of the Civil Code.
Finally, the Civil Code of the Philippines provides, in respect to exemplary damages, thus:
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. 2230. In criminal offenses, exemplary damages as a part of the civil liability may be imposed when the
crime was committed with one or more aggravating circumstances. Such damages are separate and distinct from
fines and shall be paid to the offended party.
Also known as "punitive" or "vindictive" damages, exemplary or corrective damages are intended to serve as a
deterrent to serious wrong doings, 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.
The term aggravating circumstances used by the Civil Code, the law not having specified otherwise, is to be
understood in its generic sense. The commission of an offense has a 2-pronged effect, one on the public as it
breaches the social order and the other upon the private victim as it causes personal sufferings addressed by,
respectively, the prescription of heavier punishment for the accused and by an award of additional damages to
the victim. 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.
The reason is fairly obvious as to why the Revised Rules of Criminal Procedure requires aggravating
circumstances be stated in the complaint or information in order not to trample on the constitutional right of an
accused to be informed of the nature of the alleged offense that he or she has committed. In the civil aspect, the
presence of an aggravating circumstance, even if not alleged in the information but proven during trial would
entitle the victim to an award of exemplary damages.
Being corrective in nature, exemplary damages, therefore, can be awarded, not only due to 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 People v. Matrimonio, the Court imposed exemplary damages to deter
other fathers with perverse tendencies or aberrant sexual behavior from sexually abusing their own daughters.
Also, in People v. Cristobal, the Court awarded exemplary damages on account of the moral corruption,
perversity and wickedness of the accused in sexually assaulting a pregnant married woman. In People v.
Cañada, People v. Neverio61 and People v. Layco, Sr., the Court awarded exemplary damages 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.
If, however, the penalty for the crime committed is death, which cannot be imposed because of the provisions of
R.A. No. 9346, prevailing jurisprudence sets the amount of ₱100,000.00 as exemplary damages.
Before awarding any of the above mentioned damages, the Court, however, must first consider the penalty
imposed by law.
When the circumstances surrounding the crime would justify the imposition of the death penalty were it not for
RA 9346, the Court has ruled, as early as July 9, 1998 in People v. Victor, that the award of civil indemnity for
the crime of rape when punishable by death should be ₱75,000.00 We reasoned that "[t]his is not only a reaction
to the apathetic societal perception of the penal law and the financial fluctuations over time, but also an
expression of the displeasure of the Court over the incidence of heinous crimes against chastity." Such reasoning
also applies to all heinous crimes found in RA 7659. The amount was later increased to ₱100,000.00.
In addition to this, the Court likewise awards moral damages. In People v. Arizapa, ₱50,000.00 was awarded as
moral damages without need of pleading or proving them, for in rape cases, it is recognized that the victim's
injury is concomitant with and necessarily results from the odious crime of rape to warrant per se the award of
moral damages. Subsequently, the amount was increased to ₱75,000.00 in People v. Soriano and P100,000.00 in
People v. Gambao.
Essentially, despite the fact that the death penalty cannot be imposed because of RA 9346, the imposable
penalty as provided by the law for the crime, such as those found in RA 7569, must be used as the basis for
awarding damages and not the actual penalty imposed.
Again, for crimes where the imposable penalty is death in view of the attendance of an ordinary aggravating
circumstance but due to the prohibition to impose the death penalty, the actual penalty imposed is reclusion
perpetua, the latest jurisprudence pegs the amount of ₱100,000.00 as civil indemnity and ₱100,0000.00 as moral
damages. For the qualifying aggravating circumstance and/or the ordinary aggravating circumstances present,
the amount of ₱100,000.00 is awarded as exemplary damages aside from civil indemnity and moral damages.
Regardless of the attendance of qualifying aggravating circumstance, the exemplary damages shall be fixed at
₱100,000.00. "[T]his is not only a reaction to the apathetic societal perception of the penal law and the financial
fluctuation over time, but also an expression of the displeasure of the Court over the incidence of heinous crimes
x x x."
When the circumstances surrounding the crime call for the imposition of reclusion perpetua only, there being no
ordinary aggravating circumstance, the Court rules that the proper amounts should be ₱75,000.00 as civil
indemnity, ₱75,000.00 as moral damages and ₱75,000.00 exemplary damages, regardless of the number of
qualifying aggravating circumstances present.
When it comes to compound and complex crimes, although the single act done by the offender caused several
crimes, the fact that those were the result of a single design, the amount of civil indemnity and moral damages
will depend on the penalty and the number of victims. For each of the victims, the heirs should be properly
compensated. If it is multiple murder without any ordinary aggravating circumstance but merely a qualifying
aggravating circumstance, but the penalty imposed is death because of Art. 48 of the RPC wherein the
maximum penalty shall be imposed, then, for every victim who dies, the heirs shall be indemnified with
₱100,000.00 as civil indemnity, ₱100,000.00 as moral damages and ₱100,000.00 as exemplary damages.
If the penalty is death but it cannot be imposed due to RA 9346 and what is actually imposed is the penalty of
reclusion perpetua, the civil indemnity and moral damages will be ₱100,000.00each, and another ₱100,000.00
as exemplary damages in view of the heinousness of the crime and to set an example. If there is another
composite crime included in a special complex crime and the penalty imposed is death, an additional
₱100,000.00 as civil indemnity, ₱100,000.00 moral damages and ₱100,000.00 exemplary damages shall be
awarded for each composite crime committed.
For example, in case of Robbery with Homicide wherein 3 people died as a consequence of the crime, the heirs
of the victims shall be entitled to the award of damages as discussed earlier. This is true, however, only if those
who were killed were the victims of the robbery or mere bystanders and not when those who died were the
perpetrators or robbers themselves because the crime of robbery with homicide may still be committed even if
one of the robbers dies. This is also applicable in robbery with rape where there is more than one victim of rape.
In awarding civil indemnity and moral damages, it is also important to determine the stage in which the crime
was committed and proven during the trial.
As discussed earlier, when the crime proven is consummated and the penalty imposed is death but reduced to
reclusion perpetua because of R.A. 9346, the civil indemnity and moral damages that should be awarded will
each be ₱100,000.00 and another ₱100,000.00 for exemplary damages or when the circumstances of the crime
call for the imposition of reclusion perpetua only, the civil indemnity and moral damages should be ₱75,000.00
each, as well as exemplary damages in the amount of ₱75,000.00. If, however, the crime proven is in its
frustrated stage, the civil indemnity and moral damages that should be awarded will each be ₱50,000.00, and an
award of ₱25,000.00 civil indemnity and ₱25,000.00 moral damages when the crime proven is in its attempted
stage. The difference in the amounts awarded for the stages is mainly due to the disparity in the outcome of the
crime committed, in the same way that the imposable penalty varies for each stage of the crime. The said
amounts of civil indemnity and moral damages awarded in cases of felonies in their frustrated or attempted
stages shall be the bases when the crimes committed constitute complex crime under Article 48 of the RPC. For
example, in a crime of murder with attempted murder, the amount of civil indemnity, moral damages and
exemplary damages is ₱100,000.00 each, while in the attempted murder, the civil indemnity, moral damages
and exemplary damages is ₱25,000.00 each.
In a special complex crime, like robbery with homicide, if, aside from homicide, several victims (except the
robbers) sustained injuries, they shall likewise be indemnified. It must be remembered that in a special complex
crime, unlike in a complex crime, the component crimes have no attempted or frustrated stages because the
intention of the offender/s is to commit the principal crime which is to rob but in the process of committing the
said crime, another crime is committed. For example, if on the occasion of a robbery with homicide, other
victims sustained injuries, regardless of the severity, the crime committed is still robbery with homicide as the
injuries become part of the crime, "Homicide", in the special complex crime of robbery with homicide, is
understood in its generic sense and now forms part of the essential element of robbery, which is the use of
violence or the use of force upon anything. Hence, the nature and severity of the injuries sustained by the
victims must still be determined for the purpose of awarding civil indemnity and damages. If a victim suffered
mortal wounds and could have died if not for a timely medical intervention, the victim should be awarded civil
indemnity, moral damages, and exemplary damages equivalent to the damages awarded in a frustrated stage,
and if a victim suffered injuries that are not fatal, an award of civil indemnity, moral damages and exemplary
damages should likewise be awarded equivalent to the damages awarded in an attempted stage.
In other crimes that resulted in the death of a victim and the penalty consists of divisible penalties, like
homicide, death under tumultuous affray, reckless imprudence resulting to homicide, the civil indemnity
awarded to the heirs of the victim shall be ₱50,000.00 and ₱50,000.00 moral damages without exemplary
damages being awarded. However, an award of ₱50,000.00 exemplary damages in a crime of homicide shall be
added if there is an aggravating circumstance present that has been proven but not alleged in the information.
Aside from those discussed earlier, the Court also awards temperate damages in certain cases. The award of
₱25,000.00 as temperate damages in homicide or murder cases is proper when no evidence of burial and funeral
expenses is presented in the trial court. Under Article 2224 of the Civil Code, temperate damages may be
recovered, as it cannot be denied that the heirs of the victims suffered pecuniary loss although the exact amount
was not proved. In this case, the Court now increases the amount to be awarded as temperate damages to
₱50,000.00.
In the case at bar, the crimes were aggravated by dwelling, and the murders committed were further made
atrocious by the fact that the victims are innocent, defenseless minors – one is a mere 3½-year-old toddler, and
the other a 13-year-old girl. The increase in the amount of awards for damages is befitting to show not only the
Court's, but all of society's outrage over such crimes and wastage of lives.
In summary:
I. For those crimes like, Murder, Parricide, Serious Intentional Mutilation, Infanticide, and other
crimes involving death of a victim where the penalty consists of indivisible penalties:
1.1 Where the penalty imposed is death but reduced to reclusion perpetua because of RA
9346:
a. Civil indemnity – ₱100,000.00
b. Moral damages – ₱100,000.00
c. Exemplary damages – ₱100,000.00
1.2 Where the crime committed was not consummated:
a. Frustrated:
i. Civil indemnity – ₱75,000.00
ii. Moral damages – ₱75,000.00
iii. Exemplary damages – ₱75,000.00
b. Attempted:
ii. Exemplary damages – ₱50,000.00
2.1 Where the penalty imposed is reclusion perpetua, other than the above-
mentioned:
2.2 Where the crime committed was not consummated:
a. Frustrated:
b. Attempted:
II. For Simple Rape/Qualified Rape:

1.1 Where the penalty imposed is Death but reduced to reclusion perpetua because of RA
9346:
1.2 Where the crime committed was not consummated but merely attempted:
2.1 Where the penalty imposed is reclusion perpetua, other than the above-mentioned:
2.2 Where the crime committed was not consummated, but merely attempted:
III. For Complex crimes under Article 48 of the Revised Penal Code where death, injuries, or sexual
abuse results, the civil indemnity, moral damages and exemplary damages will depend on the penalty,
extent of violence and sexual abuse; and the number of victims where the penalty consists of indivisible
penalties:
9346:
The above Rules apply to every victim who dies as a result of the crime committed. In other
complex crimes where death does not result, like in Forcible Abduction with Rape, the civil
indemnity, moral and exemplary damages depend on the prescribed penalty and the penalty
imposed, as the case may be.
IV. For Special Complex Crimes like Robbery with Homicide, Robbery with Rape, Robbery with
Intentional Mutilation, Robbery with Arson, Rape with Homicide, Kidnapping with Murder,
Carnapping with Homicide or Carnapping with Rape, Highway Robbery with Homicide, Qualified
Piracy, Arson with Homicide, Hazing with Death, Rape, Sodomy or Mutilation and other crimes with
death, injuries, and sexual abuse as the composite crimes, where the penalty consists of indivisible
penalties:
9346:
In Robbery with Intentional Mutilation, the amount of damages is the same as the above if the
penalty imposed is Death but reduced to reclusion perpetua although death did not occur.
1.2 For the victims who suffered mortal/fatal wounds and could have died if not for a timely
medical intervention, the following shall be awarded:
1.3 For the victims who suffered non-mortal/non-fatal injuries:
In Robbery with Intentional Mutilation, the amount of damages is the same as the above if the
penalty imposed is reclusion perpetua.
2.2 For the victims who suffered mortal/fatal wounds and could have died if not for a timely
medical intervention, the following shall be awarded:
2.3 For the victims who suffered non-mortal/non-fatal injuries:
In Robbery with Physical Injuries, the amount of damages shall likewise be dependent on the
nature/severity of the wounds sustained, whether fatal or non-fatal.
The above Rules do not apply if in the crime of Robbery with Homicide, the robber/s or
perpetrator/s are themselves killed or injured in the incident.
Where the component crime is rape, the above Rules shall likewise apply, and that for every
additional rape committed, whether against the same victim or other victims, the victims shall
be entitled to the same damages unless the other crimes of rape are treated as separate crimes,
in which case, the damages awarded to simple rape/qualified rape shall apply.
V. In other crimes that result in the death of a victim and the penalty consists of divisible penalties, i.e.,
Homicide, Death under Tumultuous Affray, Infanticide to conceal the dishonour of the offender,
Reckless Imprudence Resulting to Homicide, Duel, Intentional Abortion and Unintentional Abortion,
etc.:
1.1 Where the crime was consummated:
1.2 Where the crime committed was not consummated, except those crimes where there are no
stages, i.e., Reckless Imprudence and Death under tumultuous affray:
a. Frustrated:
b. Attempted:
If an aggravating circumstance was proven during the trial, even if not alleged in the
Information, in addition to the above mentioned amounts as civil indemnity and
moral damages, the amount of ₱50,000.00 exemplary damages for consummated;
₱30,000.00 for frustrated; and ₱20,000.00 for attempted, shall be awarded.
VI. A. In the crime of Rebellion where the imposable penalty is reclusion perpetua and death occurs in
the course of the rebellion, the heirs of those who died are entitled to the following:
B. For the victims who suffered mortal/fatal wounds in the course of the rebellion and could
have died if not for a timely medical intervention, the following shall be awarded:
C. For the victims who suffered non-mortal/non-fatal injuries:
VII. In all of the above instances, when no documentary evidence of burial or funeral expenses is
presented in court, the amount of ₱50,000.00 as temperate damages shall be awarded.
To reiterate, Article 2206 of the Civil Code provides that the minimum amount for awards of civil indemnity is
P3,000.00, but does not provide for a ceiling. Thus, although the minimum amount cannot be changed,
increasing the amount awarded as civil indemnity can be validly modified and increased when the present
circumstance warrants it.
Prescinding from the foregoing, for the two (2) counts of murder, attended by the ordinary aggravating
circumstance of dwelling, appellant should be ordered to pay the heirs of the victims the following damages: (1)
₱100,000.00 as civil indemnity for each of the two children who died; (2) ₱100,000.00 as moral damages for
each of the two victims; (3) another ₱100,000.00 as exemplary damages for each of the two victims; and (4)
temperate damages in the amount of ₱50,000.00 for each of the two deceased. For the four (4) counts of
Attempted Murder, appellant should pay ₱50,000.00 as civil indemnity, ₱50,000.00 as moral damages and
₱50,000.00 as exemplary damages for each of the four victims. In addition, the civil indemnity, moral damages,
exemplary damages and temperate damages payable by the appellant are subject to interest at the rate of six
percent (6%) per annum from the finality of this decision until fully paid.
Lastly, this Court echoes the concern of the trial court regarding the dismissal of the charges against Gilberto
Estores and Roger San Miguel who had been identified by Norberto Divina as the companions of appellant on
the night the shooting occurred. Norberto had been very straightforward and unwavering in his identification of
Estores and San Miguel as the two other people who fired the gunshots at his family. More significantly, as
noted by the prosecutor, the testimonies of Estores and San Miguel, who insisted they were not at the crime
scene, tended to conflict with the sworn statement of Danilo Fajarillo, which was the basis for the Provincial
Prosecutor's ruling that he finds no probable cause against the two. Danilo Fajarillo's sworn statement said that
on June 6, 2002, he saw appellant with a certain "Hapon" and Gilbert Estores at the crime scene, but it was only
appellant who was carrying a firearm and the two other people with him had no participation in the shooting
incident. Said circumstances bolster the credibility of Norberto Divina's testimony that Estores and San Miguel
may have been involved in the killing of his two young daughters.
WHEREFORE, the instant appeal is DISMISSED.
(1) In Criminal Case No. 7698-G, the Court finds accused-appellant Ireneo Jugueta GUILTY beyond reasonable
doubt of two (2) counts of the crime of murder defined under Article 248 of the Revised Penal Code, attended
by the aggravating circumstance of dwelling, and hereby sentences him to suffer two (2) terms of reclusion
perpetua without eligibility for parole under R.A. 9346. He is ORDERED to PAY the heirs of Mary Grace
Divina and Claudine Divina the following amounts for each of the two victims: (a) ₱100,000.00 as civil
indemnity; (b) ₱100,000.00 as moral damages; (c) ₱100,000.00 as exemplary damages; and (d) ₱50,000.00 as
temperate damages.
(2) In Criminal Case No. 7702-G, the Court finds accused-appellant Ireneo Jugueta GUILTY beyond reasonable
doubt of four (4) counts of the crime of attempted murder defined and penalized under Article 248 in relation to
Article 51 of the Revised Penal Code, attended by the aggravating circumstance of dwelling, and sentences him
to suffer the indeterminate penalty of four (4) years, two (2) months and one (1) day of prision correccional, as
minimum, to ten (10) years and one (1) day of prision mayor, as maximum, for each of the four (4) counts of
attempted murder. He is ORDERED to PAY moral damages in the amount of P50,000.00, civil indemnity of
P50,000.00 and exemplary damages of PS0,000.00 to each of the four victims, namely, Norberto Divina,
Maricel Divina, Elizabeth Divina and Judy Ann Divina.
(3) Accused-appellant Ireneo Jugueta is also ORDERED to PAY interest at the rate of six percent (6%) per
annum from the time of finality of this decision until fully paid, to be imposed on the civil indemnity, moral
damages, exemplary damages and temperate damages.
ACTUAL OR COMPENSATORY DAMAGES
(5) OCEANEERING CONTRACTORS (PHILS.), INC., petitioner, vs. NESTOR N. BARRETTO, doing
business as N.N.B. LIGHTERAGE, respondent.
G.R. No. 184215. February 9, 2011
Facts:
Doing business under the name and style of N.N.B. Lighterage, respondent Nestor N. Barretto (Barretto) is the
owner of the Barge "Antonieta" 3 which was last licensed and permitted to engage in coastwise trading for a
period of one year expiring on 21 August 1998.4 On 27 November 1997, Barretto and petitioner Oceaneering
Contractors (Phils.), Inc.(Oceaneering) entered into a Time Charter Agreement whereby, for the contract price
of P306,000.00, 5 the latter hired the aforesaid barge for a renewable period of thirty calendar days, for the
purpose of transporting construction materials from Manila to Ayungon, Negros Oriental. 6 Brokered by
freelance ship broker Manuel Velasco,7 the agreement included Oceaneering's acknowledgment of the
seaworthiness of the barge as well as the following stipulations, to wit:
"(a) [Barreto] shall be responsible for the salaries, subsistence, SSS premium, medical, workmen's compensation
contribution and other legal expenses of the crew;
(b) [Oceaneering] shall be responsible for all port charges, insurance of all equipments, cargo loaded to the
above mentioned deck barge against all risks (Total or Partial), or theft, security and stevedoring during loading
and unloading operations and all other expenses pertinent to the assessment, nes and forfeiture for any violation
that may be imposed in relation to the operation of the barge;
xxx xxx xxx
(f) Delivery and re-delivery be made in Pasig River, Metro Manila;
(g) Damage to deck barge caused by carelessness or negligence of stevedores hired by [Oceaneering] will be
[Oceaneering's] liability. Upon clear ndings by owners or barge patron of any damages to the barge that will
endanger its seaworth(i)ness and stability, such damage/s shall be repaired rst before loading and leaving port.
Under such conditions, the Barge Patron has the right to refuse loading and/or leaving port;
xxx xxx xxx

(i) [Barreto] reserves the right to stop, abort and deviate any voyage in case of imminent danger to the crew
and/or vessel that may be occasioned by any storm, typhoon, tidal wave or any similar events."
In accordance with the agreement, Oceaneering's hired stevedores who loaded the barge with pipe piles, steel
bollards, concrete mixers, gravel, sand, cement and other construction materials in the presence of and under the
direct supervision of the broker Manuel Velasco and Barretto's Bargemen. In addition to the polythene ropes
with which they were lashed, the cargoes were secured by steel stanchions which Oceaneering caused to be
welded on the port and starboard sides of the barge. On 3 December 1997, the barge eventually left Manila for
Negros Oriental, towed by the tug- boat "Ayalit" which, for said purpose, was likewise chartered by
Oceaneering from Lea Mer Industries, Inc. On 5 December 1997, however, Barretto's Bargeman, Eddie La
Chica, executed a Marine Protest, reporting the following circumstances under which the barge reportedly
capsized in the vicinity of Cape Santiago, Batangas, viz.:
That on or about 1635 December 3, 1997, Barge 'Antonieta' departed Pico

de Loro, Pasig River and towed by Tug-Boat 'Ayalit' bound for Ayungon, Negros
Oriental with cargo onboard steel pipes and various construction materials. While
underway on or about 0245 December 4, 1997 encountered rough sea at the
vicinity of Cape Santiago, Batangas and ma(d)e the barge . . . roll and pitch which
caused the steel pipes and various construction materials to shift on the
starboardside causing the breakdown of the steel stanch(i)ons welded on the
deck of the barge leaving holes on the deck that cause(d) water to enter the hold.
That on or about 1529 December 5, 199[7], with the continuous entrance of sea water on the hold, the barge
totally capsized touch(ed) bottom.
On 9 December 1997, Barretto apprised Oceaneering of the supposed fact that the mishap was caused by the
incompetence and negligence of the latter's personnel in loading the cargo and that it was going to proceed with
the salvage, refloating and repair of the barge. In turn contending that the barge tilted because of the water
which seeped through a hole in its hull, Oceaneering caused its counsel to serve Barretto a letter dated 12 March
1998, demanding the return of the unused portion of the charter payment amounting to P224,400.00 as well as
the expenses in the sum of P125,000.00 it purportedly incurred in salvaging its construction materials. In a
letter dated 25 March 1998, however, Barretto's counsel informed Oceaneering that its unused charter payment
was withheld by his client who was likewise seeking reimbursement for the P836,425.00 he expended in
salvaging, re oating and repairing the barge. In response to Barretto's 29 June 1998 formal demand for the
payment of the same expenses, Oceaneering reiterated its demand for the return of the unused charter payment
and the reimbursement of its salvaging expenses as aforesaid.
On 6 October 1998, Barretto commenced the instant suit with the ling of his complaint for damages
against Oceaneering, which was docketed as Civil Case No. LP- 98-0244 before Branch 255 of the
Regional Trial Court (RTC) of Las Piñas City. Contending that the accident was attributable to the
incompetence and negligence which attended the loading of the cargo by Oceaneering's hired
employees, Barretto sought indemnities for expenses incurred and lost income in the aggregate sum
of P2,750,792.50 and attorney's fees equivalent to 25% of said sum.18 Speci cally denying the
material allegations of the foregoing complaint in its 26 January 1999 answer, Oceaneering, on the
other hand, averred that the accident was caused by the negligence of Barretto's employees and the
dilapidated hull of the barge which rendered it unseaworthy. As a consequence, Oceaneering prayed
for the grant of its counterclaims for the value of its cargo in the sum of P4,055,700.00, salvaging
expenses in the sum of P125,000.00, exemplary damages, attorney's fees and litigation expenses.
The issues thus joined and the mandatory pre-trial conference subsequently terminated upon the
agreement of the parties, the RTC proceeded to try the case on the merits. In support of his
complaint, Barretto took the witness stand to prove the seaworthiness of the barge as well as the
alleged negligent loading of the cargo by Oceaneering's employees. Barretto also presented the
following witnesses: (a) Toribio Barretto II, Vice President for Operations of N.B.B. Lighterage, who
primarily testi ed on the effort exerted to salvage the barge; and, (b) Manuel Velasco, who testi ed on
his participation in the execution of the Time Charter Agreement as well as the circumstances before
and after the sinking of the barge. By way of defense evidence, Oceaneering in turn presented the
testimonies of the following witnesses: (a) Engr. Wenifredo Oracion, its Operation's Manager, to
prove, among other matters, the value of the cargo and the salvage operation it conducted in the
premises; and, (b) Maria Flores Escaño, Accounting Staff at Castillo Laman Tan Pantaleon and San
Jose Law Offices, to prove its claim for attorney's fees and litigation expenses.
To disprove the rough sea supposedly encountered by the barge as well as the negligence imputed against its
employees, Oceaneering further adduced the testimonies of the following witnesses: (a) Rosa Barba, a Senior
Weather Specialist at the Philippine Atmospheric, Geophysical and Astronomical Services Administration
(PAGASA); (b) Cmdr. Herbert Catapang, O cer-in-Charge of the Hydrographic Division at the National
Mapping Resource Information Authority (NAMRIA); and, (c) Engr. Carlos Gigante, a freelance marine
surveyor and licensed naval architect. Recalled as a rebuttal witness, Toribio Barretto II, in turn, asserted that
the hull of the barge was not damaged and that the sinking of said vessel was attributable to the improper
loading of Oceaneering's construction materials. Upon the formal offer respectively made by the parties, the
pieces of documentary evidence identi ed and marked in the course of the testimonies of the above named
witnesses30 were, accordingly, admitted by the RTC.
On 27 December 2005, the RTC rendered a decision, dismissing both Barretto's complaint and Oceaneering's
counterclaims for lack of merit. While nding that Barretto failed to adduce su cient and convincing evidence to
prove that the accident was due to the negligence of Oceaneering's employees, the RTC nevertheless brushed
aside the latter's claim that the barge was not seaworthy as acknowledged in the Time Charter Agreement.
Alongside its claim for reimbursement of the sums expended for the salvage operation it conducted which was
denied for lack of evidence to prove the same, Oceaneering's claim for the value of its cargo was likewise
denied on the ground, among other matters, that the same was not included in the demand letters it served
Barretto; and, that it has no one but itself to blame for failing to insure its cargo against all risks, as provided in
the parties' agreement. With its claims for exemplary damages and attorney's fees further denied for lack of
showing of bad faith on the part of Barretto, Oceaneering led the motion for partial reconsideration of the
foregoing decision which was denied for lack of merit in the RTC's 28 April 2006 order.
Dissatisfied, Oceaneering perfected its appeal from the aforesaid 27 December 2005 decision on the ground that
the RTC reversibly erred in not nding that the accident was caused by the unseaworthy condition of the barge
and in denying its counterclaims for actual and exemplary damages as well as attorney's fees and litigation
expenses. Docketed before the CA as CA-G.R. CV No. 87168, the appeal was partially granted in the herein
assailed 12 December 2007 decision upon the finding, among others, that the agreement executed by the parties,
by its express terms, was a time charter where the possession and control of the barge was retained by Barretto;
that the latter is, therefore, a common carrier legally charged with extraordinary diligence in the vigilance over
the goods transported by him; and, that the sinking of the vessel created a presumption of negligence and/or
unseaworthiness which Barretto failed to overcome and gave rise to his liability for Oceaneering's lost cargo
despite the latter's failure to insure the same. Applying the rule, however, that actual damages should be proved
with a reasonable degree of certainty, the CA denied Oceaneering's claim for the value of its lost cargo and
merely ordered the refund of the P306,000.00 it paid for the time charter, with indemnity for attorney's fees in
the sum of P30,000.
Alongside that interposed by Barretto, the motion for reconsideration of the foregoing decision led by
Oceaneering's was denied for lack of merit in the CA's resolution dated 11 August 2008, hence, this petition.
Issue: Whether or not the CA erred IN DENYING OCEANEERING'S COUNTERCLAIMS FOR ACTUAL
DAMAGES AMOUNTING TO (A) P3,704,700.00 REPRESENTING THE VALUE OF THE MATERIALS IT
LOST DUE TO THE SINKING OF [BARRETO'S] BARGE; AND (B) P125,000.00 REPRESENTING THE
EXPENSES IT INCURRED FOR SALVAGING ITS CARGO.
Ruling: In finding Oceaneering's petition impressed with partial merit, uppermost in our mind is the fact that
actual or compensatory damages are those damages which the injured party is entitled to recover for the
wrong done and injuries received when none were intended. Pertaining as they do to such injuries or
losses that are actually sustained and susceptible of measurement, they are intended to put the injured
party in the position in which he was before he was injured. Insofar as actual or compensatory damages are
concerned, Article 2199 of the Civil Code of the Philippines provides as follows:
"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."
Conformably with the foregoing provision, the rule is long and well settled that there must be pleading
and proof of actual damages suffered for the same to be recovered. In addition to the fact that the amount
of loss must 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. The burden of proof of the damage
suffered is, consequently, imposed on the party claiming the same who should adduce the best evidence
available in support thereof, like sales and delivery receipts, cash and check vouchers and other pieces of
documentary evidence of the same nature. In the absence of corroborative evidence, it has been held that
self- serving statements of account are not su cient basis for an award of actual damages. Corollary to the
principle that a claim for actual damages cannot be predicated on flimsy, remote, speculative, and
insubstantial proof, courts are, likewise, required to state the factual bases of the award.
Applying the just discussed principles to the case at bench, we find that Oceaneering correctly fault the CA for
not granting its claim for actual damages or, more specifically, the portions thereof which were duly pleaded and
adequately proved before the RTC. While concededly not included in the demand letters dated 12 March 1998
and 13 July 1998 Oceaneering served Barretto, the former's counterclaims for the value of its lost cargo in the
sum of P4,055,700.00 and salvaging expenses in the sum of P125,000.00 were distinctly pleaded and prayed for
in the 26 January 1999 answer it filed a quo. Rather than the entire P4,055,700.00 worth of construction
materials re ected in the inventory which Engr. Oracion claims to have prepared on 29 November 1997, based
on the delivery and o cial receipts from Oceaneering's suppliers, we are, however, inclined to grant only the
following items which were duly proved by the vouchers and receipts on record, viz.: (a) P1,720,850.00 worth
of spiral welded pipes with coal tar epoxy procured on 22 November 1997; (b) P629,640.00 worth of spiral
welded steel pipes procured on 28 October 1997; (c) P155,500.00 worth of various stainless steel materials
procured on 27 November 1997; (d) P66,750.00 worth of gaskets and shackles procured on 20 November 1997;
and, (e) P4,880.00 worth of anchor bolt procured on 27 November 1997.
The foregoing sums all add up to of P2,577,620.00 from which should be deducted the sum of P351,000.00
representing the value of the nine steel pipes salvaged by Oceaneering, or a total of P2,226,620.00 in actual
damages representing the value of the latter's lost cargo. Excluded from the computation are the following items
which, on account of the dates of their procurement, could not have possibly been included in the 29 November
1997 inventory prepared by Engr. Oracion, to wit: (a) P1,129,640.00 worth of WO#1995 and PO#OCPI-060-97
procured on 9 December 1997; and, (b) P128,000.00 worth of bollard procured on 16 December 1997. Likewise
excluded are the anchor bolt with nut Oceaneering claims to have procured for an unspecified amount on 3
November 1997 and the P109,018.50 worth of Petron oil it procured on 28 November 1997 which does not fit
into the categories of lost cargo and/or salvaging expenses for which it interposed counterclaims a quo.
Although included in its demand letters as aforesaid and pleaded in its answer, Oceaneering's claim for
salvaging expenses in the sum of P125,000.00 cannot, likewise, be granted for lack of credible evidence to
support the same.
Tested alongside the twin requirements of pleading and proof for the grant of actual damages, on the other hand,
we find that the CA also erred in awarding the full amount of P306,000.00 in favor of Oceaneering, as and by
way of refund of the consideration it paid Barretto for the Time Charter Agreement. Aside from not being
clearly pleaded in the answer it filed a quo, said refund was claimed in Oceaneering's demand letters only to the
extent of the unused charter payment in the reduced sum of P224,400.00 which, to our mind, should be the
correct measure of the award. Having breached an obligation which did not constitute a loan or forbearance of
money, moreover, Barretto can only be held liable for interest at the rate of 6% per annum on said amount as
well as the P2,226,620.00 value of the lost cargo instead of the 12% urged by Oceaneering. Although the lost
cargo was not included in the demand letters the latter served the former, said interest rate of 6% per annum
shall be imposed from the time of the ling of the complaint which is equivalent to a judicial demand. Upon the
nality of this decision, said sums shall earn a further interest of 12% per annum until full payment in accordance
with the following pronouncements handed down in Eastern Shipping Lines, Inc. vs. Court of Appeals, to wit:
"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 of the judgment of the court is made (at which time the quanti cation 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 of 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
nality until its satisfaction, this interim period being deemed to be by then an equivalent to a forbearance of
credit."
For lack of sufficient showing of bad faith on the part of Barretto, we find that the CA, nally, erred in granting
Oceaneering's claim for attorney's fees, albeit in the much reduced sum of P30,000.00. In the absence of
stipulation, after all, the rule is settled that there can be no recovery of attorney's fees and expenses of litigation
other than judicial costs except in the instances enumerated under Article 2208 of the Civil Code. Being the
exception rather than the rule, attorney's fees are not awarded every time a party prevails in a suit, in view of the
policy that no premium should be placed on the right to litigate. Even when a claimant is compelled to litigate
with third persons or to incur expenses to protect his rights, still attorney's fees may not be awarded where, as
here, no su cient showing of bad faith can be re ected in the party's persistence in a case other than an erroneous
conviction of the righteousness of his cause.
WHEREFORE, premises considered, the petition is PARTIALLY GRANTED and the assailed 12 December
2007 Decision is, accordingly, MODIFIED: (a) to GRANT Oceaneering's claim for the value of its lost cargo in
the sum of P2,226,620.00 with 6% interest per annum computed from the ling of the complaint and to earn
further interest at the rate of 12% per annum from nality of the decision until full payment; (b) t o REDUCE the
refund of the consideration for the Time Charter Agreement from P306,000.00 to P224,400.00, with 6% interest
per annum computed from 12 March 1998, likewise to earn further interest at the rate of 12% per annum from
nality of this decision; and, (c) to DELETE the CA's award of salvaging expenses and attorney's fees, for lack of
factual and legal basis. The rest is AFFIRMED in toto. SO ORDERED.
(6) REYNALDA GATCHALIAN, petitioner, vs. ARSENIO DELIM and the HON. COURT OF
APPEALS, respondents.
G.R. No. L-56487 October 21, 1991
FELICIANO, J.:
Facts:
11 July 1973 (noontime) - petitioner Reynalda Gatchalian boarded, as a paying passenger, respondent's
"Thames" mini bus at a point in San Eugenio, Aringay, La Union, bound for Bauang, of the same province. On
the way, while the bus was running along the highway in Barrio Payocpoc, Bauang, Union, "a snapping sound"
was suddenly heard at one part of the bus and, shortly thereafter, the vehicle bumped a cement flower pot on the
side of the road, went off the road, turned turtle and fell into a ditch. Several passengers, including petitioner
Gatchalian, were injured. They were promptly taken to Bethany Hospital at San Fernando, La Union, for
medical treatment. Upon medical examination, petitioner was found to have sustained physical injuries on the
leg, arm and forehead, specifically described as follows: lacerated wound, forehead; abrasion, elbow, left;
abrasion, knee, left; abrasion, lateral surface, leg, left.
14 July 1973 - while injured passengers were confined in the hospital, Mrs. Adela Delim, wife of respondent,
visited them and later paid for their hospitalization and medical expenses. She also gave petitioner P12.00 with
which to pay her transportation expense in going home from the hospital. However, before Mrs. Delim left, she
had the injured passengers, including petitioner, sign an already prepared Joint Affidavit which stated, among
other things:
That we were passengers of Thames with Plate No. 52-222 PUJ Phil. 73 and victims after the said Thames met
an accident at Barrio Payocpoc Norte, Bauang, La Union while passing through the National Highway No. 3;
That after a thorough investigation the said Thames met the accident due to mechanical defect and went off the
road and turned turtle to the east canal of the road into a creek causing physical injuries to us;
xxx xxx xxx
That we are no longer interested to file a complaint, criminal or civil against the said driver and owner of the
said Thames, because it was an accident and the said driver and owner of the said Thames have gone to the
extent of helping us to be treated upon our injuries.
Trial Court: dismissed the complaint upon the ground that when petitioner Gatchalian signed the Joint
Affidavit, she relinquished any right of action (whether criminal or civil) that she may have had against
respondent and the driver of the mini-bus.
CA: reversed the trial court's conclusion that there had been a valid waiver, but affirmed the dismissal of the
case by denying petitioner's claim for damages.
Issues:
1. W/N there is a valid waiver of cause of action?
2. W/N private respondent has successfully proved that he had exercised extraordinary diligence to prevent the
mishap involving his mini-bus?
3. W/N petitioner is entitled to damages?
Ruling:
1. We agree with the majority of the Court of Appeals who held that no valid waiver of her cause of action had
been made by petitioner. A waiver, to be valid and effective, must in the first place be couched in clear and
unequivocal terms which leave no doubt as to the intention of a person to give up a right or benefit which legally
pertains to him. A waiver may not casually be attributed to a person when the terms thereof do not explicitly
and clearly evidence an intent to abandon a right vested in such person. The terms of the Joint Affidavit in the
instant case cannot be regarded as a waiver cast in "clear and unequivocal" terms. Moreover, the circumstances
under which the Joint Affidavit was signed by petitioner Gatchalian need to be considered. Petitioner testified
that she was still reeling from the effects of the vehicular accident, having been in the hospital for only three
days, when the purported waiver in the form of the Joint Affidavit was presented to her for signing; that while
reading the same, she experienced dizziness but that, seeing the other passengers who had also suffered injuries
sign the document, she too signed without bothering to read the Joint Affidavit in its entirety. Considering these
circumstances, there appears substantial doubt whether petitioner understood fully the import of the Joint
Affidavit (prepared by or at the instance of private respondent) she signed and whether she actually intended
thereby to waive any right of action against private respondent. Finally, because what is involved here is the
liability of a common carrier for injuries sustained by passengers in respect of whose safety a common carrier
must exercise extraordinary diligence, we must construe any such purported waiver most strictly against the
common carrier. For a waiver to be valid and effective, it must not be contrary to law, morals, public policy or
good customs. To uphold a supposed waiver of any right to claim damages by an injured passenger, under
circumstances like those exhibited in this case, would be to dilute and weaken the standard of extraordinary
diligence exacted by the law from common carriers and hence to render that standard unenforceable. We
believe such a purported waiver is offensive to public policy.
2. The records before the Court are bereft of any evidence showing that respondent had exercised the
extraordinary diligence required by law. Curiously, respondent did not even attempt, during the trial before the
court a quo, to prove that he had indeed exercised the requisite extraordinary diligence. Respondent did try to
exculpate himself from liability by alleging that the mishap was the result of force majeure. But allegation is not
proof and here again, respondent utterly failed to substantiate his defense of force majeure. To exempt a
common carrier from liability for death or physical injuries to passengers upon the ground of force majeure, the
carrier must clearly show not only that the efficient cause of the casualty was entirely independent of the human
will, but also that it was impossible to avoid. Any participation by the common carrier in the occurrence of the
injury will defeat the defense of force majeure. The record yields affirmative evidence of fault or negligence on
the part of respondent common carrier. In her direct examination, Gatchalian narrated that shortly before the
vehicle went off the road and into a ditch, a "snapping sound" was suddenly heard at one part of the bus. One of
the passengers, an old woman, cried out, "What happened?" ("Apay addan samet nadadaelen?"). The driver
replied, nonchalantly, "That is only normal" ("Ugali ti makina dayta"). The driver did not stop to check if
anything had gone wrong with the bus. Moreover, the driver's reply necessarily indicated that the same
"snapping sound" had been heard in the bus on previous occasions. This could only mean that the bus had not
been checked physically or mechanically to determine what was causing the "snapping sound" which had
occurred so frequently that the driver had gotten accustomed to it. Such a sound is obviously alien to a motor
vehicle in good operating condition, and even a modicum of concern for life and limb of passengers dictated that
the bus be checked and repaired. The obvious continued failure of respondent to look after the roadworthiness
and safety of the bus, coupled with the driver's refusal or neglect to stop the mini-bus after he had heard once
again the "snapping sound" and the cry of alarm from one of the passengers, constituted wanton disregard of the
physical safety of the passengers, and hence gross negligence on the part of respondent and his driver.
3. Unrealized Revenue because of the effects of the vehicular mishap. Petitioner maintains that on the day that
the mini-bus went off the road, she was supposed to confer with the district supervisor of public schools for a
substitute teacher's job, a job which she had held off and on as a "casual employee." The Court of Appeals,
however, found that at the time of the accident, she was no longer employed in a public school since, being a
casual employee and not a Civil Service eligible, she had been laid off her employment as a substitute teacher
was occasional and episodic, contingent upon the availability of vacancies for substitute teachers. In view of her
employment status as such, the Court of Appeals held that she could not be said to have in fact lost any
employment after and by reason of the accident. Such was the factual finding of the Court of Appeals, a finding
entitled to due respect from this Court. Petitioner Gatchalian has not submitted any basis for overturning this
finding of fact, and she may not be awarded damages on the basis of speculation or conjecture. Claim for the
cost of plastic surgery for removal of the scar on her forehead. A person is entitled to the physical integrity of
his or her body; if that integrity is violated or diminished, actual injury is suffered for which actual or
compensatory damages are due and assessable. Gatchalian is entitled to be placed as nearly as possible in the
condition that she was before the mishap. A scar, especially one on the face of the woman, resulting from the
infliction of injury upon her, is a violation of bodily integrity, giving raise to a legitimate claim for restoration to
her conditio ante. If the scar is relatively small and does not grievously disfigure the victim, the cost of surgery
may be expected to be correspondingly modest. Petitioner estimated that the cost of having her scar surgically
removed was somewhere between P10,000.00 to P15,000.00. Upon the other hand, Dr. Fe Tayao Lasam, a
witness presented as an expert by petitioner, testified that the cost would probably be between P5,000.00 to
P10,000.00. In view of this testimony, and the fact that a considerable amount of time has lapsed since the
mishap in 1973 which may be expected to increase not only the cost but also very probably the difficulty of
removing the scar, we consider that the amount of P15,000.00 to cover the cost of such plastic surgery is not
unreasonable. Moral Damages. The long-established rule is that moral damages may be awarded where gross
negligence on the part of the common carrier is shown. Since we have earlier concluded that respondent
common carrier and his driver had been grossly negligent in connection with the bus mishap which had injured
petitioner and other passengers, and recalling the aggressive maneuvers of respondent, through his wife, to get
the victims to waive their right to recover damages even as they were still hospitalized for their injuries,
petitioner must be held entitled to such moral damages. Considering the extent of pain and anxiety which
petitioner must have suffered as a result of her physical injuries including the permanent scar on her forehead,
we believe that the amount of P30,000.00 would be a reasonable award. Petitioner's claim for P1,000.00 as
attorney's fees is in fact even more modest.
(7) COCA-COLA BOTTLERS PHILS., INC., v. ERNANI GUINGONA MEÑEZ
G.R. No. 209906, November 22, 2017
FACTS
Research [s]cientist Ernani Guingona Meñez was a frequent customer of Rosante Bar and Restaurant of
Dumaguete City. On March 28, 1995, at about 3:00 pm, Meñez went to Rosante and ordered two (2) bottles of
beer. Thereafter, he ordered pizza and a bottle of "Sprite". He noticed that the taste of the softdrink was not one
of Sprite but of a different substance repulsive to taste. The substance smelled of kerosene. He then felt a
burning sensation in his throat and stomach and could not control the urge to vomit. He left his table for the
toilet to vomit but was unable to reach the toilet room. Instead, he vomited on the lavatory found immediately
outside the said toilet.
Upon returning to the table, he picked up the bottle of Sprite and brought it to the waitresses and angrily told
them that he was served kerosene. All of the waitresses confirmed that the bottle smelled of kerosene and not of
Sprite. Meñez then went out of the restaurant taking with him the bottle. He found a person manning the traffic,
Gerardo Ovas, Jr. of the Traffic Assistant Unit. He reported the incident and requested the latter to accompany
him to the Silliman [University] Medical Center (SUMC). Heading to SUMC for medical attention, Ovas
brought the bottle of Sprite with him.
While at the Emergency Room, [Meñez] again vomited before the hospital staff could examine him. [Meñez]
had to be confined in the hospital for three (3) days. Later, [Meñez] came to know that a representative from
[Rosante] came to the hospital and informed the hospital staff that Rosante [would] take care of the hospital and
medical bills.
The incident was reported to the police and recorded in the Police Blotter. The bottle of Sprite was examined by
Prof. Chester Dumancas, a licensed chemist of Silliman University. The analysis identified the contents of the
liquid inside the bottle as pure kerosene.
As a result of the incident, [Meñez] filed a complaint against [CCBPI and Rosante] and prayed for the following
damages:
(a) Three Million Pesos (₱3,000,000.00) as actual damages
(b) Four Million Pesos (₱4,000,000.00) as moral damages;
(c) Five Hundred Thousand Pesos (₱500,000.00) as exemplary damages;
(d) One Hundred Thousand Pesos (₱100,000[.00]) as attorney's fees;
(e) Cost of Suit.
In answer to the complaint filed, [CCBPI (Coca-Cola Bottlers Phils., Inc.) and Rosante] set out their own
version of facts. Rosante alleged that [Meñez] was heard to have only felt nausea but did not vomit. Rosante
further denied that the waitresses confirmed kerosene. In fact, [Meñez] refused to have the waitresses smell it.
As an affirmative defense, [Rosante] argued that [Meñez] has no cause of action. It argued that Rosante is not
expected to open and taste each and every [content] in order to make sure it is safe for every customer.
CCBPI for its part filed a motion to dismiss the complaint. CCBPI interposed that a perusal of the complaint
revealed that there is no allegation therein which states that CCBPI uses noxious or harmful substance in the
manufacture of its products. What the complaint repeatedly stated is that the bottle with the name SPRITE on it
contained a substance which was later identified as pure kerosene.
As to the second ground, [CCBPI] cited Republic Act No. 3720, as amended x x x "An Act to Ensure the Safety
and Purity of Foods and Cosmetics, and the Purity, Safety, Efficacy and Quality of Drugs and Devices Being
Made Available to the Public, Vesting the Bureau of Food and Drugs with Authority to Administer and Enforce
the Laws pertaining thereto, and for other Purposes[.]" CCBPI argued that pursuant to the law, [Meñez] failed
to avail of and exhaust an administrative remedy provided for prior to a filing of a suit in court.
CCBPI further argued that the doctrine of strict liability tort being a creation of American Jurisprudence, have
never been adopted as a doctrine of the SC.
Pre-[t]rial and [t]rial ensued. With the termination of the trial, and the directive to parties to file their respective
memoranda, the case was finally submitted for decision.
RTC: Dismissed the complaint for insufficiency of evidence
Aggrieved, [Meñez went to the CA] on appeal.
CA: CA granted the appeal and reversed the Decision of the RTC. The CA ruled that an administrative remedy
is not a condition precedent in pursuing a case for damages under Article 2187 of the Civil Code. The CA also
ruled that Meñez was not entitled to actual damages given the observation of his attending physician, Dr. Juanito
Magbanua, Jr. that "his hospital stay was uneventful" and he had taken in only a small amount [of kerosene]
because the degree of adverse effect on his body [was] very minimal. The CA, however, awarded moral and
exemplary damages in favor of Meñez.
ISSUES
(1) Whether the CA erred in awarding moral damages to Meñez. (most important)
(2) Whether the CA erred in awarding exemplary damages to Meñez.
(3) Whether the CA erred in awarding attorney's fees to Meñez.
(4) Whether the CA erred in holding that Meñez did not violate the doctrine of exhaustion of
administrative remedies and prior resort to the Bureau of Food and Drugs (BFD) is not necessary.
RULING NO. 1
YES. The cases when moral damages may be awarded are specific. Unless the case falls under the enumeration
as provided in Article 2219, which is exclusive, and Article 2220 of the Civil Code, moral damages may not be
awarded. Article 2219 provides:
ARTICLE 2219. Moral damages may be recovered in the following and analogous cases:
(1) A criminal offense resulting in physical injuries;
(2) Quasi-delicts causing physical injuries;
(3) Seduction, abduction, rape, or other lascivious acts;
(4) Adultery or concubinage;
(5) Illegal or arbitrary detention or arrest;
(6) Illegal search;
(7) Libel, slander or any other form of defamation;
(8) Malicious prosecution;
(9) Acts mentioned in Article 309;
(10) Acts and actions referred to in Articles 21, 26, 27, 28, 29, 30, 32, 34, and 35.
Article 2220 provides the following additional legal grounds for awarding moral damages:
(1) willful injury to property if the court should find that, under the circumstances, such damages are
justly due; and
(2) breaches of contract where the defendant acted fraudulently or in bad faith.
In justifying the award of moral damages to Meñez, the CA invoked the U.S. cases Escola v. Coca-Cola
Bottling Co. and Wallace v. Coca-Cola Bottling Plants, Inc. The CA, however, failed to show the direct
connection of these cases with the instances when moral damages may be awarded under the Civil Code.
Apparently, the only ground which could sustain an award of moral damages in favor of Meñez and against
CCBPI is Article 2219 (2) — quasi-delict under Article 2187 causing physical injuries.
Unfortunately, Meñez has not presented competent, credible and preponderant evidence to prove that he
suffered physical injuries when he allegedly ingested kerosene from the "Sprite" bottle in question.
The diagnosis of the medical condition of Meñez in the medical abstract prepared by Dr. Abel Hilario Gomez,
who was not presented as a witness, and signed by Dr. Magbanua, Jr. provides that "the degree of poisoning on
the plaintiff [Meñez] was mild, since the amount ingested was minimal and did not have severe physical effects
on his body."
The statements of the doctors who tended to the medical needs of Meñez were equivocal. "Physical effects on
the body" and "adverse effect on his body" are not very clear and definite as to whether or not Meñez suffered
physical injuries and if these statements indicate that he did, what their nature was or how extensive they were.
Consequently, in the absence of sufficient evidence on physical injuries that Meñez sustained, he is not entitled
to moral damages.
RULING NO. 2
YES. As to exemplary or corrective damages, these may be granted in quasi-delicts if the defendant acted with
gross negligence pursuant to Article 2231 of the Civil Code.
The CA's reasoning is not in accord with the gross negligence requirement for an award of exemplary damages
in a quasi-delict case.
Moreover, Meñez has failed to establish that CCBPI acted with gross negligence. The Court agrees with the
RTC's finding that there was failure on the part of Meñez to categorically establish the chain of custody of the
"Sprite" bottle which was the very core of the evidence in his complaint for damages and that, considering that
the "Sprite" bottle allegedly contained pure kerosene, it was quite surprising why the employees of Rosante did
not notice its distinct, characteristic smell. Thus, Meñez is not entitled to exemplary damages absent the required
evidence. The only evidence presented by Meñez is the opened "Sprite" bottle containing pure kerosene.
Nothing more.
RULING NO. 3
YES. Regarding attorney's fees, Article 2208 of the Civil Code provides:
ART. 2208. In the absence of stipulation, attorney's fees and expenses of litigation, other than judicial costs,
cannot be recovered, except:
(1) When exemplary damages are awarded;
(2) When the defendant's act or omission has compelled the plaintiff to litigate with third persons or
to incur expenses to protect his interest;
(3) In criminal cases of malicious prosecution against the plaintiff;
(4) In case of a clearly unfounded civil action or proceeding against the plaintiff;
(5) Where the defendant acted in gross and evident bad faith in refusing to satisfy the plaintiffs
plainly valid, just and demandable claim;
(6) In actions for legal support;
(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;
(9) In a separate civil action to recover civil liability arising from a crime;
(10) When at least double judicial costs are awarded;
(11) In any other case where the court deems it just and equitable that attorney's fees and expenses of
litigation should be recovered.
In all cases, the attorney's fees and expenses of litigation must be reasonable.
The CA Decision did not even provide the basis for the award of ₱50,000.00 as attorney's fees and cost of suit.
The award is found only in the dispositive portion.
In any event, based on Article 2208 of the Civil Code, Meñez is not entitled to attorney's fees and expenses of
litigation because, as with his claim for exemplary damages, he has not established any other ground that would
justify this award.
RULING NO. 4
The CA correctly ruled that prior resort to BFD is not necessary for a suit for damages under Article 2187 of the
Civil Code to prosper.
ART. 2187. Manufacturers and processors of foodstuffs, drinks, toilet articles and similar goods shall be liable
for death or injuries caused by any noxious or harmful substances used, although no contractual relation exists
between them and the consumers.
Quasi-delict being the source of obligation upon which Meñez bases his cause of action for damages against
CCBPI, the doctrine of exhaustion of administrative remedies is not applicable. Such is not a condition
precedent required in a complaint for damages with respect to obligations arising from quasi-delicts under
Chapter 2, Title XVII on Extra-Contractual Obligations, Article 2176, et seq. of the Civil Code which includes
Article 2187.
(8) EXPERTRAVEL & TOURS, INC., vs CA

G.R. No. 130030. June 25, 1999
FACTS:
Expertravel & Tours, Inc., a travel agency, issued to private respondent Ricardo Lo four round-trip plane tickets
to Hongkong, with hotel accommodations and transfers, for P39,677.20. Alleging that Lo had failed to pay the
amount due, it caused several demands to be made, which were ignored, hence Expertravel filed a court
complaint for recovery of the amount claimed plus damages.
Lo then contended in his Answer that he has fully paid, and that the outstanding account was remitted to through
Expertravel’s then Chairperson, Ms. Ma. Rocio de Vega, who was theretofore authorized to deal with the
clients, evidenced by a Monte de Piedad Check No. 291559, dated 06 October 1987, for P42,175.20 for which
Ms. de Vega, in turn, issued City Trust Check No. 417920 in favor of Expertravel for the amount of P50,000.00,
with the notation "placement advance for Ricardo Lo, etc." Per its own invoice, Expertravel received the sum on
10 October 1987.
The trial court ordered to pay defendant Ricardo Lo moral damages in the amount of P30,000.00; attorney's fees
in the amount of P10,000.00, and to pay the costs of the suit. As affirmed by the appellate court, held that the
payment made by Lo was valid and binding on Expertravel, and even assuming that de Vega had not been
specifically authorized, the fact that the amount "delivered to the latter remain(ed) in its possession up to the
present, mean(t) that the amount redounded to the benefit of petitioner Expertravel, in view of the second
paragraph of Article 1241 of the Civil Code to the effect that payment made to a third person shall also be valid
in so far as it has redounded to the benefit of the creditor.
ISSUE:
Whether moral damages can be recovered in a clearly unfounded suit. NO.
Whether moral damages can be awarded for negligence or quasi-delict that did not result to physical injury to
the offended party
RULING:
Moral damages are not punitive in nature but are designed to compensate and alleviate in some way the physical
suffering, mental anguish, fright, serious anxiety, besmirched reputation, wounded feelings, moral shock, social
humiliation, and similar injury unjustly caused to a person.
Although incapable of pecuniary computation, it must somehow be proportional to and in approximation of the
suffering inflicted. Such damages, to be recoverable, must be the proximate result of a wrongful act or omission
the factual basis for which is satisfactorily established by the aggrieved party
An award of moral damages would require certain conditions to be met; to wit:

(1) First, there must be an injury, whether physical, mental or psychological, clearly sustained by the claimant;
(2) second, there must be a culpable act or omission factually established
(3) third, the wrongful act or omission of the defendant is the proximate cause of the injury sustained by the
claimant; and
(4) fourth, the award of damages is predicated on any of the cases stated in Article 2219.
In culpa contractual or breach of contract, moral damages may be recovered when the defendant acted in bad
faith or was guilty of gross negligence (amounting to bad faith) or in wanton disregard of his contractual
obligation and, exceptionally, when the act of breach of contract itself is constitutive of tort resulting in physical
injuries.
By special rule in Article 1764, in relation to Article 2206, of the Civil Code, moral damages may also be
awarded in case the death of a passenger results from a breach of carriage.
In culpa aquiliana, or quasi-delict,

(a) when an act or omission causes physical injuries, or
(b) where the defendant is guilty of intentional tort, moral damages may aptly be recovered.
This rule also applies, as aforestated, to contracts when breached by tort. In culpa criminal, moral damages
could be lawfully due when the accused is found guilty of physical injuries, lascivious acts, adultery or
concubinage, illegal or arbitrary detention, illegal arrest, illegal search, or defamation. Malicious prosecution
can also give rise to a claim for moral damages. The term "analogous cases," referred to in Article 2219,
following the ejusdem generis rule, must be held similar to those expressly enumerated by the law.
Although the institution of a clearly unfounded civil suit can at times be a legal justification for an award of
attorney's fees, such filing, however, has almost invariably been held not to be a ground for an award of moral
damages. If the rule were otherwise, then moral damages must every time be awarded in favor of the prevailing
defendant against an unsuccessful plaintiff.
Hence, the award of moral damages awarded to respondent Ricardo Lo under the assailed decision is
DELETED.
(9) Keirulf vs. CA

G.R. No. 99301, March 13, 1997
FACTS:
The initial investigation conducted by Pfc. D.O. Cornelio disclosed that at about 7:45 p.m. of 28 February
1987, the Pantranco bus, bearing plate number AVE-845 (TB PIL 86), was traveling along Epifanio de los
Santos Avenue (EDSA) from Congressional Avenue towards Clover Leaf, Balintawak. Before it reached the
corner of Oliveros Drive, the driver lost control of the bus, causing it to swerve to the left, and then to fly over
the center island occupying the east-bound lane of EDSA. The front of the bus bumped the front portion of an
Isuzu pickup driven by Legaspi, which was moving along Congressional Avenue heading towards Roosevelt
Avenue. As a result, the points of contact of both vehicles were damaged and physical injuries were inflicted on
Legaspi and his passenger Lucila Kierulf, both of whom were treated at the Quezon City General Hospital. The
bus also hit and injured a pedestrian who was then crossing EDSA.
Despite the impact, said bus continued to move forward and its front portion rammed against a Caltex
gasoline station, damaging its building and gasoline dispensing equipment. As a consequence of the incident,
Lucila suffered injuries, as stated in the medical report of the examining physician, Dr. Pedro P. Solis of the
Quezon City General Hospital. The injuries sustained by Lucila required major surgeries like "tracheotomy,
open reduction, mandibular fracture, intermaxillary repair of multiple laceration" and prolonged treatment by
specialists. Per medical report of Dr. Alex L. Castillo, Legaspi also suffered injuries.
The front portion of the pickup truck, owned by Spouses Kierulf, bearing plate number UV PGS 798, was
smashed to pieces. The cost of repair was estimated at P107,583.50.
Pantranco, in its petition, adds that on said day, the abovementioned bus was driven by Jose Malanum.
While cruising along EDSA, a used engine differential accidentally and suddenly dropped from a junk truck in
front of the bus. Said differential hit the 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.
ISSUE: How much moral, exemplary and actual damages are victims of vehicular accidents entitled to?
Ruling:
Moral Damages
Complainants aver that the moral damages awarded by Respondent Court are "clearly and woefully not
enough." The established guideline in awarding moral damages takes into consideration several factors, some of
which are the social and financial standing of the injured parties and their wounded moral feelings and personal
pride. The Kierulf spouses add that the Respondent Court should have considered another factor: the loss of
their conjugal fellowship and the impairment or destruction of their sexual life.
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 of the Civil Code provides that only the person suffering the injury may claim moral damages.
Additionally, no evidence was adduced to show that the consortium had indeed been impaired and the Court
cannot presume that marital relations disappeared with the accident.
The Courts 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 Respondent Court, is not
supported by the evidence on record. His wife might have been badly disfigured, but he had not testified that, in
consequence thereof, his right to marital consortium was affected. Clearly, Victor (and for that matter, Lucila)
had failed to make out a case for loss of consortium, unlike the Rodriguez spouse. Again, we emphasize that this
claim is factual in origin and must find basis not only in the evidence presented but also in the findings of the
Respondent Court. For lack of factual basis, such claim cannot be ruled upon by this Court at this time.
No Consideration of Social and Financial Standing in this Case

The social and financial standing of Lucila cannot be considered in awarding moral damages. The factual
circumstances prior to the accident show that no "rude and rough" reception, no "menacing attitude," no
"supercilious manner," no "abusive language and highly scornful reference" was given her. The social and
financial standing of a claimant of moral damages may be considered in awarding moral damages only if he or
she was subjected to contemptuous conduct despite the offender's knowledge of his or her social and financial
standing.
Be that as it may, it is still proper to award moral damages to Petitioner Lucila for her physical sufferings,
mental anguish, fright, serious anxiety and wounded feelings. She sustained multiple injuries on the scalp, limbs
and ribs. She lost all her teeth. She had to undergo several corrective operations and treatments. Despite
treatment and surgery, her chin was still numb and thick. She felt that she has not fully recovered from her
injuries. She even had to undergo a second operation on her gums for her dentures to fit.She suffered sleepless
nights and shock as a consequence of the vehicular accident. 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.
Exemplary Damages
Complainants also pray for an increase of exemplary damages to P500,000.00 and P50,000.00 for Spouses
Kierulf and Legaspi, respectively. This prayer is based on the pronouncement of this Court in Batangas
Transportation Company vs. Caguimbal that "it is high time to impress effectively upon public utility operators
the nature and extent of their responsibility in respect of the safety of their passengers and their duty to exercise
greater care in the selection of drivers and conductors.
Pantranco opposes this, for under Article 2231 of the Civil Code, "exemplary damages may be granted if
the defendant acted with gross negligence." And allegedly, gross negligence is sorely lacking in the instant case.
Exemplary damages are designed to permit the courts to mould behavior that has socially deleterious
consequences, and its imposition is required by public policy to suppress the wanton acts of an offender.
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) (T)hey may be imposed by way of example or correction only in addition, among others, to
compensatory damages, and cannot be recovered as a matter of right, their determination
depening upon the amount of compensatory damages that may be awarded to the claimant;
(2) the claimant must first establish his right to moral, temporate, liquidated or compensatory
damages; and
(3) the wrongful act must be accompanied by bad faith, and the award would be allowed only if
the guilty party acted in a wanton, fraudulent, reckless, oppressive or malevolent manner."
The claim of Lucila has been favorably considered in view of the finding of gross negligence by
Respondent Court on the part of Pantranco. This is made clear by Respondent Court in granting Lucila's claim
of exemplary damages:
"(P)ublic utility operators like the defendant, have made a mockery of our laws, rules and regulations
governing operations of motor vehicles and have ignored either deliberately or through negligent
disregard of their duties to exercise extraordinary degree of diligence for the safety of the travelling
public and their passengers. x x x ."
To give teeth to this warning, the exemplary damages awarded to Petitioner Lucila is increased to
P200,000.00. The fact of gross negligence duly proven, we believe that Legaspi, being also a victim of gross
negligence, should also receive exemplary damages. Under the facts proven, the Court awards him P25,000 as
exemplary damages.
Loss of Earnings as a Component of Damages
Lost income in the amount of P16,500.00 is also claimed by Legaspi stating that his "whole future has
been jeopardized." This, in turn, is not rebutted by Pantranco.
It should be noted that Respondent Court already considered this when it stated that the award of
P25,000.00 included compensation for "mental anguish and emotional strain of not earning anything with a
family to support." Moral damages, though incapable of pecuniary estimation, are in the category of an award
designed to compensate the claimant for actual injury and are not meant to enrich complainant at the expense of
defendant.
We find, however, the claim of Legaspi to be duly substantiated. Pantranco failed to rebut the claim of
Porfirio that he had been incapacitated for ten (10) months and that during said period he did not have any
income. Considering that, prior to the accident, he was employed as a driver and was earning P1,650.00 a
month, his claim for P16,500.00 as compensation for loss of earning capacity for said period is amply supported
by the records and is demandable under Article 2205 of the Civil Code.
Complainants contend that Lucila is also entitled to damages for "loss or impairment of earning capacity in
cases of temporary or permanent personal injury" under Article 2205 of the Civil Code. Notably, both the trial
court and public respondent denied this prayer because of her failure to produce her income tax returns for the
years 1985 and 1986, notwithstanding the production of her 1983 and 1984 income tax returns.
Pantranco opposes the above claim for loss of earning capacity on the ground that there is no proof "that
for the two years immediately preceding the accident Lucila was indeed deriving income from some source
which was cut off by the accident."
We agree with the findings of Respondent Court that Lucila's claim of loss of earning capacity has not
been duly proven. The alleged loss must be established by factual evidence for it partakes of actual damages. A
party is entitled to adequate compensation for such pecuniary loss actually suffered and duly proved. Such
damages, to be recoverable, must not only be capable of proof, but must actually be shown with a reasonable
degree of certainty. We have emphasized that these damages cannot be presumed, and courts in making an
award must point out specific facts which can serve as basis for measuring whatever compensatory or actual
damages are borne. 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.
Epilogue
This Court cannot remind the bench and the bar often enough that in order that moral damages may be
awarded, there must be pleading and proof of moral suffering, mental anguish, fright and the like. While no
proof of pecuniary loss is necessary in order that moral damages may be awarded, the amount of indemnity
being left to the discretion of the court, 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.
National Labor Relations Commission, the Court held that "additional facts must be pleaded and proven to
warrant the grant of moral damages under the Civil Code, these being, x x x 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.
(10) Darines vs Quiñones
GR No. 206468; August 2, 2017
Facts:
Judith D. Darines (Judith) and her daughter, Joyce D. Darines (Joyce) (petitioners) alleged in their Complaint
that on December 31, 2005, they boarded the Amianan Bus Line as paying passengers enroute from Pangasinan
to Baguio City. Respondent Rolando M. Quitan (Quitan) was driving the bus at that time. While travelling along
Kennon Road, the bus crashed into a truck. which was parked on the shoulder of Kennon Road. As a result, both
vehicles were damaged; two passengers of the bus died; and the other passengers, including petitioners, were
injured. In particular, Joyce suffered cerebral concussion while Judith had an eye wound which required an
operation.
Petitioners argued that Quitan and respondent Eduardo Quiñones (Quiñones), the operator of Amianan Bus
Line, breached their contract of carriage as they failed to bring them safely to their destination. They also
contended that Quitan's reckless and negligent driving caused the collision. Consequently, they prayed for
actual, moral, exemplary and temperate damages, and costs of suit.
Respondents countered in their Answers that Quitan was driving in a careful, prudent, and dutiful manner at the
normal speed of 40 kilometers per hour. According to them, the proximate cause of the incident was the
negligence of the truck driver, Ronald C. Fernandez, who parked the truck at the roadside right after the curve
without having installed any early warning device. They also claimed that Quiñones observed due diligence in
the selection and supervision of his employees as he conducted seminars on road safety measures; and Quitan
attended such seminars including those required by the government on traffic safety. They likewise averred that
Quitan was a licensed professional driver who, in his 12 years as a public utility driver, had not figured in any
incident like the one at hand.
Judith testified that Quitan was driving at a very fast pace resulting in a collision with the truck parked at the
shoulder of the road. Consequently, the bone holding her right eye was fractured and had to be operated. She
claimed that, as a result of incident, she failed to report for work for two months.
To prove the actual damages that she suffered, Judith presented receipts for medicine, and a summary of
expenses, which included those incurred for the ritual daois. She explained that she and Joyce are Igorots, being
members of Ibaloi, Kankanay-ey, an indigenous tribe; and as their customary practice, when a member who
meets an accident is released from the hospital, they butcher pigs to remove or prevent bad luck from returning
to the family. Moreover, to support her claim for moral damages, Judith testified that she suffered sleepless
nights since she worried about the result and possible effect of her operation.
On the other hand, respondents presented Ernesto Benitez (Benitez), who, on behalf of respondents, testified
that he bought the medicines and paid petitioners' hospitalization expenses, as evidenced by receipts he
submitted in court
RTC: ordered respondents to pay: Moral Damages (100K), Exemplary Damages (30K), Attorney’s Fees
(16,500php)
Since the respondents already paid the actual damages relating to petitioners' medical and hospitalization
expenses, then the only remaining matters for resolution were: whether respondents were liable to pay
petitioners a) actual damages representing the expenses incurred during the dao-is ritual; and, Judith's alleged
lost income; b) moral and exemplary damages; and, c) attorney's fees.
The RTC noted that petitioners did not present any receipt as regards the expenses they incurred during the dao-
is ritual. As regards their claim for Judith's lost income, the RTC held that petitioners similarly failed to
substantiate the same as there was no showing that Judith's failure to report for work for two months was
because of the incident. Thus, the RTC did not award actual damages for lack of evidence. However, the RTC
awarded moral damages grounded on Judith's testimony regarding her pain and suffering. It likewise awarded
exemplary damages by way of correction, and to serve as example to common carriers to be extraordinarily
diligent in transporting passengers. It also granted petitioners attorney's fees plus costs of suit on the ground that
petitioners were compelled to litigate the case.
CA: reversed and set aside RTC Decision. CA deleted the award of moral damages because
petitioners failed to prove that respondents acted fraudulently or in bad faith, as shown by the fact that
respondents paid petitioners' medical and hospitalization expenses. The CA held that, since no moral
damages was awarded, then there was no basis to grant exemplary damages. Finally, it ruled that because
moral and exemplary damages were not granted, then the award of attorney's fees must also be deleted.
Petitioners maintain that respondents are liable to pay them moral and exemplary damages because the
proximate cause of their injuries was the reckless driving of Quitan. They also argued that the RTC's grant of
damages and attorney's fees in their favor already attained finality because when respondents appealed to the
CA, they only questioned the amounts given by the RTC for being exorbitant, but not the award itself.
Respondents, on their end, posit that they are not liable to pay moral damages because their acts were not
attended by fraud or bad faith. They add that since petitioners are not entitled to moral damages, then it follows
that they are also not entitled to exemplary damages; and same is true with regard to the grant of attorney's fees
as the same necessitates the grant of moral and exemplary damages.
Issue: Whether or not petitioners are entitled to the award of moral damages
HELD:
NO.
Court fully agrees with the CA ruling that in an action for breach of contract, moral damages may be recovered
only when a) death of a passenger results; or b) the carrier was guilty of fraud and bad faith even if death does
not result; and that neither of these circumstances were present in the case at bar. The CA correctly held that,
since no moral damages was awarded then, there is no basis to grant exemplary damages and attorney's fees to
petitioners.
To stress, this case is one for breach of contract of carriage (culpa contractual) where it is necessary to show the
existence of the contract between the parties, and the failure of the common carrier to transport its passenger
safely to his or her destination. An action for breach of contract differs from quasi-delicts (also referred as culpa
aquiliana or culpa extra contractual) as the latter emanate from the negligence of the tortfeasor including such
instance where a person is injured in a vehicular accident by a party other than the carrier where he is a
passenger.
The principle that, in an action for breach of contract of carriage, moral damages may be awarded only in case
(1) an accident results in the death of a passenger; or (2) the carrier is guilty of fraud or bad faith, is pursuant to
Article 1764, in relation to Article 2206(3) of the Civil Code, and Article 2220 thereof, as follows:
Article 1764. Damages in cases comprised in this Section shall be awarded in accordance with Title XVIII of
this Book, concerning Damages. Article 2206 shall also apply to the death of a passenger caused by the breach
of contract by a common carrier. (Emphasis supplied)
Article 2206. The amount of damages for death caused by a crime or quasi-delict shall be at least three thousand
pesos, even though there may have been mitigating circumstances. In addition:
xxx xxx xxx
(3) The spouse, legitimate and illegitimate descendants and ascendants of the deceased may demand moral
damages for mental anguish by reason of the death of the deceased.
Article 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. (Emphasis supplied)
The aforesaid concepts of fraud or bad faith and negligence are basic as they are distinctly differentiated by law.
Specifically, fraud or bad faith connotes "deliberate orwanton wrong doing" or such deliberate disregard of
contractual obligations while negligence amounts to sheer carelessness.
More particularly, fraud includes "inducement through insidious machination." In turn, insidious machination
refers to such deceitful strategy or such plan with an evil purpose. On the other hand, bad faith does not merely
pertain to bad judgment or negligence but relates to a dishonest purpose, and a deliberate doing of a wrongful
act. Bad faith involves "breach of a known duty through some motive or interest or ill will that partakes of the
nature of fraud.
Clearly, unless it is fully established (and not just lightly inferred) that negligence in an action fo r breach of
contract is so gross as to amount to malice, then the claim of moral damages is without merit.
Here, petitioners impute negligence on the part of respondents when, as paying passengers, they sustained
injuries when the bus owned and operated by respondent Quiñones, and driven by respondent Quitan, collided
with another vehicle. Petitioners propounded on the negligence of respondents, but did not discuss or impute
fraud or bad faith, or such gross negligence which would amount to bad faith, against respondents. There being
neither allegation nor proof that respondents acted in fraud or in bad faith in performing their duties arising from
their contract of carriage, they are then not liable for moral damages.
The Court also sustains the CA's finding that petitioners are not entitled to exemplary damages. Pursuant to
Articles 2229 and 2234 of the Civil Code, exemplary damages may be awarded only in addition to moral,
temperate, liquidated, or compensatory damages. Since petitioners are not entitled to either moral, temperate,
liquidated, or compensatory damages, then their claim for exemplary damages is bereft of merit. Finally,
considering the absence of any of the circumstances under Article 2208 of the Civil Code where attorney's fees
may be awarded, the same cannot be granted to petitioners.
(11) TAN vs. OMC CARRIERS, INC. and BONIFACIO ARAMBALA
FACTS:
On September 27, 1996, the petitioners filed a complaint for damages with the RTC against OMC and Bonifacio
Arambala. The complaint states that on November 24, 1995, at around 6:15 a.m., Arambala was driving a truck
with a trailer owned by OMC, along Meralco Road, Sucat, Muntinlupa City. When Arambala noticed that the
truck had suddenly lost its brakes, he told his companion to jump out. Soon thereafter, he also jumped out and
abandoned the truck. Driverless, the truck rammed into the house and tailoring shop owned by petitioner Leticia
Tan and her husband Celedonio Tan, instantly killing Celedonio who was standing at the doorway of the house
at the time.
The petitioners alleged that the collision occurred due to OMC's gross negligence in not properly maintaining
the truck, and to Arambala's recklessness when he abandoned the moving truck. Thus, they claimed that the
respondents should be held jointly and severally liable for the actual damages that they suffered, which include
the damage to their properties, the funeral expenses they incurred for Celedonio Tan's burial, as well as the loss
of his earning capacity. The petitioners also asked for moral and exemplary damages, and attorney's fees.
The respondents denied any liability for the collision, essentially claiming that the damage to the petitioners was
caused by a fortuitous event, since the truck skidded due to the slippery condition of the road caused by spilled
motor oil.
RTC: Found OMC and Arambala jointly and severally liable to the petitioners for damages. Relying on the
doctrine of res ipsa loquitur, the RTC held that it was unusual for a truck to suddenly lose its brakes; the fact
that the truck rammed into the petitioners' house raised the presumption of negligence on the part of the
respondents. The RTC did not agree with the respondents' claim of a fortuitous event, pointing out that even
with oil on the road, Arambala did not slow down or take any precautionary measure to prevent the truck from
skidding off the road. It, thus, held OMC jointly and severally liable with Arambala for the damage caused to
the petitioners, based on the principle of vicarious liability embodied in Article 2180 12 of the Civil Code.
CA: Affirmed the RTC's findings on the issues of the respondents' negligence and liability for damages.
However, the CA modified the damages awarded to the petitioners by reducing the actual damages award
from P355,895.00 to P72,295.00. The CA observed that only the latter amount was duly supported by official
receipts. The CA also deleted the RTC's award for loss of earning capacity. The CA explained that the
petitioners failed to substantiate Celedonio Tan's claimed earning capacity with reasonable certainty; no
documentary evidence was ever presented on this point. Instead, the RTC merely relied on Leticia Tan's
testimony regarding Celedonio Tan's income. The CA further reduced the exemplary damages from
P500,000.00 to P200,000.00, and deleted the award of attorney's fees because the RTC merely included the
award in the dispositive portion of the decision without discussing its legal basis.
ISSUE:
Whether or not the CA erred when it modified the RTC's awarded damages.
HELD:
We initially denied the petition in our Resolution of February 17, 2010, for the petitioners' failure to show any
reversible error in the CA decision sufficient to warrant the exercise of our discretionary appellate jurisdiction.
In our Resolution of August 11, 2010, we reinstated the petition on the basis of the petitioners' motion for
reconsideration.
Finding merit in the petitioners' arguments, we partly grant the petition.

(1) Temperate damages in lieu of actual damages (As to actual damages arising from the damage inflicted
on petitioner Leticia Tan's house and tailoring shop, taking into account the sewing machines and various
household appliances affected)
Our basic law tells us that to recover damages there must be pleading and proof of actual damages suffered. As
we explained in Viron Transportation Co., Inc. v. Delos Santos:
“Actual damages, to be recoverable, must not only be capable of proof, but must actually be proved
with a reasonable degree of certainty. Courts cannot simply rely on speculation, conjecture or
guesswork in determining the fact and amount of damages. 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.”
The petitioners do not deny that they did not submit any receipt to support their claim for actual damages to
prove the monetary value of the damage caused to the house and tailoring shop when the truck rammed into
them. Thus, no actual damages for the destruction to petitioner Leticia Tan's house and tailoring shop can be
awarded. Nonetheless, absent competent proof on the actual damages suffered, a party still has the option of
claiming temperate damages, which may be allowed in cases where, from the nature of the case, definite proof
of pecuniary loss cannot be adduced although the court is convinced that the aggrieved party suffered some
pecuniary loss. As defined in Article 2224 of the Civil Code:
“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 photographs the petitioners presented as evidence show the extent of the damage done to the house, the
tailoring shop and the petitioners' appliances and equipment. Irrefutably, this damage was directly attributable to
Arambala's gross negligence in handling OMC's truck. Unfortunately, these photographs are not enough to
establish the amount of the loss with certainty. From the attendant circumstances and given the property
destroyed, we find the amount of P200,000.00 as a fair and sufficient award by way of temperate damages.
(2) Temperate damages in lieu of loss of earning capacity

Similarly, the CA was correct in disallowing the award of actual damages for loss of earning capacity. Damages
for loss of earning capacity are awarded pursuant to Article 2206 of the Civil Code, which states that:
“Article 2206. The amount of damages for death caused by a crime or quasi-delict shall be at least
three thousand pesos, even though there may have been mitigating circumstances. In addition:
(1) The defendant shall be liable for the loss of the earning capacity of the deceased, and the indemnity
shall be paid to the heirs of the latter; such indemnity shall in every case be assessed and awarded by
the court, unless the deceased on account of permanent physical disability not caused by the defendant,
had no earning capacity at the time of his death[.]”
General Rule: documentary evidence should be presented to substantiate the claim for loss of earning capacity.
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.
According to the petitioners, prior to his death, Celedonio was a self-employed tailor who earned approximately
P156,000.00 a year, or P13,000.00 a month. At the time of his death in 1995, the prevailing daily minimum
wage was P145.00, 29 or P3,770.00 per month, provided the wage earner had only one rest day per week. Even
if we take judicial notice of the fact that a small tailoring shop normally does not issue receipts to its customers,
and would probably not have any documentary evidence of the income it earns, Celedonio's alleged monthly
income of P13,000.00 greatly exceeded the prevailing monthly minimum wage; thus, the exception set forth
above does not apply.
In the present case, the income-earning capacity of the deceased was never disputed. Petitioners Mary Jane Tan,
Mary Lyn Tan, Celedonio Tan, Jr., Mary Joy Tan and Mark Allan Tan were all minors at the time the petition
was filed on February 4, 2010, and they all relied mainly on the income earned by their father from his tailoring
activities for their sustenance and support. Under these facts and taking into account the unrebutted annual
earnings of the deceased, we hold that the petitioners are entitled to temperate damages in the amount of
P300,000.00 [or roughly, the gross income for two (2) years] to compensate for damages for loss of the earning
capacity of the deceased.
(3) Reduction of exemplary damages proper

Exemplary or corrective damages are imposed by way of example or correction for the public good, in addition
to moral, temperate, liquidated or compensatory damages. In quasi-delicts, exemplary damages may be granted
if the defendant acted with gross negligence.
Celedonio Tan's death and the destruction of the petitioners' home and tailoring shop were unquestionably
caused by the respondents' gross negligence. The law allows the grant of exemplary damages in cases such as
this to serve as a warning to the public and as a deterrent against the repetition of this kind of deleterious
actions. The grant, however, should be tempered, as it is not intended to enrich one party or to impoverish
another. From this perspective, we find the CA's reduction of the exemplary damages awarded to the petitioners
from P500,000.00 to P200,000.00 to be proper.
(4) Attorney's fees in order

In view of the award of exemplary damages, we �nd it also proper to award the petitioners attorney's fees, in
consonance with Article 2208 (1) of the Civil Code. 38 We �nd the award of attorney's fees, equivalent to 10%
of the total amount adjudged the petitioners, to be just and reasonable under the circumstances.
(5) Interest Due

Finally, we impose legal interest on the amounts awarded, in keeping with our ruling in Eastern Shipping Lines,
Inc. v. Court of Appeals, which held that:
“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.
xxx
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
.x x x
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.”
Accordingly, legal interest at the rate of 6% per annum on the amounts awarded starts to run from May 14,
2003, when the trial court rendered judgment. From the time this judgment becomes final and executory, the
interest rate shall be 12% per annum on the judgment amount and the interest earned up to that date, until the
judgment is wholly satisfied.
As modified, respondents OMC Carriers, Inc. and Bonifacio Arambala are ordered to jointly and severally pay
the petitioners the following:
(1) P50,000.00 as indemnity for the death of Celedonio Tan; (2) P72,295.00 as actual damages for
funeral expenses; (3) P200,000.00 as temperate damages for the damage done to petitioner Leticia's
house, tailoring shop, household appliances and shop equipment; (4) P300,000.00 as damages for the
loss of Celedonio Tan's earning capacity; (5) P500,000.00 as moral damages; (6) P200,000.00 as
exemplary damages; and (7) 10% of the total amount as attorney's fees; and costs of suit.
In addition, the total amount adjudged shall earn interest at the rate of 6% per annum from May 14, 2003, and at
the rate of 12% per annum, from the finality of this Resolution on the balance and interest due, until fully paid.
(12) SEVEN BROTHERS SHIPPING CORPORATION vs.DMC-CONSTRUCTION RESOURCES,

INC. G.R. No. 193914 November 26, 2014
Facts: On 23 February 1996, the cargo ship M/V "Diamond Rabbit" (the Vessel) owned and operated by
defendant Seven Brothers Shipping Corporation (Seven Brothers), was at the PICOP Pier in Mangagoy, Bislig,
Surigao del Sur to dock there. According to the record, the weather that day was windy and the sea condition
was rough with waves 6 to 8 feet high. According to the report of the Master, it heaved its anchor and left the
causeway in order to dock at the PICOP Pier. A lifeboat pulled the vessel towards the Pier with a heaving line
attached to the vessel’s astern mooring rope, when suddenly, the heaving line broke loose, causing the astern
mooring rope to drift freely. The mooring rope got entangled in the vessel’s propeller, thereby choking and
disabling it, and preventing the further use of its main engine for maneuvering. In order to stop the vessel from
further drifting and swinging, its Master dropped her starboard anchor. To help secure the vessel, its forward
mooring rope was sent ashore and secured at the mooring fender. However, because of the strong winds and
rough seas, the vessel’s anchor and the mooring rope could not hold the vessel. The dead weight of the
vessel caused it to swung from side to side until the fender, where the mooring rope was attached, collapsed.
The uncontrollable and unmaneuverable vessel drifted and dragged its anchor until it hit several
structures at the Pier, including the coal conveyor facility owned by DMC Construction Equipment
Resources, Inc. (DMC).
Respondent sent a formal demand letter to petitioner, claiming the amount above-stated for the damages
sustained by their vessel. When petitioner failed to pay, respondent filed with the RTC a Complaint for damages
against respondent on 23 March 1998. Based on the pieces of evidence presented by both parties, the RTC ruled
that as a result of the incident, the loading conveyor and related structures of respondent were indeed damaged.
It found that no force majeure existed because petitioner’s captain was well aware of the bad weather, and yet
proceeded against the strong wind and rough seas, instead of staying at the causeway and waiting out the
passage of the typhoon.
Regarding liability, the RTC awarded respondent actual damages in the amount of ₱3,523,175.92 plus legal
interest of 6%. The value represented 50% of the ₱7,046,351.84 claimed by the respondent as the fair and
reasonable valuation of the structure at the time of the loss, because as manifested by Engr. Dalangin at the time
of the incident, the loading conveyor and related structures were almost five years old, with a normal useful life
of 10 years.
Petitioner appealed. The CA affirmed the RTC’s Decision with respect to the finding of negligence on the part
of the vessel’s captain. However, the appellate court modified the nature of damages awarded (from actual
to nominal), on the premise that actual damages had not been proved. Respondent merely relied on
estimates to prove the cost of replacing the structures destroyed by the vessel, as no actual receipt was
presented.
Issue:
Whether or not the CA erred in awarding nominal damages to respondent after having ruled that the actual
damages awarded by the RTC was unfounded.
Held:
Petitioner argues that under Articles 2221 and 2223 of the Civil Code, nominal damages are only awarded to
vindicate or recognize a right that has been violated, and not to indemnify a party for any loss suffered by the
latter. They are not awarded as a simple replacement for actual damages that were not duly proven during trial.
Respondent, on the other hand, alleges that nominal damages were rightly assessed, since there was a
categorical finding that its "property right was indubitably invaded and violated when damage to its conveyor
and port equipment due to petitioner’s negligence,” was inflicted.
We rule that temperate, and not nominal, damages should be awarded to respondent in the amount of
₱3,523,175.92. In this case, two facts have been established by the appellate and trial courts: that respondent
suffered a loss caused by petitioner; and that respondent failed to sufficiently establish the amount due to him, as
no actual receipt was presented. Temperate or moderate 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 provided with
certainty.
Under the Civil Code, when an injury has been sustained, actual damages may be awarded under the following
condition:
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.
As held in one case- [a]ctual or compensatory damages cannot be presumed, but must be duly proved, and
proved with a reasonable degree of certainty. A court cannot rely on speculation, conjecture or guess work as to
the fact and amount of damages, but must depend upon competent proof that they have suffered and on evidence
of the actual amount thereof.
We take this to mean by credible evidence. Otherwise, the law mandates that other forms of damages must be
awarded, to wit:
Art. 2216. No proof of pecuniary loss is necessary in order that moral, nominal, temperate, liquidated or
exemplary damages, may be adjudicated. The assessment of such damages, except liquidated ones, is left to the
discretion of the court, according to the circumstances of each case.
Under Article 2221 of the Civil Code, nominal damages may be awarded in order that the plaintiff’s right,
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. We have laid down the concept of nominal damages in the
following wise: Nominal damages are recoverable where a legal right is technically violated and must be
vindicated against an invasion that has produced no actual present loss of any kind or where there has
been a breach of contract and no substantial injury or actual damages whatsoever have been or can be
shown. Thus, in Saludo v. Court of Appeals, nominal damages were granted because while petitioner suffered
no substantial injury, his right to be treated with due courtesy was violated by the respondent, Transworld
Airlines, Inc. Nominal damages were likewise awarded in Northwestern Airlines v. Cuenca, Francisco v. Ferrer,
and Areola v. Court of Appeals, where a right was violated, but produced no injury or loss to the aggrieved
party.
In contrast, under Article 2224, temperate or moderate 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
provided with certainty.
In some States of the American Union, temperate damages are allowed. 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 with certainty in terms of money. 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.
Given these findings, we are of the belief that temperate and not nominal damages should have been awarded,
considering that it has been established that respondent herein suffered a loss, even if the amount thereof cannot
be proven with certainty. The amount of temperate damages to be awarded is usually left to the discretion of the
courts, but such amount must be reasonable bearing in mind that temperate damages should be more than
nominal but less than compensatory.
Here, we are convinced that respondent sustained damages to its conveyor facility due to petitioner's negligence.
Nonetheless, for failure of respondent to establish by competent evidence the exact amount of damages it
suffered, we are constrained to award temperate damages. Considering that the lower courts have factually
established that the conveyor facility had a remaining life of only five of its estimated total life of ten years
during the time of the collision, then the replacement cost of ₱7,046,351.84 should rightly be reduced to 50% or
₱3,523, 175.92. This is a fair and reasonable valuation, having taking into account the remaining useful life of
the facility.
(13) Philippine National Bank v. Court of Appeals and Loreto Tan

G.R. No. 108630, April 2, 1996
Romero, J.:
FACTS:
Loreto Tan (Tan) is the owner of a parcel of land abutting the national highway in Mandalagan, Bacolod City.
Expropriation proceedings were instituted by the government against Tan and other property owners before the
then CFI of Negros Occidental.
Tan filed a motion dated May 10, 1978 requesting issuance of an order for the release to him of the
expropriation price of P32,480.
On May 22, 1978, PNB (Bacolod Branch) was required by the RTC to release to him the amount.
On May 24, 1978, PNB, through its Assistant Branch Manager Juan Tagamolila, issued a managers check for
P32,480.00 and delivered the same to one Sonia Gonzaga WITHOUT Tan’s knowledge, consent or
authority. Sonia Gonzaga deposited it in her account with Far East Bank and Trust Co. (FEBTC) and later on
withdrew the said amount.
Tan subsequently demanded payment, but the same was refused on the ground that PNB had already paid and
delivered the amount to Sonia Gonzaga on the strength of a Special Power of Attorney (SPA) allegedly executed
in her favor by Tan.
Later, Tan made an affidavit stating that he never executed an SPA and never authorized Sonia to receive the
amount but instead he signed a motion for the court to issue an Order to release the said sum of money to him
and gave the same to Mr. Nilo Gonzaga (husband of Sonia) to be filed in court. However, after the Order was
subsequently, a certain Engineer Decena of the Highway Engineers Office issued the authority to release the
funds not to him but to Mr. Gonzaga.
Thereafter, Tan filed a motion in court to require PNB to release the amount. PNB, however opposed since,
through the SPA, amount was already paid to Sonia. However, during the hearing, said SPA was NOT produced
by PNB.
Later, RTC decided that Tan’s motion should be tried separately. Hence, the origin of the case was filed.
On September 28, 1979, PNB filed a third-party complaint against the spouses Gonzaga praying that they be
ordered to pay Tan the amount of P32,480. However, for failure of PNB to have the summons served on the
Gonzagas despite opportunities given to it, the third-party complaint was dismissed.
Tagamolila (PNB), in his answer, stated that Sonia Gonzaga presented a SPA to him but borrowed it later
with the promise to return it, claiming that she needed it to encash the check.
On August 31, 1992, the Court of Appeals affirmed the decision of the trial court against petitioner, with the
modification that the award of P5,000.00 for exemplary damages and P5,000.00 for attorneys fees by the trial
court was deleted.
RTC: Ruled in Favor of Loreto Tan. Ordering PNB and Tagamolila jointly and solidarily to pay of P32,480
with legal interest, exemplary damages of P5,000 and attorney’s fees of P5,000.
Both appealed. However, Tagamolila’s appeal was dismissed due to failure to pay the fees.
CA: Partially affirmed RTC’s decision but deleted award of exemplary damages and attorney’s fees.
Hence, this petition. PNB argues that existence of the SPA need not be proved by it under the best evidence rule
because it already proved the existence of the SPA from the testimonies of its witnesses and by the certification
issued by the FEBTC that it allowed Sonia to encash Tan’s check on the basis of the SPA.
ISSUE:
Whether or not PNB should be liable against Tan of the amount of the check? - YES!
Attorney’s fees? - YES!
Exemplary Damages? - NO!
RULING:
Under Art. 1233 of the Civil Code, a debt shall not be understood to have been paid unless the thing or service
in which the obligation consists has been completely delivered or rendered, as the case may be. The burden of
proof of such payment lies with the debtor.
Here, neither the SPA nor the check issued by PNB was ever presented in court. The testimonies of petitioners
own witnesses regarding the check were conflicting. Tagamolila testified that the check was issued to the order
of Sonia Gonzaga as attorney-in-fact of Loreto Tan, while Elvira Tibon, assistant cashier of PNB (Bacolod
Branch), stated that the check was issued to the order of Loreto Tan. Furthermore, other than the existence of
SPA, the alleged authority of Sonia was neither properly proved by PNB. Under best evidence rule, only the
original document (which has not been presented at all) is the best evidence of the fact as to whether or not
private respondent indeed authorized Sonia Gonzaga to receive the check from PNB. In the absence of such
document, PNB arguments regarding due payment must fail.
Regarding the award of attorneys fees, Tan is entitled to the same. Art. 2208 of the Civil Code allows
attorneys fees to be awarded if the claimant is compelled to litigate with third persons or to incur expenses to
protect his interest by reason of an unjustified act or omission of the party from whom it is sought.
In Rasonable v. NLRC, et al., we held that when a party is forced to litigate to protect his rights, he is entitled to
an award of attorneys fees.
As for the award of exemplary damages, it should be deleted
Under Art. 2232 of the Civil Code, exemplary damages may be awarded if a party acted in a wanton,
fraudulent, reckless, oppressive, or malevolent manner. However, they cannot be recovered as a matter of
right; the court has yet to decide whether or not they should be adjudicated.
Jurisprudence has set down the requirements for exemplary damages to be awarded:
1. they may be imposed by way of example in addition to compensatory damages, and only after the
claimants right to them has been established;
2. they cannot be recovered as a matter of right, their determination depending upon the amount of
compensatory damages that may be awarded to the claimant;
3. the act must be accompanied by bad faith or done in a wanton, fraudulent, oppressive or malevolent
manner.
Here, while there is a clear breach of PNB’s obligation to pay Tan, there is no evidence that it acted in a
fraudulent, wanton, reckless or oppressive manner. Furthermore, there is no award to compensatory damages
which is a prerequisite before exemplary damages may be awarded.
(14) Titan Construction v. Uni-Field

G.R. No. 153874 March 1, 2007
FACTS:
Petitioner Titan Construction Corporation is engaged in the construction business, while respondent Uni-Field
Enterprises, Inc is engaged in the business of selling various construction materials. They have been doing
business together from 1990 to 1993, by purchasing on credit various construction supplies and materials from
respondent. Petitioners purchases amounted to P7,620,433.12 but it was only able to pay P6,215,795.70, leaving
a balance of P1,404,637.42. Despite the demand letter by the respondent the balance remained unpaid, thus,
respondent filed a collection of sum of money with damages before the trial court. In its answer, petitioner
admitted the purchases but disputed the amount claimed by respondent. It also interposed a counterclaim based
on damaged vinyl tiles, non-delivery of materials, and advances for utility expenses, dues, and insurance
premiums on the condominium unit turned over by petitioner to respondent.
RTC: The trial court awarded the following in favor of the respondent:
1. The principal amount of P1,404,114.00;
2. Interest Charges in the amount of P504,114.00 plus accrued interest charges at 24% per annum
compounded yearly reckoned from July, 1995 up to the time of full payment;
3. Liquidated Damages in the amount of P324,147.94;
4. Attorneys Fees equivalent to 25% of whatever amount is due and payable and accumulated
appearance fees at P1,000.00 per hearing; and
5. Costs of suits.
CA:
· Petioner appealed before the CA but it was denied
· It ruled that the existence of the delivery receipts and invoices were not denied by appellant, rather, it
admitted the transactions subject of the instant case. Clearly, if the damages alleged are liquidated or
stipulated, they are deemed admitted when not specifically denied. Further, appellant cannot question the
interest rate on overdue accounts as the same was provided for in the delivery receipts and sales invoices,
which have not been denied by it. Therefore, the terms and conditions therein have become the law between
the parties.
Petitioner’s argument: it asserts that nowhere is there any stipulation that plaintiff is entitled to a 24%
interest.
Pertinent provisions in The Sales Invoices and Delivery Receipts, contained that:
This invoice is the written contract between Unifield Enterprises, [I]nc. and the
above-named customer. This is payable on demand unless otherwise indicated
hereinabove. Interest of 24% per annum will be charged on overdue accounts,
compounded with the outstanding principal obligation as they accrue. xxx Should
Unifield Enterprises, Inc. be constrained to effect collection through Court action
and proceedings before the Fiscals [sic], said customer agrees to pay the following
additional sums: (1) 25% liquidated damages based on the outstanding total
obligation; (2) 25% attorneys fees based on the total claim including said liquidated
damages; (3) appearance fees of counsel at P500.00 per hearing in addition to all
other court costs and expenses. x x x
· It insists that the trial court and the Court of Appeals had no legal basis to award
interest, liquidated damages, and attorneys fees because the delivery receipts and sales
invoices, which served as the basis for the award, were not formally offered as evidence
by respondent. Petitioner also alleges that the delivery receipts and sales invoices were in
the nature of contracts of adhesion and petitioner had no option but to accept the
conditions imposed by respondent.
ISSUE:
Whether or not the awarding of liquidated damages, attorneys fees and interest are proper
HELD:
Yes. The Court held that the respondent is entitled to an award of liquidated damages but it will reduce the
amount of attorneys fees awarded by the trial court and the Court of Appeals.
Attorneys Fees:
The law allows a party to recover attorneys fees under a written agreement. Attorneys fees here are in the nature
of liquidated damages and the stipulation therefor is aptly called a penal clause. It has been said that so long as
such stipulation does not contravene law, morals, or public order, it is strictly binding upon defendant. The
attorneys fees so provided are awarded in favor of the litigant, not his counsel.
Liquidated Damages:
The law also allows parties to a contract to stipulate on liquidated damages to be paid in case of breach. A
stipulation on liquidated damages is a penalty clause where the obligor assumes a greater liability in case of
breach of an obligation. The obligor is bound to pay the stipulated amount without need for proof on the
existence and on the measure of damages caused by the breach.
Articles 1229 and 2227 of the Civil Code empower the courts to reduce the penalty if it is iniquitous or
unconscionable. The determination of whether the penalty is iniquitous or unconscionable is addressed to the
sound discretion of the court and depends on several factors such as the type, extent, and purpose of the penalty,
the nature of the obligation, the mode of breach and its consequences.
The Court notes that respondent had more than adequately protected itself from a possible breach of contract
because of the stipulations on the payment of interest, liquidated damages, and attorneys fees. The Court finds
the award of attorneys fees equivalent to 25% of whatever amount is due and payable to be exorbitant because it
includes (1) the principal of P1,404,114.00; (2) the interest charges of P504,114.00 plus accrued interest charges
at 24% per annum compounded yearly reckoned from July 1995 up to the time of full payment; and (3)
liquidated damages of P324,147.94. Moreover, the liquidated damages and the attorneys fees serve the same
purpose, that is, as penalty for breach of the contract. Therefore, it reduce the award of attorneys fees to 25% of
the principal obligation, or P351,028.50.
Findings of the Court:

While the delivery receipts and sales invoices did not form part of respondents formal offer of evidence, records
show that the delivery receipts and sales invoices formed part of petitioners formal offer of evidence. The
delivery receipts and sales invoices expressly stipulated the payment of interest, liquidated damages, and
attorneys fees in case of overdue accounts and collection suits. Petitioner did not only bind itself to pay the
principal amount, it also promised to pay (1) interest of 24% per annum on overdue accounts, compounded with
the principal obligations as they accrue; (2) 25% liquidated damages based on the outstanding total obligation;
and (3) 25% attorneys fees based on the total claim including liquidated damages. Since petitioner freely entered
into the contract, the stipulations in the contract are binding on petitioner. Thus, the trial court and the Court of
Appeals did not err in using the delivery receipts and sales invoices as basis for the award of interest, liquidated
damages, and attorneys fees.
Considering that petitioner and respondent have been doing business from 1990 to 1993 and that petitioner is
not a small time construction company, petitioner is presumed to have full knowledge and to have acted with
due care or, at the very least, to have been aware of the terms and conditions of the contract. Petitioner was free
to contract the services of another supplier if respondents terms were not acceptable. Moreover, petitioner failed
to show that in its transactions with respondent it was the weaker party or that it was compelled to accept the
terms imposed by the respondent.
15. FRANCISCO v. SPOUSES CO; GR No. 151339; January 31, 2006
Facts:
The controversy in this case stems from the possession of the respondents, Spouses Roque and Mariano Co
(respondents), of a lot owned by Pastora Baetiong whose death caused her heirs, one of whom is petitioner
Editha Francisco (petitioner), to question the legality of the respondents’ possession of said lot.
There were already two cases filed before the present case, both of which already became final and executory.
The first one was an accion publiciana case filed by the heirs of Baetiong against respondents. It ended with a
compromise agreement, wherein the parties acknowledged the heirs of Baetiong as the owner of the subject
properties. Further, it was agreed upon that the heirs of Baetiong would lease to respondents a portion of the
properties, totaling between 25,000 square meters to 30,000 square meters, covering land then already occupied
by respondents. The lease agreement, which was contained in a Contract of Lease, was to subsist for 15 years.
Five years after, the heirs filed Motion for Constitution of Commission for the purpose of clarifying the
boundaries of the lot leased to respondents on the ground that said respondents were actually occupying a larger
portion of their land than the 30,000 square meter limit agreed upon in the Compromise Agreement. The case
reached the CA through a Petition for Certiorari and Prohibition (second case) filed by respondents. Here, the
CA ruled that the constitution of a commission for the purpose of delineating the bounds of the leased portion of
the property would serve no purpose, considering that the Compromise Agreement itself mandated that the
parties immediately conduct a delineation of the subject property for proper inclusion in the Contract of Lease.
It ruled that since the Contract of Lease specified that the leased portion had an area of "approximately" three
(3) hectares (or 30,000 sq.m.), the area occupied by respondents was the same property agreed upon for lease by
the parties in the Compromise Agreement. On the claim that the area leased was actually in excess of 7,659 sq.
meters, the CA held that the heirs of Baetiong were precluded by laches and negligence from asserting such
claim, as they had remained silent for almost fie years in contesting the subject area.
Now, for the third and present case filed four years after the CA Decision became final an executory, petitioner
filed a forcible entry case against respondents on the ground that she was the owner in fee simple of a parcel of
land, denominated as Lot No. 2-F-4, with an area of 5,679 square meters, encompassed under TCT No. 44546,
which she inherited from her mother per a 1978 Extra-Judicial Settlement of Estate which caused the
subdivision of the property into several lots. Meanwhile, respondents alleged that the property over which
petitioner was asserting her rights was covered under the Contract of Lease which had been executed pursuant to
the earlier Compromise Agreement. Respondents also pointed out that assuming petitioner had a cause of action
against them, the same was barred by res judicata.
MeTC: for petioner; concluded that the Contract of Lease expressly delineated the coverage of the lease
agreement as totaling only three (3) hectares, which according to the MeTC, excluded Lot No. 2-F-4 of the
subdivision plan. On the issue of res judicata, it found that res judicata did not apply, owing to the absence of
the requisite of identity of causes of action.
RTC: affirmed
CA: REVERSED. It ruled that the complaint for forcible entry was indeed barred by res judicata. It was held
that while there was a difference in the forms of the two actions, there was nonetheless a similarity of causes of
action in the two cases, as the same evidence would support and establish both the former and present causes of
action. The Court of Appeals also concluded that due to malicious prosecution, respondents were liable
for moral damages of P30,000.00, exemplary damages of P20,000.00, and attorney's fees of P20,000.00.
Issue: (1) Is there res judicata in this case and (2) is the award of damages and attorney’s fees proper?
Held:
(1) (Main ruling; see second issue for ruling related on damages) YES. SC held that the second type of res
judicata, conclusiveness of judgement, is present in this case. Conclusiveness of judgment operates as a bar even
if there is no identity as between the first and second causes of judgment. Under the doctrine, any right, fact, or
matter in issue directly adjudicated or necessarily involved in the determination of an action before a competent
court in which judgment is rendered on the merits is conclusively settled by the judgment therein and cannot
again be litigated between the parties and their privies whether or not the claim, demand, purpose, or subject
matter of the two actions is the same. Evidently, "conclusiveness of judgment" may operate to bar the second
case even if there is no identity of causes of action. The judgment is conclusive in the second case, only as to
those matters actually and directly controverted and determined, and not as to matters merely involved therein.
There are important CA pronouncements in the second case which are binding in this case. First, the
Compromise Agreement, which provided that the leased area be delineated by a geodetic survey instituted by
both parties, was already deemed as fully implemented and enforced through the simultaneous execution of the
Contract of Lease. Second, the Contract of Lease established that the area covered by the agreement constituted
those portions of TCT No. 44546 then occupied by respondents, which as approximated as more or less three (3)
hectares in area. Third, assuming that the area actually leased to respondents exceeded the stipulated three (3)
hectares by 7,659.84 sq. meters (or .76 hectares), the heirs of Baetiong, petitioner among them, had since been
barred from asserting such contention by reason of laches.
This being the case, it was not enough for petitioner to establish that she was the owner of Lot No. 2-F-4 which
is the sole allegation in her complaint in support of her cause of action. Neither would it have been sufficient on
her part to prove that the three (3) hectares contemplated in the Contract of Lease consisted only of Lots No. 2-
E, 2-F-1, and 2-F-2. By reason of the conclusiveness of the final judgment of the Court of Appeals, it was
essential on her part to establish that Lot No. 2-F-4 was not among that portion which respondents had been
occupying at the time of the execution of the Contract of Lease. Had respondents not been occupying Lot No. 2-
F-4 when the Contract of Lease was executed, petitioner would have had the right to seek the ejectment of
respondents from the said lot, as the said portion would not have been among that which the Court of Appeals
had earlier ruled respondents were entitled to possess by way of lease. Since petitioner failed to discharge this
burden, the petition must necessarily fail.
(2) NO. The SC REVERSED the CA’s grant of damages (moral and exemplary) and attorney’s fees to
respondents. In ruling that petitioner was in bad faith in filing the instant suit, the appellate court predicated this
conclusion on the observation that "respondent was well-aware that the issue involved in this case has already
been settled by the courts. Due to this, petitioners understandably suffered mental anguish and serious anxiety,
thereby entitling them to moral damages."
The SC held that that bad faith on the part of petitioner had NOT been preponderantly established in this case.
Bad faith does not simply connote bad judgment or negligence, but it imports a dishonest purpose or some moral
obliquity and conscious doing of a wrong. It should be established by clear and convincing evidence since the
law always presumes good faith. 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. Certainly, it does not appear that the Court of Appeals has conducted the mandated careful
examination of evidence that would sustain the award of moral damages. Nothing in the record establishes any
right to moral damages by respondents.
Neither should exemplary damages avail under the circumstances. The plaintiff must show that he is entitled to
moral, temperate or compensatory damages before the court may consider the question of whether exemplary
damages should be awarded. If the court has no proof or evidence upon which the claim for moral damages
could be based, such indemnity could not be outrightly awarded. The same holds true with respect to the award
of exemplary damages where it must be shown that the party acted in a wanton, oppressive or malevolent
manner. Furthermore, this specie of damages is allowed only in addition to moral damages such that no
exemplary damages can be awarded unless the claimant first establishes his clear right to moral damages.
Finally, contrary to the CA’s pronouncement, the mere fact that petitioners were constrained to litigate in order
to protect and assert their rights does not ipso facto entitle them to attorney's fees. What Article 2208 (2) of the
Civil Code provides, in order that attorney's fees may be awarded, is that "the defendant's act or omission has
compelled the plaintiff to litigate with third persons or to incur expenses to protect his interest". It is settled that
the fact that the party was "compelled to litigate and incur expenses to protect and enforce their claim does not
justify the award of attorney's fees. The general rule is that attorney's fees cannot be recovered as part of
damages because of the public policy that no premium should be placed on the right to litigate. The award of
attorney's fees must be deleted where the award of moral and exemplary damages are eliminated."
(16)Philippine Communications Satellite Corporation vs. Globe Telecom

GR No. 147324
Facts:
Prior to 1991, Globe Mckay Cable and Radio Corporation, now Globe Telecom, Inc. (Globe), had been engaged
in the coordination of the provision of various communication facilities for the military bases of the United
States of America (US) in Clark Air Base Pampanga and Subic Naval Base. US Defense Communications
Agency (USDCA), and for security reasons, were operated only by its personnel or those of American
companies contracted by it to operate said facilities. The USDCA contracted with said American companies,
and the latter, in turn, contracted with Globe for the use of the communication facilities. Globe, on the other
hand, contracted with local service providers such as the Philippine Communications Satellite Corporation
(Philcomsat) for the provision of the communication facilities.
On 07 May 1991, Philcomsat and Globe entered into an Agreement whereby Philcomsat obligated itself to
establish, operate and provide an IBS Standard B earth station (earth station) within Cubi Point for the exclusive
use of the USDCA. The term of the contract was for 60 months, or �ve (5) years. In turn, Globe promised to
pay Philcomsat monthly rentals for each leased circuit involved. Both parties knew that the RP-US Military
Bases Agreement was to expire in 1991. Subsequently, Philcomsat installed and established the earth station at
Cubi Point and the USDCA made use of the same.
On 16 September 1991, the Senate passed and adopted Senate Resolution No. 141, expressing its decision not to
concur in the ratification of the Treaty of Friendship, Cooperation and Security and its Supplementary
Agreements that was supposed to extend the term of the use by the US of Subic Naval Base, among others.
On 31 December 1991, the Philippine Government sent a Note Verbale to the US Government stating that since
the RP-US Military Bases Agreement, as amended, shall terminate on 31 December 1992, the withdrawal of all
US military forces from Subic Naval Base should be completed by said date. On August 1992, Globe notified
Philcomsat of its intention to discontinue the use of the earth station effective 08 November 1992 in view of the
termination of the RP-US Military Bases Agreement invoking as basis for the letter of termination Section 8
(Default) of the Agreement, which provides: “Neither party shall be held liable or deemed to be in default for
any failure to perform its obligation under this Agreement if such failure results directly or indirectly from force
majeure or fortuitous event xxx”
Philcomsat replied stating that it expects [Globe] to know its commitment to pay the stipulated rentals for the
remaining terms of the Agreement even after [Globe] shall have discontinued the use of the earth station after
November 08, 1992, referring to Section 7 of the Agreement (Notwithstanding the non-use of the earth station,
[Globe] shall continue to pay PHILCOMSAT for the rental xxx for the remaining life of the agreement…)
Philcomsat sent Globe a letter dated 24 November 1993 demanding payment of its outstanding obligations
under the Agreement amounting to US$4,910,136.00 plus interest and attorney's fees. However, Globe refused
to heed Philcomsat's demand.
Philcomsat filed with the RTC of Makati a Complaint against Globe, praying that the latter be ordered to pay
liquidated damages under the Agreement, with legal interest, exemplary damages, attorney's fees and costs of
Suit. Globe filed an Answer to the Complaint, insisting that it was constrained to end the Agreement due to the
termination of the RP-US Military Bases Agreement and the nonratification by the Senate of the Treaty of
Friendship and Cooperation, which events constituted force majeure under the Agreement. Globe explained that
the occurrence of said events exempted it from paying rentals for the remaining period of the Agreement.
RTC: ordered Globe to pay (USD92,238) the rentals starting from the month of Dec 1992 with legal interest
until amount is fully paid; Attorney’s fees (300K)
Globe contended that the RTC erred in holding it liable for payment of rent of the earth station for December
1992 and of attorney's fees. It explained that it terminated Philcomsat's services on 08 November 1992; hence, it
had no reason to pay for rentals beyond that date.
CA: affirmed the trial court's finding that certain events constituting force majeure under Section 8 the
Agreement occurred and justified the non-payment by Globe of rentals for the remainder of the term of the
Agreement. It ruled that the non-ratification by the Senate of the Treaty of Friendship, Cooperation and
Security, and its Supplementary Agreements, and the termination by the Philippine Government of the RP-US
Military Bases Agreement effective 31 December 1991 constitute force majeure. However, the Court of Appeals
ruled that although Globe sought to terminate Philcomsat's services by 08 November 1992, it is still liable to pay
rentals for the
December 1992, amounting to US$92,238.00 plus interest, considering that the US military
forces and personnel completely withdrew from Cubi Point only on 31 December 1992.
Philcomsat argues that the termination of the RP-US Military Bases Agreement cannot be considered a
fortuitous event because the happening thereof was foreseeable. It further claims that the Court of Appeals erred
in holding that Globe is not liable to pay for the rental of the earth station for the entire term of the Agreement
because it runs counter to what was plainly stipulated by the parties in Section 7 thereof. Philcomsat also
maintains that contrary to the appellate court's findings, it is entitled to attorney's fees and exemplary
damages.
On the issue of the propriety of awarding attorney's fees and exemplary damages to Philcomsat, Globe
maintains that Philcomsat is not entitled thereto because in refusing to pay rentals for the remainder of
the term of the Agreement, Globe only acted in accordance with its rights.
Issue: Whether or not Philcomsat is entitled to attorney’s fees and exemplary damages
HELD:
NO. Philcomsat is NOT entitled.
The Court agrees with CA that there is fortuitous event/force majeure in the instant case. Philcomsat and Globe
had no control over the non-renewal of the term of the RP-US Military Bases Agreement when the same expired
in 1991, because the prerogative to ratify the treaty extending the life thereof belonged to the Senate. Neither did
the parties have control over the subsequent withdrawal of the US military forces and personnel from Cubi Point
in December 1992.
As a consequence of the termination of the RP-US Military Bases Agreement (as amended) the continued stay
of all US Military forces and personnel from Subic Naval Base would no longer be allowed, hence, plaintiff
would no longer be in any position to render the service it was obligated under the Agreement. This made
impossible the continuation of the Agreement until the end of its five-year term without fault on the part of
either party. The Court of Appeals was thus correct in ruling that the happening of such fortuitous events
rendered Globe exempt from payment of rentals for the remainder of the term of the Agreement. Moreover, it
would be unjust to require Globe to continue paying rentals even though Philcomsat cannot be compelled to
perform its corresponding obligation under the Agreement
With respect to the issue of whether Globe is liable for payment of rentals for the month of December 1992, the
Court likewise affirms the appellate court's ruling that Globe should pay the same. Although Globe alleged that
it terminated the Agreement with Philcomsat effective
08 November 1992, the US military forces and personnel completely withdrew from Cubi Point only on 31
December 1992. Thus, until that date, the USDCA had control over the earth station and had the option of using
the same. Furthermore, Philcomsat could not have removed or rendered ineffective said communication facility
until after 31 December 1992 because Cubi Point was accessible only to US naval personnel up to that time.
Hence, the Court of Appeals did not err when it affirmed the trial court's ruling that Globe is liable for payment
of rentals until December 1992.
Neither did the appellate court commit any error in holding that Philcomsat is not
entitled to attorney's fees and exemplary damages.
The award of attorney's fees is the exception rather than the rule, and must be supported by factual, legal and
equitable justifications. In previously decided cases, the Court awarded attorney's fees where a party acted in
gross and evident bad faith in refusing to satisfy the other party's claims and compelled the former to litigate to
protect his rights; when the action filed is clearly unfounded, or where moral or exemplary damages are
awarded. However, in cases where both parties have legitimate claims against each other and no party actually
prevailed, such as in the present case where the claims of both parties were sustained in part, an award of
attorney's fees would not be warranted.
Exemplary damages may be awarded in cases involving contracts or quasicontracts, if the erring party acted in a
wanton, fraudulent, reckless, oppressive or malevolent manner. In the present case, it was not shown that Globe
acted wantonly or oppressively in not heeding Philcomsat's demands for payment of rentals. It was established
during the trial of the case before the trial court that Globe had valid grounds for refusing to comply with its
contractual obligations after 1992.
(17)Industrial Insurance Company vs. Bondad

GR No. 136722; April 12, 2000
Facts:
The present Petition finds its roots in an incident which involved three vehicles: a Galant Sigma car driven by
Grace Ladaw Morales, a packed passenger jeepney originally driven by Ligorio Bondad, and a DM Transit Bus
driven by Eduardo Mendoza.
Investigation disclosed that shortly before the accident took place, DM Transit bus was travelling along SLEX
from Alabang towards Makati when said bus hit and bumped the rear left side portion of Bondad’s jeepney
which was then at stop position due to flat tire. Due to the severe impact caused by the bus, it swerved to the left
and collided with Morales’ car. It was dragged to its left side and hit the concrete wall. All vehicles incurred
damages and sustaining injuries to the occupant of the jeepney and the passengers of the bus.
In 1985 before RTC Makati, pet Industrial Insurance and Grace Morales filed a Complaint for damages against
DM Transit Corp, Diaz, and Bondad. Petitioner contended that it had paid Morales P29,800 for the damages to
her insured car. It also asserted that the December 17, 1984 accident had been caused "solely and proximately"
by the "joint gross and wanton negligence, carelessness and imprudence of both defendant drivers Eduardo Diaz
y Mendoza and Ligorio Bondad y Hernandez, who failed to exercise and observe the diligence required by law
in the management and operation of their respective vehicles and by their defendant employers; D.M. Transit
Corporation and Pablo Bondad, respectively, for their failure to exercise the diligence required of them by law
in the selection and supervision of their employees including their aforementioned involved drivers."
On June 6, 1985, Respondents Pablo and Ligorio Bondad filed their Answer denying any responsibility or
liability to petitioner and Morales. They asserted that their vehicle was on full stop because of a flat tire. Thus, it
was the bus which hit Morales' car. In their Counterclaim, they contended that petitioner had acted in bad faith
in impleading them and that, contrary to its allegation, no prior demand had been made upon them.
RTC: exculpated the Bondads and ordered petitioner to pay them actual, moral and exemplary damages, as well
as attorney's fees.
CA: affirmed the ruling of the trial court with modification. It debunked petitioner's assertion that it had a cause
of action against the Bondads, whose negligence was allegedly the proximate cause of the damage to the insured
vehicle. It. however, reduced the lower court's award of damages to the Bondads, ratiocinating as follows: The
insurance company did not verify the facts before impleading the Bondads in this action for damages. The trial
court noted that petitioner failed to even make a formal demand from the defendants Bondad before it filed the
present case. As it were, the Bondads had to come to Makati from Alaminos every time this case was set for
hearing and not only suffered inconvenience but incurred expenses, particularly for attorney's fees.
"We, however, believe that the expenses for attending the hearings should be deleted, the same not having been
sufficiently proven. Likewise, moral and exemplary damages should be reduced to the more reasonable amounts
of P50,000.00 and P10,000.00, respectively
Issue: Whether or not respondent was entitled to the award of moral and exemplary damages, as well as
attorney’s fees
HELD:
YES.
In justifying the award of attorney's fees and other litigation expenses, the appellate court held that respondents
were compelled to litigate an unfounded suit because of petitioner's negligence and lack of prudence in not
verifying the facts before filing this action. In affirming the award of moral damages, it accepted the trial court's
justification that respondents had "been recklessly and without basis . . . impleaded by the plaintiff in spite of the
clear language in the Traffic Investigation Report.
Attorney's fees may be awarded by a court if one who claims it is compelled to litigate with third persons or to
incur expenses to protect one's interests by reason of an unjustified act or omission on the part of the party from
whom it is sought. In this case, the records show that petitioner's suit against respondents was manifestly
unjustified. In the first place, the contact between the vehicles of respondents and of Morales was completely
due to the impact of the onrushing bus. This fact is manifest in the police investigation report and, significantly,
in the findings of facts of both lower courts..
More significantly, petitioner knew that respondents were not the cause of the accident. This is evident from its
failure to even make a prior formal demand on them before initiating the suit. Indeed, the cause of the accident
was the negligence of the DM Transit bus driver. Court agreed with the findings of trial court:
Court's findings that the D.M. Transit Bus in question was recklessly engaged in a race with a Baliuag
Transit Bus and tried to outrun the former by using the shoulder of the road, a tactic that is very common along
the South Expressway. Unfortunately for the D.M. Transit Bus, defendant Pablo Bondad's jeepney was at a stop
at the shoulder along the path to be taken by the erring bus[;] it was not parked, but was at an emergency stop,
the emergency being a flat tire. The consequence of this rash action was the accident to the Bondad jeepney and
subsequently to the Lancer car owned and operated by one Grace Morales Ladaw which vehicle was pinned by
the D.M. Transit to the concrete island dividing the road. There can be no question that the driver of the D.M.
Transit Bus was at fault for the accident.
"It is further the Court's finding that the plaintiffs have absolutely no cause of action against the Bondads. The
latter's jeepney never got into contact with Ms. Morales' car. While it is true that before the D.M. Transit Bus hit
Ms. Morales car, it had gotten involved in an accident with the Bondad jeepney[;] it is equally true that at the
time of the accident the Bondad jeepney was at an emergency stop. This fact was obvious not only from the
scene of the accident but also from the police investigation report. There was no need to implead the Bondads as
defendants, and if the jeepney had in any way caused, or contributed to, the accident, it could very well be
impleaded by the D.M. Transit Bus operator. Worse, no demand for payment was ever made by the plaintiffs on
the Bondads. Had a formal demand been made by the plaintiffs on the Bondads, the latter's role could have been
clarified. As it is, they had to face a lawsuit and were constrained to come all the way to Makati from Alaminos
for not to do so could place them in a situation where judgment may be rendered against them
Court also affirmed the award of moral damages. To sustain this award, it must be shown that (1) the claimant
suffered injury, and (2) such injury sprung from any of the cases listed in Articles 2219 and 2220 of the Civil
Code. It is not enough that the claimant alleges mental anguish, serious anxiety, wounded feelings, social
humiliation, and the like as a result of the acts of the other party. It is necessary that such acts be shown to have
been tainted with bad faith or ill motive.
In the case at bar, it has been shown that the petitioner acted in bad faith in compelling respondents to litigate an
unfounded claim. As a result, Respondent Ligorio Bondad "could no longer concentrate on his job." Moreover,
Pablo Bondad became sick and even suffered a mild stroke. Indeed, respondents' anxiety is not difficult to
understand.
Likewise, Court affirmed the award of exemplary damages because petitioner's conduct needlessly dragged
innocent bystanders into an unfounded litigation. Indeed, exemplary damages are imposed by way of example or
correction for the public good, in addition to moral, temperate, liquidated or compensatory damages.
In sum, the Court affirms the award of moral damages, exemplary damages,attorney's fees and litigation
expenses. The facts of this case clearly show that petitioner was motivated by bad faith in impleading
respondents. Indeed, a person's right to litigate,as a rule, should not be penalized. This right, however, must be
exercised in good faith.

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(1) Sps Santos v CA and Heirs of Mabasa

1. That of defendants Cristino and Brigido Custodio;

1. that of defendant Rosalina Morato; and

There is a material distinction between damages and injury.

(2) ESTOLAS and SALVADOR v. Acena

GR. No. 157070; January 14, 2005

AS TO SALVADOR= no bad faith

Utilizing the Trial court’s finding:

Thus, the ultimate question that must be asked is:

(4) PEOPLE vs. IRENEO JUGUETA

II. For Simple Rape/Qualified Rape:

ACTUAL OR COMPENSATORY DAMAGES

(f) Delivery and re-delivery be made in Pasig River, Metro Manila;

xxx xxx xxx

That on or about 1635 December 3, 1997, Barge 'Antonieta' departed Pico

xxx xxx xxx

RTC: Dismissed the complaint for insufficiency of evidence

Aggrieved, [Meñez went to the CA] on appeal.

(8) EXPERTRAVEL & TOURS, INC., vs CA

Whether moral damages can be recovered in a clearly unfounded suit. NO.

An award of moral damages would require certain conditions to be met; to wit:

In culpa aquiliana, or quasi-delict,

(9) Keirulf vs. CA

No Consideration of Social and Financial Standing in this Case

Loss of Earnings as a Component of Damages

Finding merit in the petitioners' arguments, we partly grant the petition.

(2) Temperate damages in lieu of loss of earning capacity

(3) Reduction of exemplary damages proper

(4) Attorney's fees in order

(5) Interest Due

(12) SEVEN BROTHERS SHIPPING CORPORATION vs.DMC-CONSTRUCTION RESOURCES,

(13) Philippine National Bank v. Court of Appeals and Loreto Tan

As for the award of exemplary damages, it should be deleted

(14) Titan Construction v. Uni-Field

Findings of the Court:

15. FRANCISCO v. SPOUSES CO; GR No. 151339; January 31, 2006

(16)Philippine Communications Satellite Corporation vs. Globe Telecom

NO. Philcomsat is NOT entitled.

(17)Industrial Insurance Company vs. Bondad

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