Torts Digests

#1
SPOUSES CUSTODIO v. CA
G.R. No. 116100 | 9 February 1996 | Concept of Damages
DOCTRINE
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.
FACTS
Pacifico Mabasa filed a civil case for the grant of an easement of right of way against Cristino Custodio, Brigida Custodio,
Rosalina Morato, Lito Santos, and Maria Cristina Santos before the RTC.
The original plaintiff Pacifico Mabasa died during the pendency of this case and was substituted by Ofelia Mabasa, his
surviving spouse and children.
Pacifico Mabasa owns a parcel of land wregith a two-door apartment erected thereon. He was able to acquire said
property through a contract of sale with spouses Mamerto Rayos and Teodora Quintero as vendors. Said property may be
described to be surrounded by other immovables pertaining to Spouses Cristino and Brigada Custodio, Spouses Lito and
Maria Cristina Santos, and Rosalina Morato. Taking P. Burgos Street as the point of reference, on the left side, going to
Mabasa's property, the row of houses will be as follows: (1) that of Spouses Custodio; (2) then that of Spouses Santos; (3)
and then that of Ofelia Mabasa. On the right side, (1) that of defendant Rosalina Morato and then a septic tank. As an
access to P. Burgos Street from Mabasa's property, there are two possible passageways. The first passageway is
approximately one meter wide and is about 20 meters distant from Mabasa's residence to P. Burgos Street. Such a path is
passing in between the previously mentioned row of houses. 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 premises and who were acknowledged
by Mabasa as tenants. Consequently, one of said tenants vacated the apartment and when 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 Spouses Santos along their property which is also along the first passageway. Meanwhile,
Morato constructed her adobe fence and even extended said fence in such a way that the entire passageway was
enclosed. It was then that the remaining tenants of said apartment vacated the area.
The RTC ruled in favor of Mabasa. It ordered: (1) Spouses Custodio and Santos to give Mabasa permanent access
ingress and egress, to the public street; and (2) Mabasa to pay Spouses Custodio and Santos P8,000.00 as indemnity for
the permanent use of the passageway. Mabasa, represented by his heirs, appealed to the CA.
They raised the sole issue of whether or not the RTC erred in not awarding damages in their favor. The CA modified the
decision of the RTC and ordered Spouses Custodio and Santos to pay Mabasa: (1) P65,000 as actual damages; (b)
P30,000 as moral damages; and P10,000 exemplary damages.
ISSUE
Whether or not the award of damages in favor of Mabasa is in order. – NO.
HELD
The award of damages has no substantial legal basis. A reading of the decision of the CA 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.
3D 2021-2022 | Torts & Damages

However, the mere fact that Mabasa 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.
In the case at bar, although there was damage, there was no legal injury. Contrary to the claim of the heirs of Mabasa,
Spouses Custodio and Santos 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 Spouses Custodio and Santos 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 Mabasa, either by law or by contract. The fact that Mabasa 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. It was only that decision which gave Mabasa the right to use the said passageway after
payment of the compensation and imposed a corresponding duty on Spouses Custodio and Santos not to interfere in the
exercise of said right.
Hence, prior to said decision, Spouses Custodio and Santos 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.
To repeat, whatever injury or damage may have been sustained by Mabasa by reason of the rightful use of the said land
by Spouses Custodio and Santos is damnum absque injuria.

#2
JOSEFINA ESTOLAS and RICARDO SALVADOR v. RAYMUNDO ACENA
G.R. No. 157070 | 14 January 2005 | Concept of Damages
DOCTRINE
The law on damages prescribes that in order that one can have redress for an act which caused him damages, the act
must not only be hurtful, it must also be wrongful. There must be damnum et injuria.
FACTS
On October 18, 1982, respondent Acena was appointed as Administrative Officer with permanent status at the Rizal
Technological College (RTC), by then President of the College Dr. Profeta. The former was extended a promotion to be an
Associate Professor and was then designated Acting Administrative Officer. However, after two months, respondent wrote
a letter to President Profeta to reject the promotion in view of the CSC's Memorandum Circular No. 4 that requires
Associate Professors with a Masteral degree to qualify for permanent appointment as an Associate Professor. The same
was approved and the discrepancy of the salaries was also refunded by the Acena.
On March 26, 1986, Estolas was designated OIC in place of Dr. Profeta and on the same year, issued Memorandum Order
No. 30 revoking the designation of Acena as Acting Administrative Officer, to which appellant-defendant (now petitioner)
Ricardo Salvador was designated in his stead.
Acena then filed a civil case for Injunction and Damages enjoining Estolas from enforcing M.O. No. 30 claiming that the
same violated his rights to security of tenure. He also prayed for an award of P75,000.00 for moral damages and
P10,000.00 as exemplary damages. Meanwhile, pursuant to the letter of Acena, CSC Chairperson Gotladera, issued an
opinion holding that the Acena is still the administrative officer as he was appointed under permanent status and his
appointment as Associate Professor had been successfully withdrawn. MPSB also agreed with the opinion of the CSC.
RTC issued an order for the issuance of a writ of preliminary injunction against Estolas. It also awarded 75K as moral
damages and 10K as exemplary damages to Acena to be paid solidarily by Estolas and Salvador. CA affirmed in toto the
decision of the RTC.
ISSUE
Whether or not the award of damages is proper. – YES.
HELD
The award of damages is proper but only with respect to petitioner Estolas’ liability. In order to recover moral damages, the
claimant must prove the ff: 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 Art 2219 of the Civil Code.
The determination by the MPSB, which was based on the CSC opinion to the effect that respondent Acena still held the
position of AO in a permanent capacity at the time of the issuance of M.O. No. 30 is conclusive upon us. Next, it is
incumbent upon respondent Acena to prove bad faith on the part of the petitioners in order to recover damages. This, he
failed to do with respect to his claim against petitioner Salvador.
In the absence of contrary evidence, petitioner Salvador could not be faulted in accepting the designation as AO from his
superior and exercising the duties and functions of the office. He cannot be liable for moral damages as it was not proved
that he conspired with petitioner Estolas in issuing M.O. No. 30. Considering that 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, or
liquidated, or compensatory damages.
As regards petitioner Estolas’ liability, we agree in finding that she acted in bad faith. The evidence supports Acena’s claim
for moral damages against Estolas. The actuations of Estolas in booting-out 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.
NOTES
To resolve the issue of propriety of the award of moral and exemplary damages,, an examination of factual circumstances
would be necessary, a task that is clearly beyond this Court’s dominium except:
(1) When the findings are grounded on speculation, surmises or conjectures;
(2) When the inference made is manifestly mistaken, absurd or impossible;
(3) When there is grave abuse of discretion in the appreciation of facts;
(4) When the factual findings of the trial court and appellate courts are conflicting;
(5) When the Court of Appeals, in making its findings, has gone beyond the issues of the case and such findings are
contrary to the admissions of both appellant and appellee;
(6) When the judgment of the appellate court is premised on a misapprehension of facts or when it has failed to notice
certain relevant facts which, if properly considered will justify a different conclusion;
(7) When the findings of fact are conclusions without citation of specific evidence upon which they are based; and
(8) When findings of fact of the Court of Appeals are premised on the absence of evidence but are contradicted by the
evidence on record. No. 7 applies in this case.
#3
PEOPLE v. JUGUETA
G.R. No. 202124 | 5 April 2016 | Concept of Damages
DOCTRINE
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.
FACTS
Appellant was charged with double murder for attacking and shooting the house occupied by the family of Norberto Chua,
causing injury and killing the children of Norberto, Mary Grace and Claudine. Norberto, in response to the questions asked
as to what could be the motive, said that he had an altercation with appellant who was angered by the fact that Norberto

filed a case against appellant’s two other brothers for molesting his daughter. RTC found accused guilty of 2 counts of
murder and ordered to pay the heirs of the victims civil indemnity and actual damages. Upon appeal, CA affirmed
appellant’s conviction. Hence this petition.
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 was proper for the Court to modify the civil indemnity. – YES.
HELD
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. rescinding 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) P100,000.00 as civil indemnity for each of the two
children who died; (2) P100,000.00 as moral damages for each of the two victims; (3) another P100,000.00 as exemplary
damages for each of the two victims; and (4) temperate damages in the amount of P50,000.00 for each of the two
deceased. For the four (4) counts of Attempted Murder, appellant should pay P50,000.00 as civil indemnity, P50,000.00 as
moral damages and P50,000.00 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.
NOTES
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.
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.
Precisely, it is civil indemnity. Thus, in a crime where a person dies, in addition to the penalty of imprisonment imposed to
the offender, the accused is also ordered to pay the victim a sum of money as restitution. Also, it is apparent from Article
2206 that the law only imposes a minimum amount for awards of civil indemnity, which is P3,000.00. 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 when the present circumstance warrants it.
The second type of damages the Court awards are moral damages, which are also compensatory in nature. Corollarily,
moral damages under Article 2220 of the Civil Code also does not fix the amount of damages that can be awarded. It is
discretionary upon the court, depending on the mental anguish or the suffering of the private offended party. The amount
of moral damages can, in relation to civil indemnity, be adjusted so long as it does not exceed the award of civil indemnity
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. These terms are generally, but not always, used interchangeably. xxx
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.
#4
VIVIAN TORREON and FELOMINA ABELLANA v. GENEROSO APARRA, JR., FELIX CABALLES, and CARMELO
SIMOLDE
G.R. No. 188493 | 13 December 2017 | Concept of Damages
DOCTRINE
(Start here)
FACTS
(Start here)
ISSUE
(Start here)
HELD
(Start here)
NOTES*
(Start here)
*optional

#5
PEOPLE v. ADVICUNLA
DOCTRINE
Following jurisprudence in People v. Jugueta, the accused-appellant shall be held liable for civil indemnity, moral
damages, and exemplary damages in the amount of P75,000.00 each.
FACTS
Rodolfo Advincula stabbed Reggie Tan with a bladed weapon. Advicunla, using the same bladed weapon, also hit in
different parts of his body. Consequently, Reggie suffered serious and mortal wounds which were the direct and immediate
cause of his untimely death, to the damage of his heirs. The RTC held that the witness categorically and positively
identified the accused-appellant as the one who stabbed Reggie with a knife, which the arresting officers confiscated. The
RTC further ruled that treachery and evident premeditation attended the killing of Reggie; thus, it concluded that the
accused-appellant should be held liable for murder. The RTC imposed 75,000 as civil indemnity.
ISSUE
Whether or not the trial court gravely erred in imposing 75,000 as civil indemnity. – NO.
HELD
The trial court did not err. Following jurisprudence in People v. Jugueta, the accused-appellant shall be held liable for civil
indemnity, moral damages, and exemplary damages in the amount of P75,000.00 each.
On the temperate damages, Teresita claimed that she spent P67,400.00 for the wake and burial of Reggie. Records reveal
that only the expenses totalling to P29,600.00 were properly receipted, viz: niche for P4,000.00; memorial services for
P25,000.00; and burial permit for P600.00.60 Considering that the damages substantiated by receipts presented during
the trial is less than the prescribed P50,000.00 temperate damages in Jugueta the award of P 50,000.00 as temperate
damages, in lieu of the actual damages for a lesser amount, is justified.
Article 2206 of the Civil Code provides that the heirs of the victim are entitled to be indemnified for loss of earning capacity,
which partakes of the nature of actual damages to be proven by competent evidence. The general rule is that documentary
evidence should be presented to substantiate the claim for damages for loss of earning capacity except in the following
instances: (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.
Given the foregoing, the trial court did not err in its award for civil indemnity. Through a certification issued by Reggie's
employer, Teresita was able to prove that her son, who was then 21 years old, was earning a monthly salary of P3,500.00
as butcher's helper, and this fact was not disputed by the accused-appellant.
OCEANEERING CONTRACTORS (PHILS.), INC. v. NESTOR N. BARRETTO, doing business as N.N.B. LIGHTERAGE
G.R. No. 184215 | 9 February 2011 | Actual or Compensatory Damages
DOCTRINE
Conformably with Article 2199 of the Civil Code of the Philippines, 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 sufficient 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.
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" which was last licensed and permitted to engage in coastwise trading for a period of one year
expiring on 21 August 1998. 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, 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.
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. On 3 December 1997, the barge eventually left Manila for Negros
Oriental, towed by the tugboat "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.
On 6 October 1998, Barretto commenced the instant suit with the filing 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.
The RTC rendered a decision, dismissing both Barretto's complaint and Oceaneering's counterclaims for lack of merit.
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.
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.
ISSUE
Whether or not the court 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 [Barretto's] barge; and (b) P125,000.00
representing the expenses it incurred for salvaging its cargo. – YES.
HELD
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, refer to Article 2199 of the Civil Code of the
Philippines1.
1
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 sufficient 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 faults 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 49 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 reflected in the inventory which Engr.
Oracion claims to have prepared on 29 November 1997, based on the delivery and official 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 record2.
2
(a) P1,720,850.00 worth of spiral welded pipes with coal tar epoxy procured on 22 November 1997; 54 (b) P629,640.00 worth
of spiral welded steel pipes procured on 28 October 1997; 55 (c) P155,500.00 worth of various stainless steel materials
procured on 27 November 1997; 56 (d) P66,750.00 worth of gaskets and shackles procured on 20 November 1997; 57 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.

#7
VICTORINO MAGAT v. HON. LEO MEDIALDEA and SANTIAGO GUERRERO
G.R. No. L-37120 | 20 April 1983 | Actual or Compensatory Damages
DOCTRINE
The damages which the obligor is liable for includes not only the value of the loss suffered by the obligee [daño
emergente] but also the profits which the latter failed to obtain [lucro cesante]. If the obligor acted in good faith, he shall be
liable for those damages that are the natural and probable consequences of the breach of the obligation and which the
parties have foreseen or could have reasonably foreseen at the time the obligation was constituted; and in case of fraud,
bad faith, malice or wanton attitude, he shall be liable for all damages which may be reasonably attributed to the non-
performance of the obligation.
FACTS
In September 1972, Santiago Guerrero entered into a contract with the US Navy Exchange in Subic for the operation of a
fleet of taxicabs. Each taxicab had to have a necessary taximeter and a radio transceiver for receiving and sending
messages from mobile taxicab to fixed base stations within the Naval Base. Isidro Aligada, acting as an agent, approached
the plaintiff Victorino Magat on behalf of the defendant and proposed to import from Japan, through the plaintiff or through
plaintiff’s Japanese business associates, all taximeters and radio transceivers needed by the respondent.
Guerrero and Aligada were able to import from Japan with the assistance of the plaintiff and his Japanese business
associates the necessary taximeters for defendant's taxicabs in partial fulfillment of defendant’s commitments with the US
Navy Exchange. Later on, the plaintiff requested a letter of credit from the defendant, a normal business practice in case of
foreign importation. Plaintiff was repeatedly assured by Aligada and the defendant of the latter’s financial capabilities to
pay and refused to open a letter of credit. Thereafter, Plaintiff found out that the defendant had already been operating his
taxicabs without the required radio transceivers.
When the US Navy Authorities pressed the defendant for compliance with his commitments, the latter implicitly laid the
blame for the delay upon the plaintiff, thus destroying the reputation of the plaintiff with the said Naval Authorities. Hence,
the plaintiff filed a complaint for damages against the defendant. Defendant, on the other hand, filed a motion to dismiss on
the ground that aid complaint for lack of cause of action. He contended that the plaintiff was merely anticipating his loss or
damage which might result from the alleged failure of the defendant to comply with the terms of the alleged. The
respondent judge granted the motion to dismiss.
ISSUE
Whether or not the petitioner is entitled to damages for the breach of contract. – YES.
HELD
The parties, both businessmen, entered into the aforesaid contract with the evident intention of deriving some profits
therefrom. Upon breach of the contract by either of them, the other would necessarily suffer loss of his expected profits.
Since the loss comes into being at the very moment of breach, such loss is real, "fixed and vested" and, therefore,
recoverable under the law. Petitioner suffered not only loss of his expected profits but moral and exemplary damages as
well.
Article 1170 of the Civil Code provides that those who in the performance of their obligation are guilty of fraud, negligence,
or delay, and those who in any manner contravene the tenor thereof are liable for damages. The phrase "in any manner
contravene the tenor" of the obligation includes any illicit act or omission which impairs the strict and faithful fulfillment of
the obligation and every kind of defective performance.

The damages which the obligor is liable for includes not only the value of the loss suffered by the obligee [ daño
emergente] but also the profits which the latter failed to obtain [ lucro cesante] . If the obligor acted in good faith, he shall be
liable for those damages that are the natural and probable consequences of the breach of the obligation and which the
parties have foreseen or could have reasonably foreseen at the time the obligation was constituted; and in case of fraud,
bad faith, malice or wanton attitude, he shall be liable for all damages which may be reasonably attributed to the non-
performance of the obligation.
The same is true with respect to moral and exemplary damages. The applicable legal provisions on the matter, Articles
2220 and 2232 of the Civil Code, allow the award of such damages in breaches of contract where the defendant acted in
bad faith. To Our mind, the complaint sufficiently alleges bad faith on the part of the defendant.
GATCHALIAN v. DELIM
G.R. No. L-56487 | 21 October 1991 | Actual or Compensatory Damages
DOCTRINE
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. Petitioner Gatchalian is entitled to be placed
as nearly as possible in the condition that she was before the mishap.
FACTS
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, La 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.

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. 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 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.”
Notwithstanding this document, petitioner Gatchalian filed with the CFI La Union an action extra contractu to recover
compensatory and moral damages. She alleged in the complaint that her injuries sustained from the vehicular mishap had
left her with a conspicuous white scar measuring 1 by 1/2 inches on the forehead, generating mental suffering and an
inferiority complex on her part; and that as a result, she had to retire in seclusion and stay away from her friends. She also
alleged that the scar diminished her facial beauty and deprived her of opportunities for employment. She prayed for an
award of: P10,000.00 for loss of employment and other opportunities; P10,000.00 for the cost of plastic surgery for
removal of the scar on her forehead; P30,000.00 for moral damages; and P1,000.00 as attorney's fees.
The 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. On appeal by petitioner, the Court of Appeals 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.
ISSUE
Whether or not Gatchalian is entitled to actual or compensatory and moral damages. – YES.
HELD: Gatchalian is entitled to actual or compensatory and moral damages.
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. Petitioner 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 rise 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. On the other hand, Dr. Fe Tayao Lasam, a witness presented as an expert by the 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.
Turning to the petitioner's claim for 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.
WHEREFORE, the Decision of the Court of Appeals dated 24 October 1980, as well as the decision of the then Court of
First Instance of La Union dated 4 December 1975 are hereby REVERSED and SET ASIDE.
NOTES
No valid waiver of her cause of action had been made by the 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.
RODOLFO REGALA v. FEDERICO CARIN

G.R. No. 188715 | 6 April 2011 | Moral Damages
FACTS: Petitioner and respondent are adjacent neighbors. When petitioner decided to renovate his 1 storey residence by constructing a 2nd
floor, guise of merely building an extension to his residence, approached respondent for a permission to bore a hole through a perimeter wall
shared by both their respective properties, to which respondent verbally consented on condition that petitioner would clean the area affected by
the work.
construction of the 2nd floor, respondent suffered from the dust and dirt. As petitioner failed to address the problem to respondent’s
satisfaction, respondent filed a letter-complaint with the Office of the CBAO: petitioner’s renovation has caused damage as well as
encroachment and invasion of privacy. The City Engineer’s Office issued stop-work notices. However, despite the said notices, the petitioner
continued with the construction.
RTC favor of respondent whom it awarded moral damages in the sum of P100,000, exemplary damages of P100,000 and attorney’s fees of
P50,000 plus costs of suit for knowingly commencing the renovation of the house without the requisite building permit and misrepresenting his
true intent of introducing renovations. On appeal, the CA the trial court’s decision.
ISSUE: Whether or not the respondent is entitled to moral and exemplary damages.
HELD:
CIVIL LAW: Damages
In prayers for moral damages, recovery is more an exception rather than the rule. Moral damages are not meant to be punitive but are
designed to compensate and alleviate the physical suffering, mental anguish, fright, serious anxiety, besmirched reputation, wounded feelings,
moral shock, social humiliation, and similar harm unjustly caused to a person. To be entitled to such an award, the claimant must satisfactorily
prove that he has suffered damages and that the injury causing it has sprung from any of the cases listed in Articles 2219 and 2220 of the Civil
Code. Moreover, the damages must be shown to be the proximate result of a wrongful act or omission. The claimant must thus establish the
factual basis of the damages and its causal tie with the acts of the defendant.
In fine, an award of moral damages calls for the presentation of 1) evidence of besmirched reputation or physical, mental or psychological
suffering sustained by the claimant; 2) a culpable act or omission factually established; 3) proof that the wrongful act or omission of the
defendant is the proximate cause of the damages sustained by the claimant; and 4) the proof that the act is predicated on any of the instances
expressed or envisioned by Article 2219 and Article 2220 of the Civil Code.
here: respondent failed to establish by clear and convincing evidence that the injuries he sustained were the proximate effect of petitioner’s act
or omission. petitioner carried out his renovations to determine whether this was directly responsible for any distress respondent may have
suffered since the law requires that a wrongful or illegal act or omission must have preceded the damages sustained by the claimant.
Petitioner was engaged in the lawful exercise of his property rights to introduce renovations to his abode. While he initially did not have a
building permit and may have misrepresented his real intent when he initially sought respondent’s consent, the lack of the permit was
inconsequential since it only rendered petitioner liable to administrative sanctions or penalties. The testimony of petitioner and his witnesses
demonstrated that they had actually taken measures to prevent, or at the very least, minimize the damage to respondent’s property occasioned
by the construction work. In addition to that, before the construction began, measures were undertaken to prevent debris from falling into

respondent’s property and instructions were given to the workers to clean the area before leaving.
Malice or bad faith implies a conscious and intentional design to do a wrongful act for a dishonest purpose or moral obliquity; it is different from
the negative idea of negligence in that malice or bad faith contemplates a state of mind affirmatively operating with furtive design or ill will.
While the Court harbors no doubt that the incidents which gave rise to this dispute have brought anxiety and anguish to respondent, it is
unconvinced that the damage inflicted upon respondent’s property was malicious or willful, an element crucial to merit an award of moral
damages under Article 2220 of the Civil Code.
However, the Court ruled that the petitioner cannot steer clear from any liability for the respondent and his family’s rights to the peaceful
enjoyment of their property have, at the very least, been inconvenienced from the incident borne of petitioner’s construction work. Any
pecuniary loss or damage suffered by respondent cannot be established as the records are bereft of any factual evidence to establish the
same. Thus, nominal damages were awarded in order that a right of the respondent which has been violated or invaded by the petitioner may
be vindicated or recognized, and not for the purpose of indemnifying the plaintiff for any loss suffered by him.
EXPERTRAVEL & TOURS, INC. v. CA

G.R. No. 130030 | 25 June 1999 | Moral Damages
DOCTRINE An award of moral damages would require certain conditions to be met; to wit:
first, there must be an injury, whether physical, mental or psychological, clearly sustained by the claimant;
second, there must be a culpable act or omission factually established;
third, the wrongful act or omission of the defendant is the proximate cause of the injury sustained by the claimant; and
fourth, the award of damages is predicated on any of the cases stated in Article 2219.
FACTS
On October 7, 1987, petitioner Expertravel & Tours, Inc issued to private respondent Ricardo Lo 4 round-trip tickets for HK,
together with hotel accommodations and transfers, for a total cost of P39,677.20. Alleging that Lo had failed to pay the
amount due, Expertravel made several demands but to no avail. Thus, it filed a complaint for recovery of the amount
claimed plus damages.
Respondent Lo avers that his account with Expertravel had already been fully paid as his account was remitted to the latter
thru its then Chairperson, Ms. Ma. Rocio de Vega, who was authorized to deal with the clients of Expertravel. Lo’s
payment was evidenced by a Monte de Piedad Check dated October 6, 1987 for P42,175.20 for which Ms. De Vera, in
turn, issued City Trust Check in favor of Expertravel for the amount of P50,000 with the notation “placement advance for
Ricardo Lo, etc.”. Per its own invoice, Expertravel received the sum on October 10, 1987.
RTC ruled in favor of respondent Lo. The CA affirmed the RTC. In this recourse, petitioner raises the ff issues:
ISSUES
A. Whether or not moral damages can be awarded for negligence or quasi-delict that did not result in physical injury
to the offended party. – YES.
B. Whether or not respondent Ho is entitled to moral damages. – NO.
HELD
A. 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, moral
damages, nevertheless, 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 the ff. conditions: (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.

In culpa contractual (breach of contract), moral damages may be recovered when the defendant acted in BF or
was guilty of gross negligence 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 Art. 1764, in relation to Art. 2206, moral damages may also be awarded in case the death of a
passenger results from a breach of carriage.
In quasi-delict, moral damages may be recovered a) when an act or omission causes physical injuries, or b)
where the defendant is guilty of intentional tort. This rule also applies to contract when breached by tort.
In culpa criminal, moral damages may be recovered when the accused is found guilty of physical injuries,
lascivious acts, adultery or concubinage, illegal or arbitrary detention, illegal arrest, illegal search, or defamation,
and malicious prosecution.
B. Respondent Ho is not entitled to moral damages. unfounded civil suit was not a ground for an award of moral
damages. The rationale is that the law could not have meant to impose a penalty on the right to litigate. The
anguish suffered by a person for having been made a defendant in a civil suit would be no different from the
usual worry and anxiety suffered by anyone who is haled to court, a situation that cannot by itself be a cogent
reason for the award of moral damages.
#11
VICTOR KIERULF, LUCILA KIERULF, and PORFIRIO LEGASPI v. COURT OF APPEALS and PANTRANCO NORTH
EXPRESS, INCORPORATED
G.R. No. 99301 | 13 March 1997 | Moral Damages
DOCTRINE In order that moral damages may be awarded, there must be pleading and proof of moral suffering, mental
anguish, fright and the like. While 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.
FACTS
About 7:45pm, a PANTRANCO bus was traveling along EDSA. 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 Porfirio Legaspi. Both vehicles were
damaged and physical injuries were inflicted on Legaspi and his passenger Lucila Kierulf.
Lucila suffered injuries which required major surgeries and prolonged treatment by specialists. Legaspi also suffered
injuries. The front portion of the pickup truck, owned by Spouses Kierulf, was smashed to pieces.
PANTRANCO claims that while the bus was cruising along EDSA, a used engine differential accidentally and suddenly
dropped from a junk truck in front of the bus. Said differential hit the under chassis of the bus, throwing the bus driver off

his seat and making him lose control.
RTC ruled, among others, that PANTRANCO should pay Lucila 100,00 for moral damages. CA modified and ruled that
Lucila should get 200,000.
Petitioners and private respondents assail the CA decision. The petitioners pray for an increase in the award of damages,
over and above those granted by the CA. Petitioner Victor Keirulf, husband of victim Lucila, claims compensation/damages
for the loss of his right to marital consortium which, according to him, has been diminished due to Lucila’s disfigurement.
Meanwhile, PANTRANCO asks for exoneration by invoking an alleged fortuitous event as the cause of the mishap.
ISSUE
Whether or not the moral damages awarded by CA are “clearly and woefully not enough.”
HELD
The petition is partially granted. Lucila’s moral damages was increased, but Victor’s basis for moral damages was not
granted.
THE BASIS OF VICTOR’S MORAL DAMAGES:
The Kierulf spouses allege that CA should have considered another factor: the loss of their conjugal fellowship and the
impairment or destruction of their sexual life.
The spouses aver that the disfigurement of Lucila's physical appearance cannot but affect their marital right to
"consortium" which would have remained normal were it not for the accident. Thus, the moral damages awarded in favor of
Lucila should be increased to P1,000,000.00, not only for Lucila but also for her husband Victor who also suffered
"psychologically." They cited the a California case, Rodriguez vs. Bethlehem Steel Corporation, as authority for the claim.
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.
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.
HOWEVER, in this case, Victor's claim for deprivation of his right to consortium 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. For lack of factual basis, such claim cannot be ruled upon by this Court at this time.
THE BASIS FOR LUCILA’s claim for increase of MORAL DAMAGES:
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, the court find the
sum of P400,000.00 as moral damages for Lucila to be fair and just under the circumstances.
EPILOGUE OF THE CASE
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.
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.
#12
IGNACIO BARZAGA v. COURT OF APPEALS and ANGELITO ALVIAR
G.R. No. 115129 | 12 February 1997 | Moral Damages
DOCTRINE
The law expressly provides that those who in the performance of their obligation are guilty of fraud, negligence, or delay
and those who in any manner contravene the tenor thereof, are liable for damages.

FACTS
On December 19, 1990, Ignacio Barzaga's wife succumbed to a debilitating ailment after prolonged pain and suffering.
Forewarned by her impending death, she wished to be laid to rest before Christmas day. In fulfillment of his wife’s dying
wish, Barzaga set out her interment on December 24.
On December 21, at about 3PM, he went to Angelito Alviar’s hardware store to inquire about the availability of certain
materials to be used in the construction of a niche for his wife. He also asked if the materials could be delivered at once.
Marina Boncales, Alviar's storekeeper, replied that she had yet to verify if the store had pending deliveries that afternoon
because, if there were, then all subsequent purchases would have to be delivered the following day. At 7AM the following
day, Barzaga returned to Alviar's hardware store to follow up his purchase of construction materials, telling the store
employees that the materials he was buying would have to be delivered at the Memorial Cemetery in Dasmariňas, Cavite,
by 8AM that day since his hired workers were already at the burial site and time was of the essence . With Boncales’
assurance that the items would be delivered at the designated time and place, Barzaga purchased the materials and paid
in full the amount of P2,110. However, the materials were not delivered on time. After several follow ups, Alviar’s
employees gave him the same answer, assuring him that the materials will be delivered in no time. Due to the delay in the
delivery, Barzaga decided to dismiss his laborers for the day. Distressed that Alviar's employees were not the least
concerned despite his impassioned pleas, Barzaga decided to cancel his transaction with the store and look for
construction materials elsewhere. In the afternoon of that day, petitioner was able to buy from another store, but since
darkness was already setting in and his workers had left, he decided to start his project the next day. The niche was
completed in the afternoon of December 26 and Barzaga's wife was finally laid to rest; however, it was 2 and a 1/2 days
behind schedule.
Tormented by his inability to fulfill his wife's wish, Barzaga wrote Alviar demanding recompense for the damage he
suffered, but the latter did not respond prompting Barzaga to sue him. Alviar contended that legal delay could not be validly
ascribed to him because no specific time of delivery was agreed upon between them and, even if there was delay, it was
due to a fortuitous event since the delivery truck suffered a flat tire.
The RTC ruled in favor of Barzaga and ordered Alviar to pay the petitioner. 3 On appeal, the CA reversed the RTC, finding
that there was no contractual commitment as to the exact time of delivery since this was not indicated in the invoice
receipts covering the sale.
ISSUE
Whether or not petitioner is entitled to damages due to respondent’s delay in the performance of his contractual obligation.
– YES.
HELD
Alviar was negligent and incurred in delay in the performance of his contractual obligation, sufficiently entitling Barzaga to
be indemnified for the damage he suffered as a consequence of delay or a contractual breach. The law expressly provides
that those who in the performance of their obligation are guilty of fraud, negligence, or delay and those who in any manner
contravene the tenor thereof, are liable for damages.
There was a specific time agreed upon for the delivery of the materials to the cemetery. The argument that the invoices
never indicated a specific delivery time must fall in the face of the positive verbal commitment of respondent's storekeeper.
Alviar's justification that his truck had a flat tire, for this event, if indeed it happened, is unacceptable as this is foreseeable
and, as such, should have been reasonably guarded against. One piece of testimony by Alviar's witness Boncales has
caught our attention - that the delivery truck arrived a little late than usual because it came from a delivery of materials in
Langcaan, Dasmarias, Cavite. Significantly, this information was withheld by Boncales from Barzaga when the latter was
negotiating with her for the purchase of construction materials. It is not unreasonable to suppose that had she told Barzaga
of this fact and that the delivery of the materials would be delayed, Barzaga would not have bought the materials from
3
(a) PHP2,110 as refund for the purchase price of the materials with interest per annum, (b) PHP5,000 as temperate damages,
(c) PHP20,000 as moral damages, (d) PHP5,000 as litigation expenses, and (e) PHP5,000 as attorney's fees.

Alviar's hardware store but elsewhere which could meet his time requirement. The deliberate suppression of this
information by itself manifests a certain degree of bad faith on the part of Alviar's storekeeper.
The niche had to be constructed at the very least on December 22 considering that it would take about 2 days to finish the
job if the interment was to take place on the 24 th. Alviar's delay in the delivery of the construction materials wasted so much
time that the tomb could not be ready for the scheduled burial of Barzaga's wife and, undoubtedly, prolonged the wake.
This case is clearly one of non-performance of a reciprocal obligation. In their contract of purchase and sale, Barzaga had
already complied fully with what was required of him as purchaser (i.e., the payment of the purchase price). It was
incumbent upon Alviar to immediately fulfill his obligation to deliver the goods otherwise delay would attach.
The award of moral damages is sustained as Barzaga and his family suffered wounded feelings, mental anguish and
serious anxiety while keeping watch on Christmas day over the remains of their loved one who could not be laid to rest on
the date she herself had chosen. There is no gainsaying the inexpressible pain and sorrow Barzaga and his family bore at
that moment caused no less by the ineptitude, cavalier behavior and bad faith of Alviar and his employees in the
performance of an obligation voluntarily entered into.
NOTES
Grant of Exemplary Damages: AFFIRM
The lackadaisical and feckless attitude of Alviar’s employees over which he exercised supervisory authority indicates gross
negligence in the fulfillment of his business obligations. Alviar and his employees should have exercised fairness and good
judgment in dealing with Barzaga who was then grieving over the loss of his wife. Instead of commiserating with him, Alviar
and his employees contributed to Barzaga's anguish by causing him to bear the agony resulting from his inability to fulfill
his wife's dying wish.
Award of Temperate Damages: DELETE

Under Art. 2224 of the Civil Code, temperate damages are more than nominal but less than compensatory, and may be
recovered when the court finds that some pecuniary loss has been suffered but the amount cannot, from the nature of the
case, be proved with certainty. In this case, the trial court found that Barzaga suffered damages in the form of wages for
the hired workers for 22 December and expenses incurred during the extra 2 days of the wake. The record, however, does
not show that Barzaga presented proof of the actual amount of expenses he incurred which seems to be the reason the
trial court awarded to him temperate damages instead which is an erroneous application of temperate damages. While
Barzaga may have suffered pecuniary losses, these by their very nature could be established with certainty by means of
payment receipts. As such, the claim falls unequivocally within the realm of actual or compensatory damages. Petitioner's
failure to prove actual expenditure consequently conduces to a failure of his claim.
Award of Attorney's Fees and Litigation Expenses: AFFIRM

Award of damages, attorney's fees and litigation costs is left to the sound discretion of the court, and if such discretion be
well exercised, as in this case, it will not be disturbed on appeal.

#13
FRANCISCO v. FERRER
G.R. No. 142029 | 28 February 2001 | Moral Damages
DOCTRINE
Moral damages may be awarded in breaches of contracts where the defendant acted fraudulently or in bad faith.
FACTS
On November 19, 1992, Mrs. Rebecca Lo and her daughter Annette Ferrer ordered a three layered cake from
Fountainhead Bakeshop, Mango Avenue Branch. It was then agreed that the wedding cake shall be delivered at 5:00
o’clock in the afternoon at the Cebu Country Club, Cebu City, stating clearly that the wedding is scheduled on December
14, 1992. Plaintiffs made their first deposit in the amount of P1,000.00 on November 19, 1992 and two weeks thereafter
made a full payment on the remaining balance.
On the day of the wedding, December 14, 1992, plaintiffs arrived at the Cebu Country club around 6:00 o’clock in the
evening. They immediately notice the absence of the wedding cake. At 7:00 o’clock in the evening they made a follow-up
call to Fountainhead Bakeshop and was informed that it was probably late because of the traffic.
At 8:00 o’clock they were informed that no wedding cake will be delivered because the order slip got lost. Plaintiffs were
then compelled to buy the only available cake at the Cebu Country Club which was a sans rival. Even though they felt that
it was a poor substitute to a wedding cake, the cutting of the cake is always a part of the ceremony. At 10:00 oclock in the
evening, the wedding cake arrived but plaintiffs declined to accept it, besides their order was a three-layered cake and
what was actually delivered was a two-layered one.
Subsequently, defendant Erlinda Francisco sent a letter of apology accompanied with a P5,000.00 check, however, the
same was declined by plaintiffs because they felt it was inadequate. Two weeks after the wedding, defendant Erlinda
Francisco called Mrs. Rebecca Lo and apologized. Ricardo Ferrer, son-in-law of Rebecca Lo corroborated the latter’s
testimony, stating that two weeks after the wedding, as a result of the non-delivery of the wedding cake, Ramon Montinola,
the son-in-law of Erlinda Francisco, went to Rebecca Los residence and offered the sum of P5,000.00 to indemnify for the
damage done, but it was rejected.
On March 12, 1993, respondents filed with the Regional Trial Court, Cebu City an action for breach of contract with
damages against petitioners.
ISSUE
Whether or not the respondents are entitled with the award of moral damages. – NO.
HELD
To recover moral damages in an action for breach of contract, the breach must be palpably wanton, reckless, malicious, in
bad faith, oppressive or abusive.
Under the provisions of this law, in culpa contractual or breach of contract, moral damages may be recovered when the
defendant acted in bad faith or was guilty of gross negligence (amounting to bad faith) or in wanton disregard of his
contractual obligation and, exceptionally, when the act of breach of contract itself is constitutive of tort resulting in physical
injuries.
Moral damages may be awarded in breaches of contracts where the defendant acted fraudulently or in bad faith. Bad faith
does not simply connote bad judgment or negligence, it imports a dishonest purpose or some moral obliquity and
conscious doing of a wrong, a breach of known duty through some motive or interest or ill will that partakes of the nature of
fraud. In this case, we find no such fraud or bad faith

Moral damages are in the category of an award designed to compensate the claimant for actual injury suffered and not to
impose a penalty on the wrongdoer. The person claiming moral damages must prove the existence of bad faith by clear
and convincing evidence for the law always presumes good faith. It is not enough that one merely suffers sleepless nights,
mental anguish, serious anxiety as the result of the actuations of the other party. Invariably such action must be shown to
have been willfully done in bad faith or with ill motive. Mere allegations of besmirched reputation, embarrassment and
sleepless nights are insufficient to warrant an award for moral damages. It must be shown that the proximate cause thereof
was the unlawful act or omission of the [private respondent] petitioners.
An award of moral damages would require certain conditions to be met, to wit: (1) first, there must be an injury, whether
physical, mental or psychological, clearly sustained by the claimant; (2) second, there must be culpable act or omission
factually established; (3) third, the wrongful act or omission of the defendant is the proximate cause of the injury sustained
by the claimant; and (4) fourth, the award of damages is predicated on any of the cases stated in Article 2219 of the Civil
Code.
Nevertheless, the facts show that when confronted with their failure to deliver on the wedding day the wedding cake
ordered and paid for, petitioners gave the lame excuse that delivery was probably delayed because of the traffic, when in
truth, no cake could be delivered because the order slip got lost. For such prevarication, petitioners must be held liable for
nominal damages for insensitivity, inadvertence or inattention to their customers anxiety and need of the hour. Nominal
damages are recoverable where a legal right is technically violated and must be vindicated against an invasion that has
produced no actual present loss of 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. Nominal damages may be awarded to a plaintiff whose right has
been violated or invaded by the defendant, for the purpose of vindicating or recognizing that right, not for indemnifying the
plaintiff for any loss suffered.
Damages awarded:
1. The cost of the wedding cake in the amount of P3, 175.00;
2. Nominal damages in the amount of P10,000.00;
3. Attorneys fees in the amount of P10,000.00; and
4. Costs of litigation.
#14
DARINES v. QUIÑONES
G.R. No. 206468 | 2 August 2017 | Moral Damages
DOCTRINE
1. In an action for breach of contract, moral damages may be recovered only when: (1) death of a passenger
results; or (2) the carrier was guilty of fraud and bad faith even if death does not result.
2. Unless it is fully established, and not just lightly inferred, that negligence in an action for breach of contract is so
gross as to amount to malice, then the claim of moral damages is without merit.
FACTS
Judith Darines and her daughter, Joyce Darines, boarded the Amianan Bus Line as paying passengers en route from
Carmen, Rosales, Pangasinan to Baguio City. Rolando Quitan was driving the bus at that time. While travelling on Camp
3, Tuba, Benguet 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 Judith and
Joyce, were injured.
Consequently, Judith and Joyce filed a complaint for breach of contract of carriage and damages with the RTC against
Quiñones, the bus operator, and Quitan, the bus driver. They argued that Quiñones and Quitan 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. Thus, they prayed for actual, moral, exemplary and temperate damages, and costs of suit.
Meanwhile, Quiñones and Quitan countered: (1) that during the incident, Quitan was driving in a careful, prudent, and
dutiful manner at the normal speed of 40 kilometers per hour; (2) that the proximate cause of the incident was the

negligence of the truck driver who parked the truck at the roadside right after the curve without having installed any early
warning device; (3) that Quiñones observed due diligence in the selection and supervision of his employees as he
conducted seminars on road safety measures; (4) that Quitan attended such seminars including those required by the
government on traffic safety; and (5) 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.
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 dao-is. 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.
The RTC ruled in favor of Judith and Joyce. It ordered Quiñones and Quitan to pay the former: (1) moral damages; (2)
exemplary damages; (3) attorney’s fees; and (4) costs of suit. It held that since the Quiñones and Quitan already paid the
actual damages relating to Judith and Joyce's medical and hospitalization expenses, then the only remaining matters for
resolution were: whether the former were liable to pay the latter: (1) actual damages representing the expenses incurred
during the dao-is ritual; and, Judith's alleged lost income; (2) moral and exemplary damages; and, (3) attorney's fees.
Further, the RTC noted that Joyce and Judith 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 Judith and Joyce 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, it 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 Joyce and Judith’s attorney's fees plus costs of suit on the ground that they were compelled to litigate the case.
On appeal, the CA reversed the decision of the RTC. It, among others, deleted the award of moral damages because
Judith and Joyce failed to prove that Quiñones and Quitan acted fraudulently or in bad faith, as shown by the fact that the
latter paid the medical and hospitalization expenses. It 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.
ISSUE
Whether or not Quiñones and Quitan are liable to pay Judith and Joyce moral and exemplary damages. – NO.
HELD
In an action for breach of contract, moral damages may be recovered only when: (1) death of a passenger results; or (2)
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. Since no moral damages was awarded, there is no basis to grant exemplary damages and
attorney's fees to Judith and Joyce.
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.
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 or wanton 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."

Unless it is fully established, and not just lightly inferred, that negligence in an action for breach of contract is so gross as
to amount to malice, then the claim of moral damages is without merit.
Here, Judith and Joyce impute negligence on the part of Quiñones and Quitan when, as paying passengers, they
sustained injuries when the bus collided with another vehicle. Judith and Joyce propounded on the negligence of Quiñones
and Quitan, but did not discuss or impute fraud or bad faith, or such gross negligence which would amount to bad faith,
against the latter. There being neither allegation nor proof that Quiñones and Quitan 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.
Further, Joyce and Judith 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.
#15
SPS. ESTRADA v. PH RABBIT BUS LINES
G.R. No. L-203902 | 19 July 2017 | Moral Damages
DOCTRINE
As a general rule, moral damages are not recoverable in actions for damages predicated on breach of contract. The
exceptions are: (1) in cases in which the mishap results in the death of a passenger; and (2) in cases in which the carrier is
guilty of fraud or bad faith.
FACTS
On April 9, 2002, a passenger bus owned by Philippine Rabbit Bus, Lines, Inc. [PRBL] had a collision with another vehicle

along the national highway in Pozorrubio, Pangasinan. Petitioner Estrada was a passenger of the said bus, and due to the
accident, his right arm was amputated.
Petitioner sued PRBL and its driver Saylan for damages before RTC Urdaneta. Dionisio argued that pursuant to the
contract of carriage between him and Philippine Rabbit, respondents were duty-bound to carry him safely as far as human
care and foresight can provide, with utmost diligence of a very cautious person, and with due regard for all the
circumstances from the point of his origin to his destination. However, through the fault and negligence of Philippine
Rabbit's driver, respondents failed to transport him safely by reason of the aforementioned collision, which resulted in the
amputation of Dionisio's right arm. And since demands for Philippine Rabbit to pay him damages for the injury he
sustained remained unheeded, Dionisio filed the said complaint wherein he prayed for the following awards: moral
damages of ₱500,000.00 actual damages of ₱60,000.00, and attorney's fees of ₱25,000.00.
RTC, treating the complaint of the petitioner as one predicated on breach of contract of carriage, found respondent to be
jointly and severally liable with Eduardo. Upon appeal, CA modified the RTC decision and held PRBL to be solely and
exclusively liable to petitioner for actual damages and deleted the award for moral damages and attorney’s fees.
Petitioner raised the issue before the SC, stating that their claim for moral damages is based purely on the fact that
Dionisio lost his right arm. They argue that while in a strict sense, Dionisio incurred actual damages through the
amputation of his right arm, such loss may rightly be considered as falling under moral damages. This is because a right
arm is beyond the commerce of man and loss thereof necessarily brings physical suffering, mental anguish, besmirched
reputation, social humiliation and similar injury to a person.
ISSUE
Whether or not the petitioner’s claim of moral damages should be granted based on the fact that Dionisio lost his right arm
by reason of the accident. – NO.
HELD
As a general rule, moral damages are not recoverable in actions for damages predicated on breach of contract as it is not
one of the items enumerated under Art 2219 of the Civil Code. As an exception, such damages are recoverable in an
action for breach of contract: (1) in cases in which the mishap results in the death of a passenger, as provided in Article
1764, in relation to Article 2206(3) of the Civil Code; and (2) in cases in which the carrier is guilty of fraud or bad faith, as
provided in Article 2220.
It is obvious that this case does not come under the first of the abovementioned exceptions since Dionisio did not die in
the mishap but merely suffered an injury.
As to the second exception, fraud or bad faith that must be convincingly proved by petitioners should be one which was
committed by Philippine Rabbit in breaching its contract of carriage with Dionisio. Unfortunately for petitioners, the Court
finds no persuasive proof of such fraud or bad faith.There is no showing here that Philippine Rabbit induced Dionisio to
enter into a contract of carriage with the former through insidious machination. Neither is there any indication or even an
allegation of deceit or concealment or omission of material facts by reason of which Dionisio boarded the bus owned by
Philippine Rabbit. Likewise, it was not shown that Philippine Rabbit's breach of its known duty, which was to transport
Dionisio from Urdaneta to La Union, was attended by some motive, interest, or ill will. From these, no fraud or bad faith can
be attributed to Philippine Rabbit.
The Court however finds that the award of 500K as temperate damages in lieu of actual damages for the loss or
impairment of his earning capacity as a part time tricycle driver was warranted.
NOTES
Moral damages include physical suffering, mental anguish, fright, serious anxiety, besmirched reputation, wounded
feelings, moral shock, social humiliation, and similar injury. Though incapable of pecuniary computation, moral damages
may be recovered if they are the proximate result of the defendant's wrongful act or omission.
Under Article 2219 of the Civil Code, moral damages are recoverable 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; and (1) acts and actions
referred to in Articles 21, 26, 27, 28, 29, 30, 32, 34, and 35.
Case law establishes the following requisites for the award of moral damages: (1) there must be an injury clearly sustained
by the claimant, whether physical, mental or psychological; (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 for damages is predicated on any of the cases stated in Article 2219 of the Civil Code.
#16
BNL MANAGEMENT CORPORATION v. UY
G.R. No. 210297 | 3 April 2019 | Moral Damages
DOCTRINE
For moral damages to be awarded, the following requisites must be present:
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.
FACTS
BNL Management owned 6 condominium units at the Imperial Bayfront Tower Condominium. These units were leased to
its clients under separate contracts of lease. BNL Management also held exclusive rights to three (3) parking spaces of
Imperial Bayfront. It brought up concerns over the maintenance of the building, such as the cleanliness of the common
areas, security, building insurance, encroachment on 2 of the parking spaces and the annotation of the parking spaces on
the mother title. BNL Management, through its counsel, declared that it would withhold paying monthly dues and instead
deposit them and its arrears in a bank as escrow could be withdrawn by the Imperial Bayfront Tower Condominium
Association only after it has complied with the demands in the letter.
The Building Administrator of Imperial Bayfront Tower Condominium, Marissa Sevilla, explained that the failure to annotate
ownership of the parking spaces was due to BNL Management not submitting necessary documents to the Association.
While the maintenance issues were due to lack of funds as a result of BNL Management’s Nonpayment of association
dues. BNL Management requested that it be removed from the Association’s list of delinquent members and sent a letter
reiterating its earlier complaints. BNL received a letter from the Building Administrator Sevilla containing a breakdown of its
arrears in the payment of association dues but the former still did not pay the arrears. Thus, the Association’s Board of
Directors resolved to disconnect the lighting facilities in the 6 units owned by BNL. BNL brought it up to the Association but
the latter refused to restore its electricity and water.
BNL filed a complaint in the RTC. RTC dismissed the complaint as it found that a homeowners’ association depended on
the dues paid by its members to deliver services such as building maintenance. On appeal, the CA affirmed RTC’s

decision and found that the Condominium Act requires that any declaration of restrictions must be registered prior to
conveyance of the condominium and that these restrictions shall constitute enforceable liens. It also found that BNL and
David were not entitled to damages as they failed to prove bad faith or malice on the Associations’ Board of Directors.
Hence, this petition.
ISSUE
Whether or not petitioners BNL Management Corporation and its president, Romeo David are entitled to damages for the
disconnection of water and electricity utilities from the units they own at Imperial Bayfront. – NO.
HELD
The petition is denied.
Petitioners defend their nonpayment of association dues based on the Association's noncompliance with its correlative
obligation to address their complaints concerning Imperial Bayfront' s management and maintenance. They claim that they
are entitled to withhold payment until and unless their demands are met by the Association.
Here, when petitioners bought the condominium units from Imperial Bayfront, they were bound by the terms and conditions
of the declaration of restrictions attached to the Master Deed. As the Court of Appeals found, the Master Deed expressly
allows its condominium association to subject its owners, purchasers, tenants, and lessees to rules and regulations for "the
efficient and mutually beneficial management and operation of the project." These were the House Rules and Regulations,
which vested in the Association the power to interrupt utility services in case of nonpayment of association dues.
As the Court of Appeals held, petitioners cannot feign ignorance and P insist that these rules cannot apply to them. Neither
can they justify their nonpayment of dues with mere allegations that the House Rules and Regulations are invalid and that
the Association's Board of Directors was not duly elected. Petitioners' action for damages is not the proper forum to
determine the legitimacy of the Association's Board of Directors and whether its acts are ultra vires.
Finally, petitioners are not entitled to the damages they prayed for. Moral damages are awarded in circumstances
enumerated under Article 2217 of the Civil Code:
ARTICLE 2217. Moral damages include physical suffering, mental anguish, fright, serious anxiety, besmirched reputation,
wounded feelings, moral shock, social humiliation, and similar injury. Though incapable of pecuniary computation, moral
damages may be recovered if they are the proximate result of the defendant's wrongful act or omission.
For moral damages to be awarded, the following requisites must be present:
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.
Here, respondents were not found to have committed any culpable act or omission that would warrant an award of moral
damages for petitioner David. Clearly, the injury he allegedly sustained was caused by his own failure, as president of
petitioner BNL Management, to resolve the corporation's nonpayment of dues. For its part, petitioner BNL Management,
being a corporation, is not entitled to moral damages.
Moreover, as the Court of Appeals aptly pointed out, exemplary damages may only be awarded if a party proves
entitlement to temperate, liquidated, actual, or moral damages. Petitioners have already admitted that they will not quantify
the actual damages they sustained. They have also neither sought for nor been granted temperate or liquidated damages.

#17
LARA’S GIFTS & DECORS, INC. v. MIDTOWN INDUSTRIAL SALES, INC.
G.R. No. 225433 | 28 August 2019 | Interest
Lara's Gifts & Decors, Inc. v. Midtown Industrial Sales

GR 225433 August 28, 2019 J. Carpio
FACTS: Lara’s Gifts & Decors, Inc. is engaged in the business of manufacturing, selling, and exporting handicraft products while Midtown
Industrial Sales, Inc. is engaged in the business of selling industrial and construction materials, and Lara’s Gifts & Decors is one of its
customers. From January 2007 to December 2007, Lara’s Gifts & Decors purchased from Midtown various industrial and construction materials
totaling to P1,263,104.22. The purchases were on a 60-day credit term, with the condition that 24% interest per annum would be charged on all
accounts overdue, as stated in the sales invoices. Lara’s paid for its purchases by issuing several Chinabank postdated checks but such
checks bounced. After Midtown’s repeated demands, Lara’s replaced the bounced checks with new postdated Export and Industry Bank
checks but such checks were also dishonored. Midtown sent a demand letter which was received by petitioner on Jan. 22, 2008, informing
Lara’s of the bounced checks and demanding the latter to settle its accounts. Lara’s failed to pay prompting Midtown to file on Feb. 5, 2008 a
complaint for sum of money. In its answer, Lara’s admitted the purchases but claims that the checks it issued for payment were not for value
because not all of the materials delivered by Midtown were received in good order and condition. Thus, when Lara’s used the raw materials,
the finished product allegedly did not pass the standards required by its buyers from the US which made such orders cancelled. The trial court
held that Lara’s Gifts & Decors failed to prove that the deliveries made by Midtown did not comply with the required specifications while the
amount claimed by Midtown was supported by sales invoices and postdated checks. The trial court held that the stipulated 24% interest per
annum on overdue accounts is not unconscionable. The Court of Appeals affirmed such decision.

ISSUES: 1. Whether or not the interest rate fixed at 24% per annum is void.
2. Assuming that the interest rate of 24% is valid, whether or not the said rate shall be applied only until finality of judgment.
HELD: 1. Yes. The Court held that Lara’s Gifts & Decors, which has been doing business since 1990 and has been purchasing various
materials from Midtown since 2004, cannot claim to have been misled into agreeing to the 24% interest rate which was expressly stated in the
sales invoices. The Court has already ruled in several cases that an interest rate of 24% per annum agreed upon by the parties is valid and
binding, and not excessive and unconscionable.
2. No. The guidelines on the imposition of interest as provided in Eastern Shipping Lines and Nacar are modified as follows: With regard to an
award of interest in the concept of actual and compensatory damages, the rate of interest, as well as the accrual thereof, is imposed as follows:
1. When the obligation is breached, and it consists in the payment of a sum of money (a loan or forbearance of money, goods, credits, or
judgments, the interest due shall be which is stipulated by the parties in writing, provided it is not excessive and unconscionable, which in the
absence of a stipulated reckoning date, shall be computed from default (i.e., from extrajudicial or judicial demand in accordance with Article
1169 of the Civil Code) UNTIL FULL PAYMENT, without compounding any interest unless compounded interest is expressly stipulated by the
parties, by law or regulation. Interest due on the principal amount accruing as of judicial demand shall SEPARATELY earn legal interest at the
prevailing rate prescribed by the Bangko Sentral ng Pilipinas, from the time of judicial demand UNTIL FULL PAYMENT.
2. In the absence of stipulated interest, in a loan or forbearance of money, goods, credits, or judgments, the rate of interest on the principal
amount shall be the prevailing legal interest prescribed by the Bangko Sentral ng Pilipinas, which shall be computed from default (i.e., from
extrajudicial or judicial demand in accordance with Article 1169 of the Civil Code) UNTIL FULL PAYMENT, without compounding any interest
unless compounded interest is expressly stipulated by law or regulation. Interest due on the principal amount accruing as of judicial demand
shall SEPARATELY earn legal interest at the prevailing rate prescribed by the Bangko Sentral ng Pilipinas, from the time of judicial demand
UNTIL FULL PAYMENT. 3. When the obligation, not constituting a loan or forbearance of money, goods, credits, or judgments, is breached, an
interest on the amount of damages awarded may be imposed in the discretion of the court at the prevailing legal interest prescribed by the
Bangko Sentral ng Pilipias, pursuant to Articles 2210 and 2011 of the Civil Code. No interest, however, shall be adjudged on unliquidated
claims or damages until the demand can be established with reasonable certainty. Accordingly, where the amount of the claim or damages is
established with reasonable certainty, the prevailing legal interest shall begin to run from the time the claim is made extrajudicially or judicially
(Art. 1169) UNTIL FULL PAYMENT, but when such certainty cannot be reasonably established at the time the demand is made, the interest
shall begin to run only from the date of the judgment of the trial court (at which time the quantification of damages may bedeemed to have been
reasonably ascertained) UNTIL FULL PAYMENT. The actual base for the computation of the interest shall, in any case, be on the principal
amount finally adjudge, without compounding any interest unless compounded interest is expressly stipulated by law or regulation. This case
involves a forbearance of credit wherein Lara’s Gifts & Decors was granted a 60day credit term on its purchases, with the condition that a 24%
interest per annum would be charged on all accounts overdue. Since there was an extrajudicial demand before the complaint was filed, interest
on the amount due begins to run not from the filing of the complaint but from the date of such extrajudicial demand.
Thus, the unpaid principal obligation of P1,263,104.22 shall earn the stipulated interest of 24% per annum from the date of extrajudicial
demand on Jan. 22, 2008 until full payment. Furthermore, in accordance with Art. 2212, the 24% interest per annum due on the principal
amount accruing as of the judicial demand shall earn legal interest at the rate of 12% per annum from the date of judicial demand on Feb. 5,
2008 until June 30, 2013, which was the prevailing rate at the time, and thereafter at the rate of 6% per annum from July 1, 2013 until full
payment, which was the legal interest prescribed under BSP-MB Circ. No. 799.
(Start here)
*optional

#18
TAN v. OMC CARRIERS
DOCTRINE
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.
FACTS
Respondent OMC Carriers owned a truck, driven by respondent Arambala, which crashed into the home of petitioners Tan
when its braking mechanism failed. This caused the death of the head of the family, Celedonio Tan. The Tans went to
court to demand damages due to the negligence of OMC. OMC counters that the truck went out of control because of
motor oil spilled on the road. The RTC found OMC to be liable, that the brake of the truck malfunctioned, and that there
was no motor oil which caused the accident. The driver, Arambala, abandoned the truck when the brakes did not work
which caused the truck to slam into the home of the Tans. The RTC awarded actual damages, both on the loss of property
and earning capacity of Celedonio. Exemplary damages were also awarded. Upon appeal to the Court of Appeals, the
actual damages for loss of property was reduced as they were insufficiently substantiated. The damages for loss of
earning capacity was deleted for being totally unsubstantiated. The Tans were unable to present documents to ascertain
the amount of earning capacity lost. Exemplary damages were also reduced.
ISSUE
Whether or not temperate damages should be awarded in the present case. – YES.
HELD
Temperate damages should be awarded. 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.
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.
As a rule, documentary evidence should be presented to substantiate the claim for loss of earning capacity. By way of
exception, damages for loss of earning capacity may be awarded despite the absence of documentary evidence when: (1)
the deceased is self-employed and earning less than the minimum wage under current labor laws, in which case, judicial
notice may be taken of the fact that in the deceased's line of work, no documentary evidence is available; or (2) the
deceased is employed as a daily wage worker earning less than the minimum wage under current labor laws.
In 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 ₱300,000.00 [or roughly, the gross income for
two (2) years] to compensate for damages for loss of the earning capacity of the deceased.
SEVEN BROTHERS SHIPPING CORPORATION v. DMC-CONSTRUCTION RESOURCES, INC.

G.R. No. 193914 | 26 November 2014 | Nominal Damages
DOCTRINE
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.
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.
FACTS
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 with a wind force of 10 to 20 knots, and the sea condition was rough, with waves 6
to 8 feet high. Under the influence of the wind and current, the dead weight of the vessel caused it to swing 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 filed with the RTC a Complaint for damages against respondent. In the course of the destruction, the RTC
found that no force majeure existed. Regarding liability, the RTC awarded respondent actual damages in the amount of
P3,523,175.92 plus legal interest of 6%, based on the testimony of respondent's engineer, Loreto Dalangin (Engr.
Dalangin). The value represented 50% of the P7,046,351.84 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.
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. – YES.
HELD
We rule that temperate, and not nominal, damages should be awarded to respondent in the amount of P3,523,175.92.
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.'
In contrast, under Article 2224 4, 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.
Consequently, in computing the amount of temperate or moderate damages, it is usually left to the discretion of the courts,
but the amount must be reasonable, bearing in mind that temperate damages should be more than nominal but less than
compensatory. Here, 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
P7,046,351.84 should rightly be reduced to 50% or P3,523,175.92. This is a fair and reasonable valuation, taking into
account the remaining useful life of the facility.
4
The Code Commission, in explaining the concept of temperate damages under Article 2224, makes the following comment:
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.

#20
PHILIPPINE NATIONAL BANK v. COURT OF APPEALS AND LORETO TAN
G.R. No. 108630 | 2 April 1996 | Exemplary Damages
DOCTRINE
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 claimant's 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.
FACTS
Private respondent Loreto Tan is the owner of a parcel of land abutting the national highway in Mandalagan, Bacolod City.
It was expropriated by the government and expropriation proceedings ensued. Tan filed a motion for the issuance of an
order for the release of the expropriation price of P32,480.00. PNB was then required by the Court to release the amount
and it did so by issuing a manager’s check 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 in the amount of P32,480.00 from petitioner, but the same was refused on the
ground that petitioner 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.
When he failed to recover the amount from PNB, Tan filed a motion with the court to require PNB to pay the same to him.
The matter was set for hearing and PNB was aked to produce the SPA but failed to do so. Thereafter, Tan filed a
complaint with the RTC of Bacolod against PNB and Juan Tagamolila. In its defense, petitioner contended that private
respondent had duly authorized Sonia Gonzaga to act as his agent.
On September 28, 1979, petitioner filed a third-party complaint against the spouses Nilo and Sonia Gonzaga praying that
they be ordered to pay Loreto Tan the amount of P32,480.00. But the third party complaint was dismissed. Tagamolila, in
his answer, stated that Sonia 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 June 7, 1989, the trial court rendered judgment ordering PNB and Tagamolila to pay Tan jointly and severally the
amount of P32,480.00 with legal interest, damages and attorney's fees. Both petitioner and Tagamolila appealed to the
CA. The CA 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 attorney's fees by the trial court was deleted. Hence, this petition.
ISSUE
Whether or not the deletion of the award of the exemplary damages was proper. – YES.
HELD
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 claimant's 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.
In the case at bench, while there is a clear breach of petitioner's obligation to pay private respondents, there is no
evidence that it acted in a fraudulent, wanton, reckless or oppressive manner. Furthermore, there is no award of
compensatory damages which is a prerequisite before exemplary damages may be awarded. Therefore, the award by the
trial court of P5,000.00 as exemplary damages is baseless.
#21
TITAN CONSTRUCTION CORPORATION v. UNI-FIELD ENTERPRISES INC
G.R. No. 153874 | 1 March 2007 | Liquidated Damages
DOCTRINE
The law 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.
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. From 1990 to 1993, petitioner purchased on credit
various construction supplies and materials from the respondent. Petitioner's purchases amounted to P7,620,433.12 but
petitioner was only able to pay P6,215,795.70, leaving a balance of P1,404,637.42. On 19 October 1994, respondent sent
a demand letter to petitioner. But the balance remained unpaid.

Respondent filed with the trial court a complaint for collection of sum of money with damages against petitioner. In its
Answer, petitioner admitted the purchases but disputed the amount claimed by respondent.
The trial court rendered judgment in favor of respondent and ordered petitioner to pay: 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) Attorney's 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. The Court of Appeals denied the appeal for lack of merit and affirmed
the trial court's Decision.
ISSUE
Whether or not the Court of Appeals erred in finding legal basis for awarding liquidated damages, attorney’s fees and
interest in favor of respondent. – NO.
HELD
The Court ruled that 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 attorney's fees.
The delivery receipts and sales invoices expressly stipulated the payment of interest, liquidated damages, and attorney's
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% attorney's fees based on the
total claim including liquidated damages. Since the petitioner freely entered into the contract, the stipulations in the
contract are binding on the petitioner.
On the allegation that the delivery receipts and sales invoices are in the nature of contracts of adhesion, the Court has
repeatedly held that contracts of adhesion are as binding as ordinary contracts. Those who adhere to the contract are in
reality free to reject it entirely and if they adhere, they give their consent. 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 respondent's 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.
The law 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 attorney's fees. The Court finds the award of
attorney's 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 attorney's fees serve the same purpose, that is, as penalty for breach of the
contract. Therefore, we reduce the award of attorney's fees to 25% of the principal obligation, or P351,028.50.
WHEREFORE, we AFFIRM the appealed Decision dated 7 January 2002 of the Court of Appeals in CA-G.R. CV No.

56816 with MODIFICATION as regards the award of attorney's fees. Petitioner Titan Construction Corporation is ordered
to pay respondent Uni-Field Enterprises, Inc. attorney's fees of P351,028.50.
#22
EDITHA FRANCISCO v. ROQUE CO and/or MARIANO CO
G.R. No. 151339 | 31 January 2006 | Attorney’s Fees
DOCTRINE
(Start here)
FACTS
(Start here)
ISSUE
(Start here)
HELD
(Start here)
NOTES*
(Start here)
*optional

#23
PHILIPPINE COMMUNICATIONS SATELLITE CORP v. GLOBE TELECOM, INC.
G.R. No. 147324 | 25 May 2004 | Attorney’s Fees
DOCTRINE
In cases where both parties have legitimate claims against each other, an award of attorney’s fees would not be
warranted.
FACTS
Globe Telecom, Inc. (Globe) is engaged in the coordination of the provision of various communication facilities for the
military bases of the United States of America (US) in the Clark Air Base and Subic Naval Base. Saud communication
facilities were installed and configured for the exclusive use of the US Defense Communications Agency (USDCA). Globe
contracted Philippine Communications Satellite Corporation (Philcomsat) for the provision of the communication facilities.
Philcomsat and Globe entered into an agreement whereby Philcomsat obliged itself to establish, operate and provide an
IBS Standard B earth station (earth station) for the exclusive use of the USDCA. Globe promised to pay Philcomsat
monthly rentals for each leased circuit involved. Philcomsat installed and established the earth station and the USDCA
made use of the same.
The Senate passed and adopted its resolution, 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.
The PH government sent a Note Verbale to the US government through the US Embassy, notifying it of the Philippine
termination of the RP-US Military Base Agreement. The withdrawal of all US military forces from Subic Naval Base should
be completed by December 31. 1992. Globe notified Philcomsat of its intention to discontinue the use of the earth station.
Philcomsat demanded payment of rentals for the balance of lease term, despite the non-use of earth station.
ISSUE
Whether or not petitioner PHILCOMSAT is entitled to the award of attorney’s fees. – NO.
HELD
Petitioner is not entitled to attorney’s fees. 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.
#24
INDUSTRIAL INSURANCE COMPANY, INC. v. PABLO BONDAD and LIGORIO BONDAD
G.R. No. 136722 | 12 April 2000 | Attorney’s Fees
DOCTRINE
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 suit against the respondents was manifestly unjustified.

FACTS
There was an incident which involved three vehicles: a car driven by Grace Morales, a packed passenger jeepney
originally driven by Ligorio Bondad, and a DM Transit Bus driven by Eduardo Mendoza.
The D.M. Transit Bus was traveling along the South Expressway coming from Alabang towards the general direction of
Makati. The bus hit and bumped the rear left side portion of Bondads’ jeepney, which was then at stop position due to flat
tire. Due to the severe impact cause by the bus, the jeep swerved to the left and collided with the right side portion of
Morales’ car. The car was dragged to its left side and hit the concrete wall. All vehicles incurred damages and sustaining
injuries to the occupant of the jeep and the passengers of the bus. Victims were brought to the hospital for treatment.
Industrial Insurance Company, and Grace Morales filed a Complaint for damages against DM Transit Corporation,
Eduardo Diaz, Pablo Bondad and Ligorio Bondad. Inustrial Insurance contended that it had paid Morales for the damages
to her insured car. It also asserted that the accident had been caused "solely and proximately" by the "joint gross and
wanton negligence, carelessness and imprudence of both defendant drivers Eduardo Diaz and Ligorio Bondad.
Respondents Pablo and Ligorio Bondad denied any responsibility or liability to the insurance company 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.
The trial court exculpated the Bondads and ordered the petitioners to pay them actual, moral and exemplary damages, as
well as attorney’s fees. CA affirmed. 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. The CA, however, reduced
the lower court’s award of damages to the Bondads.
ISSUE
Whether or not the award of attorney’s fees to the respondents was proper. – YES.
HELD
The SC is limited to review of errors of law allegedly committed by the CA. without proof that this case falls under
exception, SC did not review factual issues, so the cause of the accident in this case is Eduardo Diaz, the bus driver, not
the respondents. HENCE, the award of attorney’s fees was proper.
The Supreme Court agrees with CA, which, in justifying the award of attorney’s fees and other litigation expenses, 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, CA 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.
Moreover, even a cursory examination of the events would show that respondents were not even remotely the cause of the
accident. Their vehicle was on the shoulder of the road because of a flat tire. In view of their emergency situation, they
could not have done anything to avoid getting hit by the bus. 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.

In impleading respondents, petitioner clearly acted in wanton disregard of facts that were as obvious then as they are now.
To repeat, even a cursory examination of the police investigation report and other pertinent data at the time would show
that there was no reason to implead respondents. The carelessness and lack of diligence of petitioner destroy its claim of
good faith. Accordingly, the award of attorney’s fees should be sustained.

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#1

3D 2021-2022 | Torts & Damages

3D 2021-2022 | Torts & Damages

3D 2021-2022 | Torts & Damages

3D 2021-2022 | Torts & Damages

3D 2021-2022 | Torts & Damages

3D 2021-2022 | Torts & Damages

3D 2021-2022 | Torts & Damages

3D 2021-2022 | Torts & Damages

3D 2021-2022 | Torts & Damages

3D 2021-2022 | Torts & Damages

3D 2021-2022 | Torts & Damages

HELD: Gatchalian is entitled to actual or compensatory and moral damages.

3D 2021-2022 | Torts & Damages

RODOLFO REGALA v. FEDERICO CARIN

3D 2021-2022 | Torts & Damages

EXPERTRAVEL & TOURS, INC. v. CA

3D 2021-2022 | Torts & Damages

3D 2021-2022 | Torts & Damages

THE BASIS OF VICTOR’S MORAL DAMAGES:

THE BASIS FOR LUCILA’s claim for increase of MORAL DAMAGES:

3D 2021-2022 | Torts & Damages

EPILOGUE OF THE CASE

3D 2021-2022 | Torts & Damages

3D 2021-2022 | Torts & Damages

Award of Temperate Damages: DELETE

Award of Attorney's Fees and Litigation Expenses: AFFIRM

3D 2021-2022 | Torts & Damages

3D 2021-2022 | Torts & Damages

3D 2021-2022 | Torts & Damages

3D 2021-2022 | Torts & Damages

3D 2021-2022 | Torts & Damages

3D 2021-2022 | Torts & Damages

3D 2021-2022 | Torts & Damages

For moral damages to be awarded, the following requisites must be present:

3D 2021-2022 | Torts & Damages

Lara's Gifts & Decors, Inc. v. Midtown Industrial Sales

3D 2021-2022 | Torts & Damages

3D 2021-2022 | Torts & Damages

3D 2021-2022 | Torts & Damages

SEVEN BROTHERS SHIPPING CORPORATION v. DMC-CONSTRUCTION RESOURCES, INC.

3D 2021-2022 | Torts & Damages

3D 2021-2022 | Torts & Damages

3D 2021-2022 | Torts & Damages

3D 2021-2022 | Torts & Damages

3D 2021-2022 | Torts & Damages

3D 2021-2022 | Torts & Damages

3D 2021-2022 | Torts & Damages

3D 2021-2022 | Torts & Damages

3D 2021-2022 | Torts & Damages

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