Damages
As found by the trial court, it was sent
Concept of Damages
HEIRS OF BOLADO vs. Vda.deBulan
Facts:Borlado sold a parcel of land to Bacero for
P300.00. When Francisco died, his heirs sold the lot to
Sps. Bulan. Bulan declared the lot in her name and paid
the corresponding taxes. Bulan had been in continuous,
peaceful, uninterrupted, adverse, and exclusive
possession of the land when the heirs of Borlado forcibly
entered and wrested physical possession of the land
from them.
Bulan filed a complaint for ejectment and was granted
by the trial court. The heirs of Borlado were ordered to
vacate the lot. 1100 cavans of palay was awarded as
damages.
Issue: Is the award of palay for damages proper?
Ruling: No. Palay is not legal tender currency in the
Philippines.
[NOT RELEVANT TO THE SUBJECT: appellants contended
that the trial court was wrong in awarding ownership of
the land to Bulan. The SC said that it was a question of
fact. Thus, it cannot rule on the matter]
CHIANG YIA MIN VS. RCBC
FACTS: This petition is for the recovery of an amount of
$100,000.00 and damages. The said US$100,000.00
was sent by Hang Lung Bank Ltd. of Hong Kong on
February 7, 1979 to respondent banks head office.The
remittance was for petitioners own account and was
intended to qualify him as a foreign investor under
Philippine laws.
by petitioner himself prior to his arrival in the
Philippines.When petitioner checked on his money
sometime in mid-1985, he found out that that the dollar
deposit was transferred to the Shaw Boulevard branch
of respondent bank and converted to a peso account,
which had a balance of only P1,362.10 as of October 29,
1979. A letter of respondent bank dated August 9, 1985
stated that petitioners Current Account No. 12-2009 was
opened on February 8, 1979, with an initial deposit of
P729,752.20; a total of P728,390.00 was withdrawn by
way of five checks respectively dated February 13, 19
and 23, 1979 and October 5 and 29, 1979, apparently
issued by petitioner in favor of PaperconPhils. Inc., one
of the respondents and a business venture of Tom
Pek.Petitioner insisted that he did not cause the transfer
of his money to the Shaw Boulevard branch of RCBC, as
his instructions in the telegraphic transfer were for the
money to be remitted to the RCBC head office in Makati,
nor its conversion to pesos and the subsequent
withdrawals. Nor did he authorize anyone to perform
these acts. Tom Pek and Papercon did not deny
receiving the checks worth P712,700.00 but argued that
unless proven otherwise, the said checks should be
presumed to have been issued in their favor for a
sufficient and valuable consideration. The trial court
determined that the withdrawals were not made by
petitioner nor authorized by him, and held respondent
bank liable for the US$100,000.00, and the interest from
date of filing of the complaint, damages, attorneys fees,
and costs. CA reversed trial court. SC affirmed CA.
ISSUE: Whether or not petitioner has proved that
respondent bank connived with private respondents and
third party defendants Papercon and Tom Pek in allowing
thewithdrawals, knowing them to be unauthorized by
the petitioner, and with the purpose of defrauding him,
thereby warranting an award for damages.
RULING: NO. There is no evidence to show that RCBC,
Papercon, Tom Pek colluded to defraud petitioner of his
money. Petitioners allegation that he did not authorize
the opening of the current account and the issuance of
the checks was countered by private respondents by a
witnessed they presented who testified that the
issuance of the questioned checks were all upon the
instructions of the petitioner. The evidence stands
unrebutted that petitioner instructed the opening of the
said account and signed the pertinent application forms.
Quite contrary to petitioners insinuations of fraud or
negligence, the evidence indicates that the reason why
respondent bank relaxed its rules in handling petitioners
application was because, in addition to having been
referred by a well-known client, petitioner was in a hurry
to have the remittance credited to his account. The
person who alleges fraud or negligence must prove it,
because the general presumption is that men act with
care and prudence. Good faith is always presumed and
it is the burden of the party claiming otherwise to
adduce clear and convincing evidence to the contrary.
No judgment for damages could arise where the source
of injury, be it fraud, fault, or negligence, was not
affirmatively established by competent evidence.
KINDS OF DAMAGES
ACTUAL OR COMPENSATORY
a.) As to actual loss suffered
PRODUCERS BANK OF THE PHILIPPINES,
petitioner, vs .COURT OF APPEALS and SPOUSES
SALVADOR Y. CHUA and EMILIA U. CHUA,
respondents.
Topic: actual damages, exemplary damages
Facts: The spouses Chua, engaged in several
businesses including gasoline proprietorship, obtained a
P2-million loan from Producers Bank secured by a real
estate mortgage and payable within 3 years or from
1982 to 1985. In January 1984, the spouses deposited
the total sum of P960,000 which was duly entered in
their account. However, the bank failed to credit the
deposit because its branch manager absconded with the
bank's money. The bank dishonored their checks for
insufficiency of funds despite their remaining balance of
more than a million pesos and denied their request for
copies of their account ledgers. Thus, the action for
damages by respondent spouses against petitioner. (You
can stop here for your digests.)
Meanwhile, in October 1984, PB applied for extrajudicial
foreclosure of the real estate mortgage including 2
other loans not covered by the mortgage. With this, the
spouses filed a complaint for injunction and damages
alleging that the foreclosure was maliciously instituted
to harass them. The trial court found that the spouses,
who were constantly paying their loan, were not in
default; that the loan, with a 3 year period, is not yet
due and demandable; and that the foreclosure
proceedings was initiated in evident bad faith. Judgment
was rendered in favor of the spouses ordering PB to
render an accounting, to allow the off-setting of the
obligation and awarding them moral damages, actual
damages on unrealized profits, exemplary
damages and attorney's fees. On appeal, the Court of
Appeals upheld the findings of the trial court but
reduced the amount of damages awarded. A motion for
partial reconsideration having been denied, hence, this
recourse with PB mainly assailing the factual findings of
the Court of Appeals.
Issue: Are the spouses entitled to actual damages and
exemplary damages?
Ruling: The spouses are entitled to exemplary damages
but not actual damages based on unrealized profits.
Foreclosure is but a necessary consequence of non-
payment of a mortgage indebtedness and that the
mortgage can be foreclosed only when the debt remains
unpaid at the time it is due. The application for
extrajudicial foreclosure of the mortgage which is not
due and demandable was premature. This entitles the
mortgagor to moral and exemplary damages and
attorney's fees. However, the award of actual damages
based on unrealized profits merely on the basis of the
sole testimony of one of the parties, was insufficient.
The same must be supported by independent evidence.
(Short form for your digests)
Exemplary damages
The award of exemplary damages is in order in view of
the malicious and unwarranted application for
extrajudicial foreclosure by petitioner which was
obviously done to harass, embarrass, annoy, or ridicule
private respondents. Likewise, petitioner, in its
application for extrajudicial foreclosure, included the
other loans of private respondents which were not
covered by the real estate mortgage agreement, such
as the loan of P175,000 which was a time loan, and the
amount of P400,000.00 which was a clean loan.
Moreover, petitioner unjustifiably refused to give private
respondents copies of their account ledgers which
would show the deposits made by them. Also, petitioner
bank's failure to credit the deposit in the account of
private respondents constituted gross negligence in the
performance of its contractual obligation which amounts
to evident bad faith. Verily, all these acts of petitioner
were accompanied by bad faith and done in wanton,
fraudulent and malevolent manner warranting the
award of exemplary damages in favor of private
respondents, in accordance with Article 2232 of the Civil
Code.
Actual damages
Under Articles 2199 and 2200 of the Civil Code, actual
or compensatory damages are those awarded in
satisfaction of, or in recompense for, loss or injury
sustained. They proceed from a sense of natural justice
and are designed to repair the wrong that has been
done. There are two kinds of actual or compensatory
damages: one is the loss of what a person already
possesses, and the other is the failure to receive as a
benefit that which would have pertained to him. In the
latter instance, the familiar rule is that damages
consisting of unrealized profits, frequently referred as
"ganaciasfrustradas" or lucrumcessans," are not to be
granted on the basis of mere speculation, conjecture, or
surmise, but rather by reference to some reasonably
definite standard such as market value, established
experienced, or direct inference from known
circumstances.
Anent the award of actual damages, the Court of
Appeals granted private respondents the amount of
P18,000 per month representing private respondents'
unrealized profits from his gasoline station business, to
commence from October 16, 1984. In the case at bar,
actual damages in the form of unrealized profits were
awarded on the basis of the sole testimony of private
respondent Salvador Chua. However, other than the
testimony of Salvador Chua, private respondents failed
to present documentary evidence which is necessary to
substantiate their claim for actual or compensatory
damages. In order to recover this kind of damages, the
injured party must prove his case. Applying the
foregoing test to the instant case, the Court finds the
evidence of private respondents insufficient to be
considered within the purview of "best evidence." The
bare assertion of private respondent Salvador Chua that
he lost an average of P18,000 per month is inadequate
if not speculative and should be admitted with extreme
caution especially because it is not supported by
independent evidence. Private respondents could have
presented such evidence as reports on the average
actual profits earned by their gasoline business, their
financial statements, and other evidence of profitability
which could aid the court in arriving with reasonable
certainty at the amount of profits which private
respondents failed to earn. Private respondents did not
even present any instrument or deed evidencing their
claim that they have transferred their right to operate
their gasoline station to their relatives. We cannot,
therefore, sustain the award of P18,000 a month as
unrealized profits commencing from October 16, 1984
because this amount is not amply justified by the
evidence on record. Further, well-settled is the rule that
even if the petition for extrajudicial foreclosure filed by
petitioner against private respondents is clearly
unfounded, this does not necessarily mean, in the
absence of specific facts proving damages, that actual
damage has been sustained. The Court cannot rely on
speculations as to the fact and amount of damages. It
must depend on actual proof of the damages alleged to
have been suffered.
DE VERA VS. SAN DIEGO CONSTRUCTION 18
October 2001
Facts:
For Digest:
San Diego Construction, Inc. (QPSDCI), owned a
parcel of land located on which it built Lourdes I
Condominium. To finance its construction and
development, QPSDCI entered into a Syndicate Loan
Agreement with respondents Asiatrust Development
Bank (ASIATRUST), Second Laguna Development Bank
(LAGUNA) and Capitol City Development Bank
(FUNDERS). Gregorio de Vera Jr. and QPSDCI entered
into a Condominium Reservation Agreement where De
Vera bought a condominium unit for P325,000.00 under
the following agreed terms of payment: (a) an option
money of P5,000.00 payable upon signing of the
agreement to form part of the purchase price; (b) a full
downpayment of P175,675.00 broken down into the
reservation fee of P5,000.00 and three (3) equal
monthly installments payable beginning the month after
the signing of the contract; and, (c) the remaining
balance of P160,000.00 to be secured through
petitioner's Pag-IBIG and Open-Housing Loan. Pending
release of the loan, petitioner was to avail of a bridge
financing loan with ASIATRUST or any accredited
originating bank of the Pag-IBIG program. QPSDCI failed
to pay its obligations to the FUNDERS. ASIATRUST
extrajudicially foreclosed the mortgage on twenty-seven
(27) condominium units, including that of petitioner De
Vera Jr. The units were sold at public auction, with the
FUNDERS as the highest bidder.
Petitioner, upon discovering that the FUNDERS
had already published a notice of extrajudicial
foreclosure of the mortgage, filed a complaint for
damages and injunction with urgent prayer for issuance
of a writ of preliminary injunction, annulment of
mortgage based on fraud, with urgent prayer for the
issuance of a writ of preliminary attachment and
specific performance. The trial court rendered judgment
"directing the respondents to pay to the petitioner
jointly and severally the sum equivalent to the
penalties and charges plus whatever amount may
be necessary to redeem Unit 211-2C from any lien
and encumbrances so that the title may be released and
delivered to the plaintiff, free from any lien and
encumbrances, subject only to the deduction of his
unpaid balance of P139,000.00, which the plaintiff
should pay out of his own funds, plus exemplary
damages of P100,000.00 each and to pay plaintiff
attorney's fees jointly and severally x xx
P50,000.00 plus the expenses of litigation." The lower
court denied plaintiff's prayer for moral damages and
dismissed defendants' counterclaim against the plaintiff
and cross-claims against each other. The Court of
Appeals affirmed the decision of the trial court with the
modification that respondents were ordered solidarily to
pay petitioner P50,000.00 as nominal damages, but
the award for actual and exemplary damages was
deleted.
Issue:
WON Court of Appeals is correct in deleting the
award of actual and exemplary damages and attorney's
fees in favor of De Vera?
Ruling:
In deleting the award for damages, the Court of
Appeals explained - As earlier found, QPSDCI failed to
comply with its warranties as seller. Unfortunately,
plaintiff-appellee posits the propriety of the award of
actual damages only in the probable sense: that such
award is to the amount of interests, penalties and other
charges as plaintiff may stand liable for by reason of the
non-payment of the purchase price. In other words,
plaintiff-appellee admits not having suffered damages in
consequence of non-compliance of seller's warranties.
Since actual damages are predicated on such pecuniary
loss as duly proved, the award of the lower court
therefor is plainly not in order x xx (citations omitted).
We agree with the respondent Court of Appeals on
this point. Petitioner did not present any proof that he
suffered any damage as a result of the breach of seller's
warranty. He did not lose possession of his condominium
unit, although the same had not yet been registered in
his name. In his Consolidated Reply, petitioner came up
with this feeble argument for claiming actual damages,
a rehash of his motion for reconsideration with the Court
of Appeals - Petitioner reiterates that the compensatory
damages awarded is to the amount of interests,
penalties and other charges as (he) may stand liable for
by reason of the non-payment of the balance of the
purchase price of Unit #211 in consequence of the
respondent's fault or negligence as evidenced by Exhs.
S and S-1. The compensation is the same amount as
whatever the liability may be and therefore merely
offsets the liability x xxx
The cost of clearing the CCT of liens and
encumbrances and transferring it to the name of the
petitioner are also part of the actual or compensatory
damages and are its own proof. Article 2199 of the Civil
Code provides that one is entitled to adequate
compensation only for such pecuniary loss suffered by
him as is "duly proved." This provision denies the grant
of speculative damages, or such damage not actually
proved to have existed and to have been caused to the
party claiming the same. Actual damages, to be
recoverable, must not only be capable of proof, but
must actually be proved with reasonable degree of
certainty. Courts cannot simply rely on speculation,
conjecture or guesswork in determining the fact and
amount of damages.
 This does not mean however that petitioner is
liable to private respondents for penalties, interests and
other charges that accrued by reason of non-payment of
the balance of the purchase price. Respondent
ASIATRUST had made several representations to
petitioner that his loan had been approved. The tenor of
the letters sent by ASIATRUST would lead a reasonable
man to believe that there was nothing left to do but
await the release of the loan. ASIATRUST cannot hide
behind the pithy excuse that the grant of the bridge
financing loan was subject to the release of the Pag-IBIG
loan. The essence of bridge financing loans is to obtain
funds through an interim loan while the Pag-IBIG funds
are not yet available. To await the release of the Pag-
IBIG loan would render any bridge financing nugatory.
Thus, we agree with the trial court when it said that "the
conclusion is inevitable that although the plaintiff was
not able to pay, he was a victim of circumstances and
his failure was not due to his own fault."
For Recit:
Respondent Q. P. San Diego Construction, Inc.
(QPSDCI), owned a parcel of land located on which it
built Lourdes I Condominium. To finance its construction
and development, QPSDCI entered into a Syndicate
Loan Agreement with respondents Asiatrust
Development Bank (ASIATRUST), Second Laguna
Development Bank (LAGUNA) and Capitol City
Development Bank (CAPITOL, hereafter collectively
known as FUNDERS). QPSDCI mortgaged to the creditor
banks as security the property and the condominium
constructed, it was registered with the Register of
Deeds and annotated on the individual condominium
certificates of title (CCT) of each condominium unit.
Petitioner Gregorio de Vera Jr. and QPSDCI,
through its authorized agent Fil-Estate Realty
Corporation (FIL-ESTATE), entered into a Condominium
Reservation Agreement where petitioner undertook to
buy a condominium unit for P325,000.00 under the
following agreed terms of payment: (a) an option money
of P5,000.00 payable upon signing of the agreement to
form part of the purchase price; (b) a full downpayment
of P175,675.00 broken down into the reservation fee of
P5,000.00 and three (3) equal monthly installments
payable beginning the month after the signing of the
contract; and, (c) the remaining balance of P160,000.00
to be secured through petitioner's Pag-IBIG and Open-
Housing Loan. Pending release of the loan, petitioner
was to avail of a bridge financing loan with ASIATRUST
or any accredited originating bank of the Pag-IBIG
program.
Petitioner paid the reservation fee of P5,000.00,
and the balance of the downpayment of P167,000.00,
well before the due date. As incentive, petitioner was
given a full discount on cash payment by QPSDCI to
bring the total payment to P184,040.00. Pursuant to
their Condominium Reservation Agreement, petitioner
submitted through FIL-ESTATE his application for the
Pag-IBIG loan. On 28 December 1983 ASIATRUST as
originating bank notified FIL-ESTATE that petitioner's
Pag-IBIG loan application had been approved. In a letter
dated 18 January 1984 QPSDCI President Quintin P. San
Diego forwarded the letter to petitioner. However, the
amount approved was only P139,100.00 and not
P160,000.00. Additional charges further reduced the
amount to P117,043.33. Petitioner De Vera Jr.
approached QPSDCI to have the P12,040.00 discount
credited to his additional equity. Since the resultant net
loan of P117,043.33 was insufficient to cover the
balance of the purchase price, De Vera Jr. negotiated
with QPSDCI to defer payment of the P23,916.67
deficiency until the project was completed and the unit
was ready for turnover. QPSDCI agreed. The
condominium project was substantially completed in
June 1984 and the unit was turned over to De Vera Jr.
the following month. Petitioner paid QPSDCI the
P23,916.67 shortfall between the balance and the
granted loan.
On 26 June 1984 ASIATRUST through its Vice-
President Pedro V. Lucero and Manager Nicanor T.
Villanueva wrote to QPSDCI asking the unit buyers to
pay in advance the costs of the transfer of titles and
registration of their Pag-IBIG loan mortgages. QPSDCI
forwarded the letter to De Vera Jr. and requested that he
pay the amount to QPSDCI. As ASIATRUST indicated that
the amount be paid directly to it, De Vera Jr. went to the
bank for clarification. On 23 August 1983, after learning
that ASIATRUST was in possession of the certificate of
title, De Vera Jr. paid the transfer expenses directly to
ASIATRUST.
On 17 September 1984 ASIATRUST sent another
notice of approval to QPSDCI and De Vera Jr. with the
notation, "additional equity of all accounts have (sic) to
be paid directly to the Bank." On 3 October 1984
ASIATRUST wrote another letter asking QPSDCI to advise
the unit buyers, among others, to pay all additional and
remaining equities on 10 October 1984; that their Pag-
IBIG loan mortgages would be registered only upon
payment of those equities; and, that loan mortgages
registered after 31 October 1984 would be subject to
the increased Pag-IBIG interest rates. On 12 October
1984 ASIATRUST also wrote a letter to petitioner and
signed by its Assistant Manager Leticia R. de la Cruz
informing him that his housing loan would only be
implemented upon the following conditions: (a) Payment
of the remaining equity directly to ASIATRUST
Development Bank; and (b) Signing of all Pag-IBIG
documents not later than 20 October 1984, so his
mortgages could be registered on or before 31 October
1984. Mortgages registered beyond said date shall
subject the Pag-IBIG loan to the increased interest rates
of the National Home Mortgage Finance Corp. (per
Circular #27 dated June 21, 1984).
The letter came as a total surprise to the
petitioner; all the while he thought that his loan had
already been released to QPSDCI and the titles
transferred to his name; he promptly wrote ASIATRUST
to seek clarification; ASIATRUST responded by informing
De Vera Jr. that the developmental loan agreement
between QPSDCI and the three (3) banks, under which
the individual titles of the condominium units were
mortgaged in favor of the FUNDERS to secure the loan,
shall be paid out of the net proceeds of the Pag-IBIG
loans of the buyers; that the total amount of loan from
the FUNDERS was distributed among all condominium
units such that each unit had to bear a certain portion of
the total loan, or a "loan value;" that per agreement
with QPSDCI, ASIATRUST would only grant the Pag-IBIG
Housing Loan with the release of the mortgage liens,
which could not be released unless the buyers fully paid
their respective loan values; and that petitioner's equity
payments to QPSDCI had not been remitted to the bank.
On 30 May 1985 ASIATRUST informed QPSDCI that it
could no longer extend the bridge financing loan to
some of the buyers, including petitioner, for various
reasons, among which was that petitioner had already
exceeded the age limit, hence, he was disqualified.
After learning of the disapproval of his loan,
petitioner wrote the president of QPSDCI to make
arrangements to settle his balance. Since petitioner had
already invested a substantial amount in remodeling
and improving his unit, rescinding the sale was no
longer a viable option. Consequently, he only asked the
president of QPSDCI for some assurance that the title
would be turned over to him upon full payment. As
petitioner failed to obtain the housing loan, he was not
able to pay the balance of the purchase price. QPSDCI
sent him a letter dated 6 August 1987 presenting him
with two options: (a) to pay the remaining balance of
the purchase price, with interest, which had already
ballooned to P263,751.63, on or before 15 August 1987;
or, (b) to pay rent for the use of the unit from 28 July
1984 to June 1987.
On 20 May 1988 petitioner, upon discovering that
the FUNDERS had already published a notice of
extrajudicial foreclosure of the mortgage, filed a
complaint against respondents for damages and
injunction with urgent prayer for issuance of a writ of
preliminary injunction, annulment of mortgage based on
fraud, with urgent prayer for the issuance of a writ of
preliminary attachment and specific performance.
Meanwhile, QPSDCI failed to pay its obligations to the
FUNDERS. On 23 May 1988 ASIATRUST extrajudicially
foreclosed the mortgage on twenty-seven (27)
condominium units, including that of petitioner De Vera
Jr. The units were sold at public auction, with the
FUNDERS as the highest bidder. The certificate of sale
was issued and annotated on the CCTs.
On 3 March 1992 the trial court rendered
judgment "directing the defendants (herein
respondents) to pay to the plaintiff (herein petitioner)
jointly and severally the sum equivalent to the
penalties and charges plus whatever amount may
be necessary to redeem Unit 211-2C from any lien
and encumbrances so that the title may be released and
delivered to the plaintiff, free from any lien and
encumbrances, subject only to the deduction of his
unpaid balance of P139,000.00, which the plaintiff
should pay out of his own funds, plus exemplary
damages of P100,000.00 each and to pay plaintiff
attorney's fees jointly and severally x xx
P50,000.00 plus the expenses of litigation." The lower
court denied plaintiff's prayer for moral damages and
dismissed defendants' counterclaim against the plaintiff
and cross-claims against each other. The Court of
Appeals affirmed the decision of the trial court with the
modification that respondents were ordered solidarily to
pay petitioner P50,000.00 as nominal damages, but
the award for actual and exemplary damages was
deleted.
MERALCO vs. TEAM Electronics Corp. ET AL
FACTS: Respondent Technology Electronics Assembly
and Management Pacific Corporation (TPC) wholly own
Respondent T.E.A.M. Electronics Corporation (TEC). On
the other hand, petitioner Manila Electric Company
(Meralco) is a utility company supplying electricity in the
Metro Manila area. MERALCO alleges that TEC tampered
the electric meters in its buildings and should thus be
liable for differential billings. For failure of TEC to pay
such differential billing, petitioner disconnected the
electricity supply to said buildings. TEC and TPC filed a
complaint for damages against MERALCO before the RTC
Pasig. The RTC ruled in favor of TEC-TPC and ordered
MERALCO to pay the former Actual Damages, Moral
damages, Exemplary Damages and Attorneys Fees. The
court found the evidence of petitioner insufficient to
prove that TEC was guilty of tampering the meter
installations. The CA affirmed the RTC decision with
modifications, hence this petition for review
on certiorari under Rule 45.
ISSUE 1:
RULING 1:
As to the damages awarded by the CA, SC modified the
same. Actual damages are compensation for an injury
that will put the injured party in the position where it
was before the injury. They pertain to such injuries or
losses that are actually sustained and susceptible of
measurement. Except as provided by law or by
stipulation, a party is entitled to adequate
compensation only for such pecuniary loss as is duly
proven. Basic is the rule that to recover actual
damages, not only must the amount of loss be capable
of proof; it must also be actually proven with a
reasonable degree of certainty, premised upon
competent proof or the best evidence obtainable.
Respondent TEC sufficiently established, and petitioner
in fact admitted, that the former paid P1,000,000.00
and P280,813.72 under protest, the amounts
representing a portion of the latter's claim of differential
billing. With the finding that no tampering was
committed and, thus, no differential billing due, the
aforesaid amounts should be returned by petitioner,
with interest, as ordered by the Court of Appeals and
pursuant to the guidelines set forth by the Court.46
However, despite the appellate court's conclusion that
no tampering was committed, it held Ultra solidarily
liable with petitioner for P1,000,000.00, only because
the former, as occupant of the building, promised to
settle the claims of the latter. This ruling is erroneous.
Ultra's promise was conditioned upon the finding of
defect or tampering of the meters. It did not
acknowledge any culpability and liability, and absent
any tampered meter, it is absurd to make the lawful
occupant liable. It was petitioner who received the P1
million; thus, it alone should be held liable for the return
of the amount.
ISSUE 2: is the award of MD proper?
RULING 2:
NO. SC deems it proper to delete the award of moral
damages. TECs claim was premised allegedly on the
damage to its goodwill and reputation. As a rule, a
corporation is not entitled to moral damages because,
not being a natural person, it cannot experience
physical suffering or sentiments like wounded feelings,
serious anxiety, mental anguish and moral shock. The
only exception to this rule is when the corporation has a
reputation that is debased, resulting in its humiliation in
the business realm. But in such a case, it is imperative
for the claimant to present proof to justify the award. It
is essential to prove the existence of the factual basis of
the damage and its causal relation to petitioners acts.
In the present case, the records are bereft of any
evidence that the name or reputation of TEC/TPC has
been debased as a result of petitioners acts
b.) As to earnings
Pleyto vs Lomboy
FACTS:A head-on collision between a bus and a car
along McArthur Highway in Gerona, Tarlac happened on
May 16, 1995 at around 11:30am. Petitioner Philippine
Rabbit Bus Lines, Inc (PRBL), bound for Vigan, Ilocos Sur
at the time of the accident, is engaged in carrying
passengers and goods for a fare servicing various routes
in Central and Northern Luzon. Its driver was Ernesto
Pleyto. Ricardo Lomboy was a passenger to a Mitsubishi
Lancer car driven by Arnulfo Asuncion, Ricardos
brother-in-law. Carmela, the daughter of Ricardo, also a
passenger to said car, suffered injuries requiring
hospitalization. But her father Ricardo Lomboy died.
Ricardos heirs filed an action for damages against
Pleyto and PRBL. A witness and one of the bus
passengers, RollyOrpilla, testified that Pleyto tried to
overtake a tricycle but hit it instead. Pleyto then
swerved in to the left opposite lane and smashed the
Manila-bound car killing Arnulfo and Ricardo Lomboy
while the other passengers, Carmela and friend Rhino
Daba suffered injuries. According to Pleyto, the tricycle
suddenly stopped without warning to which Pleyto
stepped on the brakes and bus lost speed but swerved
to the other lane to avoid hitting the tricycle.
Unfortunately, it collided with the Manila-bound
Mitsubishi car.
The trial court rendered decision in favor of the plaintiffs
awarding P1,642,521.00 for lost earnings of Ricardo
Lomboy. It found that Pleyto is negligent and lacked
precaution when he overtook the tricycle disregarding
completely the approaching car in the other lane. Pleyto
should have been more prudent in overtaking
considering the slippery road. The court held that Pleyto
violated traffic rules and regulations and was negligent
under Article 2185 of the Civil Code and PRBL liable as
owner of the bus and as employer of Pleyto under
Article 2180 of the Civil Code for its failure to observe
the required diligence in its supervision of its employees
and the safe maintenance of its buses. CA affirmed the
trial courts decision with modification in the award of
damages reducing the award for loss of earning
capacity to P1,152,000.00 and took note of the amounts
that were duly supported by receipts only. Petitioners
moved for reconsideration but the appellate court
denied it. Hence, this petition.
ISSUE: Whether the CA erred in pegging the monthly
living expenses at 50% of gross earnings considering
that no substantial proof was presented to prove
Lomboys gross income
RULING:No reversible error may be attributed to the
court in fixing the loss of earning capacity at the
amount P1,152,000.00. In considering the earning
capacity of the victim as an element of damages, the
net earnings, which is computed by deducting
necessary expenses from the gross earnings, and not
the gross earnings, is to be utilized in the computation.
The amount of net earnings was arrived at after
deducting the necessary expenses (pegged at 50% of
gross income) from the gross annual income. This
computation is in accord with settled jurisprudence.
(Villa Rey case) The testimony of the wife, Maria
Lomboy, that her husband was earning a monthly
income of P8,000.00 is sufficient to establish a basis for
an estimate of damages for loss of earning capacity.
Jurisprudence provides that the factors that should be
taken into account in determining the compensable
amount of lost earnings are:
the number of years for which the victim would
otherwise have lived; and,
the rate of loss sustained by the heirs of the
deceased.
Factor No. 1
Life expectancy is computed by applying the formula
(2/3 x [80-age at death]) adopted from the American
Expectancy Table of Mortality or the Actuarial Combined
Experience Table of Mortality.
Factor No. 2
Multiply the life expectancy by the net earnings of the
deceased, i.e, the total earnings less expenses
necessary in the creation of such earnings or income
and less living and other incidental expenses. The net
earning is ordinarily computed at fifty percent of the
gross earnings.
Thus, in the given case, the formula used by this Court
in computing loss of earning capacity is:
Net Earning Capacity = [2/3 x (80 age at the time of
death) x (gross annual income reasonable and
necessary living expenses)]
= [2/3 x (80 44)] x [(P96,000 50%of P96,000)]
= [2/3 x (36)] x [(P96,000 P48,000)]
= 24 x P48,000
= P1,152,000.00
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 defendants culpable
action. Its award is aimed at restoration of the spiritual
proportionate to the suffering inflicted. Thus, moral
damages of P500,000 is reduced to P100,000 in keeping
with the purpose of the law and jurisprudence in
allowing moral damages.
Lambert v. Heirs of Castillon
Facts: In the evening of January 13, 1991, Ray Castillon
visited the house of his brother Joel Castillon and
borrowed his motorcycle. He then invited his friend,
Sergio Labang, to roam around Iligan City. Ray drove
the motorcycle with Sergio as the backrider. At around
past 10:00 p.m., after eating supper at Honas
Restaurant and imbibing a bottle of beer, they traversed
the highway towards Tambo at a high speed. Upon
reaching Brgy.Sto. Rosario, they figured in an accident
with a Tamarawjeepney, owned by petitioner Nelen
Lambert and driven by Reynaldo Gamot, which was
traveling on the same direction but made a sudden left
turn. The incident resulted in the instantaneous death of
Ray and injuries to Sergio. Respondents, the heirs of Ray
Castillon, filed an action for damages. On June 29,
1993, after a full-blown trial, the court rendered a
decision in favor of the Castillon heirs but reduced
Lamberts liability by 20% in view of
the contributory negligence of Ray. The sum of
P633,091Php, representing loss of support, death
indemnity, funeral and related expenses, moral
damages and attorneys fees was awarded to the heirs.
The CA affirmed the decision of the trial court. Upon
petition to the SC, Lambert assigns as error the trial
courts computation as to the loss of earning capacity of
Ray Castillon because the computation is contrary to
the formula enunciated by the Court in the case of Villa
Rey Transit, Inc. vs. The Honorable Court of Appeals
Issue: WON the trial court erred in the
computation the loss of earning capacity of the
deceased Castillon?
Ruling:Yes. In considering the earning capacity of the
victim as an element of damages, the following factors
are considered in determining the compensable amount
of lost earnings: (1) the number of years for which the
victim would otherwise have lived; and (2) the rate of
loss sustained by the heirs of the deceased.
Jurisprudence provides that the first factor, i.e., life
expectancy, is computed by applying the formula (2/3 x
[80 - age at death]) adopted in the American
Expectancy Table of Mortality or the Actuarial Combined
Experience Table of Mortality. As to the second factor, it
is computed by multiplying the life expectancy by the
net earnings of the deceased, i.e., the total earnings
less expenses necessary in the creation of such
earnings or income and less living and other incidental
expenses. The net earning is ordinarily computed
at fifty percent (50%) of the gross earnings. Thus,
the formula used by the Court in computing loss of
earning capacity is: Net Earning Capacity = [2/3 x
(80 age at time of death) x (gross annual income
reasonable and necessary living expenses)].
It was established that Ray was 35 at the time of his
death and was earning a gross annual income of
P31,876.00 as a driver at the Mindanao State University.
In arriving at the net earnings, the trial court deducted
from the gross annual income the annual living
expenses in the amount of P9,672.00, broken down as
follows: P20.00 a day for travel or P520.00 per month;
P60.00 a month for cigarettes; P26.00 for drinks; and
other personal expenses like clothing, toiletries, etc.
estimated at P200.00 per month. The amount of
P9,672.00, however, appears unrealistic, and
constitutes only 30.34% of the gross earnings. It even
includes expenses for cigarettes which by no means can
be classified as a necessary expense. Using the cited
formula with the net earnings computed at 50% of the
gross earnings, a detailed computation is as follows:
NET EARNING = LIFE EXPECTANCY x GROSS X = [2/3 (80-35)] x [P31,876.00
CAPACITY (X) [2/3 (80-age at the ANNUAL INCOME
time of death)] (GAI)
X = [2/3 (45)] x [P31,876.00 X = 30 x 15,938.00
X = P478,140.00
c.)As to requisites for extraordinary inflation
Equitable PCI Bank vs Ng Sheung Ngor, GR No. 171545,
December 19, 2007
Facts: Ng Sheung Ngor doing business under the name
of Ken Marketing, Ken Appliance Division and Benjamin
Go went into an agreement with Equitable Bank to avail
of their peso and dollar credit facilities because they
had low interest rates. The group then signed the
promissory notes on various dates beginning on 1996.
However, they were unaware of the escalation clauses
in the documents which allowed Equitable Bank to
increase the interest rates at their pleasure, so they
filed an action for annulment and/or reformation of the
document.
The group did not pay the interest due on February 9,
2001 as well as the amount due on July 9, 2001. So
Equitable then set-off their deposits with the interest
and principal due them.
The RTC ruled that the group should pay their
obligations based on the date they contracted the
obligation (which was in 1996) instead of on the date of
maturity since there was extraordinary deflation.
However, it also ruled that the business reputation of
the group was severely damaged when Equitable froze
their accounts so it awarded moral and exemplary
damages to them.
Issue1: What are the requisites of extraordinary
deflation? Was it present in this case?
Ruling: No. The elements are:
1. that there was an official declaration of extraordinary
inflation or deflation from the Bangko Sentral ng
Pilipinas (BSP)
2. that the obligation was contractual in nature and
3. that the parties expressly agreed to consider the
effects of the extraordinary inflation or deflation.
Despite the devaluation of the peso, the BSP never
declared a situation of extraordinary inflation. Moreover,
although the obligation in this instance arose out of a
contract, the parties did not agree to recognize the
effects of extraordinary inflation (or deflation). The RTC
never mentioned that there was such stipulation either
in the promissory note or loan agreement. The general
rule is that the basis of payment will be the value of the
currency at the date of the maturity of the obligation.
The exception is when under Article 1250, there is
extraordinary inflation or deflation in which the basis of
the payment will be the value of the currency at the
making of the obligation.
Since there was no deflation, they should pay at the
dollar exchange rate on the day of maturity.
Note: Extraordinary inflation exists when there is an
unusual decrease in the purchasing power of currency
(that is, beyond the common fluctuation in the value of
currency) and such decrease could not be reasonably
foreseen or was manifestly beyond the contemplation of
the parties at the time of the obligation. Extraordinary
deflation, on the other hand, involves an inverse
situation
Issue2: Can a depositor claim moral and exemplary
damages when the bank set-off his deposits with his
obligations because he failed to pay them?
Ruling: No. The elements for a grant of moral damages
are:
a) that he or she suffered besmirched reputation, or
physical, mental or psychological suffering sustained by
the claimant;
b) that the defendant committed a wrongful act or
omission
c)that the wrongful act or omission was the proximate
cause of the damages the claimant sustained
d) The case is predicated on any of the instances in
Articles 2219 and 2220.
In culpa contractual or breach of contract, moral
damages are recoverable only if the defendant acted in
fraudulently or in bad faith or in wanton disregard of his
contractual obligations. In this case, it was only right for
Equitable to set-off the deposits with their debt since
they have a creditor-debtor relationship. Thus, any
damage suffered by the group was purely the
consequence of their failure to pay the loan. Since they
were not entitled to moral damages, they were also not
entitled to exemplary damages. (And since they were
not entitled to both moral and exemplary damages, they
could also not be awarded attorneys fees and litigation
expenses.)
d.) Attorneys Fees
JOSE V. LAGON vs. HOOVEN COMALCO
INDUSTRIES, INC
FACTS:Sometime in April 1981 Lagon, a businessman
and HOOVEN entered into two (2) contracts,
denominated Proposal, whereby for a total
consideration of P104,870.00 HOOVEN agreed to sell
and install various aluminum materials in Lagons
commercial building in Tacurong, Sultan Kudarat.
HOOVEN filed an action against Lagon claiming that the
latter failed to pay his due despite HOOVENs
performance of its obligation. Lagon, in his answer,
denied liability and averred that HOOVEN was the party
guilty of breach of contract by failing to deliver and
install some of the materials specified in the proposals;
that as a consequence he was compelled to procure the
undelivered materials from other sources; that as
regards the materials duly delivered and installed by
HOOVEN, they were fully paid.
ISSUE:Who among the parties is entitled to damages?
RULING:HOOVEN's bad faith lies not so much on its
breach of contract - as there was no showing that its
failure to comply with its part of the bargain was
motivated by ill will or done with fraudulent intent - but
rather on its appalling temerity to sue petitioner for
payment of an alleged unpaid balance of the purchase
price notwithstanding knowledge of its failure to make
complete delivery and installation of all the materials
under their contracts. Although petitioner was found to
be liable to respondent to the extent of P6,377.66,
petitioner's right to withhold full payment of the
purchase price prior to the delivery and installation of all
the merchandise cannot be denied since under the
contracts the balance of the purchase price became due
and demandable only upon the completion of the
project. Consequently, the resulting social humiliation
and damage to petitioner's reputation as a respected
businessman in the community, occasioned by the filing
of this suit provide sufficient grounds for the award of
P50,000.00 as moral damages. On the part of Lagon, he
is ordered by the court to pay HOOVEN the amount
corresponding to the value of the materials admittedly
delivered to him.
SCC Chemicals vs State Investment (2001)
Facts:SCC Chemicals Corporation (SCC) obtained a loan
from State Investment House In. (State Investment)
amounting to P129,824.48. The chairman and vice
president of SCC executed a Comprehensive Surety
Agreement (similar to promissory note) binding
themselves to pay the obligation on maturity date. SCC
failed to pay when it matured. State Investment sent
demand letters but no payment was made.
State Investment filed a case for recovery of
money. SCC contended that the promissory note was
null and void for lack of consideration. Trial court ruled
in favor of State Investment. CA affirmed.
Note: There are two issues in this case. First on
the topic of attorneys fees and the other the substantial
issue (for recit purposes ang 2 nd issue in case maam will
ask)
Issue 1: Does the award by CA of attorneys fees
proper?
Ruling:No. SCC contended that CA sustained RTC award
of attorneys fees even if RTC did not state the reason
for the award. Citing Radio Communications vs
Rodriguez, when attorneys fees are awarded, the reason
for the award must be stated in the text of the courts
decision. Award of attorneys fess is the exception rather
than the rule, hence it is necessary for the trial court to
make findings of fact and law, which would bring the
case within the exception and justify the grant of the
award. Since the failure of explicitly stating the rationale
for the award, is shall be disallowed.
Issue 2: Does State Investment sufficiently proved
authenticity of promissory note?
Ruling: Yes. SCC failed to appear several times on
hearing dates despite notice and was unable to cross-
examine the only witness of State investment. Thus,
SCC cannot claim that the testimony of witness is
hearsay since under ROC, when a party failed to object
to a hearsay evidence, the same is admissible.
Furthermore, SCC cannot claim that State Investment
needs to present the original documents because SCC
already admitted during pre-trial of the existence and
execution of the promissory note and receipt of the
demand letter. It is now too late to question the
authenticity of the presented documents.
e.) Temperate damages
BPI INVESTMENT CORP. vs. D.G. CARREON
COMMERCIAL CORP.
Facts:BPI Investment Corporation was engaged in
money market operations. D. G. Commercial
Corporation was a client of petitioner and started its
money market placements in September, 1978. BPI
Investments paid D. G. Carreon twice in interest of the
amount of P323,518.22, representing a single money
market placement, the first on December 12, 1979, and
the second on December 17, 1979. According to
petitioner, their bookkeeper made an error in posting
12-17 on the sales order slip for 12-12. BPI Investments Moral Damages of a)P1,000,000.00 to the late Daniel G.
claimed that the same placement was also booked as Carreon or his estate represented by Aurora J. Carreon;
maturing on December 12, 1979. Aurora Carreon b)P1,000,000.00 to Aurora J. Carreon; P500,000.00 to
instructed BPI Investments to roll over the whole the late Josefa M. Jeceil or her estate represented by
amount of P323,518.22 for another thirty days, or up to Aurora J. Carreon; Compensatory Damages of
January 11, 1980, at 19% interest. BPI Investments P1,500,000.00 to D. G. Carreon Commercial
claimed that roll overs were subsequently made from Corporation; Exemplary Damages ofP1,000,000.00 to all
maturing payments on which BPI Investments had made defendants; Attorneys Fees of P500,000.00 to all
over payments at a total amount of P410,937.09. defendants.

BPI Investments wrote respondents Daniel ISSUE: Whether or not BPI is guilty of gross negligence
Carreon and Aurora Carreon, demanding the return of in the handling of momey market placement and the
the overpayment of P410,937.09. The respondents award for dames was proper?
asserted that there was no overpayment and asked for
HELD: No.Gross negligence implies a want or absence
time to look for the papers. Upon the request of BPI
of or failure to exercise slight care or diligence, or the
Investments, the spouses Daniel and Aurora Carreon
entire absence of care. It evinces a thoughtless
sent to BPI Investments a proposed memorandum of
disregard of consequences without exerting any effort to
agreement. Howver, BPI Investments, without
avoid them. However, while petitioner BPI Investments
responding to the memorandum and proposal of D. G.
may not be guilty of gross negligence, it failed to prove
Carreon filed with the Court of First Instance of Rizal,
by clear and convincing evidence that D. G. Carreon
Branch 36, Makati, a complaint for recovery of a sum of
indeed received money in excess of what was due them.
money against D. G. Carreon with preliminary
The alleged payments in the complaint were admitted
attachment. The trial court issued an order for
by plaintiff itself to be withdrawals from validly issued
preliminary attachment after submission of affidavit of
commercial papers, duly verified and signed by at least
merit to support the petition, and the posting of a bond
two authorized high-ranking officers of BPI Investments.
in the amount of P200,000.00. Susequently, the trial
Exemplary damages are imposed by way of example or
court lifted the writ of attachment. BPI Investments
correction for the public good, in addition to moral,
moved for reconsideration, but the trial court denied the
temperate, liquidated, or compensatory damages. They
motion after finding the absence of double payment to
are recoverable in criminal cases as part of the civil
the defendants.
liability when the crime was committed with one or
Both parties appealed to the CA. After due
more aggravating circumstances; in quasi-delicts, if the
proceedings, the CA promulgated a decision ordering
defendant acted with gross negligence; and in
plaintiff BPI to pay the following amounts of damages:
contracts and quasi-contracts, if the defendant acted in
a wanton, fraudulent, reckless, oppressive, or
malevolent manner. BPI Investments did not act in a
wanton, fraudulent, reckless, oppressive, or malevolent
manner, when it asked for preliminary attachment. It
was just exercising a legal option. The sheriff of the
issuing court did the execution and the
attachment. Hence, BPI Investments is not to be blamed
for the excessive and wrongful attachment.
The award of moral damages and attorneys fees is also
not in keeping with existing jurisprudence. Moral
damages may be awarded in a breach of contract 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.
There is no doubt, however, that the damages sustained
by respondents were due to petitioners fault or
negligence, short of gross negligence. 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 proved
with certainty. The Court deems it prudent to award
reasonable temperate damages to respondents under
the circumstances.
MORAL DAMAGES
ALFONSO L. IRINGAN vs. HON. COURT OF APPEALS
and ANTONIO PALAO, represented by his
Attorney-in-Fact, FELISA P. DELOS SANTOS
Facts: On March 22, 1985, private respondent Antonio
Palao sold to petitioner Alfonso Iringan, an undivided
portion of lot at the Poblacion of Tuguegarao and
covered by Transfer Certificate of Title. The parties
executed a Deed of Sale on the same date with the
purchase price of P295,000.00, payable as follows:
P10,000.00 - upon the execution of the instrument;
P140,000.00 - on or before April 30, 1985; and
P145,000.00 - on or before December 31, 1985. When
the second payment was due, Iringan paid only
P40,000. Thus, on July 18, 1985, Palao sent a letter to
Iringan stating that he considered the contract as
rescinded. On August 20, 1985, Iringan through his
counsel Atty. Hilarion L. Aquino, replied that they were
not opposing the revocation of the Deed of Sale but
asked for the reimbursement of P50,000.00 - cash paid
P3,200.00 - geodetic engineer's fee; P500.00 -
attorney's fee; and the current interest. Palao stated in a
letter that he was not amenable to the reimbursements.
After correspondence through letters, the parties still
failed to arrive at an agreement. Palao filed a Complaint
for Judicial Confirmation of Rescission of Contract and
Damages against Iringan and his wife. RTC ruled in
favor of Palao and affirmed the rescission of the contract
and ordering, among others, to pay P50,000.00 as moral
damages; P10,000.00 as exemplary damages; and
P50,000.00 as attorney's fee; and to pay the costs of
suit.CA affirmed the above decision.
ISSUE: Is the award of moral and exemplary damages
proper?
HELD: Yes.
Petitioner claims that the Court of Appeals erred in
finding bad faith on his part when he resisted the
rescissionand claimed he was ready to pay but never
actually paid respondent, notwithstanding that he knew
that appellee's principal motivation for selling the lot
was to raise money to pay his SSS loan. Petitioner would
have us reverse the said CA findings based on the
exception that these findings were made on a
misapprehension of facts.
The records do not support petitioner's claims. First, per
the records, petitioner knew respondent's reason for
selling his property. As testified to by petitionerand in
the deposition of respondent, such fact was made
known to petitioner during their negotiations as well as
in the letters sent to petitioner by Palao. Second,
petitioner adamantly refused to formally execute an
instrument showing their mutual agreement to rescind
the contract of sale, notwithstanding that it was
petitioner who plainly breached the terms of their
contract when he did not pay the stipulated price on
time, leaving private respondent desperate to find other
sources of funds to payoff his loan. Lastly, petitioner did
not substantiate by clear and convincing proof, his
allegation that he was ready and willing to pay
respondent. We are more inclined to believe his claim of
readiness to pay was an afterthought intended to evade
the consequence of his breach. There is no record to
show the existence of such amount, which could have
been reflected, at the very least, in a bank account in
his name, if indeed one existed; or, alternatively, the
proper deposit made in court which could serve as a
formal tender of payment. Thus, SC finds the award of
moral and exemplary damages proper. Petition is
denied.
CITY TRUST VS VILLANUEVA
FACTS:Isagani Villanueva filed a complaint for damages
based on breach of contract and/or quasi-delict before
the Regional Trial Court of Makati City against City Trust
Banking Corporation. Villanueva alleged in his complaint
that the bank breached its contractual obligation to him
as a depositor because of its repeated dishonor of his
valid and well-funded check. The breach arose from the
bank's gross negligence and culpable recklessness in
supplying the wrong account number. The account
number assigned to Villanueva's new checkbook was
the account number of another depositor also named
"Isagani Villanueva," but with a different middle initial.
Villanueva, therefore, prayed for the award of actual,
moral and exemplary damages, and attorney's fees,
litigation expenses and costs of the suit. The bank
asserted, among others, that Villanueva's negligence to
remember his current account number was the
proximate cause of his self-proclaimed injury. It claimed
that it acted in good faith when it twice dishonored the
check and interposed counterclaims. After due
proceedings, the trial court rendered a decision which
dismissed the complaint and the compulsory
counterclaim for lack of merit. The trial court held that
Villanueva's negligence set the chain of events, which
resulted in his alleged losses and damages. Hence, he
must bear the consequent damages and losses he
allegedly suffered. With respect to Villanueva's claim for
actual damages in the form of loss of profits, the court
found the evidence in support thereof hearsay,
unreliable and not the best evidence. On appeal, the
Court of Appeals found the bank negligent and awarded
moral damages and attorney's fees to Villanueva
despite its findings that the bank's negligence was not
attended with malice and bad faith. The appellate court,
however, rejected Villanueva's claim for compensatory
damages and affirmed the trial court's finding thereon.
Both Villanueva and the bank appealed to the Supreme
Court by way of a petition for review.
ISSUE:
Whether or not Villanueva suffered actual or
compensatory damages in the form of loss of profits
RULING:
Both the Court of Appeals and the trial court have
ascertained that Villanueva was unable to prove his
demand for compensatory damages arising from loss.
The unanimity of the factual ascertainment on this point
by the trial court and the Court of Appeals barred Court
from supplanting their finding and substituting it with
their own assessment.
The Court deleted the award of moral damages since
Villanueva failed to support his claim. None of the
circumstances mentioned in Article 2219 of the Civil
Code exists to sanction the award for moral damages.
Anent the award of attorney's fees, the Court deleted
the same. Attorney's fees may not be awarded where
there is no sufficient showing of bad faith in the parties'
persistence of a case other than an erroneous
conviction of the righteousness of his cause.
Accordingly, the Court reinstated the judgment of the
trial court.
FOR RECIT LANG PO
1. CIVIL LAW; DAMAGES; ACTUAL DAMAGES; CANNOT BE
PRESUMED BUT MUST BE PROVED WITH REASONABLE
CERTAINTY. The issue of whether VILLANUEVA
suffered actual or compensatory damages in the form of
loss of profits is factual. Both the Court of Appeals and
the trial court have ascertained that VILLANUEVA was
unable to prove his demand for compensatory damages
arising from loss. His evidence thereon was found
inadequate, uncorroborated, speculative, hearsay and
not the best evidence. Basic is the jurisprudential
principle that in determining actual damages, the court
cannot rely on mere assertions, speculations,
conjectures or guesswork but must depend on
competent proof and on the best obtainable evidence of
the actual amount of the loss. Actual damages cannot
be presumed but must be duly proved with reasonable
certainty.
2. ID.; ID.; MORAL DAMAGES; REQUISITES FOR AWARD
THEREOF. Moral damages include physical suffering,
mental anguish, fright, serious anxiety, besmirched
reputation, wounded feelings, moral shock, social
humiliation, and similar injury. Although incapable of
pecuniary computation, moral damages may be
recovered if they are the proximate result of the
defendant's wrongful act or omission. Thus, case law
establishes the requisites for the award of moral
damages, viz: (1) there must be an injury, whether
physical, mental or psychological, clearly sustained by
the claimant; (2) there must be a culpable act or
omission factually established; (3) the wrongful act or
omission of the defendant is the proximate cause of the
injury sustained by the claimant; and (4) the award of
damages is predicated on any of the cases stated in
Article 2219 of the Civil Code.
3. ID.; ID.; ID.; JUSTIFICATION FOR AWARD, NOT
PRESENT IN CASE AT BAR. It is beyond cavil that
VILLANUEVA had sufficient funds for the check. Had his
account number been correct, the check would not have
been dishonored. Hence, we can say that VILLANUEVA's
injury arose from the dishonor of his well-funded check.
We have already ruled that the dishonor of the check
does not entitle him to compensatory damages. But,
could the dishonor result in his alleged "intolerable
physical inconvenience and discomfort, extreme
humiliation, indignities, etc. which he had borne before
his peers, trading partners and officers of Kingly
Commodities?" True, we find that under the
circumstances of this case, VILLANUEVA might have
suffered some form of inconvenience and discomfort as
a result of the dishonor of his check. However, the same
could not have been so grave or intolerable as he
attempts to portray or impress upon us. Further, it is
clear from the records that the BANK was able to
remedy the caveat of Kingly Commodities to
VILLANUEVA that his trading account would be closed at
5:30 p.m. on 26 June 1986. The BANK was able to issue
a manager's check in favor of Kingly Commodities
before the deadline. It was able to likewise explain to
Kingly Commodities the circumstances surrounding the
unfortunate situation. Verily, the alleged
embarrassment or inconvenience caused to
VILLANUEVA as a result of the incident was timely and
adequately contained, corrected, mitigated, if not
entirely eradicated. VILLANUEVA, thus, failed to support
his claim for moral damages. In short, none of the
circumstances mentioned in Article 2219 of the Civil
Code exists to sanction the award for moral damages.
4. ID.; ID.; ATTORNEY'S FEES NOT AWARDED ABSENT
BAD FAITH. The award of attorney's fees should
likewise be deleted. The general rule is that attorney's
fees cannot be recovered as part of damages because
of the policy that no premium should be placed on the
right to litigate. They are not to be awarded every time
a party wins a suit. The power of the court to award
attorney's fees under Article 2208 of the Civil Code
demands factual, legal and equitable justification. Even
when a claimant is compelled to litigate with third
persons or to incur expenses to protect his rights, still
attorney's fees may not be awarded where there is no
sufficient showing of bad faith in the parties' persistence
of a case other than an erroneous conviction of the
righteousness of his cause.
Filipinas Broadcasting Network vs. Ago Medical
and Educational Center
Facts: "Expos" is a radio documentary program
aired every morning over DZRC-AM which is owned by
Filipinas Broadcasting Network, Inc. ("FBNI"). It is heard
over Legazpi City, the Albay municipalities and other
Bicol areas. In the morning of December 14 and 15,
1989, the hosts of the program exposed various alleged
complaints from students, teachers and parents against
Ago Medical and Educational Center-Bicol Christian
College of Medicine ("AMEC") and its administrators. The
alleged complaint include issues like requiring students
to take and pay for the subject even if the subject does
not have an instructor and that AMEC is a dumping
ground for moral and physically misfit people. Claiming
that the broadcasts were defamatory, AMEC and
Angelita Ago ("Ago"), as Dean of AMECs College of
Medicine, filed a complaint for damages against FBNI
including the hosts. The complaint further alleged that
AMEC is a reputable learning institution and with the
supposed expos, FBNI and the hosts transmitted
malicious imputations, and as such, destroyed AMECs
and Agos reputation. AMEC and Ago included FBNI as
defendant for allegedly failing to exercise due diligence
in the selection and supervision of its employees,
particularly the hosts. The Court of Appeals affirmed the
trial courts decision, making FBNI and the hosts liable
for libel. In holding FBNI liable for libel, the lower court
found that FBNI failed to exercise diligence in the
selection and supervision of its employees.
Issues: 1: Whether or not the broadcasts are libelous
2: Whether or not AMEC is entitled to moral
damages
Ruling:
1 The broadcasts are libelous. Every defamatory
imputation is presumed malicious. The hosts failed to
show adequately their good intention and justifiable
motive in airing the supposed gripes of the students.
As hosts of a documentary or public affairs program,
they should have presented the public issues
free from inaccurate and misleading information.
Hearing the students alleged complaints a month
before the expos, they had sufficient time to verify
their sources and information. However, they hardly
made a thorough investigation of the students
alleged gripes. Had the comments been an
expression of opinion based on established facts, it is
immaterial that the opinion happens to be
mistaken, as long as it might reasonably be
inferred from the facts. However, the comments of
said hosts were not backed up by facts. Therefore,
the broadcasts are not privileged and remain libelous
per se. Moreover, there is insufficient evidence on
record that FBNI exercised due diligence in
the selection and supervision of its employees, FBNI
did not show how it exercised diligence in supervising
its broadcasters. FBNIs alleged constant reminder to
its broadcasters to "observe truth, fairness and
objectivity and to refrain from using libelous and
indecent language" is not enough to prove due
diligence in the supervision of its broadcasters.
Adequate training of the broadcasters on the
industrys code of conduct, sufficient information on
libel laws, and continuous evaluation of the
broadcasters performance are but a few of the many
ways of showing diligence in the supervision of
broadcasters.
2 AMEC is entitled to moral damages. A juridical person
is generally not entitled to moral damages because,
unlike a natural person, it cannot experience
physical suffering or such sentiments as
wounded feelings, serious anxiety, mental anguish or
moral shock. The Court of Appeals cites Mambulao
Lumber Co. v. PNB, et al. to justify the award of moral
damages. However, the Courts statement in
Mambulao that a corporation may have a good
reputation which, if besmirched, may also be a
ground for the award of moral damages is an obiter
dictum or only a judge's incidental expression of
opinion. Nevertheless, AMECs claim for moral
damages falls under item 7 of Article 2219 of the
Civil Code. This provision expressly authorizes the
recovery of moral damages in cases of libel, slander
or any other form of defamation. Article 2219(7) does
not qualify whether the plaintiff is a natural or
juridical person. Therefore, a juridical person such as
a corporation can validly complain for libel or any
other form of defamation and claim for moral
damages.
MERALCO vs. TEAM ELECTRONICS
(see previous case)
Exemplary damages (Refer to previous cases)
BPI Investment vs DG Carreon
Producers Bank vs. Chua
Nominal Damages
Pedrosa v Rodriguez
Facts: Spouses Miguel and Rosalina de Rodriguez
adopted Maria Elena Rodriguez Pedrosa. Years later,
Miguel died intestate. Private respondents filed an
action to annul the adoption of Maria Elena. The RTC
upheld the validity of the adoption. While the case is
pending on appeal in the Court of Appeals, the
Rodriguezes entered into a Deed of Extrajudicial
Settlement and Partition with respondent Rosalina for
the partition of the estate of Miguel and of another
sister, Pilar. Rosalina acted as the representative of the
heirs of Miguel Rodriguez. New TCTs under the name of
the respondents were subsequently issued. Maria Elena
then sent her daughter to claim their share of the
properties from the Rodriguezes. The latter refused
saying that Maria Elena and Loreto were not heirs since
they were not their blood relatives. Maria Elena filed a
complaint to annul the partition.
Issue: Can Elena Rodriguez claim for nominal
damages?
Ruling: YES. Petitioner asks for the award of
damages. No receipts, agreements or any other
documentary evidence was presented to justify such
claim for damages. Actual damages, to be recoverable,
must be proved with a reasonable degree of
certainty. Courts cannot simply rely on speculation,
conjecture or guesswork in determining the fact and
amount of damages. The same is true for moral
damages. These cannot be awarded in the absence of
any factual basis. The unsubstantiated testimony of
Loreto Jocelyn Pedrosa is hearsay and has no probative
value. It is settled in jurisprudence that damages may
not be awarded on the basis of hearsay
evidence. Nonetheless, the failure of the petitioner to
substantiate her claims for damages does not mean
that she will be totally deprived of any damages. Under
the law, nominal damages are awarded, so that a
plaintiffs right, which has been invaded or violated by
defendants may be vindicated and recognized.
Considering that (1) technically, petitioner sustained
injury but which, unfortunately, was not adequately and
properly proved, (2) petitioner was unlawfully deprived
of her legal participation in the partition of the estate of
Miguel, her adoptive father, (3) respondents had
transferred portions of the properties involved to third
parties, and (4) this case has dragged on for more than
a decade, we find it reasonable to grant in petitioners
favor nominal damages in recognition of the existence
of a technical injury. The amount to be awarded as such
damages should at least commensurate to the injury
sustained by the petitioner considering the concept and
purpose of said damages. Such award is given in view of
the peculiar circumstances cited and the special reasons
extant in this case. Thus, the grant of ONE HUNDRED
THOUSAND (P100,000.00) PESOS to petitioner as
damages is proper in view of the technical injury she
has suffered.