Country Bankers Insurance Corporation vs.
Lianga Bay and
VOL. 374, JANUARY 25, 2002 653
Country Bankers Insurance Corporation vs. Lianga Bay
and Community Multi-Purpose Cooperative, Inc.
* liability. Stated elsewise, since the petitioner in this case is
G.R. No. 136914. January 25, 2002.
COUNTRY BANKERS INSURANCE CORPORATION,
petitioner, vs. LIANGA BAY AND COMMUNITY MULTI-
PURPOSE COOPERATIVE, INC., respondent.
Evidence; Each party must prove his own affirmative
allegations by the amount of evidence required by law which in civil
cases, is preponderance of evidence, to obtain a favorable judgment.
·A party is bound by his own affirmative allegations. This is a
well-known postulate echoed in Section 1 of Rule 131 of the Revised
Rules of Court. Each party must prove his own affirmative
allegations by the amount of evidence required by law which in civil
cases, as in this case, is preponderance of evidence, to obtain a
favorable judgment.
Same; Insurance; If a proof is made of a loss apparently within
a contract of insurance, the burden is upon the insurer to prove that
the loss arose from a cause of loss which is excepted or for which it is
not liable, or from a cause which limits its liability.·Where a risk is
excepted by the terms of a policy which insures against other perils
or hazards, loss from such a risk constitutes a defense which the
insurer may urge, since it has
_______________
* SECOND DIVISION.
654
654 SUPREME COURT REPORTS ANNOTATED
Community Multi-Purpose Cooperative, Inc.
not assumed that risk, and from this it follows that an insurer
seeking to defeat a claim because of an exception or limitation in
the policy has the burden of proving that the loss comes within the
purview of the exception or limitation set up. If a proof is made of a
loss apparently within a contract of insurance, the burden is upon
the insurer to prove that the loss arose from a cause of loss which is
excepted or for which it is not liable, or from a cause which limits its
defending on the ground of non-coverage and relying upon an
exemption or exception clause in the fire insurance policy, it has the
burden of proving the facts upon which such excepted risk is based,
by a preponderance of evidence. But petitioner failed to do so.
Same; Hearsay Rule; A witness can testify only to those facts
which he knows of his personal knowledge, which means those facts
which are derived from his perception·a witness may not testify as
to what he merely learned from others either because he was told or
read or heard the same; The hearsay rule is based upon serious
concerns about the trustworthiness and reliability of hearsay
evidence inasmuch as such evidence are not given under oath or
solemn affirmation and, more importantly, have not been subjected
to cross-examination.·A witness can testify only to those facts
which he knows of his personal knowledge, which means those facts
which are derived from his perception. Consequently, a witness may
not testify as to what he merely learned from others either because
he was told or read or heard the same. Such testimony is considered
hearsay and may not be received as proof of the truth of what he
has learned. Such is the hearsay rule which applies not only to oral
testimony or statements but also to written evidence as well. The
hearsay rule is based upon serious concerns about the
trustworthiness and reliability of hearsay evidence inasmuch as
such evidence are not given under oath or solemn affirmation and,
more importantly, have not been subjected to cross-examination by
opposing counsel to test the perception, memory, veracity and
articulateness of the out-of-court declarant or actor upon whose
reliability on which the worth of the out-of-court statement
depends.
Same; Same; Exceptions; Entries in Official Records; Requisites.
·There are exceptions to the hearsay rule, among which are
entries in official records. To be admissible in evidence, however,
three (3) requisites must concur, to wit: (a) that the entry was made
by a public officer, or by another person specially enjoined by law to
do so; (b) that it was made by the public officer in the performance
of his duties, or by such other person in the performance of a duty
specially enjoined by law; and (c) that the public officer or other
person had sufficient knowledge of the facts by him
655
VOL. 374, JANUARY 25, 2002 655
Country Bankers Insurance Corporation vs. Lianga Bay and
Community Multi-Purpose Cooperative, Inc.
stated, which must have been acquired by him personally or
through official information.
Insurance; Damages; Interest Rates; The insurance claim in this
case is evidently not a forbearance of money, goods or credit, and
thus the interest rate should be fixed at six percent (6%) computed
from the date of filing of the complaint.·In the said case of Eastern
Shipping, the Court further observed that a „forbearance‰ in the
context of the usury law is a „contractual obligation of lender or
creditor to refrain, during a given period of time, from requiring the
borrower or debtor to repay a loan or debt then due and payable.‰
Considering the foregoing, the insurance claim in this case is
evidently not a forbearance of money, goods or credit, and thus the
interest rate should be as it is hereby fixed at six percent (6%)
computed from the date of filing of the complaint.
Same; Same; Exemplary damages are imposed not to enrich one
party or impoverish another but to serve as a deterrent against or as
a negative incentive to curb socially deleterious actions.
·Concerning the award of exemplary damages for Fifty Thousand
Pesos (P50,000.00), we likewise find no legal and valid basis for
granting the same. Article 2229 of the New Civil Code provides that
exemplary damages may be imposed by way of example or
correction for the public good. Exemplary damages are imposed not
to enrich one party or impoverish another but to serve as a
deterrent against or as a negative incentive to curb socially
deleterious actions. They are designed to permit the courts to mould
behavior that has socially deleterious consequences, and its
imposition is required by public policy to suppress the wanton acts
of an offender. However, it cannot be recovered as a matter of right.
It is based entirely on the discretion of the court. We find no cogent
and valid reason to award the same in the case at bar.
Same; Same; AttorneyÊs Fees; AttorneyÊs fees are not awarded
every time a party prevails in a suit because of the policy that no
premium should be placed on the right to litigate.·With respect to
the award of litigation expenses and attorneyÊs fees, Article 2208 of
the New Civil Code enumerates the instances where such may be
awarded and, in all cases, it must be reasonable, just and equitable
if the same were to be granted. AttorneyÊs fees as part of damages
are not meant to enrich the winning party at the expense of the
losing litigant. They are not awarded every time a party prevails in
a suit because of the policy that no premium should be placed on
the right to litigate. The award of attorneyÊs fees is the exception
rather than the general rule. As such, it is necessary for the court to
make findings of facts and law that would bring the case within the
exception and
656
656 SUPREME COURT REPORTS ANNOTATED
Country Bankers Insurance Corporation vs. Lianga Bay and
Community Multi-Purpose Cooperative, Inc.
justify the grant of such award. We find none in this case to warrant
the award by the trial court of litigation expenses and attorneyÊs
fees in the amounts of Five Thousand Pesos (P5,000.00) and Ten
Thousand Pesos (P10,000.00), respectively, and therefore, the same
must also be deleted.
PETITION for review on certiorari of a decision of the
Court of Appeals.
The facts are stated in the opinion of the Court.
Velasquez, Meru & Associates for petitioner.
Alvizo, Alvizo, Ranoco & Alvizo Law Offices for
private respondent.
DE LEON, JR., J.:
Before us is a petition for review on certiorari of the
1 2
Decision of the Court of Appeals dated December 29, 1998
in CA-G.R. CV Case No. 36902 affirming in toto the
3
Decision dated December 26, 1991 of the Regional Trial
Court of Lianga, Surigao del Sur, Branch 28, in Civil Case
No. L-518 which ordered petitioner Country Bankers
Insurance Corporation to fully pay the insurance claim of
respondent Lianga Bay and Community Multi-Purpose
Cooperative, Inc., under Fire Insurance Policy No. F-1397,
for loss sustained as a result of the fire that occurred on
July 1, 1989 in the amount of Two Hundred Thousand
Pesos (P200,000.00), with interest at twelve percent (12%)
per annum from the date of filing of the complaint until
fully paid, as well as Fifty Thousand Pesos (P50,000.00) as
actual damages, Fifty Thousand Pesos (P50,000.00) as
exemplary damages, Five Thousand Pesos (P5,000.00) as
litigation expenses, Ten Thousand Pesos (P10,000.00) as
attorneyÊs fees, and the costs of suit.
_______________
1 Penned by Associate Justice Jesus M. Elbinias and concurred in by
Associate Justices Eugenio S. Labitoria and Marina L. Buzon, Rollo, pp.
25-29.
2 Fourth Division.
3 Penned by Judge Bernardo V. Saludares, Rollo, pp. 31-52.
VOL. 374, JANUARY 25, 2002
Country Bankers Insurance Corporation vs. Lianga Bay
and Community Multi-Purpose Cooperative, Inc.
The facts are undisputed:
The petitioner is a domestic corporation principally
engaged in the insurance business wherein it undertakes,
for a consideration, to indemnify another against loss,
damage or liability from an unknown or contingent event
including fire while the respondent is a duly registered
cooperative judicially declared insolvent and represented
by the elected assignee, Cornelio Jamero.
It appears that sometime in 1989, the petitioner and the
respondent entered into a contract of fire insurance. Under
Fire Insurance Policy No. F-1397, the petitioner insured
the respondentÊs stocks-in-trade against fire loss, damage
or liability during the period starting from June 20, 1989 at
4:00 p.m. to June 20, 1990 at 4:00 p.m., for the sum of Two
Hundred Thousand Pesos (P200,000.00).
On July 1, 1989, at or about 12:40 a.m., the respondentÊs
building located at Barangay Diatagon, Lianga, Surigao del
Sur was gutted by fire and reduced to ashes, resulting in
the total loss of the respondentÊs stocks-in-trade, pieces of
furniture and fixtures, equipments and records.
Due to the loss, the respondent filed an insurance claim
with the petitioner under its Fire Insurance Policy No. F-
1397, submitting: (a) the Spot Report of Pfc. Arturo V.
Juarbal, INP Investigator, dated July 1, 1989; (b) the
Sworn Statement of Jose Lomocso; and (c) the Sworn
Statement of Ernesto Urbiztondo.
The petitioner, however, denied the insurance claim on
the ground that, based on the submitted documents, the
building was set on fire by two (2) NPA rebels who wanted
to obtain canned goods, rice and medicines as provisions for
their comrades in the forest, and that such loss was an
excepted risk under paragraph No. 6 of the policy
conditions of Fire Insurance Policy No. F-1397, which
provides:
This insurance does not cover any loss or damage occasioned by or
through or in consequence, directly or indirectly, of any of the
following occurrences, namely:
xxx xxx xxx
657
658
657
658 SUPREME COURT REPORTS ANNOTATED
Country Bankers Insurance Corporation vs. Lianga Bay
and Community Multi-Purpose Cooperative, Inc.
(d) Mutiny, riot, military or popular uprising, insurrection,
rebellion, revolution, military or usurped power.
Any loss or damage happening during the existence of abnormal
conditions (whether physical or otherwise) which are occasioned by
or through or in consequence, directly or indirectly, of any of said
occurrences shall be deemed to be loss or damage which is not
covered by this insurance, except to the extent that the Insured
shall prove that such loss or damage happened independently of the
existence of such abnormal conditions.
Finding the denial of its claim unacceptable, the
respondent then instituted in the trial court the complaint
for recovery of „loss, damage or liability‰ against petitioner.
The petitioner answered the complaint and reiterated the
ground it earlier cited to deny the insurance claim, that is,
that the loss was due to NPA rebels, an excepted risk under
the fire insurance policy.
In due time, the trial court rendered its Decision dated
December 26, 1991 in favor of the respondent, declaring
 4
that: anchored on three (3) assigned errors, to wit:
Based on its findings, it is therefore the considered opinion of this
1. THE HONORABLE COURT OF APPEALS
Court, as it so holds, that the defenses raised by defendant-Country
FAILED TO APPRECIATE AND GIVE
Bankers has utterly crumbled on account of its inherent weakness,
CREDENCE TO THE SPOT REPORT OF PFC.
incredibility and unreliability, and after applying those helpful tools
ARTURO JUARBAL (EXH. 3) AND THE SWORN
like common sense, logic and the CourtÊs honest appraisal of the
STATEMENT OF JOSE LOMOCSO (EXH. 4)
real and actual situation obtaining in this area, such defenses
THAT THE RESPONDENTÊS STOCK-IN-TRADE
remains (sic) unimpressive and unconvincing, and therefore, the
WAS BURNED BY THE NPA REBELS, HENCE
defendant-Country Bankers has to be irreversibly adjudged liable,
AN EXCEPTED RISK UNDER THE FIRE
as it should be, to plaintiff-Insolvent Cooperative, represented in
INSURANCE POLICY.
this action by its Assignee, Cornelio Jamero, and thus, ordering
2. THE HONORABLE COURT OF APPEALS ERRED
said defendant-Country Bankers to pay the plaintiff-Insolvent
IN HOLDING PETITIONER LIABLE FOR 12%
Cooperative, as follows:
INTEREST PER ANNUM ON THE FACE VALUE
1. To fully pay the insurance claim for the loss the insured- OF THE POLICY FROM THE FILING OF THE
plaintiff sustained as a result of the fire under its Fire COMPLAINT UNTIL FULLY PAID.
Insurance Policy No. F-1397 in its full face value of 3. THE HONORABLE COURT OF APPEALS ERRED
P200,000.00 with interest of 12% per annum from date of IN HOLDING THE PETITIONER LIABLE FOR
filing of the complaint until the same is fully paid; ACTUAL AND EXEMPLARY DAMAGES,
2. To pay as and in the concept of actual or compensatory LITIGATION EXPENSES, ATTORNEYS FEES
damages in the total sum of P50,000.00; AND COST OF SUIT.
3. To pay as and in the concept of exemplary damages in the
total sum of P50,000.00; A party is bound by his own affirmative allegations. This is
a well-known postulate echoed in Section 1 of Rule 131 of
659 the Revised Rules of Court. Each party must prove his own
affirmative allegations by the amount of evidence required
by law which in
VOL. 374, JANUARY 25, 2002 659
Country Bankers Insurance Corporation vs. Lianga Bay _______________
and Community Multi-Purpose Cooperative, Inc.
4 Rollo, p. 12.

4. To pay in the concept of litigation expenses the sum of 660

P5,000.00;
5. To pay by way of reimbursement the attorneyÊs fees in the
sum of P10,000.00; and
6. To pay the costs of the suit.
For being unsubstantiated with credible and positive evidence, the
„counterclaim‰ is dismissed.
IT IS SO ORDERED.
Petitioner interposed an appeal to the Court of Appeals. On
December 29, 1998, the appellate court affirmed the
challenged decision of the trial court in its entirety.
Petitioner now comes before us via the instant petition
660 SUPREME COURT REPORTS ANNOTATED
Country Bankers Insurance Corporation vs. Lianga Bay
and Community Multi-Purpose Cooperative, Inc.
civil cases, as in this case, is5 preponderance of evidence, to
obtain a favorable judgment.
In the instant case, the petitioner does not dispute that
the respondentÊs stocks-in-trade were insured against fire
loss, damage or liability under Fire Insurance Policy No. F-
1397 and that the respondent lost its stocks-in-trade in a
fire that occurred on July 1, 1989, within the duration of
said fire insurance. The petitioner, however, posits the view
that the cause of the loss was an excepted risk under the
terms of the fire insurance policy.
Where a risk is excepted by the terms of a policy which
insures against other perils or hazards, loss from such a
risk constitutes a defense which the insurer may urge,
since it has not assumed that risk, and from this it follows
that an insurer seeking to defeat a claim because of an
exception or limitation in the policy has the burden of
proving that the loss comes within the purview of the
exception or limitation set up. If a proof is made of a loss
apparently within a contract of insurance, the burden is
upon the insurer to prove that the loss arose from a cause
of loss which is excepted or for which it is not liable, or
6
from a cause which limits its liability. Stated elsewise,
since the petitioner in this case is defending on the ground
of non-coverage and relying upon an exemption or
exception clause in the fire insurance policy, it has the
burden of proving the facts upon which such excepted risk
7
is based, by a preponderance of evidence. But petitioner
failed to do so.
The petitioner relies on the Sworn Statements of Jose
Lomocso and Ernesto Urbiztondo as well as on the Spot
Report of Pfc. Arturo V. Juarbal dated July 1, 1989, more
particularly the following statement therein:
_______________
5 Tai Tong Chuache & Co. v. Insurance Commission, 158 SCRA 366,
372 (1988); Summit Guaranty & Insurance Co., Inc. v. Court of Appeals,
110 SCRA 241, 249 (1981) citing 20 Am. Jur. 142; Paris-Manila Perfume
Co. v. Phoenix Assurance Co., 49 Phil. 753 (1926).
6 44 Am Jur 2d Insurance § 1938.
7 44 Am Jur 2d Insurance § 2021.
661
VOL. 374, JANUARY 25, 2002 661
Country Bankers Insurance Corporation vs. Lianga Bay
and Community Multi-Purpose Cooperative, Inc.
x x x investigation revealed by Jose Lomocso that those armed men
wanted to get can goods and rice for their consumption in the forest
PD investigation further disclosed that the perpetrator are member
(sic) of the NPA PD end . . . x x x
A witness can testify only to those facts which he knows of
his personal knowledge, which8
means those facts which are
derived from his perception. Consequently, a witness may
not testify as to what he merely learned from others either
because he was told or read or heard the same. Such
testimony is considered hearsay and may not be received as
proof of the truth of what he has learned. Such is the
hearsay rule which applies not only to oral testimony
9
or
statements but also to written evidence as well.
The hearsay rule is based upon serious concerns about
the trustworthiness and reliability of hearsay evidence
inasmuch as such evidence are not given under oath or
solemn affirmation and, more importantly, have not been
subjected to cross-examination by opposing counsel to test
the perception, memory, veracity and articulateness of the
out-of-court declarant or actor upon whose reliability 10
on
which the worth of the out-of-court statement depends.
Thus, the Sworn Statements of Jose Lomocso and
Ernesto Urbiztondo are inadmissible in evidence, for being
hearsay, inasmuch as they did not take the witness stand
and could not therefore be cross-examined.
There are exceptions to the hearsay
11
rule, among which
are entries in official records. To be admissible in
evidence, however, three (3) requisites must concur, to wit:
_______________
8 Section 36 of Rule 130 of the Revised Rules of Court.
9 D.M. Consunji, Inc. v. Court of Appeals and Maria J. Juego, G.R. No.
137873, April 20, 2001, pp. 3-4, 357 SCRA 249 citing 31A C.J.S. Evidence
§ 194 and Philippine Home Assurance Corp. v. Court of Appeals, 257
SCRA 468, 479 (1996).
10 Section 216 [2], Gilbert, Law Summaries on Evidence, cited in
Remedial Law, Vol. V: Revised Rules on Evidence, Oscar M. Herrera,
1999 Edition, p. 565.
11 Section 44 of Rule 130 of the Revised Rules of Court provides:
Entries in official records made in the performance of his duty by a public
officer of the Philippines, or by a person in the perfor
662
662 SUPREME COURT REPORTS ANNOTATED
Country Bankers Insurance Corporation vs. Lianga Bay
 and Community Multi-Purpose Cooperative, Inc.
(a) that the entry was made by a public officer, or by
another person specially enjoined by law to do so;
(b) that it was made by the public officer in the
performance of his duties, or by such other person
in the performance of a duty specially enjoined by
law; and
(c) that the public officer or other person had sufficient
knowledge of the facts by him stated, which must
have been acquired12 by him personally or through
official information.
The third requisite was not met in this case since no
investigation, independent of the statements gathered from
Jose Lomocso, was conducted by Pfc. Arturo V. Juarbal. In
fact, as the petitioner itself 13 pointed out, citing the
testimony of Pfc. Arturo Juarbal, the latterÊs Spot Report
„was based on the personal knowledge of the caretaker Jose
Lomocso who witnessed every single incident surrounding
the facts and circumstances of the case.‰ This argument
undeniably weakens the petitionerÊs defense, for the Spot
Report of Pfc. Arturo Juarbal relative to the statement of
Jose Lomocso to the effect that NPA rebels allegedly set fire
to the respondentÊs building is inadmissible in evidence, for
the purpose of proving the truth of the statements
contained in the said report, for being hearsay.
The said Spot Report is admissible only insofar as it
constitutes part of the testimony of Pfc. Arturo V. Juarbal
since he himself took the witness stand and was available
for cross-examination. The portions of his Spot Report
which were of his personal knowledge or which consisted of
his perceptions and conclusions are not hearsay. The rest of
the said report relative to the statement of Jose Lomocso
may be considered as independently relevant statements
gathered in the course of JuarbalÊs investigation and may
be admitted
14
as such but not necessarily to prove the truth
thereof.
_______________
mance of a duty specially enjoined by law, are prima facie evidence of
the facts therein stated.
12 Africa v. Caltex (Phils.), Inc., 16 SCRA 448, 452 (1966).
13 Rollo, pp. 16-17.
14 Rodriguez v. Court of Appeals, 273 SCRA 607, 618 (1997).
663
VOL. 374, JANUARY 25, 2002 663
Country Bankers Insurance Corporation vs. Lianga Bay
and Community Multi-Purpose Cooperative, Inc.
The petitionerÊs evidence to prove its defense is sadly
wanting and thus, gives rise to its liability to the
respondent under Fire Insurance Policy No. F-1397.
Nonetheless, we do not sustain the trial courtÊs imposition
of twelve percent (12%) interest on the insurance claim as
well as the monetary award for actual and exemplary
damages, litigation expenses and attorneyÊs fees for lack of
legal and valid basis.
Concerning the application of the proper interest rates,
the following guidelines were set in Eastern Shipping
Lines, Inc. v. Court of Appeals and Mercantile Insurance
15
Co., Inc.:
I. When an obligation, regardless of its source, i.e.,
law, contracts, quasi-contracts, delicts or quasi-
delicts, is breached, the contravenor can be held
liable for damages. The provisions under Title
XVIII on „Damages‰ of the Civil Code govern in
determining the measure of recoverable damages.
II. With regard particularly to an award of interest in
the concept of actual and compensatory damages,
the rate of interest, as well as the accrual thereof, is
imposed, as follows:
1. When the obligation is breached, and it consists in
the payment of a sum of money, i.e., a loan or
forbearance of money, the interest due should be
that which may have been stipulated in writing.
Furthermore, the interest due shall itself earn legal
interest from the time it is judicially demanded. In
the absence of stipulation, the rate of interest shall
be 12% per annum to be computed from default, i.e.,
from judicial or extrajudicial demand under and
subject to the provisions of Article 1169 of the Civil
Code.
2. When an obligation, not constituting a loan or
 forbearance of money, is breached, an interest on
the amount of damages awarded may be imposed at
the discretion of the court at the rate of 6% per
annum. No interest, however, shall be adjudged on
unliquidated claims or damages except when or
until the demand can be established with
reasonable certainty. Accordingly, where the
demand is established with reasonable certainty,
the interest shall begin to run from the time the
claim is made judicially or extrajudicially (Art.
1169, Civil Code) but when such certainty cannot be
so reasonably established at the time the demand is
made, the interest shall begin to run only from the
date the judgment of the court is made (at
_______________
15 234 SCRA 78, 95-97 (1994).
664
664 SUPREME COURT REPORTS ANNOTATED
Country Bankers Insurance Corporation vs. Lianga Bay
and Community Multi-Purpose Cooperative, Inc.
which time the quantification of damages may be
deemed to have been reasonably ascertained). The
actual base for the computation of legal interest
shall, in any case, be on the amount finally
adjudged.
3. When the judgment of the court awarding a sum of
money becomes final and executory, the rate of legal
interest, whether the case falls under paragraph 1
or paragraph 2, above, shall be 12% per annum
from such finality until its satisfaction, this interim
period being deemed to be by then an equivalent to
a forbearance of credit.
In the said case of Eastern Shipping, the Court further
observed that a „forbearance‰ in the context of the usury
law is a „contractual obligation of lender or creditor to
refrain, during a given period of time, from requiring the
borrower or debtor to repay a loan or debt then due and
payable.‰
Considering the foregoing, the insurance claim in this
case is evidently not a forbearance of money, goods or
credit, and thus the interest rate should be as it is hereby
fixed at six percent (6%) computed from the date of filing of
the complaint.
We find no justification for the award of actual damages
of Fifty Thousand Pesos (P50,000.00). Well-entrenched is
the doctrine that actual, compensatory and consequential
16
damages must be proved, and cannot be presumed. That
part of the dispositive portion of the Decision of the trial
court ordering the petitioner to pay actual damages of Fifty
Thousand Pesos (P50,000.00) has no basis at all. The
justification, if any, for such an award of actual damages
does not appear in the body of the decision of the trial
court. Neither is there any testimonial and documentary
evidence on the alleged actual damages of Fifty Thousand
Pesos (P50,000.00) to warrant such an award. Thus, the
same must be deleted.
Concerning the award of exemplary damages for Fifty
Thousand Pesos (P50,000.00), we likewise find no legal and
valid basis for granting the same. Article 2229 of the New
Civil Code provides that exemplary damages may be
imposed by way of example or
_______________
16 Eduardo P. Lucas v. Spouses Maximo C. Royo and Corazon B. Royo,
G.R. No. 136185, October 30, 2000, p. 9, 344 SCRA 481; Integrated
Packaging Corporation v. Court of Appeals, 333 SCRA 170, 179 (2000);
Lucena v. Court of Appeals, 313 SCRA 47, 61-62 (1999).
665
VOL. 374, JANUARY 25, 2002 665
Country Bankers Insurance Corporation vs. Lianga Bay
and Community Multi-Purpose Cooperative, Inc.
correction for the public good. Exemplary damages are
imposed not to enrich one party or impoverish another but
to serve as a deterrent against or as a negative incentive to
curb socially deleterious actions. They are designed to
permit the courts to mould behavior that has socially
deleterious consequences, and its imposition is required by
public policy to suppress the wanton acts of an offender.
However, it cannot be recovered as a matter of right. It is
based entirely on the discretion of the court. We find no
cogent and valid reason to award the same in the case at
bar.
With respect to the award of litigation expenses and 17
attorneyÊs fees, Article 2208 of the New Civil Code
enumerates the instances
_______________
17 Art. 2208. In the absence of stipulation, attorneyÊs fees and expenses
of litigation, other than judicial costs, cannot be recovered, except:
1) When exemplary damages are awarded;
2) When the defendantÊs act or omission has compelled the plaintiff
to litigate with third persons or to incur expenses to protect his
interest;
3) In criminal cases of malicious prosecution against the plaintiff;
4) In case of a clearly unfounded civil action or proceeding against
the plaintiff;
5) Where the defendant acted in gross and evident bad faith in
refusing to satisfy the plaintiffs plainly valid, just and
demandable claim;
6) In actions for legal support;
7) In actions for the recovery of wages of household helpers, laborers
and skilled workers;
8) In actions for indemnity under workmenÊs compensation and
employerÊs liability laws;
9) In a separate civil action to recover civil liability arising from a
crime;
10) When at least double judicial costs are awarded;
11) In any other case where the court deems it just and equitable
that attorneyÊs fees and expenses of litigation should be
recovered.
666
666 SUPREME COURT REPORTS ANNOTATED
Country Bankers Insurance Corporation vs. Lianga Bay
and Community Multi-Purpose Cooperative, Inc.
where such may be awarded and, in all cases, it must be
reasonable, just and equitable if the same were to be
granted. AttorneyÊs fees as part of damages are not meant
to enrich the winning party at the expense of the losing
litigant. They are not awarded every time a party prevails
in a suit because of the policy that
18
no premium should be
placed on the right to litigate. The award of attorneyÊs
fees is the exception rather than the general rule. As such,
it is necessary for the court to make findings of facts and
law that would bring the case within the exception and
justify the grant of such award. We find none in this case to
warrant the award by the trial court of litigation expenses
and attorneyÊs fees in the amounts of Five Thousand Pesos
(P5,000.00) and Ten Thousand Pesos (P10,000.00),
respectively, and therefore, the same must also be deleted.
WHEREFORE, the appealed Decision is MODIFIED.
The rate of interest on the adjudged principal amount of
Two Hundred Thousand Pesos (P200,000.00) shall be six
percent (6%) per annum computed from the date of filing of
the Complaint in the trial court. The awards in the
amounts of Fifty Thousand Pesos (P50,000.00) as actual
damages, Fifty Thousand Pesos (P50,000.00) as exemplary
damages, Five Thousand Pesos (P5,000.00) as litigation
expenses, and Ten Thousand Pesos (P10,000.00) as
attorneyÊs fees are hereby DELETED. Costs against the
petitioner.
SO ORDERED.
Bellosillo (Chairman), Mendoza, Quisumbing and
Buena, JJ., concur.
Judgment modified.
Notes.·Entries in official records are only prima facie
evidence of the facts therein stated. They are not
conclusive. (Ford vs. Court of Appeals, 186 SCRA 21 [1990])
_______________
In all cases, the attorneyÊs fees and expenses of litigation must be reasonable.
18 Ibaan Rural Bank, Inc. v. Court of Appeals, 321 SCRA 88, 95 (1999).
667
VOL. 374, JANUARY 25, 2002 667
People vs. Moreno
As a rule, insurance contracts are supposed to be
 interpreted liberally in favor of the assured. (Sun
Insurance Office, Ltd. vs. Court of Appeals, 211 SCRA 554
[1992])

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