Moral Damages Cases.docx

THIRD DIVISION

The defendant is further ordered to pay the amount of P50,000.00 as fair and reasonable attorney's fees.

G.R. No. 99301 March 13, 1997

And to pay the costs of suit.

VICTOR KIERULF, LUCILA H. KIERULF and PORFIRIO LEGASPI, petitioners, vs. THE COURT OF APPEALS and PANTRANCO NORTH EXPRESS, INCORPORATED, respondents.

Respondent Court of Appeals modified the decision of the Regional Trial Court of Quezon City, Branch 92, 4rendered on May 24, 1989 in Civil Case No. Q-50732 for damages. The dispositive portion of the said decision is quoted below: 5

G.R. No. 99343 March 13, 1997 PANTRANCO NORTH EXPRESS, INCORPORATED, petitioner, vs. VICTOR KIERULF, LUCILA H. KIERULF and PORFIRIO LEGASPI, respondents. PANGANIBAN, J.: How much moral, exemplary and actual damages are victims of vehicular accidents entitled to?

WHEREFORE, in view of the foregoing, judgment is hereby rendered against the defendant, ordering Pantranco to pay: Under the First Cause of Action 1. In favor of plaintiff Lucia H. Kierulf actual damages in the amount on ONE HUNDRED SEVENTY FOUR THOUSAND ONE HUNDRED and 77/100 (P174,100.77) PESOS;

In G.R. No. 99301, the victims of the vehicular mishap pray for an increase in the award of damages, over and above those granted by the appellate court. In this case, the husband of the victim of the vehicular accident claims compensation/damages for the loss of his right to marital consortium which, according to him, has been diminished due to the disfigurement suffered by his wife. In G.R. No. 99343, the transport company which owned the bus that collided with the victims' pickup truck, asks for exoneration by invoking an alleged fortuitous event as the cause of the mishap.

2. To pay said plaintiff moral damages in the amount of ONE HUNDRED THOUSAND and 00/100 (P100,000.00) PESOS;

Petitioners in both cases assail the Decision, 1 dated March 13, 1991, in CA-GR CV No. 23361 of the Court of Appeals, Sixth Division 2 ordering the following: 3

1. To pay plaintiff Victor Kierulf the amount of NINETY SIX THOUSAND EIGHT HUNDRED TWENTY FIVE and 15/100 (P96,825.15) PESOS by way of indemnification for the damages to the Isuzu Carry All with plate No. UV PGS 796 registered in his name.

For reasons indicated and in the light of the law and jurisprudence applicable to the case at bar, the judgment of the trial court is hereby modified as follows: Under the first cause of action, the defendant is hereby ordered to pay Lucila H. Kierulf the following: (1) For actual damages incurred for hospitalization, medical case (sic) and doctor's fees, the sum of P241,861.81; (2) For moral P200,000.00;

damages

the

sum

of

(3) For exemplary damages the amount of P100,000.00. Under the second cause of action, to pay Victor Kierulf, by way of indemnification damage to the Isuzu Carry All with plate No. UV PGS 798, the amount of P96,825.15.

3. To pay exemplary damages in the amount of TEN THOUSAND and 00/100 (P10,000.00) PESOS. Under the Second Cause of Action

Under the Third Cause of Action 1. To pay the plaintiff spouses by way of reimbursement for actual damages incurred for the treatment of injuries sustained by their driver Porfirio Legaspi in the amount of SIX THOUSAND THREE HUNDRED TWENTY EIGHT and 19/100 (P6,328.19) PESOS; and 2. To pay plaintiff Porfirio Legaspi moral damages in the amount of TEN THOUSAND and 00/100 (P10,000.00) PESOS. Defendant is further ordered to pay the amount of P25,000.00 for and as attorney's fees, and to pay costs. All other claims dismissed.

and

counterclaims

are

The Facts Under the third cause of action, to pay Porfirio Legaspi the following: (1) For moral damages in the amount of P25,000.00; (2) To reimburse the plaintiff the amount of P6,328.19 for actual damages incurred in the treatment and hospitalization of the driver Porfirio Legaspi.

The following may be culled from the undisputed factual findings of the trial court and Respondent Court of Appeals: The initial investigation conducted by Pfc. D.O. Cornelio disclosed that at about 7:45 p.m. of 28 February 1987, the Pantranco bus, bearing plate number AVE-845 (TB PIL 86), was traveling along Epifanio de los Santos Avenue (EDSA) from Congressional Avenue towards Clover Leaf, Balintawak. Before it reached the corner of Oliveros Drive, the driver lost control of the bus, causing it to swerve to the left, and then to fly over the center island occupying the east-bound lane of EDSA. The front of the bus bumped the front portion of an Isuzu pickup driven by Legaspi,

which was moving along Congressional Avenue heading towards Roosevelt Avenue. As a result, the points of contact of both vehicles were damaged and physical injuries were inflicted on Legaspi and his passenger Lucila Kierulf, both of whom were treated at the Quezon City General Hospital. The bus also hit and injured a pedestrian who was then crossing EDSA.

On the other hand, Pantranco raises the following assignment of errors: 10

Despite the impact, said bus continued to move forward and its front portion rammed against a Caltex gasoline station, damaging its building and gasoline dispensing equipment.

4.2 The Honorable Court of Appeals erred in holding that the proximate cause of the accident was the negligence of Pantranco and not a fortuitous event; and

As a consequence of the incident, Lucila suffered injuries, as stated in the medical report 6 of the examining physician, Dr. Pedro P. Solis of the Quezon City General Hospital. The injuries sustained by Lucila required major surgeries like "tracheotomy, open reduction, mandibular fracture, intermaxillary repair of multiple laceration" and prolonged treatment by specialists. Per medical report of Dr. Alex L. Castillo, Legaspi also suffered injuries. 7

4.1 The Honorable Court of Appeals erred in holding that the driver of Pantranco was negligent.

4.2 (sic) The Honorable Court of Appeals erred in awarding excessive damages. In sum, Spouses Kierulf and Legaspi argue that the damages awarded were inadequate while Pantranco counters that they were astronomical, bloated and not duly proved. 11 The Court's Ruling

The front portion of the pickup truck, owned by Spouses Kierulf, bearing plate number UV PGS 798, was smashed to pieces. The cost of repair was estimated at P107,583.50. Pantranco, in its petition, 8 adds that on said day, the abovementioned bus was driven by Jose Malanum. While cruising along EDSA, a used engine differential accidentally and suddenly dropped from a junk truck in front of the bus. Said differential hit the under chassis of the bus, throwing Malanum off his seat and making him lose control of said bus. The bus swerved to the left, hit the center island, and bumped the pickup of the spouses. The Issues Spouses Kierulf and their driver Legaspi raise the following assignment of errors in this appeal: 9 A The respondent court of appeals erred in awarding only P200,000.00 and P25,000.00 as and for moral damages for the petitioners Kierulf and Legaspi respectively when it should at least have been P1,000,000.00 and P100,000.00 respectively. B The respondent court of appeals erred in awarding only P100,000.00 to the petitioners Kierulf and nothing to petitioner Legaspi as and for exemplary damages when it should have at least been P500,000.00 and P50,000.00 respectively. C The respondent court of appeals erred in not awarding any amount for the lost income due to the petitioner Lucila H. Kierulf. D The respondent court of appeals erred in not awarding the amount of P107,583.50 for the damages sustained by the Isuzu carry-all pickup truck. E The respondent court of appeals erred in not awarding any legal interest on the sums awarded.

First Issue: Negligence and Proximate Cause Are Factual Issues Even on appeal, Pantranco insists that its driver was not negligent and that the mishap was due to a fortuitous event. February 28, 1987, the date of the incident, was a Saturday; hence, driving at the speed of 40-50 kilometers per hour (kph) was prudent. It contends that the proximate cause was the accidental dropping of a used engine differential by a junk truck immediately ahead of the bus. 12 As to what really caused the bus to careen to the opposite lane of EDSA and collide with the pickup truck driven by Legaspi is a factual issue which this Court cannot pass upon. As a rule, the jurisdiction of this Court is limited to the review of errors of law allegedly committed by the appellate court. This Court is not bound to analyze and weigh all over again the evidence already considered in the proceedings below. 13 Although the Court may review factual issues in some instances, 14 the case at bar does not fall under any one of them. The fact that there is no conflict between the findings of the trial court and respondent Court bolsters our position that a review of the facts found by respondent Court is not necessary. 15 There being no conflict between the findings of the Court of Appeals and the trial court that gross negligence was the real cause of the collision, we see no reason to digress from the standard rule. We quote with concurrence the factual findings of the appellate and trial courts, showing that the accident was, contrary to the belief of Pantranco, the result of the gross negligence of its driver. To wit: 16 The vehicular accident was certainly not due to a fortuitous event. We agree with the trial court's findings that the proximate cause was the negligence of the defendant's driver, such as: (1) Driving at that part of EDSA at 7:45 P.M. from Congressional Avenue towards Clover Leaf overpass in the direction of Balintawak at 40-50 kph is certainly not a manifestation of good driving habit of a careful and prudent man exercising the extraordinary diligence required by law. Traffic in that place and at that time of the day is always heavy. (2) Losing control of the wheel in such a place crowded with moving vehicles, jumping over the island which separates the East bound from the West bound lane of EDSA indicate that the defendant's bus was traveling at a speed limit beyond what a prudent and careful driver is expected of, if such driver were exercising due diligence

required by law. (3) Finally, crossing over the island and traversing the opposite lane and hitting an oncoming vehicle with such force as to smash the front of such vehicle and finally being forced to stop by bumping against a Caltex service station — all show not only negligence, but recklessness of the defendant's driver. (4) If defendant's driver was not driving fast, was not recklessly negligent and had exercised due care and prudence, with due respect to human life and to others travelling in the same place, the driver could have stopped the bus the moment it crossed the island, and avoided crossing over to the other lane and bumping against vehicles travelling in opposite direction. The defendant's driver did not take any evasive action and utterly failed to adopt any measure to avoid injuries and damage to others because he "lost control of the bus", which was like a juggernaut, let loose in a big crowd, smashing everything on its path. Second Issue: Moral Damages

husband's pain, mental anguish and frustration, she was always nervous, tense, depressed and had trouble sleeping, eating and concentrating. Thus, the California court awarded her damages for loss of consortium. Whether Rodriguez may be cited as authority to support the award of moral damages to Victor and/or Lucila Kierulf for "loss of consortium," however, cannot be properly considered in this case. Victor's claim for deprivation of his right to consortium, although argued before Respondent Court, is not supported by the evidence on record. His wife might have been badly disfigured, but he had not testified that, in consequence thereof, his right to marital consortium was affected. Clearly, Victor (and for that matter, Lucila) had failed to make out a case for loss of consortium, unlike the Rodriguez spouse. Again, we emphasize that this claim is factual in origin and must find basis not only in the evidence presented but also in the findings of the Respondent Court. For lack of factual basis, such claim cannot be ruled upon by this Court at this time. Third Issue: No Consideration of Social and Financial Standing in this Case

Complainants aver that the moral damages awarded by Respondent Court are "clearly and woefully not enough." The established guideline in awarding moral damages takes into consideration several factors, some of which are the social and financial standing of the injured parties and 17 their wounded moral feelings and personal pride. 18 The Kierulf spouses add that the Respondent Court should have considered another factor: the loss of their conjugal fellowship and the impairment or destruction of their sexual life. 19

The social and financial standing of Lucila cannot be considered in awarding moral damages. The factual circumstances prior to the accident show that no "rude and rough" reception, no "menacing attitude," no "supercilious manner," no "abusive language and highly scornful reference" was given her. The social and financial standing of a claimant of moral damages may be considered in awarding moral damages only if he or she was subjected to contemptuous conduct despite the offender's knowledge of his or her social and financial standing. 24

The spouses aver that the disfigurement of Lucila's physical appearance cannot but affect their marital right to "consortium" which would have remained normal were it not for the accident. Thus, the moral damages awarded in favor of Lucila should be increased to P1,000,000.00, not only for Lucila but also for her husband Victor who also suffered "psychologically." A California case, Rodriguez vs. Bethlehem Steel Corporation, 20 is cited as authority for the claim of damages by reason of loss or marital consortium, i.e. loss of conjugal fellowship and sexual relations. 21

Be that as it may, it is still proper to award moral damages to Petitioner Lucila for her physical sufferings, mental anguish, fright, serious anxiety and wounded feelings. She sustained multiple injuries on the scalp, limbs and ribs. She lost all her teeth. She had to undergo several corrective operations and treatments. Despite treatment and surgery, her chin was still numb and thick. She felt that she has not fully recovered from her injuries. She even had to undergo a second operation on her gums for her dentures to fit. She suffered sleepless nights and shock as a consequence of the vehicular accident. 25 In this light and considering further the length of time spent in prosecuting the complaint and this appeal, we find the sum of P400,000.00 as moral damages for Petitioner Lucila to be fair and just under the circumstances.

Pantranco rebuts that Victor's claim of moral damages on alleged loss of consortium is without legal basis. Article 2219 of the Civil Code provides that only the person suffering the injury may claim moral damages. Additionally, no evidence was adduced to show that the consortium had indeed been impaired and the Court cannot presume that marital relations disappeared with the accident. 22 The Courts notes that the Rodriguez case clearly reversed the original common law view first enunciated in the case of Deshotel vs. Atchison, 23 that a wife could not recover for the loss of her husband's services by the act of a third party. Rodriguez ruled that when a person is injured to the extent that he/she is no longer capable of giving love, affection, comfort and sexual relations to his or her spouse, that spouse has suffered a direct and real personal loss. The loss is immediate and consequential rather than remote and unforeseeable; it is personal to the spouse and separate and distinct from that of the injured person. Rodriguez involved a couple in their early 20s, who were married for only 16 months and full of dreams of building a family of their own, when the husband was struck and almost paralyzed by a falling 600-pound pipe. The wife testified how her life had deteriorated because her husband became a lifelong invalid, confined to the home, bedridden and in constant need of assistance for his bodily functions; and how her social, recreational and sexual life had been severely restricted. It also deprived her of the chance to bear their children. As a constant witness to her

Fourth Issue: Exemplary Damages Complainants also pray for an increase of exemplary damages to P500,000.00 and P50,000 for Spouses Kierulf and Legaspi, respectively. This prayer is based on the pronouncement of this Court in Batangas Transportation Company vs. Caguimbal 26 that "it is high time to impress effectively upon public utility operators the nature and extent of their responsibility in respect of the safety of their passengers and their duty to exercise greater care in the selection of drivers and conductors . . . ." Pantranco opposes this, for under Article 2231 of the Civil Code, "exemplary damages may be granted if the defendant acted with gross negligence." And allegedly, gross negligence is sorely lacking in the instant case. Exemplary damages are designed to permit the courts to mould behavior that has socially deleterious consequences, and its imposition is required by public policy to suppress the wanton acts of an offender. 27However, it cannot be recovered as a matter of right. It is based entirely on the discretion of the Court. 28Jurisprudence sets certain requirements before exemplary damages may be awarded, to wit: 29

(1) (T)hey may be imposed by way of example or correction only in addition, among others, to compensatory damages, and cannot be recovered as a matter of right, their determination depending upon the amount of compensatory damages that may be awarded to the claimant; (2) the claimant must first establish his right to moral, temperate, liquidated or compensatory damages; and (3) the wrongful act must be accompanied by bad faith, and the award would be allowed only if the guilty party acted in a wanton, fraudulent, reckless, oppressive or malevolent manner. The claim of Lucila has been favorably considered in view of the finding of gross negligence by Respondent Court on the part of Pantranco. This is made clear by Respondent Court in granting Lucila's claim of exemplary damages: 30 (P)ublic utility operators like the defendant, have made a mockery of our laws, rules and regulations governing operations of motor vehicles and have ignored either deliberately or through negligent disregard of their duties to exercise extraordinary degree of diligence for the safety of the travelling public and their passengers. . . . . To give teeth to this warning, the exemplary damages awarded to Petitioner Lucila is increased to P200,000.00. The fact of gross negligence duly proven, we believe that Legaspi, being also a victim of gross negligence, should also receive exemplary damages. Under the facts proven, the Court awards him P25,000 as exemplary damages. Fifth Issue: Loss of Earnings as a Component of Damages Lost income in the amount of P16,500.00 is also claimed by Legaspi stating that his "whole future has been jeopardized." 31 This, in turn, is not rebutted by Pantranco. It should be noted that Respondent Court already considered this when it stated that the award of P25,000.00 included compensation for "mental anguish and emotional strain of not earning anything with a family to support." Moral damages, though incapable of pecuniary estimation, are in the category of an award designed to compensate the claimant for actual injury and are not meant to enrich complainant at the expense of defendant. 32 We find, however, the claim of Legaspi to be duly substantiated. Pantranco failed to rebut the claim of Porfirio that he had been incapacitated for ten (10) months and that during said period he did not have any income. Considering that, prior to the accident, he was employed as a driver and was earning P1,650.00 a month, his claim for P16,500.00 as compensation for loss of earning capacity for said period is amply supported by the records 33 and is demandable under Article 2205 of the Civil Code. 34 Complainants contend that Lucila is also entitled to damages for "loss or impairment of earning capacity in cases of temporary or permanent personal injury" under Article 2205 of the Civil Code. Notably, both the trial court and public respondent denied this prayer because of her failure to produce her income tax returns for the years 1985 and 1986, notwithstanding the production of her 1983 and 1984 income tax returns. Pantranco opposes the above claim for loss of earning capacity on the ground that there is no proof "that for the two years

immediately preceding the accident Lucila was indeed deriving income from some source which was cut off by the accident. 35 We agree with the findings of Respondent Court that Lucila's claim of loss of earning capacity has not been duly proven. The alleged loss must be established by factual evidence for it partakes of actual damages. A party is entitled to adequate compensation for such pecuniary loss actually suffered and duly proved. Such damages, to be recoverable, must not only be capable of proof, but must actually be shown with a reasonable degree of certainty. We have emphasized that these damages cannot be presumed, and courts in making an award must point out specific facts which can serve as basis for measuring whatever compensatory or actual damages are borne. 36 Mere proof of Lucila's earnings consisting of her 1983 and 1984 income tax returns would not suffice to prove earnings for the years 1985 and 1986. The incident happened on February 28, 1987. If indeed Lucila had been earning P50,000.00 every month prior to the accident, as she alleged, there are evidentiary proofs for such earnings other than income tax returns such as, bur not limited to, payroll receipts, payments to the SSS, or withholding tax paid every month. Sad to say, these other proofs have not been presented, and we cannot presume that they exist on the strength of the word of Lucila alone. Sixth Issue: Reduction of Actual Damages on the Pickup Based on an Estimate Complainants contend that the reduction of 10% from the written estimate of the cost of repairs by the trial court is pure speculation. 37 Pantranco opposes this by pointing out that judicial notice is made by respondent Court of the propensity of motor repair shops to exaggerate their estimates. 38 An estimate, as it is categorized, is not an actual expense incurred or to be incurred in the repair. The reduction made by respondent Court is reasonable considering that in this instance such estimate was secured by the complainants themselves. Epilogue This Court cannot remind the bench and the bar often enough that in order that moral damages may be awarded, there must be pleading and proof of moral suffering, mental anguish, fright and the like. While no proof of pecuniary loss is necessary in order that moral damages may be awarded, the amount of indemnity being left to the discretion of the court, 39 it is nevertheless essential that the claimant should satisfactorily show the existence of the factual basis of damages 40 and its causal connection to defendant's acts. This is so because moral damages, though incapable of pecuniary estimation, are in the category of an award designed to compensate the claimant for actual injury suffered and not to impose a penalty on the wrongdoer. 41 In Francisco vs. GSIS, 42 the Court held that there must be clear testimony on the anguish and other forms of mental suffering. Thus, if the plaintiff fails to take the witness stand and testify as to his/her social humiliation, wounded feelings and anxiety, moral damages cannot be awarded. In Cocoland Development Corporation vs. National Labor Relations Commission, 43 the Court held that "additional facts must be pleaded and proven to warrant the grant of moral damages under the Civil Code, these being, . . . social humiliation, wounded feelings, grave anxiety, etc., that resulted therefrom." Moral damages are awarded to enable the injured party to obtain means, diversions or amusements that will serve to alleviate the moral suffering he/she has undergone, by reason of the defendant's culpable action. 44 Its award is aimed at restoration, as much as possible, of the spiritual status quo ante; thus, it must be proportionate to the suffering inflicted. 45 Since each case must be governed by its own peculiar circumstances, there is no hard and fast rule in determining the proper amount. The yardstick should be that the amount awarded should not be so palpably and

scandalously excessive as to indicate that it was the result of passion, prejudice or corruption on the part of the trial judge. 46 Neither should it be so little or so paltry that it rubs salt to the injury already inflicted on plaintiffs. WHEREFORE, premises considered, the petition for review in G.R. No. 99301 is PARTIALLY GRANTED, while that of Pantranco North Express, Inc., in G.R. No. 99343 is DISMISSED. The Decision appealed from is AFFIRMED with MODIFICATION. The award of moral damages to Lucila and Legaspi is hereby INCREASED to P400,000.00 and P50,000.00 respectively; exemplary damages to Lucila is INCREASED to P200,000.00. Legaspi is awarded exemplary damages of P50,000.00. The amount of P 16,500.00 as actual or compensatory damages is also GRANTED to Legaspi. All other awards of Respondent Court of Appeals are AFFIRMED. Pantranco shall also PAY legal interest of 6% per annum on all sums awarded from the date of promulgation of the decision of the trial court, May 24, 1989, until actual payment. SO ORDERED. Narvasa, C.J., Davide, Jr., Melo and Francisco, JJ., concur.

SECOND DIVISION G.R. No. 121998

Acts committed contrary to the provisions of Art. 248 of the Revised Penal Code.3

March 9, 2000

PEOPLE OF THE PHILIPPINES, plaintiff-appellee, vs. TEODORICO CLEOPAS and FLORENCIO PIRAME, accused, FLORENCIO PIRAME, accused-appellant. QUISUMBING, J.: On appeal is the decision dated January 5, 1995, of the Regional Trial Court of Tagbilaran City, Branch 1, in Criminal Case No. 8343 finding the accused Teodorico Cleopas and Florencio Pirame guilty of murder beyond reasonable doubt. 1 The facts of the case, as found by the trial court, are as follows: The factual findings of the Court based on the testimony of the witnesses for the prosecution and the defense are, as follows, to wit:

Upon arraignment, Florencio Pirame and Teodorico Cleopas entered a plea of not guilty. Epifanio Cleopas was not arraigned, being at large.4 Thereafter, trial on the merits ensued. The prosecution presented the following witnesses: (1) SPO2 Sabiniano Atupan, who led the police team that conducted the investigation of the killing: (2) Dr. Arnold Cagulada, the Municipal Health Officer of Ubay, Bohol, who examined the cavader of the victim; (3) Candida Cusip,5 an aunt of the victim ventured towards the house of accused Teodorico Cleopas on the day of the incident; (4) Evelyn Torrenueva, the wife of the victim, who corroborated the testimony of Cusip and testified as to the damages incurred by her due to her husband's death; (5) Pedro Acquiat, who joined the police in the search for the victim's body; and (6) Cipriano Supero, the alleged eyewitness to the killing who identified all the three accused as the victim's assailants. In turn, the defense presented accused Teodorico Cleopas and appellant Florencio Pirame, who both testified on their behalf.

a) That in morning of March 18, 1993 near the house of Demetrio Cleopas, father of the accused Teodorico Cleopas and Epifanio Cleopas at Barangay Tubog, Ubay, Bohol, the eye-witness Cipriano Supero saw the victim in the instant case Pedro Torrenueva while being held by the accused Florencio Perame (sic) the accused Epifanio Cleopas struck him with an iron pipe and by the accused Teodorico Cleopas with a piece of wood, hitting the aforementioned victim Pedro Torrenueva on the forehead, which, as a consequence, fell on the ground dead;

On January 5, 1995, the Regional Trial Court of Tagbilaran City, Branch I, rendered its decision finding Teodorico Cleopas and Florencio Pirame guilty of the crime of murder. It disposed:

b) That to cover the discovery of the commission of the crime the dead body of the victim Pedro Torrenueva was buried in the well near the house of Demetrio Cleopas father of the accused Epifanio Cleopas who is still at large and the accused Teodorico Cleopas;

The accused Teodorico Cleopas and Florencio Pirame are further ordered to indemnify the surviving spouse of the deceased victim Pedro Torrenueva in the amount of Fifty Thousand Pesos (P50,000.00) each and the amount of Twenty Three Thousand Fourteen (sic) Pesos (23,214.00) representing burial and incidental expenses and Fifty Thousand Pesos each (P50,000) representing moral and exemplary damages and in all instances without subsidiary imprisonment in case of insolvency.

c) That the testimony of the other witnesses for the prosecution SPO2 Sabeniano Atopan, Candida Cosip, Evelyn Torrenueva and Pedro Acquiat viewed in their totality with the testimony of the eye-witness Cipriano Supero points to the accused Teodorico Cleopas, Epifanio Cleopas and Florencio Pirame as the perepetrators (sic) of the crime as charged. 2 On May 13, 1993, the three accused, Teodorico Cleopas, Epifanio Cleopas and Florencio Pirame, were charged with the crime of murder under the following information: That on or about the 18th day of March, 1993, in the municipality of Ubay, province of Bohol, Philippines, and within the jurisdiction of this Honorable Court, the abovenamed accused conspiring, confederating and mutually helping one another, with intent to kill, armed with stainless pipe and a piece of wood, with treachery, evident premeditation and abuse of superior strength, did then and there willfully, unlawfully and feloniously, attack, assault and strike one Pedro Torrenueva who was unarmed and unaware thereof with the said stainless pipe and piece of wood thereby inflicting fatal injuries on the different parts of the victim's body which resulted to his immediate death; to the damage and prejudice of the heirs of the deceased to be proved during the trial of the case.1âwphi1.nêt

PREMISES, CONSIDERED, the Court finds the accused Teodorico Cleopas and Florencio Pirame guilty of the crime of Murder punished under Article 248 of the Revised Penal Code and hereby sentences each one of them to suffer an imprisonment of RECLUSION PERPETUA, with the accessories of the law and to pay the cost.

It appearing that the accused in the instant case Teodorico Cleopas and Florencio Pirame have undergone preventive imprisonment they are entitled to the full time of their preventive imprisonment to be deducted from their term of sentence if they have not executed a waiver otherwise they will only be entitled to 4/5 of the time have undergone preventive imprisonment to be deducted from their term of sentence if they have not executed a waiver. The foregoing separate Decision does not affect the accused Epifanio Cleopas who is still at large who will be tried separately as soon as he shall have been arrested. SO ORDERED.6 Only Florencio Pirame appealed from the decision of the trial court. He assigns the following errors in his brief: I THE TRIAL COURT COMMITTED GRAVE ERROR IN RELYING ON THE WEAKNESS OF THE DEFENSE

EVIDENCE RATHER THAN ON THE STRENGTH OF THE EVIDENCE FOR THE PROSECUTION IN FINDING THE ACCUSED-APPELLANT PIRAME GUILTY OF MURDER BEYOND REASONABLE DOUBT. II THE TRIAL COURT COMMITTED GRAVE ERROR IN GIVING CREDENCE TO THE TESTIMONY OF PROSECUTION WITNESSES CIPRIANO SUPERO AND CANDIDA CUCIP IMPLICATING ACCUSEDAPPELLANT FLORENCIO PIRAME IN THE CRIME OF MURDER DESPITE THEIR MANIFEST UNBELIEVABLE, IMPROBABLE AND UNRELIABLE TESTIMONY.7 In his brief, appellant alleges that the declaration of Demetrio Cleopas, both in the course of police investigation and in a sworn statement, to the effect that his two sons were responsible for the killing did not make any mention of him, hence, he should not have been implicated. Such declaration, appellant contends, as made in the sworn statement, should have been considered by the trial court as part of the res gestae. In addition, he urges that the trial court should have considered the testimony of accused Teodorico Cleopas, who testified that he did not see appellant on the date of the incident. He also contends that contrary to the trial court's view, there was no "uniting point" or corroboration between the testimonies of Cipriano Supero, the alleged eyewitness to the incident, and that of the other prosecution witnesses. Supero's testimony, he further claims, should not have been considered by the trial court as this witness was a coached and rehearsed witness, who testified only two months after the incident, and whose testimony is allegedly not worthy of belief. Appellant also asserts that while he invokes the weak defense of alibi, the evidence against him is likewise weak, and did not prove his guilt beyond reasonable doubt. Lastly, appellant contends that the trial court erred in finding him to be a co-conspirator of the other two accused. In its brief, the Office of the Solicitor General contends that the positive identification by prosecution witness Cipriano Supero of appellant at the scene of the crime should prevail over appellant's denial and alibi. It further argues that a conspiracy to kill the victim was present. Taken together, these contentions of appellant and the appellee point to one, issue, which is the credibility of witnesses in this case. We find that credibility preponderates in favor of the prosecution, and against the appellant. Appellant makes much of the testimony of prosecution witness SPO2 Atupan. This witness testified that in the course of police investigation, Demetrio Cleopas, father of accused Teodorico and Epifanio Cleopas, said that his two sons were responsible for the killing, Demetrio reiterated the same allegation in a sworn statement made before the Ubay Police on March 24, 1993, 8 which appellant also relies upon to support his claim of innocence. This particular allegation in the sworn statement, appellant urges, should be considered as part of the res gestae, as it "grew out of the main fact, shed light upon it, and which are (sic) unpremeditated, spontaneous, and made at a time so near, subsequent to the main act, as to exclude the idea of deliberation and fabrication.9 This assertion made by Demetrio Cleopas in his sworn statement is not part of the res gestae. Res gestae refers to those exclamations and statements made by either the participants, victims, or spectators immediately before, during, or immediately after the commission of the crime, when the circumstances are such that the statements were made as a spontaneous reaction or

utterance inspired by the excitement of the occasion and there was no opportunity for the declarant to deliberate and to fabricate a false statement. 10 The allegations made by Demetrio Cleopas in his sworn statement were not made immediately after the killing of the victim. They were made on March 24, 1993, or six days after the killing of the victim on March 18. As we have held that a statement given a day after the incident in answer to questions propounded in an investigation cannot be considered part of the res gestae, 11 so too with the declarations of Demetrio Cleopas in his sworn statement. Moreover, resort to the very sworn statement invoked by appellant would reveal that Demetrio Cleopas himself was in no position to identify all the perpetrators of the crime. The pertinent portion of the statement reads as follows: Q: Do you remember where were you on March 18, 1993? A: Yes, I was in our nipa hut near our house. Q: What were (sic) the unusual incident that you have witness (sic) on that day; (sic) A: On March 18, 1993 at 10:00 o'clock in the morning more or less. I heard a shout from my wife that's why I went near to her and what I have seen was a man lying on the ground which in my belief was already dead. Q: What was the cause of death of that person? A: When I asked my son Epifanio Cleopas alias "Paning" what was that incident and he answered that they mutually struck him because he boxed one on (sic) my son named Teodorico Cleopas @ "Tidoy". 12 It is clear that Demetrio Cleopas did not see the actual killing of the victim. He only learned of the details of the killing from his son Epifanio. Thus, SPO2 Atupan's testimony that Demetrio Cleopas named his sons as the perpetrators of the crime, without mention of appellant Florencio Pirame, and which declaration was based on Epifanio Cleopas' admission of guilt for the killing, is in effect hearsay twice removed. It cannot be used to absolve appellant of his participation in the crime. Further still, the testimony of used Teodorico Cleopas that he never saw appellant on the date of the incident, 13 does not support the declarations of Demetrio Cleopas, as Teodorico's testimony cannot be expected to implicate a coaccused, being self-serving as it is. Appellant next assails the trial court's dictum to the effect that the testimonies of the prosecution witnesses, viewed in their totality, point to the guilt of all three accused, including appellant. 14 He claims that it was only Cipriano Supero who testified that he saw appellant hold the arms of the victim while the other two accused hit him on the head with a stick and a not steel pipe. This, he asserts, was not corroborated by any other prosecution witness, hence there was no "unifying point" in their testimonies. That the testimony of Supero was not corroborated by any other witness is no moment. It is axiomatic that the testimonies of witnesses are weighed, not numbered, and the testimony of a single witness may suffice for conviction if found trustworthy and reliable. That the prosecution had only one eyewitness to implicate appellant hardly negates its cause. There is no law, which requires that the testimony of a single witness needs corroboration except where the law expressly mandates such corroboration. 15 Indeed, the testimony of a single witness, when positive and credible, is sufficient to support a conviction even of murder. Hence, a finding of guilt may be based on the uncorroborated testimony of a single

witness when the trial court finds such testimony positive and credible. 16 On this score, appellant that the testimony of Cipriano Supero should not have been considered by the trial court, as Supero is allegedly a coached and rehearsed witness. In effect, appellant assails Supero's credibility. He points out that on direct examination, Supero initially stated that the killing took place "inside the house of Demetrio Cleopas", but later on modified his answer to clarify that the victim was killed "outside the house." 17 In addition, appellant emphasizes that it took Supero two months after the death of the victim to come out and volunteer to two testify as to what he had seen transpire on the morning of March 18, 1993. Appellant asserts that this delay further proves that Supero was a rehearsed witness. These contentions are without merit. The initial lapse in Supero's testimony as to whether the crime was committed inside or outside of the house of Demetrio Cleopas was eventually settled by the trial court when it asked clarificatory questions. Supero was nonetheless able to testify on the actual killing of the victim, as well as identify all the perpetrators of the crime. The earlier inconsistency in his testimony, slight as it is, cannot suffice to impeach this witness. Settled is the rule that inconsistencies in the testimonies of witnesses when referring only to minor details and collateral matters do not affect either the substance of their declaration, their veracity, or the weight of their testimony. Although there may be inconsistencies on minor details, the same do not impair the credibility of the witnesses where there is consistency in relating the principal occurrence and positive identification of the assailants. Slight contradictions in fact even serve to strengthen the sincerity of the witness and prove that his testimony is not rehearsed. They are safeguards against memorized perjury. 18 Further still, the delay of Supero in volunteering to testify on the incident is of little consequence. At the time Supero witnessed the killing, all he saw was the striking of the victim by the assailants while appellant held the victim's arms. The victim then fell to the ground, motionless. Thereafter, Supero left, fearful of what he had seen. 19 He did not divulge this to anyone else except his mother, for they were afraid of being involved in that matter. 20 At the time he witnessed the incident, Supero was not aware that the victim had died as a result of the assault. He came to know that the victim died only two months after, when word spread that the body of the victim was discovered in the well of Demetrio Cleopas. 21 Upon learning of the victim's fate, he came forward to reveal what he had seen when he testified in open court. Hence, appellant cannot claim that Supero's report and testimony on the incident was belatedly made. Thus, the two-month delay in reporting the account of the eyewitness in this case does not give rise to any doubt on the veracity thereof. As we have held, the belated report and the reluctance of witnesses to testify in criminal actions is a matter of judicial notice. 22 Against Supero's positive identification of appellant as the person who held the hands of the victim while accused Teodorico and Epifanio Cleopas struck him, appellant advanced the defense of alibi. He testified that he was harvesting palay the whole day at Barangay Corazon, San Miguel, Bohol on March 18, 1993. 23 The distance of the house of Demetrio Cleopas from his house, which is located at the center of Barangay Corazon, 24 was estimated by him to be seven kilometers. 25 We find this distance of seven kilometers to be less than sufficient for purposes of an air-tight alibi. Alibi is an affirmative defense and, considering that it is easy to conduct, when an accused relies thereon, he has the burden of proving it, i.e., that he could not have been at the scene of the crime at the time of its commission. For alibi to prosper, an accused must prove that not only was he absent at the scene of the crime at the time of its commission, but also that it was

physically impossible for him to be so situated at said instance. 26This, appellant failed to do, more so when his claim that he was harvesting palay on the day the killing took place was not corroborated by anyone else. Appellant asserts that the trial erred in finding appellant a conspirator, hence guilty of murder beyond reasonable doubt. We find the trial court's finding of the existence of a conspiracy to kill the victim well-taken. Cipriano Supero's testimony discloses that appellant held the victim's arms in a cross-wise manner while Epifanio and Teodorico Cleopas struck the victim on the forehead with a steel pipe and a long piece of wood, respectively. Thereafter, the victim fell to the ground. 27 These concurrent actions of appellant and his co-accused reveal a mutual intention and determination to kill the victim, an indicator of conspiracy. Conspiracy, in order to exist, does not require an agreement for an appreciable period prior to the commission of the crime; it exists if, at the time of the commission of the offense, the accused had the same purpose and was united in its execution. 28 The fact that appellant conspired in the commission of the crime charged was sufficiently and convincingly shown by his active participation in holding the victim to render him immobile, thus enabling the other two accused to consummate their dastardly act of killing the victim. 29 We note, however, that the trial court in its decision did not make any definitive finding on the circumstances which qualified the crime to murder. While the information charging appellant and the other accused alleged that the commission of the crime was attended by treachery, evident premeditation and abuse of superior strength, the court did not expound upon or point to the existence of these aggravating circumstances in the case at bar. In other words, it did not state its basis for qualifying the crime to murder. We are thus required to determine if the crime at bar could be qualified to murder, to resolve this appeal. It is axiomatic that an appeal, once accepted by this Court, throws the entire case open to review, and that this Court has the authority to review matters, not specifically raised or assigned as errors by the parties, if their consideration is necessary in arriving at a just resolution of the case. 30 In the present case, the prosecution alleged the attendance of treachery in the commission of the crime. The requisites for treachery to be a qualifying circumstance are: (1) the employment means, method, or manner of execution which will ensure the safety of the malefactor from defensive or retaliating acts on the part of the victim, no opportunity being given to the latter to defend himself or to retaliate; and (2) deliberate or conscious adoption of such means, method, or manner of execution. 31 Cipriano Supero testified that appellant Florencio Pirame held the arms of the victim while Epifanio and Teodorico Cleopas struck the victim on the head, causing his death. The victim was defenseless during the attack as his hands were restrained by appellant, facilitating the beating of the victim by the other perpetrators. Clearly, the manner by which the victim was restrained and assaulted was deliberately and consciously adopted by his assailants to ensure. Thus, there was treachery in the killing of the victim, as the offenders employed means, methods or forms in the execution thereof which tended directly and specially to insure its execution, without risk to themselves arising from the defense which the victim might take. 32 The attendance of evident premeditation in the commission of the crime, though alleged in the information, is not supported by the evidence, as there is no showing as to when appellant and his coaccused determined to kill the victim. Likewise, abuse of superior strength, being absorbed by treachery, 33 cannot be considered as an aggravating circumstance in this case.

As treachery was resent when the victim as killed, we find that the crime of murder was committed by appellant and his co-accused. At the time of the commission of the crime, the imposable penalty for murder was reclusion temporal in its maximum period to death. There being no aggravating or mitigating circumstances attending the killing, the applicable penalty would thus be the medium period of the imposable penalty, which is reclusion perpetua. 34 We concur with the trial court's award of P50,000.00 each from appellant Florencio Pirame and co-accused Teodorico Cleopas as death indemnity to the victim's heirs, which is in line with current jurisprudence. We also find the amount of P23,214.00 awarded by the trial court as "burial and incidental expenses" supported by the records. 35The award of P50,000.00 from each accused as moral and exemplary damages, however, is unsupported. The widow of the victim did not testify on any mental anguish or emotional distress, which she suffered as a result of her husband's death. The absence of any generic aggravating circumstance attending the crime likewise precludes the award of exemplary damages. WHEREFORE, the instant appeal is DENIED. The decision of the Regional Trial Court convicting appellant Florencio Pirame of the crime of murder and sentencing him to reclusion perpetua, and to pay the widow of the victim P50,000.00 as civil indemnity and P23,214.00 as actual damages, as well as the costs is AFFIRMED, but the award of P50,000.00 as moral and exemplary damages is hereby DELETED, there being no legal and factual basis therefor.1âwphi1.nêt SO ORDERED. Bellosillo, Mendoza, Buena and De Leon, Jr., JJ., concur.

FIRST DIVISION G.R. No. 134784

December 9, 2002

CARLOS ARCONA y MOBAN, petitioner, vs. THE COURT OF APPEALS and PEOPLE OF THE PHILIPPINES, respondents. DECISION YNARES-SANTIAGO, J.: Petitioner Carlos Arcona y Moban1 and his brother Benito Arcona y Moban were charged with Murder and Frustrated Murder 2 in separate information which read: Criminal Case No. 6408 (Murder) That on or about the 27th day of June, 1986 at Barangay Labog, Municipality of Brooke’s Point, Province of Palawan, Philippines, and within the jurisdiction of this Honorable Court the abovenamed accused conspiring, confederating together and mutually helping one another, with intent to kill and with evident premeditation and treachery, did then and there willfully, unlawfully and feloniously attack, assault and stab one NAPOLEON ONG with a bladed weapon to wit; a knife hitting him in vital part of his body and inflicting upon him injury which was the direct and immediate cause of his death shortly thereafter. Criminal Case No. 6409 (Frustrated Murder) That on or about the 27th day of June 1986 at Barangay Labog, Municipality of Brooke’s Point, Province of Palawan, Philippines, and within the jurisdiction of this Honorable Court the abovenamed accused conspiring, confederating together and mutually helping one another, with evident premeditation and treachery and with intent to kill did then and there willfully, unlawfully and feloniously attack, assault, strike and beat with a bamboo pole one EDGARDO TALANQUINES hitting him on different parts of his body and inflicting upon him injuries which would have caused his death thru performing all the acts of execution which would have produced the crime of murder as a consequence but nevertheless did not produce it by reason of causes independent of the will of the accused that is EDGARDO TALANQUINES have parried the blows, escape away from his assailant and by the timely and able medical assistance rendered to said Edgardo Talanquines which prevented his death. On arraignment both accused pleaded "not guilty". Thereafter, the cases were jointly tried. It appears that at around 7:30 in the evening of June 27, 1986, Napoleon Ong and Edgardo Talanquines were walking along the national highway at Barangay Labog, Brooke’s Point, Palawan, on their way home after coming from a birthday party. When they were near the house of Jerry Boston, Edgardo heard a loud thud. He turned around saw Napoleon slump to the ground. Suddenly, someone hit Edgardo from behind with a piece of bamboo, causing him to fall. He saw no one in the immediate premises except petitioner. Edgardo then stood up and ran towards the house of Cesar Umapas to ask for help. Prosecution witness Leo Zaragoza testified that he was standing in front of Jerry Boston’ house, about seven (7) meters away, when he saw petitioner stab Napoleon.

Napoleon expired on the way to the hospital. Dr. Joaquin Fabellon, who conducted the autopsy on Napoleon’s body, certified that the cause of death was the stab wound sustained at the stomach area just above the waistline. Petitioner voluntarily surrendered to T/Sgt. Romeo Laging at the PC Detachment Command in Barangay Lugod. In his defense, petitioner alleged that in the evening of June 27, 1986, he was walking alone when he met Napoleon Ong and Edgardo Talanquines. Without any provocation, Napoleon suddenly drew his bolo and shouted, "Caloy, I will kill you!"3 Napoleon swung the bolo at him twice but missed him. Petitioner then drew out his knife and stabbed Napoleon. When he saw Edgardo Talanquines rushing towards him, he grabbed a piece of bamboo from the newly constructed culvert and hit the former on the left arm. Talanquines ran away. Petitioner also left the premises and went home. On the way, he met his brother, Benito, and together they proceeded to their house. 4 After trial, the court a quo rendered judgment in Criminal Case No. 6408 convicting petitioner of Homicide and acquitting Benito Arcona. In Criminal Case No. 6409, the trial court convicted Benito Arcona of Slight Physical Injuries and acquitted petitioner. The dispositive portion of the decision5 reads: WHEREFORE, premises considered, the Court renders judgment in Criminal Case No. 6408 finding Carlos Arcona y Moban GUILTY beyond reasonable doubt of the crime of Homicide under Art. 249 of the Revised Penal Code, with the mitigating circumstance of voluntary surrender to authorities and no aggravating circumstances. He is hereby sentenced to suffer the indeterminate penalty of SIX (6) YEARS and ONE (1) DAY of PRISION MAYOR as MINIMUM to FOURTEEN (14) YEARS and ONE (1) DAY OF RECLUSION TEMPORAL as MAXIMUM, and to indemnify the heirs of Napoleon Ong the sum of THIRTY THOUSAND PESOS (P30,000.00) for his death, TEN THOUSAND PESOS (P10,000.00) as actual damages and TEN THOUSAND PESOS (P10,000.00) as moral damages. Benito Arcona is acquitted of the crime charged, for failure of Prosecution to prove his guilt beyond reasonable doubt. In Criminal Case No. 6409, Benito Arcona is found GUILTY beyond reasonable doubt of the crime of Slight Physical injuries and is sentenced to suffer imprisonment of TWENTY (20) DAYS of ARRESTO MENOR and to indemnify Edgardo Talanquines the sum of TEN THOUSAND PESOS (P 10,000.00) as actual damages. Carlos Arcona is ACQUITTED of the crime charged for failure of Prosecution to prove his guilt beyond reasonable doubt. Only petitioner appealed to the Court of Appeals, assailing his conviction for Homicide in Criminal Case No. 6408. On January 28, 1997, the Court of Appeals affirmed the findings of the trial court but increased the civil indemnity to P50,000.00, thus: WHEREFORE, for all the foregoing, the decision of the trial court finding appellant Carlos Arcona guilty of Homicide mitigated by his voluntary surrender to the authorities is hereby AFFIRMED, with the sole modification that the civil indemnity Carlos Arcona shall pay to the heirs of Napoleon Ong is hereby increased to Fifty Thousand Pesos (P50,000.00).6 Petitioner filed the instant petition for review. He maintains that he acted in self-defense when he stabbed Napoleon and hit Edgardo with a bamboo stick. He contends that Napoleon committed unlawful aggression when drew an unsheathed bolo and attempted to hack him with it twice. Moreover, petitioner invokes the testimony of Jerry Boston, to the effect that before the stabbing incident he heard somebody shout, "Caloy, patayon kita." (Caloy, I will kill you!)7

We are not persuaded. It is settled jurisprudence that when an accused invokes self-defense, the onus probandi to show that the killing was justified shifts to him. Even if the prosecution evidence was weak, it could not be readily dismissed considering that the accused had openly admitted his responsibility for the killing. 8

armed with a bolo (TSN, March 27, 1990, pp. 3, 7 and 9). Moreover, accused-appellant’s claim that Edgardo Talanquines rushed him is also questionable because appellant who was then already armed with a knife was purportedly attacked by Mr. Talanquines who was not at all armed (Ibid, p. 10). 12

To prove self-defense, the accused must show with clear and convincing evidence that: (1) he is not the unlawful aggressor; (2) there was lack of sufficient provocation on his part; and (3) he employed reasonable means to prevent or repel the aggression. Self-defense, like alibi, is a defense easy to concoct. It is axiomatic that once an accused had admitted that he inflicted fatal injuries on the deceased, it is incumbent upon him, in order to avoid criminal liability, to prove the justifying circumstance claimed by him with clear, satisfactory and convincing evidence. 9

In fine, the plea of self-defense cannot be justifiably entertained where it is not only uncorroborated by any separate competent evidence but also extremely doubtful in itself. Accused-appellant having failed to discharge the burden proving his defense, his conviction shall of necessity follow, on the basis of his admission to the killing.13

The question whether accused-appellant acted in self-defense is essentially a question of fact. In self-defense, unlawful aggression is a primordial element.10 In the case at bar, the trial court was evidently not satisfied and convinced with petitioner’s claim that Napoleon was the unlawful aggressor, thus: It has been established that a bolo identified as belonging to Napoleon Ong was found at the scene of the crime. The Court is also convinced that the stabbing incident was preceded by the sounds of a scuffle or fight because it was these unusual noises which led Leo Zaragosa and Benito Arcona to go out of the house of Jerry Boston in order to investigate what had happened. However, the presence of the bolo of Napoleon Ong, and the shout of "Caloy, I will kill you" allegedly uttered by the deceased are circumstantial evidence and not sufficient to conclude that the deceased had committed acts of unlawful aggression which justified the stabbing by accused Carlos Arcona.11 We agree with the findings of the trial court. The presence of Napoleon’s unsheathed bolo at the crime scene and the scattered bamboo sticks suggest a number of scenarios. While the physical evidence may suggest that Napoleon drew the bolo from its scabbard, such fact alone would not in any way satisfactorily support the conclusion that, indeed, Napoleon was the unlawful aggressor. Likewise, the trial court was correct in refusing to give any weight to the shout, "Caloy, I will kill you!" which Jerry Boston allegedly heard immediately prior to the actual stabbing incident. Indeed, Jerry Boston testified that "somebody" shouted those words. He did not categorically say that it was Napoleon. Even granting that Napoleon uttered those words, it was still possible that he said it while being assaulted by petitioner. Significantly, Jerry only heard the shouted words but never saw the sequence of events preceding the stabbing incident, thereby rendering doubtful the contention that Napoleon was the unlawful aggressor. Simply, these circumstances are insufficient to conclusively establish that Napoleon was the unlawful aggressor.lavvphil.net Parenthetically, the Court of Appeals concurred with the findings of the trial court and even concluded that the physical evidence only made petitioner’s claim improbable, thus: Accused-appellant miserably failed to convince the trial court that the stabbing was indeed in self-defense. Accused-appellant’s version that he was waylaid by Edgardo Talanquines and the deceased Napoleon Ong is highly improbable because he escaped the alleged ambush without a single scratch considering that there were allegedly two (2) attackers and one was even

We have consistently ruled that the trial judge is the best person to evaluate the veracity of a witness’s testimony as he is in the most ideal position to see the demeanor, actuation and countenance of a witness. Hence, we do not generally disturb the findings of the trial court except in cases where the judge acted arbitrarily. 14 In the case at bar, petitioner failed to point out any arbitrariness on the part of the trial court. Thus, we find that the court a quo was correct in convicting petitioner of Homicide attended by the mitigating circumstance of voluntary surrender and no aggravating circumstance. The penalty prescribed by law for Homicide, reclusion temporal, shall be imposed in its minimum period, pursuant to Article 64 (2) of the Revised Penal Code. Under the Indeterminate Sentence Law, petitioner shall be entitled to a minimum term of imprisonment to be taken from the penalty next lower in degree, prision mayor. Therefore, the indeterminate sentence imposed on him by the trial court, ranging from six (6) years and one (1) day of prision mayor, as minimum, to fourteen (14) years and one (1) day of reclusion temporal, as maximum, is affirmed. Likewise, the Court of Appeals was correct in increasing the amount of civil indemnity to P50,000.00, in line with existing jurisprudence.15 In cases of murder, homicide, parricide and rape, civil indemnity in the amount of P50,000.00 is automatically granted to the offended party or his heirs in case of his death, without need of further evidence other than the fact of the commission of the crime.16 On the other hand, the award of moral damages in the sum of P 10,000.00 must be increased to P50,000.00. As borne out by human nature and experience, a violent death invariably and necessarily brings about emotional pain and anguish on the part of the victim’s family. It is inherently human to suffer sorrow, torment, pain and anger when a loved one becomes the victim of a violent or brutal killing. Such violent death or brutal killing not only steals from the family of the deceased his precious life, deprives them forever of his love, affection and support, but often leaves them with the gnawing feeling that an injustice has been done to them. For this reason, moral damages must be awarded even in the absence of any allegation and proof of the heirs’ emotional suffering.17 Finally, the award of actual damages in the amount of P10,000.00 does not appear to have been substantiated. Only those expenses which are duly proven, or those that appear to have been genuinely incurred in connection with the death, wake or burial of the victim, will be recognized in court.18 Hence, the same must be deleted.1awph!l.net WHEREFORE, in view of the foregoing, the petition for review is DENIED. The decision of the Court of Appeals, finding petitioner Carlos Arvuna y Morban guilty beyond reasonable doubt of Homicide, attended by the mitigating circumstance of voluntary surrender, and sentencing him to suffer the indeterminate penalty of six (6) years and one (1) day of prision mayor, as minimum, to fourteen (14) years and one (1) day of reclusion temporal, as

maximum, and to pay the heirs of the deceased Napoleon Ong the sum of P50,000.00 as civil indemnity, is AFFIRMED with MODIFICATION. As modified, petitioner is further ordered to pay the heirs of the deceased moral damages in the increased amount of P50,000.00. The award of actual damages is deleted for lack of factual and legal basis. SO ORDERED. Davide, Jr., C.J., (Chairman), Vitug, Carpio, and Azcuna, JJ., concur.

SECOND DIVISION G.R. No. 170813

Rivera guilty of reckless imprudence resulting in damage to property with physical injuries.

April 16, 2008

B.F. METAL (CORPORATION), petitioners, vs. SPS. ROLANDO M. LOMOTAN and LINAFLOR LOMOTAN and RICO UMUYON, respondents. DECISION TINGA, J.: Before the Court is a petition for review on certiorari under Rule 45 of the 1997 Rules of Civil Procedure, assailing the award of damages against petitioner in the Decision1 and Resolution2 of the Court of Appeals in CA-G.R. CV No. 58655. The Court of Appeals affirmed with modification the Decision of the Regional Trial Court (RTC), Branch 72, Antipolo, Rizal in Civil Case No. 1567-A, which found petitioner corporation and its driver, Onofre V. Rivera, solidarily liable to respondents for damages.

For its part, petitioner presented at the hearing Rivera himself and Habner Revarez, petitioner’s production control superintendent. Included in its documentary evidence were written guidelines in preventive maintenance of vehicles and safety driving rules for drivers. On 21 April 1997, the trial court rendered its Decision, the dispositive portion of which reads: WHEREFORE, premises considered, judgment is hereby rendered ordering defendants to pay jointly and severally to herein plaintiffs the following sums: (a) Actual --- i. P96,700.00 for cost of Damages the owner-type jeep ii. P15,000.00 expenses

iii. P50,000.00 for loss of earnings

The following factual antecedents are not disputed. In the morning of 03 May 1989, respondent Rico Umuyon ("Umuyon") was driving the owner-type jeep owned by respondents, Spouses Rolando and Linaflor Lomotan ("Spouses Lomotan"). The jeep was cruising along Felix Avenue in Cainta, Rizal at a moderate speed of 20 to 30 kilometers per hour. Suddenly, at the opposite lane, the speeding ten-wheeler truck driven by Onofre Rivera overtook a car by invading the lane being traversed by the jeep and rammed into the jeep. The jeep was a total wreck while Umuyon suffered "blunt thoracic injury with multiple rib fracture, fractured scapula (L), with pneumohemothorax," which entailed his hospitalization for 19 days. Also in view of the injuries he sustained, Umuyon could no longer drive, reducing his daily income from P150.00 to P100.00. On 27 October 1989, respondents instituted a separate and independent civil action for damages against petitioner BF Metal Corporation ("petitioner") and Rivera before the Regional Trial Court (RTC) of Antipolo, Rizal. The complaint essentially alleged that defendant Rivera’s gross negligence and recklessness was the immediate and proximate cause of the vehicular accident and that petitioner failed to exercise the required diligence in the selection and supervision of Rivera. The complaint prayed for the award of actual, exemplary and moral damages and attorney’s fees in favor of respondents. In the Answer, petitioner and Rivera denied the allegations in the complaint and averred that respondents were not the proper parties-in-interest to prosecute the action, not being the registered owner of the jeep; that the sole and proximate cause of the accident was the fault and negligence of Umuyon; and that petitioner exercised due diligence in the selection and supervision of its employees. During the trial, respondents offered the testimonies of Umuyon, SPO1 Rico Canaria, SPO4 Theodore Cadaweg and Nicanor Fajardo, the auto-repair shop owner who gave a cost estimate for the repair of the wrecked jeep. Among the documentary evidence presented were the 1989 cost estimate of Pagawaan Motors, Inc.,3 which pegged the repair cost of the jeep at P96,000.00, and the cost estimate of Fajardo Motor Works4 done in 1993, which reflected an increased repair cost at P130,655.00. They also presented in evidence a copy of the Decision of the RTC, Assisting Branch 74, Cainta, Rizal in Criminal Case No. 4742, entitled People of the Philippines v. Onofre V. Rivera, finding

medical

(b) Moral --- P100,000.00 Damages (c) Exemplary --- P100,000.00 Damages (d) Attorney’s --- P25,000.00 plus P1,000.00 Fees for every Court appearance

Costs of Suit. SO ORDERED.5 The trial court declared Rivera negligent when he failed to determine with certainty that the opposite lane was clear before overtaking the vehicle in front of the truck he was driving. It also found petitioner negligent in the selection and supervision of its employees when it failed to prove the proper dissemination of safety driving instructions to its drivers. Petitioner and Rivera appealed the decision to the Court of Appeals. On 13 April 2005, the Court of Appeals rendered the assailed Decision. It affirmed the trial court’s finding that Rivera’s negligence was the proximate cause of the accident and that petitioner was liable under Article 21806 of the Civil Code for its negligence in the selection and supervision of its employees. However, the appellate court modified the amount of damages awarded to respondents. The dispositive portion of the Decision reads: WHEREFORE, the decision appealed from AFFIRMED with MODIFICATION to read as follows:

is

"WHEREFORE, premises considered, judgment is hereby rendered ordering defendants to pay jointly and severally to herein plaintiffs the following sums:

(a) Actual --- i. P130,655.00, for Damages cost of repairing the owner-type jeep.

is the acquisition cost or the purchase price of the jeep minus depreciation for one year of use equivalent to 10% of the purchase price. Petitioner’s argument is partly meritorious.

ii. P10,167.99 in medical expenses. iii. P2,850.00 for lost earnings during medical treatment. (b) Moral --- P100,000.00 Damages (c) Exemplary Damages

Except as provided by law or by stipulation, one is entitled to an adequate compensation only for such pecuniary loss suffered by him as he has duly proved. Such compensation is referred to as actual or compensatory damages.10 Actual damages are such compensation or damages for an injury that will put the injured party in the position in which he had been before he was injured. They pertain to such injuries or losses that are actually sustained and susceptible of measurement. To justify an award of actual damages, there must be competent proof of the actual amount of loss. Credence can be given only to claims which are duly supported by receipts.11

--- P100,000.00

(d) Attorney’s --- P25,000.00 Fees

Costs of suit." SO ORDERED.7 On 12 December 2005, the Court of Appeals denied the motion for reconsideration of its Decision. Only petitioner filed the instant petition, expressly stating that it is assailing only the damages awarded by the appellate court. The instant petition raises the following issues: (1) whether the amount of actual damages based only on a job estimate should be lowered; (2) whether Spouses Lomotan are also entitled to moral damages; and (3) whether the award of exemplary damages and attorneys is warranted. For their part, respondents contend that the aforementioned issues are factual in nature and therefore beyond the province of a petitioner for review under Rule 45. This is not the first instance where the Court has given due course to a Rule 45 petition seeking solely the review of the award of damages.8 A party’s entitlement to damages is ultimately a question of law because not only must it be proved factually but also its legal justification must be shown. In any case, the trial court and the appellate court have different findings as to the amount of damages to which respondents are entitled. When the factual findings of the trial and appellate courts are conflicting, the Court is constrained to look into the evidence presented before the trial court so as to resolve the herein appeal. 9 The trial court split the award of actual damages into three items, namely, the cost of the wrecked jeep, the medical expenses incurred by respondent Umuyon and the monetary value of his earning capacity. On appeal, the Court of Appeals reduced the amount of medical expenses and loss of earning capacity to which respondent Umuyon is entitled but increased from P96,700.00 to P130,655.00 the award in favor of Spouses Lomotan for the cost of repairing the wrecked jeep. The instant petition assails only the modified valuation of the wrecked jeep. Petitioner points out that the alleged cost of repairing the jeep pegged at P130,655.00 has not been incurred but is only a job estimate or a sum total of the expenses yet to be incurred for its repair. It argues that the best evidence obtainable to prove with a reasonable degree of certainty the value of the jeep

In People v. Gopio,12 the Court allowed the reimbursement of only the laboratory fee that was duly receipted as "the rest of the documents, which the prosecution presented to prove the actual expenses incurred by the victim, were merely a doctor’s prescription and a handwritten list of food expenses." 13 In Viron Transportation Co., Inc. v. Delos Santos,14 the Court particularly disallowed the award of actual damages, considering that the actual damages suffered by private respondents therein were based only on a job estimate and a photo showing the damage to the truck and no competent proof on the specific amounts of actual damages suffered was presented. In the instant case, no evidence was submitted to show the amount actually spent for the repair or replacement of the wrecked jeep. Spouses Lomotan presented two different cost estimates to prove the alleged actual damage of the wrecked jeep. Exhibit "B," is a job estimate by Pagawaan Motors, Inc., which pegged the repair cost of the jeep at P96,000.00, while Exhibit "M," estimated the cost of repair at P130,655.00. Following Viron, neither estimate is competent to prove actual damages. Courts cannot simply rely on speculation, conjecture or guesswork in determining the fact and amount of damages.15 As correctly pointed out by petitioner, the best evidence to prove the value of the wrecked jeep is reflected in Exhibit "I," the Deed of Sale showing the jeep’s acquisition cost at P72,000.00. However, the depreciation value of equivalent to 10% of the acquisition cost cannot be deducted from it in the absence of proof in support thereof. Petitioner also questions the award of moral and exemplary damages in favor of Spouses Lomotan. It argues that the award of moral damages was premised on the resulting physical injuries arising from the quasi-delict; since only respondent Umuyon suffered physical injuries, the award should pertain solely to him. Correspondingly, the award of exemplary damages should pertain only to respondent Umuyon since only the latter is entitled to moral damages, petitioner adds. In the case of moral damages, recovery is more an exception rather than the rule. Moral damages are not punitive in nature but are designed to compensate and alleviate the physical suffering, mental anguish, fright, serious anxiety, besmirched reputation, wounded feelings, moral shock, social humiliation, and similar harm unjustly caused to a person. In order that an award of moral damages can be aptly justified, the claimant must be able to satisfactorily prove that he has suffered such damages and that the injury causing it has sprung from any of the cases listed in Articles 221916 and 222017 of the Civil Code. Then, too, the damages must be shown to be the proximate result of a wrongful act or omission. The claimant must establish the factual basis of the damages and its causal tie with the acts of the defendant. In

fine, an award of moral damages would require, firstly, evidence of besmirched reputation or physical, mental or psychological suffering sustained by the claimant; secondly, a culpable act or omission factually established; thirdly, proof that the wrongful act or omission of the defendant is the proximate cause of the damages sustained by the claimant; and fourthly, that the case is predicated on any of the instances expressed or envisioned by Article 2219 and Article 2220 of the Civil Code. 18 In culpa aquiliana, or quasi-delict, (a) when an act or omission causes physical injuries, or (b) where the defendant is guilty of intentional tort, moral damages may aptly be recovered. This rule also applies, as aforestated, to breaches of contract where the defendant acted fraudulently or in bad faith. In culpa criminal, moral damages could be lawfully due when the accused is found guilty of physical injuries, lascivious acts, adultery or concubinage, illegal or arbitrary detention, illegal arrest, illegal search, or defamation.19 Undoubtedly, petitioner is liable for the moral damages suffered by respondent Umuyon. Its liability is based on a quasi-delict or on its negligence in the supervision and selection of its driver, causing the vehicular accident and physical injuries to respondent Umuyon. Rivera is also liable for moral damages to respondent Umuyon based on either culpa criminal or quasi-delict. Since the decision in the criminal case, which found Rivera guilty of criminal negligence, did not award moral damages, the same may be awarded in the instant civil action for damages. Jurisprudence show that in criminal offenses resulting to the death of the victim, an award within the range of P50,000.00 to P100,000.00 as moral damages has become the trend. 20 Under the circumstances, because respondent Umuyon did not die but had become permanently incapacitated to drive as a result of the accident, the award of P30,000.00 for moral damages in his favor is justified.21 However, there is no legal basis in awarding moral damages to Spouses Lomotan whether arising from the criminal negligence committed by Rivera or based on the negligence of petitioner under Article 2180.22 Article 221923speaks of recovery of moral damages in case of a criminal offense resulting in physical injuries or quasi-delictscausing physical injuries, the two instances where Rivera and petitioner are liable for moral damages to respondent Umuyon. Article 222024 does speak of awarding moral damages where there is injury to property, but the injury must be willful and the circumstances show that such damages are justly due. There being no proof that the accident was willful, Article 2220 does not apply. Exemplary or corrective damages are imposed, by way of example or correction for the public good, in addition to moral, temperate, liquidated or compensatory damages.25 Exemplary damages cannot be recovered as a matter of right; the court will decide whether or not they should be adjudicated. 26 In quasi-delicts, exemplary damages may be granted if the defendant acted with gross negligence.27 While the amount of the exemplary damages need not be proved, the plaintiff must show that he is entitled to moral, temperate or compensatory damages before the court may consider the question of whether or not exemplary damages should be awarded.28 As correctly pointed out by the Court of Appeals, Spouses Lomotan have shown that they are entitled to compensatory damages while respondent Umuyon can recover both compensatory and moral damages. To serve as an example for the public good, the Court affirms the award of exemplary damages in the amount of P100,000.00 to respondents. Because exemplary damages are awarded, attorney’s fees may also be awarded in consonance with Article 2208 (1).29 The Court affirms

the appellate court’s award of attorney’s fees in the amount of P25,000.00. WHEREFORE, the instant petition for certiorari is PARTIALLY GRANTED. The Decision of the Court of Appeals in CA-G.R. CV No. 58655 is AFFIRMED with MODIFICATION. The award of actual damages for the cost of repairing the owner-type jeep is hereby REDUCED to P72,000.00 while the moral damages of P30,000.00 is awarded solely to respondent Umuyon. All other awards of the Court of Appeals are AFFIRMED. Following jurisprudence,30petitioner is ordered to PAY legal interest of 6% per annum from the date of promulgation of the Decision dated 21 April 1997 of the Regional Trial Court, Branch 72, Antipolo, Rizal and 12% per annum from the time the Decision of this Court attains finality, on all sums awarded until their full satisfaction. SO ORDERED.

SECOND DIVISION G.R. No. 174470 April 27, 2007 [Formerly G. R. Nos. 159844-46] PEOPLE OF THE PHILIPPINES, Appellee, vs. FILOMINO LIZANO y MARVILLA Appellant. DECISION TINGA, J.: For consideration is an appeal by Filomino Lizano y Marvilla1 (appellant) from the Decision2 dated 28 April 2006 of the Court of Appeals in CA-G.R. CR-H.C. No. 01659, affirming the 30 May 2003 Decision3 of the Regional Trial Court (RTC) of Calauag, Quezon, which found him guilty beyond reasonable doubt of the crime of rape. On 20 February 1997, appellant was charged with three (3) counts of rape in three (3) separate Informations, which, except for the date, similarly read as follow: That on or about the month of January 1996, at Sitio San Jose Ilaya, Barangay Sta. Cecilia, in the Municipality of Tagkawayan, Province of Quezon, Philippines and within the jurisdiction of this Honorable Court, the above-named accused, who is the uncle of the offended party, with lewd design, by means of force, violence and intimidation, did then and there willfully, unlawfully and feloniously have carnal knowledge of one [AAA], 4 a minor, 11 years of age, against her will. Contrary to law.5 The two (2) other Informations6 alleged that appellant had raped AAA on 18 and 19 January 1997, respectively. Appellant pleaded not guilty on all three charges. Trial then proceeded. The victim, AAA, testified that she had been staying in her grandmother’s house in Barangay Sta. Cecilia, Tagkawayan, Quezon, together with appellant and his wife, BBB who is AAA’s aunt. Sometime in January 1996, AAA, who was then only 11 years old, was sleeping inside the house when appellant lay down beside her and began undressing her while threatening to kill her, her grandmother and aunt should she reveal his acts to anybody. Afterwards, appellant also took off his clothes. He then went on top of AAA and inserted his penis into her vagina, causing her to feel pain.7 A year later, on 18 January 1997, appellant raped AAA again. The following day, at around 10:30 a.m., appellant raped her for the third time. She, however, declared during directexamination that there were only slight penetrations in these two occasions.8 AAA was only forced to disclose the incident to an uncle, a brother of her mother, upon the prodding of BBB, who chanced upon AAA while inside the room of appellant. 9 The prosecution also presented CCC to testify on the age of her daughter, AAA. CCC stated in court that AAA was born on 14 May 1985.10 AAA’s birth certificate11 attesting to the same data was likewise presented in court. The third witness for the prosecution was Delia Mayuga Ayuda, a Medical Clerk at the Tagkawayan District Hospital, whose duty was to keep all the files of the patients in the hospital. She identified the signature of Dr. Juvy Paz Purino in the Medico-Legal Certificate which contained the following findings:

- superficial lacerations at 6 o’clock and 8 o’clock positions, hymen NOI- Allegedly raped by someone DOI- January 18, 1997 TOI- P.M. POI- San Jose Tagkawayan, Quezon12 Appellant testified on his behalf, raising denial and alibi as defenses. Appellant denied raping AAA sometime January 1996.13 He averred that on 19 January 1997, he was driving his tricycle the whole day and got home 11 a.m. the next day. He however recalled an incident where he asked AAA to get a spare part of a tricycle in the living room. Unable to follow his orders, appellant followed AAA inside the house. It was at that moment when his wife, BBB, arrived and accused him of raping AAA.14 Appellant maintained that BBB had induced AAA to charge him with rape because of their frequent quarrels.15 The trial court found the first incident of rape as credible and found appellant guilty in Criminal Case No. 2857-C. However, he was acquitted in Criminal Case Nos. 2858-C and 2859-C for insufficiency of evidence.16 From the decision in Criminal Case No. 2857-C, appellant directly appealed to this Court. Conformably with our ruling in People v. Mateo,17 the appeal was remanded to the Court of Appeals for intermediate review. On 28 April 2006, the Court of Appeals promulgated a Decision dismissing the appeal and affirming in toto the decision of the RTC. Both parties opted not to file Supplemental Briefs and instead adopted their Briefs before the appellate court. 18 In this appeal, appellant contends that the prosecution’s evidence is insufficient to sustain his conviction, especially taking into account the alleged delay on the part of the victim in reporting the rape. Thus, the resolution of this case hinges on the straightforward issue of whether the prosecution was able to establish appellant’s guilt beyond reasonable doubt based on the complainant’s testimony. In the prosecution of rape cases, conviction or acquittal depends on the credence to be accorded to the complainant’s testimony because of the fact that usually the participants are the only witnesses to the occurrences.19 Thus, the issue boils down to credibility. Significantly, findings of fact of the trial court should not be disturbed on appeal since conclusions as to the credibility of witnesses in rape cases hinge heavily on the sound judgment of the trial court which is in a better position to decide the question, having heard the witnesses and observed their deportment and manner of testifying.20 In the case at bar, the trial court aptly observed: In the first incident, the private complainant AAA then an 11 years old [sic] girl in a clear, convincing and straightforward manner testified how the accused Filomino Lizano undressed her and then afterwards, he undressed also, put himself on top of her and inserted his penis to her private part. AAA clearly stated that the accused’s penis was able to fully penetrate her vagina and it was painful. . . Her clear account of the first incident of rape

unequivocally show that she was indeed raped by the accused Filomino Lizano.21

xxxx WITNESS:

We find no cogent reason to depart from these findings. During the direct examination, AAA recounted the rape incident and positively identified appellant as the perpetrator, thus: Q: Do you know this Filomino Lizano? A: Yes, sir. Q: Why do you know him? A: He is the husband of my auntie, sir. xxxx Q: If this Filomino Lizano is in Court, will you be able to point to him?

Because if I inform [sic] about the incident, he will kill us, sir. FISCAL BONIFACIO Q: When you say "us," whom was he referring to? A: My grandmother, auntie, and myself, sir. Q: After he undressed you, is there anything more he did? A: He undressed himself also, sir. Q: Then anything more? A: He put himself on top of me, sir.

A: Yes, sir. Q: Please do so. (Witness pointing to a man who identified himself to be Filomino Lizano).

Q: And when he put himself on top of you, did he do anything more? A: He entered his penis to my private part, sir.

Q: Now, in January, 1996, how old were you then? A: 11 years old, sir. Q: And on that month, do you remember any unusual incident that happened to you?

Q: Do you know if he was able to fully penetrate his penis on your private part? A: Yes, sir. Q: What did you feel when he was doing that?

A: Yes, sir. Q: And what was that unusual incident? A: I was raped by Filomino Lizano, sir. Q: Where? A: In the house of my grandmother, sir. Q: Where is that house of your Lola located? A: In Brgy. Sta. Cecilia, Tagkawayan, Quezon. Q: Will you tell or relay to this Court that particular incident that you are referring to that you were raped by Filomino Lizano? A: He slept beside me, sir. Q: And after sleeping beside you, what did he do if he did anything? A: He undressed me, sir. Q: After undressing you, did he do anything more? A: He told me not to tell anybody. Q: And did he tell you what will happen if you will tell anyone about that incident?

A: It was painful, sir.22 In her sworn statement23 taken before the Police Station in Tagkawayan Quezon, AAA narrated the same details contained in her testimony before the trial court. These positive declarations bolster the inevitable conclusion that appellant had indeed raped AAA. The trial court correctly lent credence to the straightforward version of the victim as against the bare denial by appellant. It has been an oft-repeated rule that mere denial, if unsubstantiated by clear and convincing evidence, has no weight in law and cannot be given greater evidentiary value than the positive testimony of a rape victim. 24 As between a categorical testimony that rings of truth on one hand, and a bare denial on the other, the former is generally held to prevail. 25 Appellant’s main argument, however, is premised on the delay incurred by the victim in reporting the crime. Appellant underscores the failure of the victim to report the alleged rape which occurred in January 1996 even when there was no showing that appellant was continuously threatening her after the said incident.26 His does not persuade. The Solicitor General correctly points out that delay in reporting a rape incident does not impair the credibility of the victim in the face of threats of death or physical violence. 27 Indeed, delay in revealing the commission of rape is not an indication of a fabricated charge. Such intimidation must be viewed in light of the victim's perception and judgment at the time of the commission of the crime and not by any hard and fast rule. It is enough that the intimidation produces a fear that if the victim does not yield to the perverse impulses of the accused, something would happen to her

at the moment, or even thereafter, as when she is threatened with death if she would report the incident.28 AAA satisfactorily explained the delay. Appellant threatened to kill her, her grandmother and aunt should she report the incident to anybody.29 This immediate threat directed at AAA, who was then only eleven (11) years old, engendered fear on her part to reveal the unpleasant incident. A rape victim cannot, after all, be expected to summon the courage to report a sexual assault committed against her person, where the act was accompanied by a death threat.30 Under Article 335 of the Revised Penal Code, rape, which is punishable by reclusion perpetua is committed by having carnal knowledge of a woman under any of the following circumstances: 1. By using force or intimidation; 2. When the woman is deprived of reason or otherwise unconscious; 3. When the woman is under twelve years of age or is demented. Hence, the trial court correctly imposed the penalty of reclusion perpetua for the rape of AAA, who was then under 12 years old, as proven by the prosecution through the testimony of her mother and the presentation of AAA’s birth certificate. We affirm the trial court’s award of civil indemnity and moral damages each in the amounts of ₱50,000.00 in line with current jurisprudence. 31 Civil indemnity is automatically imposed upon the accused without need of proof other than the fact of the commission of rape. Moral damages is also automatically granted in rape cases without need of further proof other than the commission of the crime because it is assumed that a rape victim had actually suffered moral injuries entitling her to such award.32 WHEREFORE, in view of the foregoing, the Decision of the Court of Appeals dated 28 April 2006 is AFFIRMED. Appellant FILOMINO LIZANO y MARVILLA is hereby found guilty beyond reasonable doubt of statutory rape and is sentenced to suffer the penalty of reclusion perpetua, and is ordered to pay the victim the amounts of ₱50,000.00 as civil indemnity and ₱50,000.00 as moral damages. SO ORDERED.

THIRD DIVISION G.R. No. 179570

February 4, 2010

EGAP MADSALI, SAJIRON LAJIM and MARON LAJIM, Petitioner, vs. PEOPLE OF THE PHILIPPINES, Respondent. DECISION PERALTA, J.: This is an appeal from the Decision1of the Court of Appeals (CA) in CA-G.R. CR-HC No. 00475, affirming the Decision of the Regional Trial Court (RTC) of Palawan, Puerto Princesa City, Branch 50, finding accused Sajiron Lajim and Maron Lajim 2 guilty beyond reasonable doubt of the crime of abduction with rape in Criminal Case No. 12281 and finding accused Egap Madsali and Sajiron Lajim guilty beyond reasonable doubt of the crime of serious illegal detention in Criminal Case No. 12309. In view of our decision in People v. Cabalquinto,3 the real name and identity of the rape victim, as well as the members of her immediate family, are withheld. In this regard, the rape victim is herein referred to as AAA; her mother, BBB; and her father, CCC. In Criminal Case No. 12281, Sajiron Lajim (Sajiron) and Maron Lajim (Maron) were charged with the crime of abduction with rape in an Information4 dated March 17, 1995, which reads: That on or about the 1st day of July, 1994, in Barangay Malitub, Municipality of Bataraza, Province of Palawan, Philippines, and within the jurisdiction of this Honorable Court, the above-named accused conspiring, confederating together and helping one another and by means of force, threat, violence and intimidation, while armed with a bladed weapon known as "Badong", did then and there willfully, unlawfully and feloniously take and carry away one AAA, a girl of 16 years of age, against her will and consent and brought to the forest and on the occasion thereof the said accused by means of force, threat, violence and intimidation, and while armed with a knife, accused Sahiron Lajim, with lewd design, did then and there willfully, unlawfully and feloniously have carnal knowledge with said AAA, against her will and consent, to her damage and prejudice. That on the occasion of the said Rape, accused Maron Lajim helped Sahiron Lajim by acting as look-out during the commission of the said crime. CONTRARY TO LAW. In Criminal Case No. 12309, Egap Madsali (Egap) and Sajiron Lajim (Sajiron) were charged with the crime of serious illegal detention in an Amended Information5 dated August 28, 1995, which reads: That on or about the 2nd day of July, 1994 in the morning up to December 15, 1994, at Barangay Malitub, Municipality of Bataraza, Province of Palawan, Philippines, and within the jurisdiction of this Honorable Court, the above-named accused conspiring, confederating together and mutually helping one another, with the use of force, violence and intimidation, did then and there willfully, unlawfully and feloniously take and detain AAA, an unmarried woman under 15 years of age in the house of Egap Madsali thereby depriving said AAA of her liberty all against her will and as a result of that illegal detention, said AAA was not able to go home to her mother for a period of more than five (5) months.

CONTRARY TO LAW. Upon motion of the private prosecutor and with the conformity of the Provincial Prosecutor's Office, Criminal Case No. 12309 was consolidated with Criminal Case No. 12281, pending before the RTC of Palawan, Puerto Princesa City, Branch 50. Sajiron was arraigned on April 21, 1995 in Criminal Case No. 12281 and on September 21, 1995 in Criminal Case No. 12309. He pleaded not guilty to both charges. Egap was arrested and, thereafter, arraigned on March 8, 1996. He pleaded not guilty in Criminal Case No. 12309. Maron was arrested and, later, arraigned on March 11, 1996. He pleaded not guilty in Criminal Case No. 12281. A joint trial ensued. However, in July 1996, Egap escaped while under the custody of prison guards. The evidence presented by the prosecution are as follows: On July 1, 1994, around 3:30 o'clock in the afternoon, fifteen-yearold AAA and her aunt Inon Dama were fetching water in a cave in Barangay (Brgy.) Malitub, Bataraza, Palawan. Suddenly, Sajiron arrived, running towards them and carrying a badong (bolo). They tried to run away, but Sajiron overtook them. He held the hair of AAA and told her, "Sara, you go with me. If you will not go with me, I will kill you." Inon Dama came to AAA's rescue, but Sajiron tried to hack her. Luckily, she was able to shield herself with a plastic container. AAA was crying while she held her aunt's hand. Sajiron then drew his gun, which was tucked in his waist, pointed it at Inon Dama and said, "If you will not go, I will shoot you." Inon Dama went home and reported the incident to AAA's mother. When Inon Dama left the place, Maron, Sajiron's father, suddenly appeared with a gun and told AAA to come with them. When AAA refused, Sajiron and Maron tied her hands behind her back, covered her mouth with a piece of cloth, and brought her to the forest. There, AAA was untied and undressed, leaving only her bra on. While Sajiron was undressing AAA, she pleaded with him not to abuse her, but Sajiron told her that if she would submit to his desire, her life would be spared. Sajiron held her breast, touched her private parts and inserted his sex organ inside her vagina. AAA resisted, but to no avail. She felt pain and she noticed blood on her private parts. She was sexually abused three times on the ground, where she was made to lie down on a bed of leaves. During the entire time that AAA was being abused by Sajiron, Maron stood guard and watched them. They left the forest at around 10:00 o'clock in the morning of the following day and brought AAA to the house of Egap, where she was detained in a room. Sajiron instructed Egap to guard AAA and to shoot her if she would attempt to escape. On July 2, 1994, AAA’s mother came to get AAA, but Egap refused and threatened to kill her daughter if she would report the matter to the authorities. Out of fear of losing her daughter, she went home and did not report the incident to the police authorities. 6 Egap asked AAA if she wanted to marry Sajiron, but she refused. AAA was then forced to sign an unknown document, which she was not able to read. Nine days after the abduction, or on July 11, 1994, upon instruction of Egap, AAA and Sajiron were married by Imam Musli Muhammad. The marriage was solemnized against AAA's will and without the presence of her parents. After the marriage, AAA and Sajiron lived in the house of Egap, together with the latter's wife, children and mother-in-law. AAA stayed in one room with Sajiron. While detained, AAA did not try to escape, because her house was very far from the place where she was held captive, and her captors threatened to kill her and her family if she would attempt to escape. During her detention, Sajiron abused her twice every night. She was free to roam within the vicinity of the house but she was usually accompanied by Egap's wife who served as her guard. She was also guarded and threatened by Egap's sons. She got pregnant after some time.

On November 24, 1994, BBB and Inon Dama went to Puerto Princesa City to report AAA's abduction to the proper authorities. AAA was detained at the house of Egap from July 2, 1994 until December 15, 1994. On December 16, 1994, Sajiron and Egap were arrested by the police.

With respect to the first assigned error, petitioners allege that the five-month inaction of BBB through his failure to report the alleged abduction and illegal detention of her daughter is totally inconsistent with AAA's claim that she was abducted and illegally detained.

The defense, on the other hand, denied having committed the crimes charged. Sajiron claimed that he and AAA were engaged for three years prior to their elopement. During the period of their engagement, Sajiron lived with AAA in her mother's house. AAA married Sajiron voluntarily and out of her own free will. The sexual intercourse between AAA and Sajiron was consensual. The defense further claimed that AAA merely filed criminal charges against Sajiron because he did not pay the dowry (dower) in the amount of ₱10,000.00 to AAA's parents. Sajiron asserted that he did not pay the dowry because he had already rendered services to AAA's family for about three years prior to his marriage with AAA. After the marriage, Sajiron and AAA were brought by the latter's father to his house in Balabac, Palawan. They stayed there for about four months. Then they went to Brgy. Malitub, Bataraza, Palawan and stayed at the house of Egap for about two weeks. Sajiron was thereafter arrested by the authorities. He only learned that a case for abduction with rape was filed against him by AAA when he was being interrogated by the Bataraza Police.

We are not persuaded.

On July 25, 2002, the RTC rendered a Decision7 finding Sajiron and Maron guilty beyond reasonable doubt of the crime of abduction with rape. Egap and Sajiron were also found guilty beyond reasonable doubt of the crime of serious illegal detention. The dispositive portion of the Decision is as follows: WHEREFORE, premises considered, this Court finds the accused guilty beyond reasonable doubt of the crime charged, to suffer imprisonment as follows: 1. In Criminal Case No. 12281, the accused Sa[j]iron Lajim and Maron Lajim are hereby sentenced to suffer the penalty of Reclusion Perpetua or forty (years) and each of the accused are ordered to indemnify the complainant AAA the same amount of ₱50,000.00 as and for civil indemnity; 2. In Criminal Case No. 12309, the accused Egap Madsali and Sa[j]iron Lajim are hereby sentenced to suffer the penalty of Reclusion Perpetua and both accused are ordered to separately indemnify the complainant AAA the amount of ₱50,000.00 as and for civil indemnity. SO ORDERED. Petitioners filed a Notice of Appeal, and the records of the case were forwarded to this Court. However, pursuant to this Court’s ruling in People v. Mateo,8 the case was transferred to the CA. The CA rendered a Decision dated July 31, 2007 affirming the decision of the trial court in Criminal Case Nos. 12281 and 12309. Hence, this petition assigning the following errors: THE HONORABLE COURT OF APPEALS ERRED IN IGNORING THE IMPLICATION OF THE 5-MONTH INACTION BY THE PRIVATE COMPLAINANT'S MOTHER IN REPORTING THE ALLEGED ADBUCTION AND ILLEGAL DETENTION OF HER DAUGHTER; AND THE HONORABLE COURT OF APPEALS ERRED IN IGNORING THE UNREBUTTED TESTIMONY OF THE PRIVATE COMPLAINANT'S OWN FATHER.

Delay in reporting an incident of rape due to death threats does not affect the credibility of the complainant, nor can it be taken against her. The charge of rape is rendered doubtful only if the delay was unreasonable and unexplained. 9 BBB explained that she did not immediately report the abduction, rape and detention of her daughter to the authorities, because Egap threatened to kill AAA,10 who was then in his custody. Further, BBB testified that, on another occasion, Egap threatened to kill her if she dared to report the matter to the authorities. True enough, when Egap learned that she did what he forbade her to do, he made good his threat and shot her at the back. 11 Thus, BBB's delay in reporting the incident for five months should not be taken against her. Anent the second assignment of error, petitioners argue that the unrebutted testimonies of CCC and Imam Musli Muhammad cast a reasonable doubt on the charge against them. CCC testified that Sajiron courted his daughter and proposed marriage after their three-year courtship. He claimed that he gave his consent to the marriage of his daughter to Sajiron. Prior to the marriage, CCC said that he was even able to talk to his daughter and his wife, and both were amenable to the marriage. AAA never mentioned to him anything about having been kidnapped or raped. Neither did his wife tell him of their daughter's alleged harrowing experience. He and his wife were present during the marriage celebration. Again, the testimony of CCC fails to persuade Us. AAA testified that she had never seen her father since she was a child, as her father had abandoned them.12 BBB testified that she and her husband had been separated for a long time, and she did not know his whereabouts. She further said that CCC left their place in March 1983 to go to Malaysia, and that was the last time she saw him.13 CCC's allegation that his wife was present during the marriage celebration was also controverted by the testimonies of AAA, her mother, and Imam Musli Muhammad. Thus, save for CCC's self-serving allegations, he could not muster any sufficient evidence to beef up those allegations. It is also very surprising that CCC, after his long absence, suddenly appeared and testified for the defense. CCC would like to impress upon this Court that he has maintained constant communication with his family; however, no single witness was presented to corroborate this claim. Furthermore, CCC, in his Malayang Sinumpaang Salaysay14 dated December 28, 1995, alleged that in 1991, his wife wrote and informed him that Sajiron asked for their daughter's hand in marriage. CCC replied that he was giving his permission for their daughter to marry. In the same salaysay, he also said that Egap wrote him a letter on July 4, 1994 and instructed him to proceed to Malitub, Bataraza to discuss the intended marriage of AAA and Sajiron. However, records are bereft of proof of the existence of these letters. Clearly, these allegations, being unsupported by evidence, are self-serving and cannot be given any probative value. Moreover, Imam Musli Mohammad, while testifying as prosecution witness, attested that the parents of AAA and Sajiron were not present during the marriage,15 thus controverting CCC's allegation that he was present and gave consent to the marriage. Although Imam Musli Muhammad, when presented as an accused witness, recanted his earlier testimony that CCC was not present at the wedding, the same cannot be given credit. Recantations are

frowned upon by the courts. A recantation of a testimony is exceedingly unreliable, for there is always the probability that such recantation may later on be itself repudiated. Courts look with disfavor upon retractions, because they can easily be obtained from witnesses through intimidation or for monetary considerations. Hence, a retraction does not necessarily negate an earlier declaration. They are generally unreliable and looked upon with considerable disfavor by the courts. 16 Moreover, it would be a dangerous rule to reject the testimony taken before a court of justice, simply because the witness who has given it later on changes his mind for one reason or another. 17 As to the defense of denial, the same is inherently weak. Denial is a self-serving negative evidence, which cannot be given greater weight than that of the declaration of a credible witness who testifies on affirmative matters. Like alibi, denial is an inherently weak defense, which cannot prevail over the positive and credible testimonies of the prosecution witnesses. Denial cannot prevail over the positive testimonies of prosecution witnesses who were not shown to have any ill motive to testify against petitioner. 18 The assertion of the accused that the reason why a criminal case was filed against him was his failure to pay the ₱10,000.00 dowry is too lame to be accepted as true. No young Filipina of decent repute would publicly admit she has been raped unless that is the truth. Even in these modern times, this principle holds true. 19 When the offended parties are young and immature girls from 12 to 16, as in this case, courts are inclined to lend credence to their version of what transpired, considering not only their relative vulnerability, but also the public humiliation to which they would be exposed by a court trial, if their accusation were not true.20

In the case at bar, the trial court found AAA's testimony credible. The trial court held that AAA's testimony was clear, categorical and consistent. She remained steadfast in her assertions and unfaltering in her testimony given in court on the unfortunate incident.27 The trial court found that AAA positively identified Sajiron and Maron as her abductors and narrated how she was taken and thrice raped by Sajiron in the forest. AAA recounted her sordid experience as follows: AAA on Direct-Examination by Private Prosecutor Narrazid. Q: On July 1, 1994 more or less at 3:30 p.m. do you remember where you were? A: Yes ma’am. Q: Where were you? A: We fetched water on July 1, 1994. Q: Where? A: In a cave, ma’am. Q: Was there anything unusual that happened during that time? A: Yes ma’am.

It is highly improbable that a young girl, such as AAA, would concoct a horrid story and impute to the accused a crime so grave and subject herself and her family to the humiliation and invasive ordeal of a public trial just to avenge the alleged non-payment of the dowry, unless she be impelled by a genuine desire to expose the truth, vindicate her honor and seek justice she so greatly deserves. Neither is the Court convinced of the "sweetheart theory," the defense of the accused, by alleging that AAA and Sajiron were engaged for three years prior to their elopement and marriage. If there were indeed romantic relationship between AAA and Sajiron, as the latter claims, her normal reaction would have been to cover up for the man she supposedly loved. On the contrary, AAA lost no time in reporting the incident to the National Bureau of Investigation,21 right after she was rescued by the authorities.

Q: What was that incident? A: I noticed that Sahiron Lajim run towards me and held me by my hair. He was carrying a Barong and he was forcing me to go with him but I refused ma’am. Q: And what did you do if any when he forced you to go with him? A: He threatened me to kill me if I will not go with him. What I did was to hold the hair of Inon Dama who came to my rescue, ma’am. Q: What did Sahiron Lajim do if any?

Moreover, the "sweetheart theory" proffered by the accused is effectively an admission of carnal knowledge of the victim, which consequently places on him the burden of proving the supposed relationship by substantial evidence.22 The "sweetheart theory" hardly deserves any attention when an accused does not present any evidence, such as love letters, gifts, pictures, and the like to show that, indeed, he and the victim were sweethearts.23 In the case at bar, Sajiron was unable to present any evidence to prove their relationship. Clearly, the "sweetheart theory" is a self-serving defense and mere fabrication of the accused to exculpate himself and his cohorts from the charges filed against them. It bears stressing that during her testimony before the trial court, AAA vehemently denied that she and Sajiron were sweethearts and firmly declared that the latter never lived in their house. 24

A: He hacked Inon Dama but was not hit and it was the container that was hit, ma’am. And Sahiron Lajim left and I was forced to go with him telling me, "go with me if you do not want to die."

More importantly, in rape cases, the credibility of the victim's testimony is almost always the single most important factor. When the victim's testimony is credible, it may be the sole basis for the accused's conviction.25 This is so because, owing to the nature of the offense, in many cases, the only evidence that can be given regarding the matter is the testimony of the offended party. 26

A: The father of Sahiron Lajim told me to go with them but I refused. What they did was to tie my hands behind my back and my mouth was covered by them by a piece of cloth, ma’am.

Q: When this Inon Dama left what happened next and you were left alone with Sahiron Lajim? A: His father suddenly appeared who was also carrying a gun. Q: What happened next?

Q: And after that what happened next?

A: Then they brought me to the forest ma’am.

Q: And you stated that his organ entered your private part again for the second time, how long?

Q: And when you were in the forest what happened next?

A I did not notice anymore how long was it, ma’am.

A: Sahiron Lajim raped me while his father was watching ma’am.

Q: And you stated Madam Witness that you were repeatedly raped that night, is that correct?

Q: And how did Sahiron Lajim raped you?

A: Yes ma’am.

A: When we reached the forest my hands were untied and my dress were removed and only my bra was left ma’am.

Q: Up to what time?

Q: Who removed your dress?

A: The first time that he raped me was about 7:00 o’clock in the evening, the second was midnight. And the third was 3:00 o’clock in the morning.

A: Sahiron Lajim ma’am.

Q: Were you able to sleep that night?

Q: And you stated that it was only your bra that was left in your body how about your panty?

A: No ma’am.

A: It was already removed. Q: While Sahiron Lajim was undressing you what did you do, if any?

Q: At the time when you were raped for the first time where was the father of Sahiron Lajim? A: He was guarding ma’am. Q: How far was his father?

A: I pleaded to him not to pursue his intention and Sahiron Lajim threatened me that if I will allow him to do such thing to me he will not kill me, ma’am. Q: And did he hold the private parts of your body? A: Yes ma’am. (witness pointing to her bust, and the lower part of her body)

A: He was near a tree which was 10 meters away from us. Q: Now, the place where you were brought by Sahiron Lajim is a forest? A: Yes ma’am.

Q: What other part did Sahiron Lajim touch in your body?

Q: Was there a hut in that forest?

A: My private part, my vagina, ma’am.

A: None ma’am, we were at a place where there were big trees, ma’am.

Q: What else did he do to you? Q: So, you mean to say you were raped on the ground? A: He inserted his organ to my vagina. Then after raping me he required me to wear my blouse. He repeated the act again for two times up to the following day, ma’am. Q: How long was the private part of Sahiron Lajim inside your private part?

A: Yes ma’am. Q: Without any blanket? A: He got some leaves of trees, ma’am.

A: A little bit long. Nearing one (1) hour. Q: What did he do with that leaves of trees? Q: That was the first time his organ entered your private part?

A: He secured some leaves and placed it on the ground, which served as mat, ma’am.

A: Yes ma’am. Q: Did you notice anything in your private part? A: I have seen blood. I was even pushing him away. Q: How did you feel at that time when his organ was inside your private part? A: It was painful, ma’am.

Q: Now, the second and the third time that Sahiron Lajim raped you where was his father? A: He was also there, ma’am.28 (Emphasis supplied) xxxx As a rule, this Court gives great weight to the trial court’s evaluation of the testimony of a witness, because the trial court

had the opportunity to observe the facial expression, gesture, and tone of voice of a witness while testifying, thus, putting it in a better position to determine whether a witness was lying or telling the truth.29 However, the Court does not agree with the findings of the CA affirming the trial court's judgment finding Sajiron and Maron guilty of abduction and rape in Criminal Case No. 12281. An appeal in a criminal case opens the entire case for review on any question, including one not raised by the parties 30 Article 342 of the Revised Penal Code spells out the elements of the crime of forcible abduction, thus: (a) that the person abducted is a woman, regardless of her age, civil status, or reputation; (b) that the abduction is against her will; and (c) that the abduction is with lewd designs. A reading of the Information in Criminal Case No. 12281, for abduction with rape, would readily show that the allegations therein do not charge the accused with forcible abduction, because the taking, as alleged, was not with lewd designs. The only act that was alleged to have been attended with lewd design was the act of rape. Upon further perusal of the allegations in the information, it appears that the crime charged was actually the special complex crime of kidnapping and serious illegal detention and rape, defined and penalized under Article 267 of the Revised Penal Code. Although the information does not specifically allege the term "kidnap or detain," the information specifically used the terms "take" and "carry away." To "kidnap" is to carry away by unlawful force or fraud or to seize and detain for the purpose of so carrying away.31 Whereas, to "take" is to get into one's hand or into one's possession, power, or control by force or strategem. 32 Thus, the word take, plus the accompanying phrase carry away, as alleged in the information, was sufficient to inform the accused that they were charged with unlawfully taking and detaining AAA. Further, the real nature of the criminal charge is determined not from the caption or preamble of the information or from the specification of the provision of law alleged to have been violated, they being conclusions of law which in no way affect the legal aspects of the information, but from the actual recital of facts as alleged in the body of the information. 33 Simply put, the crime charged is determined by the information's accusatory portion and not by its denomination. The accusatory portion of the information alleges that AAA was taken and carried away by Sajiron and Maron against her will and brought to the forest; and, on the occasion thereof, Sajiron -- by means of force, threat, violence and intimidation -- had carnal knowledge of AAA. The elements of kidnapping and serious illegal detention under Article 267 of the Revised Penal Code34 are: (1) the offender is a private individual; (2) he kidnaps or detains another or in any other manner deprives the latter of his liberty; (3) the act of detention or kidnapping is illegal; and (4) in the commission of the offense, any of the following circumstances are present: (a) the kidnapping or detention lasts for more than 3 days; or (b) it is committed by simulating public authority; or (c) any serious physical injuries are inflicted upon the person kidnapped or detained or threats to kill him are made; or (d) the person kidnapped or detained is a minor, female, or a public officer.35 In the case at bar, Sajiron and Maron, who are private individuals, forcibly took and dragged AAA, a minor, to the forest and held her captive against her will. The crime of serious illegal detention consists not only of placing a person in an enclosure, but also of detaining him or depriving him in any manner of his liberty. 36 For there to be kidnapping, it is enough that the victim is restrained

from going home.37 Its essence is the actual deprivation of the victim's liberty, coupled with indubitable proof of the intent of the accused to effect such deprivation.38 In the present case, although AAA was not actually confined in an enclosed place, she was clearly restrained and deprived of her liberty, because she was tied up and her mouth stuffed with a piece of cloth, thus, making it very easy to physically drag her to the forest away from her home. The crime of rape was also proven beyond reasonable doubt in this case. Sajiron succeeded in having carnal knowledge of AAA through the use of force and intimidation. For fear of losing her life, AAA had no choice but to give in to Sajiron's beastly and lustful assault. Clearly, conspiracy between Sajiron and Maron attended the commission of forcible abduction and the subsequent rape of AAA. Conspiracy exists when two or more persons come to an agreement concerning a felony and decide to commit it.39 It may be inferred from the acts of the accused before, during or after the commission of the crime which, when taken together, would be enough to reveal a community of criminal design, as the proof of conspiracy is frequently made by evidence of a chain of circumstances. Once established, all the conspirators are criminally liable as co-principals regardless of the degree of participation of each of them, for in the contemplation of the law, the act of one is the act of all.40 In the case at bar, it was proven that Sajiron and Maron cooperated to prevent AAA from resisting her abduction by tying her hands behind her back and putting a piece of cloth in her mouth. Maron watched and stood guard to make sure that no one would interrupt or prevent the bestial act perpetrated by his son against AAA. Maron did not endeavor to prevent his son from raping AAA thrice. The next morning, Sajiron and Maron brought AAA to the house of Egap to detain her there. The last paragraph of Art. 267 of the Revised Penal Code provides that if the victim is killed or dies as a consequence of the detention, or is raped or subjected to torture or dehumanizing acts, the maximum penalty shall be imposed. In People v. Larrañaga,41 the Court explained that this provision gives rise to a special complex crime: This amendment introduced in our criminal statutes, the concept of 'special complex crime' of kidnapping with murder or homicide. It effectively eliminated the distinction drawn by the courts between those cases where the killing of the kidnapped victim was purposely sought by the accused, and those where the killing of the victim was not deliberately resorted to but was merely an afterthought. Consequently, the rule now is: Where the person kidnapped is killed in the course of the detention, regardless of whether the killing was purposely sought or was merely an afterthought, the kidnapping and murder or homicide can no longer be complexed under Art. 48, nor be treated as separate crimes, but shall be punished as a special complex crime under the last paragraph of Art. 267, as amended by R.A. No. 7659." Where the law provides a single penalty for two or more component offenses, the resulting crime is called a special complex crime. Some of the special complex crimes under the Revised Penal Code are (1) robbery with homicide, (2) robbery with rape, (3) kidnapping with serious physical injuries, (4) kidnapping with murder or homicide, and (5) rape with homicide. In a special complex crime, the prosecution must necessarily prove each of the component offenses with the same precision that would be necessary if they were made the subject of separate complaints. As earlier mentioned, R.A. No. 7659 amended Article 267 of the Revised Penal Code by adding thereto this provision: "When the victim is killed or dies as a consequence of the detention, or is raped, or is subjected to torture or dehumanizing acts, the maximum penalty shall be imposed; and that this provision gives rise to a special complex crime. (Italics in the original)

Thus, we hold that Sajiron and Maron are guilty beyond reasonable doubt of the special complex crime of kidnapping and serious illegal detention with rape in Criminal Case No. 12281. In Criminal Case No. 12309, we also find Sajiron guilty beyond reasonable doubt of the crime of serious illegal detention.

surrenders or submits to the jurisdiction of the court, he is deemed to have waived any right to seek relief from it. 54 Hence, insofar as accused Egap is concerned, the judgment against him became final and executory upon the lapse of fifteen (15) days from promulgation of the judgment. As to the award of damages.

All the elements of the crime of serious illegal detention are present in the instant case: AAA, a female and a minor, testified that on July 2, 1994, after she was raped in the forest, she was brought to and detained at the house of Egap and forced to cohabit with Sajiron. From the very start of her detention on July 2, 1994, Egap directed Sajiron to guard her, and shoot her if she attempted to escape.42 She did not dare to escape because the accused threatened to kill her and her family if she attempted to flee.43 AAA was also guarded by Egap's wife. 44 Even the two sons of Egap, upon the latter's instruction, constantly guarded and threatened her to keep her from leaving.45 In fine, the accused had successfully instilled fear in AAA's mind that escaping would cause her not only her own life, but also the lives of her loved ones. To give a color of legitimacy to AAA's detention, Sajiron married AAA. However, the marriage between her and Sajiron is considered irregular under the Code of Muslim Personal Laws (Presidential Decree No. 1083). Art. 15 (b) of said the law provides that no marriage contract shall be perfected unless the essential requisite of mutual consent of the parties be freely given. And under Art. 32 of the same law, if the consent of either party is vitiated by violence, intimidation, fraud, deceit or misrepresentation, the marriage is considered irregular (fasid) from the time of its celebration. AAA did not give her consent to the wedding. 46 The marriage was solemnized only upon the instruction of Egap. 47She was also forced to sign the marriage contract without the presence of her parents or any of her relatives.48 She did not want to marry Sajiron because she did not love him.49 The Imam who solemnized their marriage did not even ask for the consent of the parties. 50 He was merely compelled to solemnize the marriage because he was afraid of Egap, and the latter threatened him. 51 Clearly, the marriage ceremony was a farce, and was only orchestrated by the accused in an attempt to exculpate themselves from criminal responsibility. Anent Criminal Case No. 12309, the prescribed penalty for serious illegal detention under Art. 267 of the Revised Penal Code, as amended by Republic Act (R. A.) No. 7659, is reclusion perpetua to death. There being no aggravating or modifying circumstance in the commission of the offense, the proper penalty to be imposed is reclusion perpetua, pursuant to Art. 63 of the Revised Penal Code. As to Criminal Case No. 12281, the penalty for the special complex crime of kidnapping and serious illegal detention and rape is death. However, R.A. No. 9346, entitled "An Act Prohibiting the Imposition of Death Penalty in the Philippines," which was approved on June 24, 2006, prohibits the imposition of the death penalty. Thus, the penalty of death is reduced to reclusion perpetua,52 without eligibility for parole.53 As to accused Egap, his act of escaping from his police escort during the pendency of his case and his subsequent unexplained absence during the promulgation of the decision convicting him of the crime charged has divested him of the right to avail himself of any remedy that may be available to him, including his right to appeal. In a recent case, this Court held that once an accused jumps bail or flees to a foreign country, or escapes from prison or confinement, he loses his standing in court; and unless he

In Criminal Case No. 12281, AAA is entitled to civil indemnity in line with prevailing jurisprudence that civil indemnification is mandatory upon the finding of rape.55 In People v. Quiachon,56 even if the penalty of death is not to be imposed because of the prohibition in R.A. No. 9346, the civil indemnity of ₱75,000.00 is proper, because it is not dependent on the actual imposition of the death penalty but on the fact that qualifying circumstances warranting the imposition of the death penalty attended the commission of the offense. As explained in People v. Salome,57 while R.A. No. 9346 prohibits the imposition of the death penalty, the fact remains that the penalty provided for by the law for a heinous offense is still death, and the offense is still heinous. Accordingly, the civil indemnity for AAA is ₱75,000.00. In addition, AAA is entitled to moral damages pursuant to Art. 2219 of the Civil Code,58 without the necessity of additional pleadings or proof other than the fact of rape.59 Moral damages is granted in recognition of the victim's injury necessarily resulting from the odious crime of rape.60 Such award is separate and distinct from the civil indemnity.61 Therefore, the Court awards the amount of ₱75,000.00 as moral damages.1avvphi1 In Criminal Case No. 12309, for serious illegal detention, the trial court's award of ₱50,000 civil indemnity to AAA was proper, in line with prevailing jurisprudence.62 We also find that AAA is entitled to moral damages pursuant to Art. 2219 of the Civil Code, which provides that moral damages may be recovered in cases of illegal detention.63 This is predicated on AAA's having suffered serious anxiety and fright when she was detained for more than five months. Thus, the Court awards the amount of ₱50,000.00 as moral damages.64 Finally, AAA was sexually abused on July 1, 1994 and gave birth on April 8, 1995. There was no showing that AAA had previously been sexually abused or had sexual relations with other men. Further, Dr. Ma. Rebethia Alcala, a Municipal Health Officer of Bataraza, Palawan, testified that since AAA gave birth on April 8, 1995, the baby must have been conceived sometime in July 1994, which was at or about the time of the commission of the rape. Therefore, it can be logically deduced that Sajiron is the father of the child. Under Art. 345 of the Revised Penal Code, 65 he is civilly liable for the support of his offspring. Hence, he is directed to provide support to the victim's child born out of the rape, subject to the amount and conditions to be determined by the trial court, after due notice and hearing, in accordance with Art. 201 of the Family Code.66 WHEREFORE, the appeal is DENIED. The Decision of the Court of Appeals in CA-G.R. CR-HC No. 00475 is AFFIRMED with MODIFICATIONS as follows: (a) In Criminal Case No. 12281, accused Sajiron Lajim and Maron Lajim are found guilty beyond reasonable doubt of the special complex crime of kidnapping and serious illegal detention with rape under Article 267 of the Revised Penal Code, as amended by Republic Act No. 7659, and are sentenced to suffer the penalty of reclusion perpetua, without eligibility for parole, and to

pay jointly and severally, the offended party AAA, the amounts of ₱75,000.00 as civil indemnity and ₱75,000.00 as moral damages. Accused Sajiron Lajim is further ordered to support the offspring born as a consequence of the rape. The amount of support shall be determined by the trial court after due notice and hearing, with support in arrears to be reckoned from the date the appealed decision was promulgated by the trial court; and (b) In Criminal Case No. 12309, accused Sajiron Lajim is found guilty beyond reasonable doubt of the crime of kidnapping and serious illegal detention under Article 267 of the Revised Penal Code, as amended by Republic Act No. 7659, and is sentenced to suffer the penalty of reclusion perpetua and to pay the amounts of ₱50,000.00 as civil indemnity and ₱50,000.00 as moral damages. SO ORDERED.

THIRD DIVISION G.R. No. 82146

January 22, 1990

EULOGIO OCCENA, petitioner, vs. HON. PEDRO M. ICAMINA, Presiding Judge, Branch X of the Regional Trial Court Sixth Judicial Region, San Jose, Antique; THE PEOPLE OF THE PHILIPPINES, represented by the Honorable Provincial Fiscal of Antique; and CRISTINA VEGAFRIA, respondents. Comelec Legal Assistance Office for petitioner. Comelec Legal Assistance Officer for private respondent. FERNAN, C.J.: On May 31, 1979, herein petitioner Eulogio Occena instituted before the Second Municipal Circuit Trial Court of Sibalom, San Remigio — Belison, Province of Antique, Criminal Case No. 1717, a criminal complaint for Grave Oral Defamation against herein private respondent Cristina Vegafria for allegedly openly, publicly and maliciously uttering the following insulting words and statements: "Gago ikaw nga Barangay Captain, montisco, traidor, malugus, Hudas," which, freely translated, mean: "You are a foolish Barangay Captain, ignoramus, traitor, tyrant, Judas" and other words and statements of similar import which caused great and irreparable damage and injury to his person and honor. Private respondent as accused therein entered a plea of not guilty. Trial thereafter ensued, at which petitioner, without reserving his right to file a separate civil action for damages actively intervened thru a private prosecutor. After trial, private respondent was convicted of the offense of Slight Oral Defamation and was sentenced to pay a fine of Fifty Pesos (P50.00) with subsidiary imprisonment in case of insolvency and to pay the costs. No damages were awarded to petitioner in view of the trial court's opinion that "the facts and circumstances of the case as adduced by the evidence do not warrant the awarding of moral damages." 1 Disagreeing, petitioner sought relief from the Regional Trial Court, which in a decision dated March 16, 1987 disposed of petitioner's appeal as follows: IN VIEW OF ALL THE FOREGOING, the civil aspect of the lower court's decision of April 20, 1981 subject of this appeal, for lack of merit, is hereby DENIED. After the decision shall have become final, remand the records of this case to the court of origin, Second Municipal Circuit Trial Court of Sibalom, San RemigioBelison, Antique, for the execution of its decision on the criminal aspect. SO ORDERED. 2 Petitioner is now before us by way of a petition for review on certiorari seeking to annul the RTC decision for being contrary to Article 100 of the Revised Penal Code providing that every person criminally liable for a felony is also civilly liable, and Article 2219 of the New Civil Code providing that moral damages may be recovered in libel, slander or any other form of defamation. He submits that public respondent RTC erred in relying on the cases of Roa vs. de la Cruz, 107 Phil. 10 and Tan vs. Standard Vacuum Oil Co., et al., 91 Phil. 672 cited therein. He differentiates said cases from the case at bar by saying that in the case of Roa, the

decision of the trial court had become final before Maria C. Roa instituted a civil action for damages; whereas in the instant case, the decision of the trial court has not yet become final by reason of the timely appeal interposed by him and no civil action for damages has been instituted by petitioner against private respondent for the same cause. Tan, on the other hand, contemplates of two actions, one criminal and one civil, and the prosecution of the criminal case had resulted in the acquittal of the accused, which is not the situation here where the civil aspect was impliedly instituted with the criminal action in accordance with Section 1, Rule 111, of the Rules of Court. Private respondent for her part argues that the decision of the trial court carries with it the final adjudication of her civil liability. Since petitioner chose to actively intervene in the criminal action without reserving his right to file a separate civil action for damages, he assumed the risk that in the event he failed to recover damages he cannot appeal from the decision of the lower court. We find merit in the petition. The issues confronting us in the instant petition is whether or not the decision of the Second Municipal Trial Court of Sibalom, SanRemigio-Belison, Province of Antique constitutes the final adjudication on the merits of private respondent's civil liability; and whether or not petitioner is entitled to an award of damages arising from the remarks uttered by private respondent and found by the trial court to be defamatory. The decision of the Municipal Circuit Trial Court as affirmed by the Regional Trial Court in Criminal Case No. 1709 cannot be considered as a final adjudication on the civil liability of private respondent simply because said decision has not yet become final due to the timely appeal filed by petitioner with respect to the civil liability of the accused in said case. It was only the unappealed criminal aspect of the case which has become final. In the case of People vs. Coloma, 105 Phil. 1287, we categorically stated that from a judgment convicting the accused, two (2) appeals may, accordingly, be taken. The accused may seek a review of said judgment, as regards both civil and criminal actions; while the complainant may appeal with respect only to the civil action, either because the lower court has refused to award damages or because the award made is unsatisfactory to him. The right of either to appeal or not to appeal in the event of conviction of the accused is not dependent upon the other. Thus, private respondent's theory that in actively intervening in the criminal action, petitioner waived his right to appeal from the decision that may be rendered therein, is incorrect and inaccurate. Petitioner may, as he did, appeal from the decision on the civil aspect which is deemed instituted with the criminal action and such appeal, timely taken, prevents the decision on the civil liability from attaining finality. We tackle the second issue by determining the basis of civil liability arising from crime. Civil obligations arising from criminal offenses are governed by Article 100 of the Revised Penal Code which provides that "(E)very person criminally liable for a felony is also civilly liable," in relation to Article 2177 of the Civil Code on quasidelict, the provisions for independent civil actions in the Chapter on Human Relations and the provisions regulating damages, also found in the Civil Code. Underlying the legal principle that a person who is criminally liable is also civilly liable is the view that from the standpoint of its effects, a crime has dual character: (1) as an offense against the state because of the disturbance of the social order; and (2) as an offense against the private person injured by the crime unless it involves the crime of treason, rebellion, espionage, contempt and others wherein no civil liability arises on the part of the offender

either because there are no damages to be compensated or there is no private person injured by the crime. 3 In the ultimate analysis, what gives rise to the civil liability is really the obligation of everyone to repair or to make whole the damage caused to another by reason of his act or omission, whether done intentional or negligently and whether or not punishable by law. 4 In the case at bar, private respondent was found guilty of slight oral defamation and sentenced to a fine of P50.00 with subsidiary imprisonment in case of insolvency, but no civil liability arising from the felonious act of the accused was adjudged. This is erroneous. As a general rule, a person who is found to be criminally liable offends two (2) entities: the state or society in which he lives and the individual member of the society or private person who was injured or damaged by the punishable act or omission. The offense of which private respondent was found guilty is not one of those felonies where no civil liability results because either there is no offended party or no damage was caused to a private person. There is here an offended party, whose main contention precisely is that he suffered damages in view of the defamatory words and statements uttered by private respondent, in the amount of Ten Thousand Pesos (P10,000.00) as moral damages and the further sum of Ten Thousand Pesos (P10,000) as exemplary damages. Article 2219, par. (7) of the Civil Code allows the recovery of moral damages in case of libel, slander or any other form of defamation This provision of law establishes the right of an offended party in a case for oral defamation to recover from the guilty party damages for injury to his feelings and reputation. The offended party is likewise allowed to recover punitive or exemplary damages. It must be remembered that every defamatory imputation is presumed to be malicious, even if it be true, if no good intention and justifiable motive for making it is shown. And malice may be inferred from the style and tone of publication 5 subject to certain exceptions which are not present in the case at bar. Calling petitioner who was a barangay captain an ignoramus, traitor, tyrant and Judas is clearly an imputation of defects in petitioner's character sufficient to cause him embarrassment and social humiliation. Petitioner testified to the feelings of shame and anguish he suffered as a result of the incident complained of. 6 It is patently error for the trial court to overlook this vital piece of evidence and to conclude that the "facts and circumstances of the case as adduced by the evidence do not warrant the awarding of moral damages." Having misapprehended the facts, the trial court's findings with respect thereto is not conclusive upon us. From the evidence presented, we rule that for the injury to his feelings and reputation, being a barangay captain, petitioner is entitled to moral damages in the sum of P5,000.00 and a further sum of P5,000.00 as exemplary damages. WHEREFORE, the petition is hereby GRANTED. The decision of the Regional Trial Court is hereby MODIFIED and private respondent is ordered to pay petitioner the amount of P5,000.00 as moral damages and another P5,000.00 as exemplary damages. Costs against private respondent. SO ORDERED. Gutierrez, Jr., Feliciano, Bidin and Cortés JJ., concur

II. Can moral damages be awarded for negligence or quasi-delict that did not result to physical injury to the offended party?2

THIRD DIVISION G.R. No. 130030 June 25, 1999 EXPERTRAVEL & TOURS, INC., petitioner, vs. THE HON. COURT OF APPEALS and RICARDO LO, respondents. VITUG, J.: Petitioner, Expertravel and Tours, Inc., seeks in the instant petition for review on certiorari a modification of the decision, dated 20 March 1997, of the Court of Appeals affirming in toto the 07th November 1994 judgment of the Regional Trial Court (Branch 5) of Manila, the dispositive portion of which reads: WHEREFORE, in view of all the foregoing, judgment is rendered declaring the instant suit DISMISSED, and hereby orders the plaintiff to pay defendant Ricardo Lo moral damages in the amount of P30,000.00; attorney's fees in the amount of P10,000.00, and to pay the costs of the suit. No pronouncement as to other damages for lack of evidence to warrant the same. 1 The factual and case settings of the controversy are culled from the pleadings on record and the assailed decision of the appellate court and that of the court a quo. On 07 October 1987, Expertravel & Tours, Inc., ("Expertravel"), a domestic corporation engaged in the travel agency business, issued to private respondent Ricardo Lo four round-trip plane tickets for Hongkong, together with hotel accommodations and transfers, for a total cost of P39,677.20. Alleging that Lo had failed to pay the amount due, Expertravel caused several demands to be made. Since the demands were ignored by Lo, Expertravel filed a court complaint for recovery of the amount claimed plus damages. Respondent Lo explained, in his answer, that his account with Expertravel had already been fully paid. The outstanding account was remitted to Expertravel through its then Chairperson, Ms. Ma. Rocio de Vega, who was theretofore authorized to deal with the clients of Expertravel. The payment was evidenced by a Monte de Piedad Check No. 291559, dated 06 October 1987, for P42,175.20 for which Ms. de Vega, in turn, issued City Trust Check No. 417920 in favor of Expertravel for the amount of P50,000.00, with the notation "placement advance for Ricardo Lo, etc." Per its own invoice, Expertravel received the sum on 10 October 1987. The trial court, affirmed by the appellate court, held that the payment made by Lo was valid and bidding on petitioner Expertravel. Even on the assumption that Ms. de Vera had not been specifically authorized by Expertravel, both courts said, the fact that the amount "delivered to the latter remain(ed) in its possession up to the present, mean(t) that the amount redounded to the benefit of petitioner Expertravel, in view of the second paragraph of Article 1241 of the Civil Code to the effect that payment made to a third person shall also be valid in so far as it has rebounded to the benefit of the creditor." In this recourse, petitioner confines itself to the following related legal issues; viz.:

There is merit in the petition. Moral damages are not punitive in nature but are designed to compensate3 and alleviate in some way the physical suffering, mental anguish, fright, serious anxiety, besmirched reputation, wounded feelings, moral shock, social humiliation, and similar injury unjustly caused to a person. Although incapable of pecuniary computation, moral damages, nevertheless, must somehow be proportional to and in approximation of the suffering inflicted.4 Such damages, to be recoverable, must be the proximate result of a wrongful act or omission the factual basis for which is satisfactorily established by the aggrieved party. 5 An award of moral damages would require certain conditions to be met; to wit: (1) First, there must be an injury, whether physical, mental or psychological, clearly sustained by the claimant; (2) second, there must be a culpable act or omission factually established; (3) third, the wrongful act or omission of the defendant is the proximate cause of the injury sustained by the claimant; and (4) fourth, the award of damages is predicated on any of the cases stated in Article 2219.6 Under the provisions of this law, in culpa contractual or breach of contract, moral damages may be recovered when the defendant acted in bad faith or was guilty of gross negligence (amounting to bad faith) or in wanton disregard of his contractual obligation and, exceptionally, when the act of breach of contract itself is constitutive of tort resulting in physical injuries.7 By special rule in Article 1764, in relation to Article 2206, of the Civil Code, moral damages may also be awarded in case the death of a passenger results from a breach of carriage. In culpa aquiliana, or quasi-delict, (a) when an act or omission causes physical injuries, or (b) where the defendant is guilty of intentional tort,8 moral damages may aptly be recovered. This rule also applies, as aforestated, to contracts when breached by tort. In culpa criminal, moral damages could be lawfully due when the accused is found guilty of physical injuries, lascivious acts, adultery or concubinage, illegal or arbitrary detention, illegal arrest, illegal search, or defamation. Malicious prosecution can also give rise to a claim for moral damages. The term "analogous cases," referred to in Article 2219, following the ejusdem generis rule, must be held similar to those expressly enumerated by the law. 9 Although the institution of a clearly unfounded civil suit can at times be a legal justification for an award of attorney's fees, 10 such filing, however, has almost invariably been held not to be a ground for an award of moral damages. 11 The rationale for the rule is that the law could not have meant to impose a penalty on the right to litigate. The anguish suffered by a person for having been made a defendant in a civil suit would be no different from the usual worry and anxiety suffered by anyone who is haled to court, a situation that cannot by itself be a cogent reason for the award of moral damages. 12 If the rule were otherwise, then moral damages must every time be awarded in favor of the prevailing defendant against an unsuccessful plaintiff.13 The Court confirms, once again, the foregoing rules. WHEREFORE, the petition is GRANTED and the award of moral damages to respondent Ricardo Lo under the assailed decision is DELETED. In its other aspects, the appealed decision shall remain undisturbed. No costs.1âwphi1.nêt SO ORDERED. Panganiban, Purisima and Gonzaga-Reyes, JJ., concur.

I. Can moral damages be recovered in a clearly unfounded suit?

Romero, J., abroad, on official business leave.

SECOND DIVISION G.R. No. 208462

December 10, 2014

SPOUSES CARLOS J. SUNTAY and ROSARIO R. SUNTAY, Petitioners, vs. KEYSER MERCANTILE, INC., Respondent. DECISION

register the said deed of absolute sale in February 1996, it discovered the Notice of Levy and the Certificate of Sale annotated at the back of CCT No. 15802 in favor of Spouses Suntay. Nevertheless, on March 12, 1996, the Register of Deeds cancelled the title of Bayfront and issued CCT No. 264748 in the name of Keyser but carried over the annotation of the Suntays. 9 Subsequently, the sheriff’s Final Deed of Sale10 was executed on April 16, 1996 in favor of the Suntays upon the expiration of the one (1) year period of redemption from the earlier auction sale. CCT No. 26474 of Keyser was cancelled and, thereafter, CCT No. 34250-A11 was issued in the name of Spouses Suntay.

MENDOZA, J.: This is a petition for review on certiorari seeking to reverse and set aside the September 7, 2012 Decision1 and the August 8, 2013 Resolution2 of the Court of Appeals (CA) in CA-G.R. CV No. 94677, entitled Keyser Mercantile, Inc., v. Spouses Carlos and Rosario Suntay" involving the ownership of Unit G and two (2) parking slots in Bayfront's Tmver Condominium. The Facts On October 20, 1989, Eugenia Gocolay, chairperson and president of respondent Keyser Mercantile, Inc. (Keyser), entered into a contract to sell with Bayfront Development Corporation (Baxfront) for the purchase on installment basis of a condominium unit in Bayfront Tower Condominium located at A. Mabini Street, Malate, Manila. The subject of the sale was Unit G of the said condominium project consisting of 163.59 square meters with the privilege to use two (2) parking slots covered by Condominium Certificate of Title (CCT)No. 15802. This Contract to Sell 3 was not registered with the Register of Deeds ofManila. Thus, the subject unit remained in the name of Bayfront with a clean title. On July 7, 1990, petitioner spouses Carlos and Rosario Suntay (Spouses Suntay) also purchased several condominium units on the 4th floor of Bayfront Tower Condominium through another contract to sell. Despite payment of the full purchase price, however, Bayfront failed to deliver the condominium units. When Bayfront failed to reimburse the full purchase price, Spouses Suntay filed an action against it before the Housing and Land Use Regulatory Board (HLURB) for violation of Presidential Decree (P.D.) No. 957 and P.D. No. 1344, rescission of contract, sum of money, and damages. In its decision, dated April 23 1994, the HLURB rescinded the Contract to Sell between Bayfront and Spouses Suntay and ordered Bayfront to pay Spouses Suntay the total amount of 2,752,068.60 as purchase price with interest. Consequently, on November 16, 1994, the HLURB issued a writ of execution. 4 Upon the application of Spouses Suntay, the Sheriffs of the Regional Trial Court (RTC) of Manila levied Bayfront’s titled properties, including the subject condominium Unit G and the two parking slots. Considering that CCT No. 15802 was still registered under Bayfront with a clean title, the sheriffs deemed it proper to be levied. The levy on execution5 in favor of Spouses Suntay was duly recorded in the Register of Deeds of Manila on January 18, 1995. The auction sale was conducted on February 23, 1995, and Spouses Suntay were the highest bidder. Consequently, on March 1, 1995, the Certificate of Sale6 in favor of Spouses Suntay was issued. This was duly annotated at the back of CCT No. 15802 on April 7, 1995. Meanwhile, the Deed of Absolute Sale 7 between Bayfront and Keyser involving the subject property was finally executed on November 9, 1995. The latter allegedly paid the full purchase price sometime in 1991. When Keyser was about to

Keyser then filed a complaint for annulment of auction sale and cancellation of notice of levy before the HLURB, docketed as HLURB Case No. REM 032196-9152. In its decision, dated November 18, 1996, the HLURB ruled in favor of Keyser. Spouses Suntay appealed the decision to the Office of the Presidentand later to the CA but both affirmed the HLURB judgment. On appeal before this Court, however, the HLURB decision was set aside. In its September 23, 2005 Decision, the Court ruled that the HLURB had no jurisdiction over controversies between condominium unit owners and the issue of ownership, possession or interest in the disputed condominium units could not be adjudicated by the HLURB due to its limited jurisdiction under P.D. No. 957 and P.D. No. 1344. RTC Ruling Undaunted, on March 24, 2006, Keyser filed before the RTC of Manila a new complaint for annulment of auction sale, writ of execution, declaration of nullity of title, and reconveyance of property with damages against Spouses Suntay, docketed asCivil Case No. 06-114716. In their answer, Spouses Suntay denied the material allegations of the complaint and interposed special and affirmative defenses of res judicata, forum shopping, prescription, and lack of cause of action. On October 19, 2009, the RTC rendered a Decision12 in favor of Keyser. It explained that when Spouses Suntay registered the Certificate of Sale, the condominium unit was already registered in the name of Keyser. It also held that the auction sale was irregular due to lack of posting and publication of notices. The RTC thus disposed: WHEREFORE, premises considered, the Court hereby declares the auction sale as null and void, orders the Registry of Deeds to reinstate the title of Keyser Mercantile Inc. and to pay the costs. SO ORDERED.13 CA Ruling Spouses Suntay elevated the decision to the CA. In its September 7, 2012 Decision, the CA denied the appealas it found that Spouses Suntay did not acquire the subject property because at the time it was levied, Bayfront had already sold the condominium unit to Keyser. Considering that the judgment debtor had no interest in the property, Spouses Suntay, as purchasers at the auction sale, also acquired no interest. The decretal portion of the CA decision reads: WHEREFORE,in view of the foregoing considerations, the Decision dated October 19, 2009 of the Regional Trial Court (RTC) of Manila, Branch 21, in Civil Case No. 06-114716, is AFFIRMED. SO ORDERED.14

Spouses Suntay filed a motion for reconsideration, but it was denied in the August 8, 2013 Resolution of the CA. Hence, this petition, anchored on the following STATEMENT OF ISSUES

in injury prescribe after four (4) years. The resulting injury started on January 18, 1995. They argue that the correct reckoning period was March 24, 2006 when Civil Case No. 06-114716 was filed in the RTC; and that a period of more or less twelve (12) years had lapsed and the action had already prescribed. HLURB Case No. REM-032196-9152 filed on March 21, 1996 should not have been considered to have tolled the prescriptive period because it had a null and void judgment due to lack of jurisdiction.

I WHETHER OR NOT THE COURT OF APPEALS COMMITTED A REVERSIBLE ERROR IN SUSTAINING THE TRIAL COURT’S DECISION BY NOT DISMISSINGTHE COMPLAINT CASE OF HEREIN RESPONDENT ON GROUND OF PRESCRIPTION OF ACTIONS UNDER ARTICLE 1146 OFTHE CIVIL CODE OF THE PHILIPPINES, AS WELL AS, DUE TO ESTOPPEL BY LACHES; II WHETHER OR NOT THE COURT OFAPPEALS IN SUSTAINING THE DECISION OF THE COURT A QUO COMMITTED A SERIOUS REVERSIBLE ERROR IN NOT APPLYING SECTION 52 OF P.D. 1529 AND ARTICLE 1544 OF THE CIVIL CODE OF THE PHILIPPINES BY FINDING THAT HEREIN PETITIONERS HAVE BETTER RIGHTS OF OWNERSHIP OVER THE SUBJECT CONDOMINIUM PROPERTY IN LITIGATION;

Spouses Suntay argue that the CA erred in not applying Section 52 of P.D. No. 1529 and Article 1544 of the New Civil Code. Their right as purchasers in a public action should havebeen preferred because their right acquired thereunder retroacts to the date of registration of the Notice of Levy on January 18, 1995 and the subsequent auction sale on February 23, 1995. They claim that their right over the subject property is superior over that of Keyser because they purchased the subject property in a legitimate auction sale prior to Keyser’s registration of the deed of absolute sale. Spouses Suntay also pray for moral, exemplary damages and attorney’s fees. They allegedly experienced mental anguish, besmirched reputation, sleepless nights, and wounded feelings warranting moral damages. They contend that exemplary damages should also be awarded in view of the reckless and wanton attitude of Keyser in instituting a groundless action against them. Furthermore, Spouses Suntay were constrained to hire the services of counsel to defend their right against a baseless action.

III The Court’s Ruling WHETHER OR NOT THE COURT OF APPEALS COMMITTED A REVERSIBLE ERROR IN SUSTAINING THE TRIAL COURT’S DECISION BY NOT DISMISSINGTHE COMPLAINT FOR LACK OF VALID AND LEGITIMATE CAUSEOF ACTION OF HEREIN RESPONDENT AGAINST HEREIN PETITIONERS; IV WHETHER OR NOT THE COURT OF APPEALS COMMITTED A REVERSIBLE ERROR IN SUSTAINING THE TRIAL COURT’S DECISION BY NOT DISMISSING THE COMPLAINT ON GROUND OF FORUM SHOPPING; V WHETHER OR NOT THE COURT OF APPEALS COMMITTED A REVERSIBLE ERROR IN SUSTAINING THE TRIAL COURT’S DECISION BY NOT DISMISSING THE COMPLAINT [ON] GROUND OF RES JUDICATA; VI WHETHER OR NOT THE COURT OF APPEALS COMMITTED A REVERSIBLE ERROR IN SUSTAINING THE TRIAL COURT’S DECISION BY NOT AWARDING DAMAGES AND ATTORNEY’S FEES IN FAVOR OF HEREIN PETITIONERS.15 Spouses Suntay contend that res judicata existed. They assert that HLURB Case No. REM-032196-9152 involved the same cause of action, parties and subject matter with Civil Case No. 06-114716 before the RTC. Considering that the former case had been decided on appeal by this Court, then there was already res judicata in the RTC case. They likewise claim the existence of forum shopping in the refiling of the case with the RTC for the second time on March 24, 2006. Spouses Suntay also raise the issue of prescription because Article 1146 of the New Civil Code16 provides that actions resulting

The petition is meritorious. No shopping this case

res and

judicata, prescription

forum in

As to the procedural matters, the Court finds that the grounds invoked by Spouses Suntay are inapplicable. First, the defense of res judicata must fail. The doctrine of res judicatais a fundamental principle of law which precludes parties from re-litigating issues actually litigated and determined by a prior and final judgment.17 Res judicata constituting bar by prior judgment occurs when the following requisites concur: (1) the former judgment is final; (2) it is rendered by a court having jurisdiction over the subject matter and the parties; (3) it isa judgment or an order on the merits; and (4) there is identity of parties, of subject matter, and of causes of action.18 The previous case instituted by Keyser in the HLURB was denied on appeal by this Court based on lack of jurisdiction. Thus, the third requisite of res judicata is not present because the previous case was not adjudicated on the merits as it was denied on jurisdictional grounds. There is no forum shopping either in this case. To determine whether a party violated the rule against forum shopping, the elements of litis pendentiamust be present, or the final judgment in one case amounts to res judicata in another.19 Since there is no res judicata in this case, then there is no forum shopping either. The defense of prescription is likewise unavailing. In Fulton Insurance Company v. Manila Railroad Company,20 this Court ruled that the filing of the first action interrupted the running of the period, and then declared that, at any rate, the second action was filed within the balance of the remaining period. Applying Article 1155 of the New Civil Code in that case, 21 the interruption took place when the first action was filed in the Court of First Instance of Manila. The interruption lasted during the pendency of the action

until the order of dismissal for alleged lack of jurisdiction became final. In the present case, the prescriptive period was interrupted when HLURB Case No. REM-032196-9152 was filed on March 21, 1996. The interruption lasted during the pendency of the action and until the judgment of dismissal due to lack of jurisdiction was rendered on the September 23, 2005. Thus, the filing of Civil Case No. 06114716 on March 24, 2006 was squarely within the prescriptive period of four (4) years. Spouses Suntay properly relied on the Certificate of Title of Bayfront Now, the Court proceeds to the substantial issues. This Court finds that the petition is meritorious applying the Torrens System of Land Registration. The main purpose of the Torrens system is to avoid possible conflicts of title to real estate and to facilitate transactions relative thereto by giving the public the right to rely upon the face of a Torrens certificate of title and to dispense with the need of inquiring further, except when the party concerned has actual knowledge of facts and circumstances that should impel a reasonably cautious man to makesuch further inquiry. Every person dealing with a registered land may safely rely on the correctness of the certificate of title issued therefor and the law will in no way oblige him to go beyond the certificate to determine the condition of the property.22 Again to stress, any buyer or mortgagee of realty covered by a Torrens certificate of title, in the absence of any suspicion, is not obligated to look beyond the certificate to investigate the title of the seller appearing on the face of the certificate. And, heis charged with notice only of such burdens and claims as are annotated on the title.23 In the case at bench, the subject property was registered land under the Torrens System covered by CCT No. 15802 with Bayfront as the registered owner. At the time that the Notice of Levy was annotated on January 18, 1995, the title had no previous encumbrances and liens. Evidently, it was a clean title. The Certificate of Sale, pursuant to an auction sale, was also annotated on April 7,1995, with Bayfront still as the registered owner. It was only on March 12, 1996, almosta year later, that Keyser was able to register its Deed of Absolute Sale with Bayfront. Prior to such date, Spouses Suntay appropriately relied on the Torrens title of Bayfront to enforce the latter’s judgment debt. Because "the act of registration is the operative act to convey or affect the land insofar as third persons are concerned," 24 it follows that where there is nothing in the certificate of title toindicate any cloud or vice in the ownership of the property, or any encumbrance thereon, the purchaser is not required to explore farther than what the Torrens title upon its face indicates in quest for any hidden defect or inchoate right thatmay subsequently defeat his right thereto. If the rule were otherwise, the efficacy and conclusiveness of the certificate of title which the Torrens system seeks to insure would entirely be futile and nugatory. The public shall then be denied of its foremost motivation for respecting and observing the Torrens system of registration.25 When the notice of levy and certificate of sale were annotated on the title, the subject property was unoccupied and no circumstance existed that might suggest to Spouses Suntay that it was owned by another individual.26 Records reveal that it was only later, on January 6, 1999, that the subject property was discovered by the sheriffs to be padlocked.27 The administrator of the condominium did not even knowthe whereabouts of the alleged owner.28 To reiterate, absent any peculiar circumstance, Spouses Suntay could

not be required to disregard the clean title of Bayfront and invest their time, effort and resources to scrutinize every square feet of the subject property. This Court is convinced that Spouses Suntay properly relied on the genuineness and legitimacy of Bayfront’s Torrens certificate of title when they had their liens annotated thereon. Levy on execution is superior to the subsequent registration of the deed of absolute sale. The CA stated in its decision that when the subject property was levied and subjected to an execution sale, Bayfront had already sold it to Keyser. As such, Spouses Suntay no longer acquired the right over the subject property from Bayfront because the latter, as judgment debtor, had nothing more to pass.29 Earlier, the RTC held that at the time Spouses Suntay were to register the auction sale, the subject property was already registered in Keyser’s name and, thus, they were fully aware of the earlier sale. It was too late for Spouses Suntayto deny their knowledge of Keyser’s title. The RTC also found the auction sale questionable due to the lack of posting and publication of notice.30 The Court disagrees with the lower courts. They had completely overlooked the significance of a levy on execution. The doctrine is wellsettled that a levy on execution duly registered takes preference over a prior unregistered sale. Even if the prior salewas subsequently registered before the sale in execution but after the levy was duly made, the validity of the execution sale should be maintained because it retroacts to the date of the levy. Otherwise, the preference created by the levy would be meaningless and illusory.31 In this case, the contract to sell between Keyser and Bayfront was executed on October 20, 1989, but the deed of absolute sale was only made on November 9, 1995 and registered on March 12, 1996. The Notice of Levy in favor of Spouses Suntay was registered on January 18, 1995, while the Certificate of Sale on April 7, 1995, both dates clearly ahead of Keyser’s registration of its Deed of Absolute Sale. Evidently, applying the doctrine of primus tempore, potior jure(first in time, stronger in right), Spouses Suntay have a better right than Keyser. In the case of Uy v. Spouses Medina32 which dealt with essentially the same issues, the Court wrote: Considering that the sale was not registered earlier, the right of petitioner over the land became subordinate and subject to the preference created over the earlier annotated levy in favor of Swift. The levy of execution registered and annotated on September 1, 1998 takes precedence over the sale of the land to petitioner on February 16, 1997, despite the subsequent registration on September 14, 1998 of the prior sale. Such preference in favor of the levy on execution retroacts to the date of levy for to hold otherwise will render the preference nugatory and meaningless. xxx The settled rule is that levyon attachment, duly registered, takes preference over a prior unregistered sale. This result is a necessary consequence of the fact that the property involved was duly covered by the Torrens system which works under the fundamental principle that registration is the operative act which gives validity to the transfer or creates a lien upon the land. The preference created by the levy on attachment is not diminished even by the subsequent registration of the prior sale. This is so because an attachment is a proceeding in rem. It is against the particular property, enforceable against the whole world. The attaching creditor acquires a specific lien on the attached property which nothing can subsequently destroy except the very

dissolution of the attachment or levy itself. Such a proceeding, in effect, means that the property attached is an indebted thing and a virtual condemnation of it to pay the owner’s debt. The lien continues until the debt is paid, or sale is had under execution issued on the judgment, or until the judgment is satisfied, or the attachment discharged or vacated in some manner provided by law. [Emphases supplied] The Court does not agree with the RTC either that the auction sale had glaring irregularities. Assisting Sheriff Rufo Bernardo Jr., testifying as Keyser’s witness, categorically stated that they had posted notices of the auction sale and had conducted the bidding.33 The documentary evidence of S pouses Suntay also shows that publication of the auction sale was indeed complied with.34 No award of actual, moral and exemplary damages Finally, the Court cannot grant the claim for damages by Spouses Suntay. The filing alone of a civil action should not be a ground for an award of moral damages in the same way that a clearly unfounded civil action is not among the grounds for moral damages.35 Spouses Suntay failed to show a compelling reason to warrant the award of moral damages aside from their bare allegations. As to the award of exemplary damages, Article 2229 of the New Civil Code provides that exemplary damages may be imposed by way of example or correction for the public good, in addition to the moral, temperate, liquidated or compensatory damages. 36 The claimant, however, must first establish his right to moral, temperate, liquidated or compensatory damages. In this case, because Spouses Suntay failed to prove their entitlement to moral or compensatory damages, there could be no award of exemplary damages. Spouses Suntay are not entitled to attorney's fees either.1âwphi1 The settled rule is that no premium should be placed on the right to litigate and that not every winning party is entitled to an automatic grant of attorney's fees. 37 WHEREFORE, the petition is GRANTED. The September 7, 2012 Decision and the August 8, 2013 Resolution of the Court of Appeals (CA) in CA-G.R. CV No. 94677 are REVERSED and SET ASIDE. Accordingly, the Court hereby declares the auction sale as valid and binding on Keyser Mercantile, Inc. and all other subsequent registrants. SO ORDERED.

THIRD DIVISION

where she worked seven days a week from August 22 to October 5, 1993. Again, she was not compensated.

G.R. No. 129584 December 3, 1998 TRIPLE EIGHT INTEGRATED SERVICES, INC., petitioner, vs. NATIONAL LABOR RELATIONS COMMISSION, HON. LABOR ARBITER POTENCIANO S. CANIZARES, JR. and ERLINDA OSDANA, respondents. ROMERO, J.: In this petition for certiorari now before us, petitioner Triple Eight Integrated Services Inc. seeks to annul the decision 1 of public respondent National Labor Relations Commission (First Division, Quezon City) dated March 11, 1997 affirming the August 20, 1996 decision 2 of Labor Arbiter Potenciano Canizares. Petitioner was ordered to pay private respondent Erlinda Osdana her salaries for the unexpired portion of her employment contract, unpaid salaries, salary differential, moral and exemplary damages, as well as attorney's fees. On April 28, 1997, the NLRC denied petitioner's motion for reconsideration. 3 The antecedent facts follow. Sometime in August 1992, private respondent Osdana was recruited by petitioner for employment with the latter's principal, Gulf Catering Company (GCC), a firm based in the Kingdom of Saudi Arabia. Under the original employment contract, Osdana was engaged to work as "Food Server" for a period of thirty-six (36) months with a salary of five hundred fifty Saudi rials (SR550). Osdana claims she was required by petitioner to pay a total of eleven thousand nine hundred fifty pesos (P11,950.00) in placement fees and other charges, for which no receipt was issued. She was likewise asked to undergo a medical examination conducted by the Philippine Medical Tests System, a duly accredited clinic for overseas workers, which found her to be "Fit of Employment." Subsequently, petitioner asked Osdana to sign another "Contractor Employee Agreement" 4 which provided that she would be employed as a waitress for twelve (12) months with a salary of two hundred eighty US dollars ($280). It was this employment agreement which was approved by the Philippine Overseas Employment Administration (POEA). On September 16, 1992, Osdana left for Riyadh, Saudi Arabia, and commenced working for GCC. She was assigned to the College of Public Administration of the Oleysha University and, contrary to the terms and conditions of the employment contract, was made to wash dishes, cooking pots, and utensils, perform janitorial work and other tasks which were unrelated to her job designation as waitress. Making matters worse was the fact that she was made to work a gruelling twelve-hour shift, from six o'clock in the morning to six o'clock in the evening, without overtime pay. Because of the long hours and the strenuous nature of her work, Osdana suffered from numbness and pain in her arms. The pain was such that she had to be confined at the Ladies Villa, a housing facility of GCC, from June 18 to August 22, 1993, during which period, she was not paid her salaries. After said confinement, Osdana was allowed to resume work, this time as Food Server and Cook at the Hota Bani Tameem Hospital,

Then, from October 6 to October 23, 1993, Osdana was again confined at the Ladies Villa for no apparent reason. During this period, she was still not paid her salary. On October 24, 1993, she was re-assigned to the Oleysha University to wash dishes and do other menial tasks. As with her previous assignment at the said University, Osdana worked long hours and under harsh conditions. Because of this, she was diagnosed as having Bilateral Carpal Tunnel Syndrome, a condition precipitated by activities requiring "repeated flexion, pronation, and supination of the wrist and characterized by excruciating pain and numbness in the arms." 5 As the pain became unbearable, Osdana had to be hospitalized. She underwent two surgical operations, one in January 1994, another on April 23, 1994. Between these operations, she was not given any work assignments even if she was willing and able to do light work in accordance with her doctor's advice. Again, Osdana was not paid any compensation for the period between February to April 22, 1994. After her second operation, Osdana was discharged From the hospital on April 25, 1994. The medical report stated that "she had very good improvement of the symptoms and she was discharged on the second day of the operation. 6 Four days later, however, she was dismissed from work, allegedly or, the ground of illness. She was not given any separation pay nor was she paid her salaries for the periods when she was not allowed to work. Upon her return to the Philippines, Osdana sought the help of petitioner, but to no avail. She was thus constrained to file a complaint before the POEA against petitioner, praying for unpaid and underpaid salaries, salaries for the unexpired portion of the employment contract, moral and exemplary damages and attorney's fees, as well as the revocation, cancellation, suspension and/or imposition of administrative sanctions against petitioner. Pursuant to Republic Act No. 8042, otherwise known as the Migrant Workers and Overseas Filipinos Act of 1995, the case was transferred to the arbitration branch of the NLRC and assigned to Labor Arbiter Canizares. In a decision dated August 20, 1996, the labor arbiter ruled in favor of Osdana. The dispositive portion of the decision follows: Wherefore, the respondent is hereby ordered to pay the complainant US$2,499.00 as salaries for the unexpired portion of the contract, and US$1,076.00 as unpaid salary and salary differential, or its equivalent in Philippine Peso. The respondent is likewise ordered to pay the complainant P50,000 moral damages, and P20,000 exemplary damages. The respondent is further ordered to pay the complainant 10% of the monetary award as attorney's fee. Other claims are hereby dismissed for lack of sufficient evidence.

SO ORDERED. Aggrieved by the labor arbiter's decision, petitioner appealed to the NLRC, which affirmed the decision in question on March 11, 1997. Petitioner's motion for reconsideration was likewise denied by the NLRC in its order dated April 28, 1997. Hence, this petition for certiorari. Petitioner alleges grave abuse of discretion on the part of the public respondents for the following reasons: (a) ruling in favor of Osdana even if there was no factual or legal basis for the award and, (b) holding petitioner solely liable for her claims despite the fact that its liability is joint and several with its principal, GCC. At the outset, petitioner argues that "public respondent Labor Arbiter gravely abused his discretion when he rendered the questioned decision dated August 20, 1996 without stating the facts and the law where he derived his conclusions." 7 In support of this argument, petitioner cites the first paragraph of Article VIII, Section 14 of the Constitution: "No decision shall be rendered by any court without expressing therein clearly and distinctly the facts and the law on which it is based." On this point, it is enough to note that the decisions of both the labor arbiter and the NLRC were based mainly on the facts and allegations in Osdana's position paper and supporting documents. We find these sufficient to constitute substantial evidence to support the questioned decisions. Generally, findings of facts of quasi-judicial agencies like the NLRC are accorded great respect and, at times, even finality if supported by substantial evidence. "Substantial evidence" is such amount of relevant evidence which a reasonable mind might accept as adequate to justify a conclusions. 8 Moreover, well-settled is the rule that if doubts exist between the evidence presented by the employer and the employee, the scales of justice must be tilted in favor of the latter. Thus, in controversies between a worker and her employer, doubts reasonably arising from the evidence or in the interpretation of agreements should be resolved in favor of the former. Petitioner, for its part, was given the same opportunity to file its own position paper but instead, it opted to file a two-page Answer With Special And Affirmative Defenses, denying generally the allegations of the complaint. 9 As observed by the labor arbiter, "The record shows the complainant fled complaint (sic), position paper, and supporting documents, and prosecuted her case diligently; while the respondent merely tried to settle the case amicably, failing even to file its position paper." 10 The present case being one for illegal dismissal, it was incumbent upon petitioner employer to show by substantial evidence that the termination was validly made. In termination cases, the burden of proof rests on the employer to show that the dismissal is for a just cause. 11 Having failed to file its position paper and to support its denials and affirmative defenses in its answer, petitioner cannot now fault the labor arbiter and the NLRC for relying on the facts as laid down by Osdana in her position paper and supported by other documents. The essence of due process is that a party be afforded reasonable opportunity to be heard and to submit any evidence he may have in support of his defense, 12 and this is exactly what petitioner was accorded, although it chose not to fully avail thereof. This Court, therefore, upholds the finding of herein public respondents that the facts and the evidence on record adduced by Osdana and taken in relation to the answer of petitioner show that

indeed there was breach of the employment contract and illegal dismissal committed by petitioner's principal. Petitioner claims that public respondents committed grave abuse of discretion when they ruled that Osdana had been illegally dismissed by GCC. It maintains that the award for salaries for the unexpired portion of the contract was improper because Osdana was validly dismissed on the ground of illness. The argument must fail. In its Answer, Memorandum of Appeal, 13 Petition for Certiorari, 14 and Consolidated Reply, 15 petitioner consistently asserted that Osdana was validly repatriated for medical reasons, but it failed to substantiate its claim that such repatriation was justified and done in accordance with law. Art. 284 of the Labor Code is clear on the matter of termination by reason of disease or illness, viz: Art. 284. Disease as a ground for termination — An employer may terminate the services of an employee who has been found to be suffering from any disease and whose continued employment is prohibited by law or prejudicial to his health as well as the health of his co-employees: . . . . Specifically, Section 8, Rule 1, Book VI of the Omnibus Rules Implementing the Labor Code provides: Sec. 8. Disease as a ground for dismissal — Where the employee suffers from a disease and his continued employment is prohibited by law or prejudicial to his health or to the health of his co-employees, the employer shall not terminate his employment unless there is a certification by competent public authority that the disease is of such nature or at such a stage that it cannot be cured within a period of six 6 months with proper medical treatment. If the disease or ailment can be cured within the period, the employer shall not terminate the employee but shall ask the employee to take a leave. The employer shall reinstate such employee to his former position immediately upon the restoration of his normal health. (Emphasis supplied). Viewed in the light of the foregoing provisions, the manner by which Osdana was terminated was clearly in violation of the Labor Code and its implementing rules and regulations. In the first place, Osdana's continued employment despite her illness was not prohibited by law nor was it prejudicial to her health, as well as that of her co-employees. In fact, the medical report issued after her second operation stated that "she had very good improvement of the symptoms." Besides, "Carpal Tunnel Syndrome" is not a contagious disease. Petitioner attributes good faith on the part of its principal, claiming that "It was the concern for the welfare and physical well being (sic) of private respondent that drove her employer to take the painful decision of terminating her from the service and having her repatriated to the Philippines at its expense. The employer did not want to risk the aggravation of the illness of private respondent which could have been the logical consequence were private respondent allowed to continue with her job." 16

The Court notes, however, that aside from these bare allegations, petitioner has not presented any medical certificate or similar document from a competent public health authority in support of its claims. On the medical certificate requirement, petitioner erroneously argues that "private respondent was employed in Saudi Arabia and not here in the Philippines. Hence, there was a physical impossibility to secure from a Philippine public health authority the alluded medical certificate that public respondent's illness will not be cured within a period of six months." 17 Petitioner entirely misses the point, as counsel for private respondent states in the Comment. 18 The rule simply prescribes a "certification by a competent public health authority" and not a "Philippine public health authority." If, indeed, Osdana was physically unfit to continue her employment, her employer could have easily obtained a certification to that effect from a competent public health authority in Saudi Arabia, thereby heading off any complaint for illegal dismissal. The requirement for a medical certificate under Article 284 of the Labor Code cannot be dispensed with; otherwise, it would sanction the unilateral and arbitrary determination by the employer of the gravity or extent of the employee's illness and thus defeat the public policy on the protection of labor. As the Court observed in Prieto v. NLRC, 19 "The Court is not unaware of the many abuses suffered by our overseas workers in the foreign land where they have ventured, usually with heavy hearts, in pursuit of a more fulfilling future. Breach of contract, maltreatment, rape, insufficient nourishment, sub-human lodgings, insults and other forms of debasement, are only a few of the inhumane acts to which they are subjected by their foreign employers, who probably feel they can do as they please in their country. While these workers may indeed have relatively little defense against exploitation while they are abroad, that disadvantage must not continue to burden them when they return to their own territory to voice their muted complaint. There is no reason why, in their own land, the protection of our own laws cannot be extended to them in full measure for the redress of their grievances." Petitioner likewise attempts to sidestep the medical certificate requirement by contending that since Osdana was working in Saudi Arabia, her employment was subject to the laws of the host country. Apparently, petitioner hopes to make it appear that the labor laws of Saudi Arabia do not require any certification by a competent public health authority in the dismissal of employees due to illness. Again, petitioner's argument is without merit. First, established is the rule that lex loci contactus (the law of the place where the contract is made) governs in this jurisdiction. There is no question that the contract of employment in this case was perfected here in the Philippines. Therefore, the Labor Code, its implementing rules and regulations, and other laws affecting labor apply in this case. Furthermore, settled is the rule that the courts of the forum will not enforce any foreign claim obnoxious to the forum's public policy. 20 Here in the Philippines, employment agreements are more than contractual in nature. The Constitution itself, in Article XIII Section 3, guarantees the special protection of workers, to wit: The State shall afford fill protection to labor, local and overseas, organized and unorganized, and promote full employment and equality of employment opportunities for all.

It shall guarantee the rights of all workers to self-organization, collective bargaining and negotiations, and peaceful concerted activities, including the right to strike in accordance with law. They shall be entitled to security of tenure, humane conditions of work, and a living wage. They shall also participate in policy and decision-making processes affecting their rights and benefits as may be provided by law. xxx

xxx

xxx

This public policy should be borne in mind in this case because to allow foreign employers to determine for and by themselves whether an overseas contract worker may be dismissed on the ground of illness would encourage illegal or arbitrary pretermination of employment contracts. As regards the monetary award of salaries for the unexpired portion of the employment contract, unpaid salaries and salary differential granted by public respondents to Osdana, petitioner assails the same for being contrary to law, evidence and existing jurisprudence, all of which therefore constitutes grave abuse of discretion. Although this contention is without merit, the award for salaries for the unexpired portion of the contract must, however, be reduced. Paragraph 5, Section 10 of R.A. No. 8042, applies in this case, thus: In case of termination of overseas employment without just, valid or authorized cause as defined by law or contract, the worker shall be entitled to the full reimbursement of his placement fee with interest at twelve percent (12%) per annum, plus his salaries for the unexpired portion of his employment contract or for three (3) months for every year of the unexpired term, whichever is less. In the case at bar, while it would appear that the employment contract approved by the POEA was only for a period of twelve months, Osdana's actual stint with the foreign principal lasted for one year and seven-and-a-half months. It may be inferred, therefore, that the employer renewed her employment contract for another year. Thus, the award for the unexpired portion of the contract should have been US$1,260 (US$280 x 4 1/2 months) or its equivalent in Philippine pesos, not US$2,499 as adjudged by the labor arbiter and affirmed by the NLRC. As for the award for unpaid salaries and differential amounting to US$ 1,076 representing seven months' unpaid salaries and one month underpaid salary, the same is proper because, as correctly pointed out by Osdana, the "no work, no pay" rule relied upon by petitioner does not apply in this case. In the first place, the fact that she had not worked from June 18 to August 22, 1993 and then from January 24 to April 29, 1994, was due to her illness which was clearly work-related. Second, from August 23 to October 5, 1993, Osdana actually worked as food server and cook for seven days a week at the Hota Bani Tameem Hospital, but was not paid any salary for the said period. Finally, from October 6 to October 23, 1993, she was confined to quarters and was not given any work for no reason at all. Now, with respect to the award of moral and exemplary damages, the same is likewise proper but should be reduced. Worth reiterating is the rule that moral damages are recoverable where the dismissal of the employee was attended by bad faith or fraud or constituted an act oppressive to labor, or was done in a manner contrary to morals, good customs, or public policy. 21 Likewise,

exemplary damages may be awarded if the dismissal was effected in a wanton, oppressive or malevolent manner. 22 According to the facts of the case as stated by public respondent, Osdana was made to perform such menial chores, as dishwashing and janitorial work, among others, contrary to her job designation as waitress. She was also made to work long hours without overtime pay. Because of such arduous working conditions, she developed Carpal Tunnel Syndrome. Her illness was such that she had to undergo surgery twice. Since her employer determined for itself that she was no longer fit to continue working, they sent her home posthaste without as much as separation pay or compensation for the months when she was unable to work because of her illness. Since the employer is deemed to have acted in bad faith, the award for attorney's fees is likewise upheld. Finally, petitioner alleges save abuse of discretion on the part of public respondents for holding it solely liable for the claims of Osdana despite the fact that its liability with the principal is joint and several. Petitioner misunderstands the decision in question. It should be noted that contrary to petitioner's interpretation, the decision of the labor arbiter which was affirmed by the NLRC did not really absolve the foreign principal. Petitioner was the only one held liable for Osdana's monetary claims because it was the only respondent named in the complaint and it does not appear that petitioner took steps to have its principal included as co-respondent. Thus, the POEA, and later the labor arbiter, did not acquire jurisdiction over the foreign principal. This is not to say, however, that GCC may not be field liable at all. Petitioner can still claim reimbursement or contribution from it for the amounts awarded to the illegally-dismissed employee. WHEREFORE, in view of the foregoing, the instant petition is DISMISSED. Accordingly, the decisions of the labor arbiter dated August 20, 1996, and of the NLRC dated March 11, 1997, are AFFIRMED with the MODIFICATION that the award to private respondent Osdana should be one thousand two hundred sixty US dollars (US$1,260), or its equivalent in Philippine pesos, as salaries for the unexpired portion of the employment contract, and one thousand seventy six US dollars (US$1,076), or its equivalent in Philippine pesos, representing unpaid salaries for seven (7) months and underpaid salary for one (1) month, plus interest. Petitioner is likewise ordered to pay private respondent P30,000.00 in moral damages, P10,000.00 in exemplary damages and 10% attorney's fees. This decision is without prejudice to any remedy or claim for reimbursement or contribution petitioner may institute against its foreign principal, Gulf Catering Company. No pronouncement as to costs. SO ORDERED. Kapunan, Purisima and Pardo, JJ., concur.

SECOND DIVISION G.R. No. 120706

January 31, 2000

RODRIGO CONCEPCION, petitioner, vs. COURT OF APPEALS and SPS. NESTOR NICOLAS and ALLEM NICOLAS, respondents. BELLOSILLO, J.: Petitioner Rodrigo Concepcion assails in this petition for review on certiorari the Decision of the Court of Appeals dated 12 December 1994 which affirmed the decision of the Regional Trial Court of Pasig City ordering him to pay respondent spouses Nestor Nicolas and Allem Nicolas the sums of P50,000.00 for moral damages, P25,000.00 for exemplary damages and P10,000.00 for attorney's fees, plus the costs of suit.* Petitioner claims absence of factual and legal basis for the award of damages. The courts a quo found that sometime in 1985 the spouses Nestor Nicolas and Allem Nicolas resided at No. 51 M. Concepcion St., San Joaquin, Pasig City, in an apartment leased to them by the owner thereof, Florence "Bing" Concepcion, who also resided in the same compound where the apartment was located. Nestor Nicolas was then engaged in the business of supplying government agencies and private entities with office equipment, appliances and other fixtures on a cash purchase or credit basis. Florence Concepcion joined this venture by contributing capital on condition that after her capital investment was returned to her, any profit earned would be divided equally between her and Nestor. Sometime in the second week of July 1985 Rodrigo Concepcion, brother of the deceased husband of Florence, angrily accosted Nestor at the latter's apartment and accused him of conducting an adulterous relationship with Florence. He shouted, "Hoy Nestor, kabit ka ni Bing! . . . Binigyan ka pa pala ni Bing Concepcion ng P100,000.00 para umakyat ng Baguio. Pagkaakyat mo at ng asawa mo doon ay bababa ka uli para magkasarilinan kayo ni Bing."1 To clarify matters, Nestor went with Rodrigo, upon the latter's dare, to see some relatives of the Concepcion family who allegedly knew about the relationship. However, those whom they were able to see denied knowledge of the alleged affair. The same accusation was hurled by Rodrigo against Nestor when the two (2) confronted Florence at the terrace of her residence. Florence denied the imputations and Rodrigo backtracked saying that he just heard the rumor from a relative. Thereafter, however, Rodrigo called Florence over the telephone reiterating his accusation and threatening her that should something happen to his sick mother, in case the latter learned about the affair, he would kill Florence.1âwphi1.nêt As a result of this incident, Nestor Nicolas felt extreme embarrassment and shame to the extent that he could no longer face his neighbors. Florence Concepcion also ceased to do business with him by not contributing capital anymore so much so that the business venture of the Nicolas spouses declined as they could no longer cope with their commitments to their clients and customers. To make matters worse, Allem Nicolas started to doubt Nestor's fidelity resulting in frequent bickerings and quarrels during which Allem even expressed her desire to leave her husband. Consequently, Nestor was forced to write Rodrigo demanding public apology and payment of damages. Rodrigo pointedly ignored the demand, for which reason the Nicolas spouses filed a civil suit against him for damages.

In his defense, Rodrigo denied that he maligned Nestor by accusing him publicly of being Florence's lover. He reasoned out that he only desired to protect the name and reputation of the Concepcion family which was why he sought an appointment with Nestor through Florence's son Roncali to ventilate his feelings about the matter. Initially, he discussed with Nestor certain aspects of the joint venture in a friendly and amiable manner, and then only casually asked the latter about his rumored affair with his sister-inlaw. In contesting the decision of the appellate court, petitioner Rodrigo Concepcion raises the following issues: (a) whether there is basis in law for the award of damages to private respondents, the Nicolas spouses; and, (b) whether there is basis to review the facts which are of weight and influence but which were overlooked and misapplied by the respondent appellate court. Petitioner argues that in awarding damages to private respondents, the Court of Appeals was without legal basis to justify its verdict. The alleged act imputed to him by respondent spouses does not fall under Arts. 262 and 22193 of the Civil Code since it does not constitute libel, slander, or any other form of defamation. Neither does it involve prying into the privacy of another's residence or meddling with or disturbing the private life or family relation of another. Petitioner also insists that certain facts and circumstances of the case were manifestly overlooked, misunderstood or glossed over by respondent court which, if considered, would change the verdict. Impugning the credibility of the witnesses for private respondents and the manner by which the testimonial evidence was analyzed and evaluated by the trial court, petitioner criticized the appellate court for not taking into account the fact that the trial judge who penned the decision was in no position to observe first-hand the demeanor of the witnesses of respondent spouses as he was not the original judge who heard the case. Thus, his decision rendered was flawed. The Court has ruled often enough that its jurisdiction in a petition for review on certiorari under Rule 45 of the Revised Rules of Court is limited to reviewing only errors of law, not of fact, unless the factual findings complained of are devoid of support by the evidence on record or the assailed judgment is based on misapprehension of facts.4The reason behind this is that the Supreme Court respects the findings of the trial court on the issue of credibility of witnesses, considering that it is in a better position to decide the question, having heard the witnesses themselves and observed their deportment and manner of testifying during the trial.5 Thus it accords the highest respect, even finality, to the evaluation made by the lower court of the testimonies of the witnesses presented before it. The Court is also aware of the long settled rule that when the issue is on the credibility of witnesses, appellate courts will not generally disturb the findings of the trial court; however, its factual findings may nonetheless be reversed if by the evidence on record or lack of it, it appears that the trial court erred. 6 In this respect, the Court is not generally inclined to review the findings of fact of the Court of Appeals unless its findings are erroneous, absurd, speculative, conjectural, conflicting, tainted with grave abuse of discretion, or contrary to the findings culled by the trial court of origin. 7 This rule of course cannot be unqualifiedly applied to a case where the judge who penned the decision was not the one who heard the case, because not having heard the testimonies himself, the judge would not be in a better position than the appellate courts to make such determination.8 However, it is also axiomatic that the fact alone that the judge who heard the evidence was not the one who rendered the judgment but merely relied on the record of the case does not render his judgment erroneous or irregular. This is so even if the judge did not have the fullest opportunity to weigh the testimonies not having heard all the witnesses speak nor observed their deportment and

manner of testifying. Thus the Court generally will not find any misapprehension of facts as it can be fairly assumed under the principle of regularity of performance of duties of public officers that the transcripts of stenographic notes were thoroughly scrutinized and evaluated by the judge himself. Has sufficient reason then been laid before us by petitioner to engender doubt as to the factual findings of the court a quo? We find none. A painstaking review of the evidence on record convinces us not to disturb the judgment appealed from. The fact that the case was handled by different judges brooks no consideration at all, for preponderant evidence consistent with their claim for damages has been adduced by private respondents as to foreclose a reversal. Otherwise, everytime a Judge who heard a case, wholly or partially, dies or lives the service, the case cannot be decided and a new trial will have to be conducted. That would be absurb; inconceivable. According to petitioner, private respondents' evidence is inconsistent as to time, place and persons who heard the alleged defamatory statement. We find this to be a gratuitous observation, for the testimonies of all the witnesses for the respondents are unanimous that the defamatory incident happened in the afternoon at the front door of the apartment of the Nicolas spouses in the presence of some friends and neighbors, and later on, with the accusation being repeated in the presence of Florence, at the terrace of her house. That this finding appears to be in conflict with the allegation in the complaint as to the time of the incident bears no momentous significance since an allegation in a pleading is not evidence; it is a declaration that has to be proved by evidence. If evidence contrary to the allegation is presented, such evidence controls, not the allegation in the pleading itself, although admittedly it may dent the credibility of the witnesses. But not in the instant case. It is also argued by petitioner that private respondents failed to present as witnesses the persons they named as eyewitnesses to the incident and that they presented instead one Romeo Villaruel who was not named as a possible witness during the pre-trial proceedings. Charging that Villaruel's testimony is not credible and should never have been accorded any weight at all, petitioner capitalizes on the fact that a great distance separates Villaruel's residence and that of private respondents as reflected in their house numbers, the former's number being No. 223 M. Concepcion St., while that of the Nicolas spouses, No. 51 along the same street. This being so, petitioner concludes, Villaruel could not have witnessed the ugly confrontation between Rodrigo and Nestor. It appears however from Villaruel's testimony that at the time of the incident complained of, he was staying in an apartment inside the compound adjacent to that of the Nicolas spouses. Whether his apartment was then numbered 223 is not stated. What is definite and clear is his statement that he and Nestor Nicolas were neighbors on 14 July 1985. There are other inconsistencies pointed out by petitioner in the testimonial evidence of private respondents but these are not of such significance as to alter the finding of facts of the lower court. Minor inconsistencies even guarantee truthfulness and candor, for they erase any suspicion of a rehearsed testimony.9 Inconsistencies in the testimonies of witnesses with on minor details and collateral matters do not affect the substance of their testimonies.10 All told, these factual findings provide enough basis in law for the award of damages by the Court of Appeals in favor of respondents. We reject petitioner's posture that no legal provision supports such award, the incident complained of neither falling under Art. 2219 nor Art. 26 of the Civil Code. It does not need further elucidation that the incident charged of petitioner was no less than an invasion on the right of respondent Nestor as a person. The philosophy behind Art. 26 underscores the necessity

for its inclusion in our civil law. The Code Commission stressed in no uncertain terms that the human personality must be exalted. The sacredness of human personality is a concomitant consideration of every plan for human amelioration. The touchstone of every system of law, of the culture and civilization of every country, is how far it dignifies man. If the statutes insufficiently protect a person from being unjustly humiliated, in short, if human personality is not exalted — then the laws are indeed defective.11 Thus, under this article, the rights of persons are amply protected, and damages are provided for violations of a person's dignity, personality, privacy and peace of mind. It is petitioner's position that the act imputed to him does not constitute any of those enumerated in Arts 26 and 2219. In this respect, the law is clear. The violations mentioned in the codal provisions are not exclusive but are merely examples and do not preclude other similar or analogous acts. Damages therefore are allowable for actions against a person's dignity, such as profane, insulting, humiliating, scandalous or abusive language. 12 Under Art. 2217 of the Civil Code, moral damages which include physical suffering, mental anguish, fright, serious anxiety, besmirched reputation, wounded feelings, moral shock, social humiliation, and similar injury, although incapable of pecuniary computation, may be recovered if they are the proximate result of the defendant's wrongful act or omission. There is no question that private respondent Nestor Nicolas suffered mental anguish, besmirched reputation, wounded feelings and social humiliation as a proximate result of petitioner's abusive, scandalous and insulting language. Petitioner attempted to exculpate himself by claiming that he made an appointment to see Nestor through a nephew, Roncali, the son of Florence, so he could talk with Nestor to find out the truth about his rumored illicit relationship with Florence. He said that he wanted to protect his nephews and nieces and the name of his late brother (Florence's husband).13 How he could be convinced by some way other than a denial by Nestor, and how he would protect his nephews and nieces and his family's name if the rumor were true, he did not say. Petitioner admitted that he had already talked with Florence herself over the telephone about the issue, with the latter vehemently denying the alleged immoral relationship. Yet, he could not let the matter rest on the strength of the denial of his sister-in-law. He had to go and confront Nestor, even in public, to the latter's humiliation. Testifying that until that very afternoon of his meeting with Nestor he never knew respondent, had never seen him before, and was unaware of his business partnership with Florence, his subsequent declarations on the witness stand however belie this lack of knowledge about the business venture for in that alleged encounter he asked Nestor how the business was going, what were the collection problems, and how was the money being spent. He even knew that the name of the business, Floral Enterprises, was coined by combining the first syllables of the name Florence and Allem, the name of Nestor's wife. He said that he casually asked Nestor about the rumor between him and Florence which Nestor denied. Not content with such denial, he dared Nestor to go with him to speak to his relatives who were the source of his information. Nestor went with him and those they were able to talk to denied the rumor. We cannot help noting this inordinate interest of petitioner to know the truth about the rumor and why he was not satisfied with the separate denials made by Florence and Nestor. He had to confront Nestor face to face, invade the latter's privacy and hurl defamatory words at him in the presence of his wife and children, neighbors and friends, accusing him — a married man — of having an adulterous relationship with Florence. This definitely caused private respondent much shame and embarrassment that he could no longer show himself in his neighborhood without feeling distraught and debased. This brought dissension and distrust in his family where before there was none. This is why a few days after

the incident, he communicated with petitioner demanding public apology and payment of damages, which petitioner ignored. If indeed the confrontation as described by private respondents did not actually happen, then there would have been no cause or motive at all for them to consult with their lawyer, immediately demand an apology, and not obtaining a response from petitioner, file an action for damages against the latter. That they decided to go to court to seek redress bespeaks of the validity of their claim. On the other hand, it is interesting to note that while explaining at great length why Florence Concepcion testified against him, petitioner never advanced any reason why the Nicolas spouses, persons he never knew and with whom he had no dealings in the past, would sue him for damages. It also has not escaped our attention that, faced with a lawsuit by private respondents, petitioner sent his lawyer, a certain Atty. Causapin, to talk not to the Nicolas spouses but to Florence, asking her not to be involved in the case, otherwise her name would be messily dragged into it. Quite succinctly, Florence told the lawyer that it was not for her to decide and that she could not do anything about it as she was not a party to the court case.1âwphi1.nêt WHEREFORE, in light of the foregoing premises, the assailed Decision of the Court of Appeals affirming the judgment of the Regional Trial Court of Pasig City, Br. 167, holding Rodrigo Concepcion liable to the spouses Nestor Nicolas and Allem Nicolas for F50,000.00 as moral damages, P25,000.00 for exemplary damages, P10,000.00 for attorney's fees, plus costs of suit, is AFFIRMED. SO ORDERED. Mendoza, Quisumbing, Buena and De Leon, Jr., JJ., concur.

THIRD DIVISION G.R. No. 188715

April 6, 2011

Petitioner, vs. FEDERICO P. CARIN, Respondent. DECISION CARPIO MORALES, J.: Assailed via this petition for review of petitioner Rodolfo N. Regala is the May 26, 2009 Decision1 of the Court of Appeals which affirmed with modification the May 29, 2006 Decision 2 of the Regional Trial Court (RTC) of Las Piñas City, Br. 255 in Civil Case No. LP-99-0058, ordering petitioner to pay respondent Federico P. Carin moral and exemplary damages and attorney’s fees. Petitioner and respondent are adjacent neighbors at Spirig Street, BF Resort Village, Las Piñas City. When petitioner decided to renovate his one storey residence by constructing a second floor, he under the guise of merely building an extension to his residence, approached respondent sometime in May 1998 for permission to bore a hole through a perimeter wall shared by both their respective properties, to which respondent verbally consented on condition that petitioner would clean the area affected by the work. As earlier indicated, petitioner’s real intention was to build a second floor, in fact with a terrace atop the dividing wall. In the course of the construction of the second floor, respondent and his wife Marietta suffered from the dust and dirt which fell on their property. As petitioner failed to address the problem to respondent’s satisfaction, respondent filed a letter-complaint3 with the Office of the City Engineer and Building Official of Las Piñas City on June 9, 1998. In his letter-complaint, respondent related that, despite the lack of a building permit for the construction of a second floor, petitioner had demolished the dividing wall, failed to clean the debris falling therefrom, allowed his laborers to come in and out of his (respondent’s) property without permission by simply jumping over the wall, and trampled on his vegetable garden; and that despite his protestations, petitioner persisted in proceeding with the construction, he claiming to be the owner of the perimeter wall. Several "sumbongs"4 (complaints) were soon lodged by respondent before the Office of Barangay Talon Dos against petitioner for encroachment, rampant invasion of privacy and damages arising from the construction, and for illegal construction of scaffoldings inside his (respondent’s) property. As no satisfactory agreement was reached at the last barangay conciliation proceedings in December 1998, and petitioner having continued the construction work despite issuance of several stopwork notices from the City Engineer’s Office for lack of building permit, respondent filed on March 1999 a complaint 5 for damages against petitioner before the RTC of Las Piñas City. In his complaint, respondent alleged in the main that, instead of boring just one hole as agreed upon, petitioner demolished the whole length of the wall from top to bottom into five parts for the purpose of constructing a second floor with terrace; and that debris and dust piled up on respondent’s property ruining his garden and forcing him to, among other things, shut some of the windows of his house. Respondent thus prayed for the award of moral and exemplary damages.

Petitioner, denying respondent’s allegations, claimed in his Answer6 that he was the sole and exclusive owner of the wall referred to as a perimeter wall, the same having been built within the confines of his property and being part and parcel of the house and lot package he purchased from the developer, BF Homes, Inc., in 1981; that the issue of its ownership has never been raised by respondent or his predecessor; and that securing the consent of respondent and his neighbors was a mere formality in compliance with the requirements of the Building Official to facilitate the issuance of a building permit, hence, it should not be taken to mean that he (petitioner) acknowledges respondent to be a coowner of the wall. He added that he eventually secured the requisite building permit7 in March 1999 and had duly paid the administrative fine.8 Further, petitioner, denying that a demolition of the whole length of the wall took place, claimed that he and his contractor’s laborers had been diligently cleaning respondent’s area after every day’s work until respondent arrogantly demanded the dismantling of the scaffoldings, and barred the workforce from, and threatening to shoot anyone entering the premises; and that the complaint was instituted by respondent as leverage to force him to withdraw the criminal case for slander and light threats 9 which he had earlier filed against respondent for uttering threats and obscenities against him in connection with the construction work. At the trial, after respondent and his wife confirmed the material allegations of the complaint, petitioner took the witness stand and presented his witnesses. Architect Antonio Punzalan III10 testified that he installed GI sheets to prevent debris from falling onto respondent’s property and had instructed his workers to clean the affected area after every work day at 5:00 p.m., but they were later barred by respondent from entering his property. Engineer Crisostomo Chan11 from the Office of the Building Official of Las Piñas City testified, among other things, on the circumstances surrounding the complaint for illegal construction filed by respondent and that a building permit was eventually issued to petitioner on March 15, 1999. Engineer Sonia Haduca12 declared that upon a joint survey conducted on the properties of both petitioner and respondent in December 1998 to determine their exact boundaries, she found an encroachment by petitioner of six centimeters at the lower portion of the existing wall negligible, since the Land Survey Law permits an encroachment of up to ten centimeters. By Decision of May 29, 2006, Branch 255 of the Las Piñas City RTC rendered judgment in favor of respondent whom it awarded moral damages in the sum of ₱100,000, exemplary damages of ₱100,000 and attorney’s fees of ₱50,000 plus costs of suit.13 In finding for respondent, the trial court declared that, apart from the fact that petitioner knowingly commenced the renovation of his house without the requisite building permit from the City Engineer’s Office, he misrepresented to respondent his true intent of introducing renovations. For, it found that instead of just boring a hole in the perimeter wall as originally proposed, petitioner divided the wall into several sections to serve as a foundation for his firewall (which ended up higher than the perimeter wall) and the second storey of his house. The trial court further declared that respondent and his family had thus to contend with the noise, dust and debris occasioned by the construction, which petitioner and his work crew failed to address despite respondent’s protestations, by refusing to clean the mess or install the necessary safety devices.

Applying Article 2176 of the Civil Code on quasi-delicts, the trial court ruled that petitioner was at fault and negligent for failing to undertake sufficient safety measures to prevent inconvenience and damage to respondent to thus entitle respondent to moral and exemplary damages. On appeal by petitioner, the Court of Appeals affirmed the trial court’s decision with modification by reducing the award of moral and exemplary damages to ₱50,000 and ₱25,000, respectively. The appellate court anchored its affirmance on Article 19 of the New Civil Code which directs every person to, in the exercise of his rights and in the performance of his duties, act with justice, and observe honesty and good faith. By Resolution14 of July 10, 2009, the appellate court denied petitioner’s motion for reconsideration as well as respondent’s prayer in his Comment that the original awards made by the trial court be restored. Hence, petitioner’s present petition faulting the appellate court in Affirming with modification the decision of the trial court….considering the absence of any competent proof to warrant the grant of moral and exemplary damages as well as attorney’s fees.15 (underscoring supplied) Petitioner maintains that since moral and exemplary damages are compensatory in nature, being meant neither to punish nor enrich, the claimant must establish that not only did he sustain injury but also that the other party had acted in bad faith or was motivated by ill will. To petitioner, respondents failed to discharge this burden. He adds that the trial court did not delve into whether petitioner’s renovations were the primary cause of respondent’s claimed injuries, viz violation of privacy, sleepless nights and mental anguish, among other things, as it instead focused on the lack of a building permit as basis for the awards. Rebutting the testimony of respondent’s wife as to the alleged unauthorized intrusion of petitioner’s workers into respondent’s property in order to erect scaffoldings, petitioner points out that such an undertaking would take a considerable length of time and could not have gone unnoticed had consent not been given by respondent. Moreover, petitioner posits, if consent had truly been withheld, there was nothing to prevent respondent from dismantling or immediately removing the offending structures – a course of action he did not even attempt. In his Comment16 to the petition, respondent quotes heavily from the appellate and trial court’s findings that fault and negligence attended petitioner’s renovation, thus justifying the award of damages. He goes on to reiterate his plea that the awards given by the trial court in its decision of May 29, 2006 should be reinstated. The petition is partly impressed with merit. The trial court’s award of moral and exemplary damages, as affirmed by the appellate court, was premised on the damage and suffering sustained by respondent arising from quasi-delict under Article 217617 of the Civil Code. Thus the trial court explained: Indeed, there was fault or negligence on the part of the defendant when he did not provide sufficient safety measures to prevent causing a lot of inconvenience and disturbance to the plaintiff and his family. The evidence presented by the plaintiff regarding the dirt or debris, as well as the absence of devices or safety

measures to prevent the same from falling inside plaintiff’s property, were duly established. It did not help the cause of the defendant that he made a lot of misrepresentations regarding the renovations on his house and he did not initially have a building permit for the same. In fact, it was only after the construction works were completed that the said permit was issued and upon payment of an administrative fine by the defendant.18 In prayers for moral damages, however, recovery is more an exception rather than the rule. Moral damages are not meant to be punitive but are designed to compensate and alleviate the physical suffering, mental anguish, fright, serious anxiety, besmirched reputation, wounded feelings, moral shock, social humiliation, and similar harm unjustly caused to a person. To be entitled to such an award, the claimant must satisfactorily prove that he has suffered damages and that the injury causing it has sprung from any of the cases listed in Articles 221919 and 222020 of the Civil Code. Moreover, the damages must be shown to be the proximate result of a wrongful act or omission. The claimant must thus establish the factual basis of the damages and its causal tie with the acts of the defendant. In fine, an award of moral damages calls for the presentation of 1) evidence of besmirched reputation or physical, mental or psychological suffering sustained by the claimant; 2) a culpable act or omission factually established; 3) proof that the wrongful act or omission of the defendant is the proximate cause of the damages sustained by the claimant; and 4) the proof that the act is predicated on any of the instances expressed or envisioned by Article 2219 and Article 2220 of the Civil Code.21 In the present case, respondent failed to establish by clear and convincing evidence that the injuries he sustained were the proximate effect of petitioner’s act or omission. It thus becomes necessary to instead look into the manner by which petitioner carried out his renovations to determine whether this was directly responsible for any distress respondent may have suffered since the law requires that a wrongful or illegal act or omission must have preceded the damages sustained by the claimant. It bears noting that petitioner was engaged in the lawful exercise of his property rights to introduce renovations to his abode. While he initially did not have a building permit and may have misrepresented his real intent when he initially sought respondent’s consent, the lack of the permit was inconsequential since it only rendered petitioner liable to administrative sanctions or penalties.1avvphi1 The testimony of petitioner and his witnesses, specifically Architect Punzalan, demonstrates that they had actually taken measures to prevent, or at the very least, minimize the damage to respondent’s property occasioned by the construction work. Architect Punzalan details how upon reaching an agreement with petitioner for the construction of the second floor, he (Punzalan) surveyed petitioner’s property based on the Transfer Certificate of Title (TCT) and Tax Declarations22 and found that the perimeter wall was within the confines of petitioner’s property; that he, together with petitioner, secured the consent of the neighbors (including respondent) prior to the start of the renovation as reflected in a Neighbor’s Consent23 dated June 12, 1998; before the construction began, he undertook measures to prevent debris from falling into respondent’s property such as the installation of GI sheet strainers, the construction of scaffoldings24 on respondent’s property, the instructions to his workers to clean the area before leaving at 5:00 p.m;25 and that the workers conducted daily clean-up of respondent’s property with his consent, until animosity developed between the parties.26 Malice or bad faith implies a conscious and intentional design to do a wrongful act for a dishonest purpose or moral obliquity; it is different from the negative idea of negligence in that malice or bad

faith contemplates a state of mind affirmatively operating with furtive design or ill will.27 While the Court harbors no doubt that the incidents which gave rise to this dispute have brought anxiety and anguish to respondent, it is unconvinced that the damage inflicted upon respondent’s property was malicious or willful, an element crucial to merit an award of moral damages under Article 2220 of the Civil Code. Necessarily, the Court is not inclined to award exemplary damages.28 Petitioner, however, cannot steer clear from any liability whatsoever. Respondent and his family’s rights to the peaceful enjoyment of their property have, at the very least, been inconvenienced from the incident borne of petitioner’s construction work. Any pecuniary loss or damage suffered by respondent cannot be established as the records are bereft of any factual evidence to establish the same. Nominal damages may thus be adjudicated in order that a right of the plaintiff, respondent herein, which has been violated or invaded by the defendant, petitioner herein, may be vindicated or recognized, and not for the purpose of indemnifying the plaintiff for any loss suffered by him. 29 WHEREFORE, the petition is GRANTED. The May 26, 2009 Decision of the Court of Appeals is VACATED. The Court orders petitioner to pay respondent the sum of ₱25,000 as nominal damages. No costs. SO ORDERED.

SECOND DIVISION G.R. No. 142029

"Two weeks after the wedding, defendant Erlinda Francisco called Mrs. Rebecca Lo and apologized.

February 28, 2001

ERLINDA FRANCISCO, doing business in the name and style of Cebu Fountainhead Bakeshop and JULIANA PAMAONG, petitioners, vs. RICARDO FERRER, JR., ANNETTE FERRER, ERNESTO LO AND REBECCA LO, respondents. PARDO, J.: Appeal via certiorari1 taken by petitioners from the decision of the Court of Appeals2 increasing the trial court's award of moral damages to Ricardo Ferrer, Jr., Annette Ferrer, Ernesto Lo and Rebecca Lo to two hundred fifty thousand pesos (P250,000.00) and awarding exemplary damages in the amount of one hundred thousand pesos (P100,000.00), in addition to the following: "1. The cost of the wedding cake in the amount of P3,175.00;

"Ricardo Ferrer, son-in-law of Rebecca Lo corroborated the latter's testimony, stating that two weeks after the wedding, as a result of the non-delivery of the wedding cake, Ramon Montinola, the son-in-law of Erlinda Francisco, went to Rebecca Lo's residence and offered the sum of P5,000.00 to indemnify for the damage done, but it was rejected."4 On March 12, 1993, respondents filed with the Regional Trial Court, Cebu City an action for breach of contract with damages against petitioners.5 After due trial, on May 19, 1995, the trial court rendered a decision in favor of plaintiffs [herein defendants], the dispositive portion of which reads as follows: "THE FOREGOING CONSIDERED, judgment is hereby rendered in favor of the plaintiffs and against Erlinda Francisco.

"2. Attorney's fees in the amount of P10,000.00; and

"Directing the latter to pay the former the following:

"3. Cost of litigation."

"1. The cost of the wedding cake in the amount of P3,175.00;

The facts, as found by the Court of Appeals, 3 are as follows: "On November 19, 1992 Mrs. Rebecca Lo and her daughter Annette Ferrer ordered a three-layered cake from Fountainhead Bakeshop, Mango Avenue Branch. It was then agreed that the wedding cake shall be delivered at 5:00 o'clock in the afternoon at the Cebu Country Club, Cebu City, stating clearly that the wedding is scheduled on December 14, 1992. "Plaintiffs made their first deposit in the amount of P1,000.00 on November 19, 1992 and two weeks thereafter made a full payment on the remaining balance. "On the day of the wedding, December 14, 1992, plaintiffs arrived at the Cebu Country Club around 6:00 o'clock in the evening. They immediately notice the absence of the wedding cake. "At 7:00 o'clock in the evening they made a follow-up call to Fountainhead Bakeshop and was informed that it was probably late because of the traffic. "At 8:00 o'clock they were informed that no wedding cake will be delivered because the order slip got lost. Plaintiffs were then compelled to buy the only available cake at the Cebu Country Club which was a sans rival. Even though they felt that it was a poor substitute to a wedding cake, the cutting of the cake is always a part of the ceremony. "At 10:00 o'clock in the evening, the wedding cake arrived but plaintiffs declined to accept it, besides their order was a three-layered cake and what was actually delivered was a two-layered one. "Subsequently, defendant Erlinda Francisco sent a letter of apology accompanied with a P5,000.00 check, however, the same was declined by plaintiffs because they felt it was inadequate.

"2. Moral damages in the amount of P30,000.00; "3. Attorney's fees in the amount of P10,000.00; and "4. Cost of litigation. "SO ORDERED."6 On May 25, 1995, petitioners appealed to the Court of Appeals. 7 After due proceedings, on July 05, 1999, the Court of Appeals promulgated its decision modifying the appealed decision as set out in the opening paragraph of this opinion. 8 Hence, this appeal.9 The issues raised are (1) whether the Court of Appeals erred in affirming the trial court's award of moral damages and increasing the amount from thirty thousand (30,000.00) to two hundred fifty thousand pesos (P250,000.00); and (2) whether the Court of Appeals was justified in awarding in addition to moral damages, exemplary damages of one hundred thousand pesos (P100,000.00).1âwphi1.nêt Petitioners submit that the Court of Appeals and the trial court erred in awarding moral damages in favor of respondents because moral damages are recoverable in breach of contract cases only where the breach was palpably wanton, reckless, malicious, in bad faith, oppressive or abusive.10 We agree. "To recover moral damages in an action for breach of contract, the breach must be palpably wanton, reckless, malicious, in bad faith, oppressive or abusive."11 "Under the provisions of this law, 12 in culpa contractual or breach of contract, moral damages may be recovered when the defendant acted in bad faith or was guilty of gross negligence (amounting to bad faith) or in wanton disregard of his contractual obligation and,

exceptionally, when the act of breach of contract itself is constitutive of tort resulting in physical injuries."13 "Moral damages may be awarded in breaches of contracts where the defendant acted fraudulently or in bad faith." 14 "Bad faith does not simply connote bad judgment or negligence, it imports a dishonest purpose or some moral obliquity and conscious doing of a wrong, a breach of known duty through some motive or interest or ill will that partakes of the nature of fraud." 15 In this case, "[w]e find no such fraud or bad faith." 16 "Moral damages are in the category of an award designed to compensate the claimant for actual injury suffered and not to impose a penalty on the wrongdoer."17 "The person claiming moral damages must prove the existence of bad faith by clear and convincing evidence for the law always presumes good faith. It is not enough that one merely suffered sleepless nights, mental anguish, serious anxiety as the result of the actuations of the other party. Invariably such action must be shown to have been willfully done in bad faith or will ill motive."18 "Mere allegations of besmirched reputation, embarrassment and sleepless nights are insufficient to warrant an award for moral damages. It must be shown that the proximate cause thereof was the unlawful act or omission of the [private respondent] petitioners."19 "An award of moral damages would require certain conditions to be met, to wit: (1) first, there must be an injury, whether physical, mental or psychological, clearly sustained by the claimant; (2) second, there must be culpable act or omission factually established; (3) third, the wrongful act or omission of the defendant is the proximate cause of the injury sustained by the claimant; and (4) fourth, the award of damages is predicated on any of the cases stated in Article 2219" of the Civil Code.21 "It must again be stressed that moral damages are emphatically not intended to enrich a plaintiff at the expense of the defendant."22 "When awarded, moral damages must not be palpably and scandalously excessive as to indicate that it was the result of passion, prejudice or corruption on the part of the trial court judge"23 or appellate court justices.24 In the same fashion, to warrant the award of exemplary damages, "[t]he wrongful act must be accompanied by bad faith, and an award of damages would be allowed only if the guilty party acted in a wanton, fraudulent, reckless or malevolent manner." 25 "The requirements of an award of exemplary damages are: (1) they may be imposed by way of example in addition to compensatory damages, and only after the claimant's right to them has been established; (2) that they can not be recovered as a matter of right, their determination depending upon the amount of compensatory damages that may be awarded to the claimant; (3) the act must be accompanied by bad faith or done in a wanton, fraudulent, oppressive or malevolent manner."26 Nevertheless, the facts show that when confronted with their failure to deliver on the wedding day the wedding cake ordered and paid for, petitioners gave the lame excuse that delivery was probably delayed because of the traffic, when in truth, no cake could be delivered because the order slip got lost. For such prevarication, petitioners must be held liable for nominal damages for insensitivity, inadvertence or inattention to their customer's anxiety and need of the hour. "Nominal damages are 'recoverable where a legal right is technically violated and must be vindicated against an invasion that has produced no actual present loss of

any kind or where there has been a breach of contract and no substantial injury or actual damages whatsoever have been or can be shown.'"27 Nominal damages may be awarded "to a plaintiff whose right has been violated or invaded by the defendant, for the purpose of vindicating or recognizing that right, not for indemnifying the plaintiff for any loss suffered."28 WHEREFORE, the Court GRANTS the petition. The Court REVERSES the decision of the Court of Appeals in CA-G. R. CV No. 50894, and in lieu thereof, sentences petitioners to pay respondents, as follows: 1. The cost of the wedding cake in the amount of P3,175.00; 2. Nominal damages in the amount of P10,000.00; 3. Attorney's fees in the amount of P10,000.00; and 4. Costs of litigation. No costs in this instance. SO ORDERED. Davide, Jr., Puno, Kapunan, and Ynares-Santiago, JJ., concur.

SECOND DIVISION G.R. No. 141761

damages, P200,000.00 for exemplary damages, and P100,000.00 for attorney's fees and costs of suit.

July 28, 2006

BANKARD, INC., petitioner, vs. DR. ANTONIO NOVAK FELICIANO, respondent. DECISION PUNO, J.: Before us is a petition for review under Rule 45 of the May 31, 1999 Decision1 and January 28, 2000 Resolution2 of the Court of Appeals in CA-G.R. CV No. 56734 which modified the July 22, 1997 Decision3 of the Regional Trial Court (RTC) of Makati City, Branch 148, in Civil Case No. 95-1492. The facts are as follows: Respondent Dr. Antonio Novak Feliciano is the holder of PCIBank Mastercard No. 5407-2610-0000-5864, issued and managed by petitioner Bankard, Inc. An extension of the card, PCIBank Mastercard No. 5407-2611-0000-5863, was issued to his wife, Mrs. Marietta N. Feliciano. On June 19, 1995, respondent used his PCIBank Mastercard No. 5407-2610-0000-5864 to pay a breakfast bill in Toronto, Canada. The card was, however, dishonored for payment. Respondent's guests, Dr. Bellaflor Bumanlag and three other Filipino doctors based in Canada, had to pay the bill. Respondent immediately called the US toll-free number of petitioner to inquire on the cause of dishonor. He was informed that the reason was the nonpayment of his last billing statement. Respondent denied that he failed to pay, and requested the person on the line to verify the correct status of his credit card again. Respondent likewise called his secretary in the Philippines to confirm the fact of payment, and requested her to advise petitioner's office in Manila. The following day, respondent met with Dr. Bumanlag to reimburse her for the cost of the breakfast the previous day. Thereafter, Dr. Bumanlag accompanied the respondent to the Eddie Bauer Fairview Mall, a prestigious mall in Toronto, where the latter bought several dressing items. Respondent presented his PCIBank Mastercard No. 5407-2610-0000-5864 for payment. Again, the card was dishonored to the embarrassment of the respondent. Worse, the manager of the department store confiscated the card in front of Dr. Bumanlag and other shoppers. Respondent protested but the manager called security and forcibly retained the card. To end the commotion that ensued, respondent just asked for a receipt for the confiscated card. On October 5, 1995, respondent filed a complaint against petitioner Bankard, Inc. and Mastercard International for breach of contractual rights and damages before the RTC-Makati City, docketed as Civil Case No. 95-1492. Respondent alleged that he is a holder in good standing for more than ten (10) years of PCIBank Mastercard No. 5407-2610-0000-5864, and that petitioner and Mastercard International reneged on their agreement by suspending the services of the card without notice to him. As a result of the suspension and confiscation of his card in Toronto, Canada, respondent suffered social humiliation, embarrassment and besmirched reputation. The Canadian-based doctors, who were his guests during the breakfast meeting in Toronto and whom he expected to donate at least fifty thousand Canadian dollars to his charitable clinic in Makati, withdrew their contributions because of the incidents. Respondent prayed for P1,000,000.00 in actual damages representing the peso equivalent of the aborted contributions, P1,000,000.00 for moral

In defense, petitioner claimed due diligence before suspending the privileges of respondent's credit card. Petitioner alleged that on June 13, 1995, it received a fraud alert or warning bulletin4 from Bank International Indonesia. A fraud alert or warning bulletin is a notice by telex5 or telephone addressed to the issuer of a card when a fraudulent or counterfeit use of the card has been detected or suspected by an acquirer. In the June 13, 1995 fraud alert, PCIBank Mastercard No. 5407-2611-0000-5863 was listed as having had a suspected counterfeit transaction in Indonesia on June 11, 1995. Petitioner's fraud analyst, Mr. Ferdinand Lopez, then accessed petitioner's directory of cardholders to identify the holder of PCIBank Mastercard No. 5407-2611-0000-5863. The directory showed that the principal cardholder for PCIBank Mastercard No. 5407-2611-0000-5863 was respondent Dr. Antonio Novak Feliciano, and that the credit card was the extension card issued to his wife, Marietta Feliciano. Mr. Lopez immediately called respondent at his clinic but the latter was not there. Neither he nor his wife was at home. Consequently, Mr. Lopez left his name, telephone number, and a message for respondent to return his call, to the woman who answered the phone. He likewise inquired from the woman whether respondent and his wife were in the country or whether they had just arrived from abroad. The woman answered "no." With that information and considering that Indonesia has a high incidence of counterfeit credit card transactions, Mr. Lopez concluded that the transaction involving PCIBank Mastercard No. 5407-2611-0000-5863 was counterfeit. He sent a notice of card account blocking to the Authorization Department. He likewise sent a written notice to the Felicianos that PCIBank Mastercard No. 5407-2611-0000-5863 had a counterfeit movement in another country and that petitioner is temporarily suspending the services of the card including the principal card, PCIBank Mastercard No. 5407-2610-0000-5864, pending investigation on the matter. The Felicianos were required to submit an affidavit of disclaim and photocopies of their passports. The Felicianos did not respond to the notification. On July 22, 1997, the trial court decided the case in favor of respondent.6It found that petitioner's negligence was the immediate and proximate cause of respondent's injury. Although the claim for actual damages was disallowed for lack of proof, petitioner was ordered to pay: (1) P1,000,000.00 as moral damages, (2) P200,000.00 as exemplary damages, and (3) P100,000.00 for attorney's fees and costs of suit. Petitioner was likewise ordered to restore respondent's good name with the merchant establishment in Canada which confiscated his Mastercard, and to return the card with apologies to respondent. Petitioner assailed the decision in a petition for review with the Court of Appeals. In its Decision dated May 31, 1999, 7the Court of Appeals affirmed the trial court's finding of negligence on the part of the petitioner. However, the appellate court modified the trial court's decision by deleting the award for exemplary damages, and by reducing moral damages to P800,000.00, and attorney's fees and costs of suit to P50,000.00. Actual damages was still disallowed for lack of proof. Petitioner's motion for partial reconsideration was denied. Hence, this petition. Petitioner assigns the following errors: I. THE COURT OF APPEALS ERRED IN AWARDING RESPONDENT MORAL DAMAGES IN THE EXCESSIVE AND UNPRECEDENTED AMOUNT OF P800,000.00, WITHOUT ANY LEGAL OR FACTUAL BASIS, CONSIDERING THAT:

A. NO EVIDENCE WAS PRESENTED TO SHOW THAT PETITIONER ACTED FRAUDULENTLY OR IN BAD FAITH OR IN A WANTON, RECKLESS AND OPPRESSIVE MANNER IN SUSPENDING RESPONDENT'S CREDIT CARD. B. EVEN AS IT WAS RESPONDENT'S DUTY TO AFFIRMATIVELY PROVE HIS CLAIM FOR MORAL DAMAGES, PETITIONER HAS DULY ESTABLISHED THAT IT WAS PROMPTED TO SUSPEND THE CREDIT CARD OF RESPONDENT SOLELY TO PROTECT ITSELF AND THE RESPONDENT FROM ANYONE WRONGFULLY USING HIS CREDIT CARD AND NOT OUT OF MALICE, OR ANY DELIBERATE INTENT TO CAUSE HARM TO RESPONDENT. C. CONTRARY TO THE FINDINGS OF THE TRIAL COURT WHICH THE COURT OF APPEALS AFFIRMED, PETITIONER WAS NOT GUILTY OF NEGLIGENCE IN SUSPENDING RESPONDENT'S CREDIT CARD. ASSUMING ARGUENDO THAT PETITIONER WAS NEGLIGENT IN DOING SO, THE SAME DOES NOT WARRANT A FINDING OF MALICE OR BAD FAITH AS TO JUSTIFY GRANTING AN AWARD OF MORAL DAMAGES IN THE STAGGERING AMOUNT OF P800,000.00. D. IN THE ABSENCE OF AN AWARD OF ACTUAL DAMAGES, RESPONDENT IS NOT ENTITLED TO MORAL DAMAGES. E. THE HONORABLE COURT HAS REPEATEDLY ADMONISHED AGAINST GRANTING EXCESSIVE MORAL DAMAGES WHICH ARE NOT INTENDED TO ENRICH A COMPLAINANT AT THE EXPENSE OF A DEFENDANT.

THE DAY BEFORE WHEN HE FIRST ATTEMPTED TO USE IT AFTER HIS PURPORTED BREAKFAST MEETING WITH SOME DOCTORS. We shall now resolve the issue of whether petitioner is liable to respondent for moral damages and attorney's fees. The award of moral damages is governed by Section 1, Chapter 3, Title XVIII, Book IV of the Civil Code. Article 2220 provides: Willful injury to property may be a legal ground for awarding moral damages if the court should find that, under the circumstances, such damages are justly due. The same rule applies to breaches of contract where the defendant acted fraudulently or in bad faith. (emphasis added) Under the foregoing, moral damages may be recovered in culpa contractual where the defendant acted in bad faith or with malice in the breach of the contract.8Malice or bad faith implies moral obliquity or a conscious and intentional design to do a wrongful act for a dishonest purpose.9However,a conscious or intentional design need not always be present since negligence may occasionally be so gross as to amount to malice or bad faith. 10 Bad faith, in the context of Art. 2220 of the Civil Code, includes gross negligence.11 Thus, we have held in a number of cases that moral damages may be awarded in culpa contractual or breach of contract when the defendant acted fraudulently or in bad faith, or is guilty of gross negligence amounting to bad faith, or in wanton disregard of his contractual obligations.12 Petitioner alleged that it suspended the privileges of respondent's credit card only after it received the fraud alert from Indonesia, and after its fraud analyst, Mr. Lopez, tried to contact both the respondent and his wife at his clinic and at home. At first blush, bad faith or malice appears not to be attributable to petitioner. However, we find that its efforts at personally contacting respondent regarding the suspension of his credit card fall short of the degree of diligence required by the circumstances.

IV.

Petitioner received the fraud alert on June 13, 1995. The following day, petitioner's fraud analyst tried to call up respondent at his clinic and at home, to no avail. Apart from this attempt, however, no further effort was exerted to personally inform respondent about the cancellation of his card. Petitioner had more than enough time within which to do so considering that it was not until four (4) days later or June 18, 1995 that respondent left for Canada. But, petitioner's Mr. Lopez contented himself with just leaving a message with an unidentified woman in respondent's house for the latter to return his call. Before receiving the return call, respondent's PCIBank Mastercard No. 5407-2610-0000-5864 and that of his wife, PCIBank Mastercard No. 5407-2611-0000-5863, had been blocked on June 15, 1995. To be sure, a notice of card account blocking was sent to respondent. However, by the ordinary course of mail, the notice was not expected to reach respondent for several days yet. Despite the possibility that respondent or his wife may have occasion to use their credit cards, petitioner's fraud analyst made no further attempt to contact and warn them. Thus, respondent left for Canada on June 18, 1995 armed with his PCIBank Mastercard No. 5407-2610-0000-5864 but totally unaware that the card had been blocked three (3) days previously, and that he was not to use the same.

THE COURT OF APPEALS ERRED IN NOT FINDING THAT RESPONDENT WAS CONTRIBUTORILY NEGLIGENT IN CONTINUING TO USE HIS CREDIT CARD ON 20 JUNE 1995 DESPITE THE FACT THAT IT HAD ALREADY BEEN PREVIOUSLY DISHONORED

Petitioner claims that it suspended respondent's card to protect him from fraudulent transactions. However, while petitioner's motive has to be lauded, we find it lamentable that petitioner was not equally zealous in protecting respondent from potentially embarrassing and humiliating situations that may arise from the

II. THE COURT OF APPEALS ERRED IN AWARDING ATTORNEY'S FEES TO RESPONDENT CONSIDERING THAT PETITIONER ACTED IN GOOD FAITH AND WITH DUE DILIGENCE IN SUSPENDING RESPONDENT'S CREDIT CARD. III. THE COURT OF APPEALS ERRED IN TOTALLY DISREGARDING THE CONTRACT BETWEEN THE PARTIES WHICH, AMONG OTHERS, EXPRESSLY STIPULATES THAT RESPONDENT WOULD HOLD PETITIONER "FREE AND HARMLESS FROM ANY CLAIM OF DAMAGES ARISING FROM THE FAILURE OF ANY ACCREDITED ESTABLISHMENT TO HONOR" HIS CREDIT CARD.

unsuspecting use of his suspended PCIBank Mastercard No. 5407-2610-0000-5864. Considering the widespread use of access devices in commercial and other transactions,13 petitioner and other issuers of credit cards should not only guard against fraudulent uses of credit cards but should also be protective of genuine uses thereof by the true cardholders. In the case at bar, the duty is much more demanding for the evidence shows that respondent is a credit cardholder for more than ten (10) years in good standing, and has not been shown to have violated any of the provisions of his credit card agreement with petitioner. Considering the attendant circumstances, we find petitioner to have been grossly negligent in suspending respondent's credit card. To reiterate, moral damages may be awarded in a breach of contract when the defendant acted fraudulently or in bad faith, or is guilty of gross negligence amounting to bad faith. 14 With respect to the amount of moral damages to be awarded, the well-entrenched principle is that the grant thereof depends upon the discretion of the court considering the circumstances of each case.15 In the case at bar, it is undisputed that respondent's PCIBank Mastercard No. 5407-2610-0000-5864 was dishonored in a foreign country where the respondent was not expected to have family members or close friends nearby to lend him a helping hand. It was twice dishonored in public places. Worse, the card was first dishonored during a breakfast-cum-business meeting with respected medical colleagues based in that country. Respondent had absolutely no inkling then that there was a problem with his card. Moreover, he had no reason to think that something was amiss since he is a member in good standing for more than ten (10) years and had no previous bad experience with the card. However, since moral damages are patently not meant to enrich the complainant at the expense of the defendant and should only be commensurate with the actual loss or injury suffered, 16 we reduce the amount awarded by the Court of Appeals from P800,000.00 to P500,000.00. We likewise affirm the award for attorney's fees. Plaintiff was compelled to litigate to protect his interest, and the lower courts deemed it just and equitable to award him attorney's fees.17 The respondent had to vindicate his rights up to the highest court of the land. IN VIEW WHEREOF, the petition is DENIED. The assailed Decision of the Court of Appeals, dated May 31, 1999, granting moral damages and attorney's fees to respondent, as well as its Resolution dated January 28, 2000 in CA-G.R. CV No. 56734, is AFFIRMED with the sole modification that the amount of moral damages is REDUCED to P500,000.00. SO ORDERED. Sandoval-Gutierrez, Corona, Azcuna, Garcia, J.J., concur.

SECOND DIVISION G.R. No. 156654

November 20, 2008

PHILIPPINE AIRLINES, INC., petitioner vs. VICENTE LOPEZ, JR., respondent.

examining or checking the latter's ticket during his booking validation; and (2) the admission of PAL's check-in clerk8 at the Bangkok Airport that when Lopez checked-in for his return trip to Manila, she similarly gave Lopez an economy boarding pass based on the information found in the coupon of the ticket and the passenger manifest without checking the latter's ticket. The trial court said that had PAL's employees examined his ticket in those instances, the error or oversight which might have resulted from the phoned-in booking could have been easily rectified. 9

RESOLUTION QUISUMBING, J.: This petition for review assails the Decision1 dated June 20, 2002 and the Resolution2 dated December 10, 2002 of the Court of Appeals in CA-G.R. CV No. 53360 which affirmed in toto the Decision3 dated April 19, 1995 of the Regional Trial Court (RTC) of Manila, Branch 24 in Civil Case No. 92-60199. The RTC had ordered petitioner Philippine Airlines, Inc. (PAL) to pay respondent Vicente Lopez, Jr. P100,000 moral damages, P20,000 exemplary damages and P30,000 attorney's fees plus costs of suit. The antecedent facts are as follows: In a Complaint4 dated February 11, 1992, filed with the RTC of Manila, Branch 24, Lopez claimed that PAL had unjustifiably downgraded his seat from business to economy class in his return flight from Bangkok to Manila last November 30, 1991, and that, in view thereof, PAL should be directed to pay him moral damages of at least P100,000, exemplary damages of at least P20,000, attorney's fees in the sum of P30,000, as well as the costs of suit. To support his claim, Lopez averred that he purchased a ManilaHongkong-Bangkok-Manila PAL business class ticket and that his return flight to Manila was confirmed by PAL's booking personnel in Bangkok on November 26, 1991. He also mentioned that he was surprised to learn during his check-in for the said return flight that his status as business class passenger was changed to economy class, and that PAL was not able to offer any valid explanation for the sudden change when he protested the change. Lopez added that although aggrieved, he nevertheless took the said flight as an economy class passenger because he had important appointments in Manila. For its part, PAL denied any liability and claimed that whatever damage Lopez had suffered was due to his own fault. PAL explained that the terms and conditions of the contract of carriage required Lopez to reconfirm his booking for the Bangkok-to-Manila leg of his trip, and that he did not protest the economy seat given to him when the change in his accommodations was read to him by the person who received his phone reconfirmation. PAL also asserted that Lopez did not complain against his economy seat during the check-in and that he raised the issue only after the flight was over.5 Thus, PAL prayed that the case be dismissed for lack of merit.6 In its Decision dated April 19, 1995, the trial court held PAL liable for damages. It said that PAL's contention that Lopez might have thought that he was holding an economy class ticket or that he waived his right to have a business class seat is untenable, considering that Lopez is an experienced businessman and a Bachelor of Science degree holder. It also noted that the following showed that PAL's employees had been negligent in booking and confirming Lopez's travel accommodations from Bangkok to Manila: (1) the admission of PAL's booking personnel7 that she affixed the validation sticker on Lopez's ticket on the basis of the passenger's name list showing that his reservation was for an economy class seat without

Thus, citing Articles 173310 and 222011 of the Civil Code and the case of Ortigas, Jr. v. Lufthansa German Airlines,12 the trial court held that the inattention and lack of care on the part of the common carrier, in this case PAL, resulting in the failure of the passenger to be accommodated in the class contracted for amounts to bad faith or fraud, making it liable for damages. 13 The trial court likewise awarded attorney's fees in favor of Lopez after noting that Lopez was forced to litigate in order to assert his rights.14 The dispositive portion of the trial court's decision reads: Based on all the foregoing therefore, the Court finds in favor of the plaintiff and against the defendant and orders defendant to pay plaintiff, as prayed for in the complaint, the following amounts: P100,000.00 for moral damages; P20,000.00 for exemplary damages and P30,000.00 for attorney's fees and also to pay for the cost of suit. All amounts awarded to bear legal interest from date of this decision. SO ORDERED.15 On appeal, the Court of Appeals affirmed in toto the trial court's decision after having been fully convinced of the negligence of PAL's employees and after finding PAL's defenses to be unworthy of belief and contrary to common observation and experience. PAL moved for reconsideration but it was denied. Hence, this petition. In our Resolution16 dated September 26, 2007, we suspended the proceedings of this case and directed PAL to submit a status report on its then ongoing corporate rehabilitation. Pursuant to our directive, PAL submitted a Manifestation/Compliance17 dated October 22, 2007, informing us of the Securities and Exchange Commission Order18 dated September 28, 2007, which granted its request to exit from corporate rehabilitation. Thus, we now resolve the instant petition. Petitioner contends that: I. THE COURT OF APPEALS ERRED IN NOT RULING THAT IN AN OPEN-DATED CONTRACT OF CARRIAGE, THE PARTIES ARE FREE TO AGREE ON THE TERMS THEREOF ON THE DATE LEFT OPEN. II. THE COURT OF APPEALS ERRED IN NOT RULING THAT RESPONDENT'S CONTRIBUTORY NEGLIGENCE PREVENTS HIM FROM RECOVERING DAMAGES FROM PETITIONER. III.

THE COURT OF APPEALS ERRED IN NOT RULING THAT IN MORAL DAMAGES RECOVERABLE IN BREACHES OF CONTRACTS, THE TERMS "FRAUD" AND "BAD FAITH" HAVE REFERENCE TO WANTON, RECKLESS, OPPRESSIVE, OR MALEVOLENT CONDUCT. IV. THE COURT OF APPEALS ERRED IN NOT RULING THAT EXEMPLARY DAMAGES ARE NOT RECOVERABLE IN THE ABSENCE OF FRAUD OR BAD FAITH. V. THE COURT OF APPEALS ERRED IN NOT RULING THAT AWARD OF ATTORNEY'S FEES IS NOT PROPER IN THE ABSENCE OF GROSS AND EVIDENT BAD FAITH ON THE PART OF PETITIONER.19 Simply put, the issues are: (1) Did the Court of Appeals err in not ruling that Lopez agreed or allowed his business class seat to be downgraded to economy class? (2) Did the Court of Appeals err in not ruling that Lopez's alleged contributory negligence was the proximate cause of the downgrading of his seat? and (3) Did the Court of Appeals err in awarding moral damages, exemplary damages and attorney's fees in favor of Lopez in view of the alleged absence of fraud or bad faith of PAL? A perusal of the aforesaid issues readily shows that the same are questions of facts since its resolution would entail a re-evaluation of the evidence presented before the trial court.20 Thus, we could not take cognizance of such issues considering the settled rule that our review under Rule 45 is confined to questions of law. It is true that there are several exceptions21 to the said rule; however, none finds application in this case. Moreover, we had already specifically held that issues on the existence of negligence, fraud and bad faith are questions of fact. 22 We had also observed that PAL is also guilty of raising prohibited new matters23 and in changing its theory of defense24 since it is only in the present petition that it alleged the contributory negligence of Lopez. PAL's procedural lapses notwithstanding, we had nevertheless carefully reviewed the records of this case and found no compelling reason to depart from the uniform factual findings of the trial court and the Court of Appeals that: (1) it was the negligence of PAL which caused the downgrading of the seat of Lopez; and (2) the aforesaid negligence of PAL amounted to fraud or bad faith, considering our ruling in Ortigas.25 Moreover, we cannot agree with PAL that the amount of moral damages awarded by the trial court, as affirmed by the Court of Appeals, was excessive. In Mercury Drug Corporation v. Baking,26 we had stated that "there is no hard-and-fast rule in determining what would be a fair and reasonable amount of moral damages, since each case must be governed by its own peculiar facts. However, it must be commensurate to the loss or injury suffered."27 Taking into account the attending circumstances here, we believe that the amount of P100,000 awarded as moral damages is appropriate. WHEREFORE, the assailed Decision dated June 20, 2002 and Resolution dated December 10, 2002 of the Court of Appeals in

CA-G.R. CV No. 53360 are AFFIRMED. Costs against the petitioner. SO ORDERED.

FIRST DIVISION G.R. No. 157009

March 17, 2010

SULPICIO LINES, INC., Petitioner, vs. DOMINGO E. CURSO, LUCIA E. CURSO, MELECIO E. CURSO, SEGUNDO E. CURSO, VIRGILIO E. CURSO, DIOSDADA E. CURSO, and CECILIA E. CURSO, Respondents.

On July 28, 1995, the RTC dismissed the complaint upon its finding that the sinking of the vessel was due to force majeure. The RTC concluded that the officers of the MV Doña Marilyn had acted with the diligence required of a common carrier; that the sinking of the vessel and the death of its passengers, including Dr. Curso, could not have been avoided; that there was no basis to consider the MV Doña Marilyn not seaworthy at the time of the voyage; that the findings of the Special Board of Marine Inquiry (SBMI) constituted to investigate the disaster absolved the petitioner, its officers, and crew of any negligence and administrative liability; and that the respondents failed to prove their claim for damages.

DECISION Ruling of the CA BERSAMIN, J.: Are the surviving brothers and sisters of a passenger of a vessel that sinks during a voyage entitled to recover moral damages from the vessel owner as common carrier? This is the question presented in the appeal taken by the common carrier from the reversal by the Court of Appeals (CA) of the decision of the Regional Trial Court (RTC) dismissing the complaint for various damages filed by the surviving brothers and sisters of the late Dr. Cenon E. Curso upon a finding that force majeure had caused the sinking. The CA awarded moral and other damages to the surviving brothers and sisters. Antecedents On October 23, 1988, Dr. Curso boarded at the port of Manila the MV Doña Marilyn, an inter-island vessel owned and operated by petitioner Sulpicio Lines, Inc., bound for Tacloban City. Unfortunately, the MV Doña Marilyn sank in the afternoon of October 24, 1988 while at sea due to the inclement sea and weather conditions brought about by Typhoon Unsang. The body of Dr. Curso was not recovered, along with hundreds of other passengers of the ill-fated vessel. At the time of his death, Dr. Curso was 48 years old, and employed as a resident physician at the Naval District Hospital in Naval, Biliran. He had a basic monthly salary of ₱3,940.00, and would have retired from government service by December 20, 2004 at the age of 65. On January 21, 1993, the respondents, allegedly the surviving brothers and sisters of Dr. Curso, sued the petitioner in the RTC in Naval, Biliran to claim damages based on breach of contract of carriage by sea, averring that the petitioner had acted negligently in transporting Dr. Curso and the other passengers. They stated, among others, that their parents had predeceased Dr. Curso, who died single and without issue; and that, as such, they were Dr. Curso’s surviving heirs and successors in interest entitled to recover moral and other damages.1 They prayed for judgment, as follows: (a) compensatory damages of ₱1,924,809.00; (b) moral damages of ₱100,000.00; (c) exemplary or corrective damages in the amount deemed proper and just; (d) expenses of litigation of at least ₱50,000.00; (e) attorney’s fees of ₱50,000.00; and (f) costs of suit. The petitioner denied liability, insisting that the sinking of the vessel was due to force majeure (i.e., Typhoon Unsang), which exempted a common carrier from liability. It averred that the MV Doña Marilyn was seaworthy in all respects, and was in fact cleared by the Philippine Coast Guard for the voyage; and that after the accident it conducted intensive search and rescue operations and extended assistance and aid to the victims and their families. Ruling of the RTC

The respondents appealed to the CA, contending that the RTC erred: (a) in considering itself barred from entertaining the case by the findings of fact of the SBMI in SBMI-ADM Case No. 08-88; (b) in not holding that the petitioner was negligent and did not exercise the required diligence and care in conducting Dr. Curso to his destination; (c) in not finding that the MV Doña Marilyn was unseaworthy at the time of its sinking; and (d) in not awarding damages to them.2 In its decision dated September 16, 2002,3 the CA held and disposed: Based on the events described by the appellee’s witness, the Court found inadequate proof to show that Sulpicio Lines, Inc., or its officers and crew, had exercised the required degree of diligence to acquit the appellee of liability. In the first place, the court finds inadequate explanation why the officers of the M.V. Doña Marilyn had not apprised themselves of the weather reports on the approach of typhoon "Unsang" which had the power of a signal no. 3 cyclone, bearing upon the general direction of the path of the M.V. Doña Marilyn. If the officers and crew of the Doña Marilyn had indeed been adequately monitoring the strength and direction of the typhoon, and had acted promptly and competently to avoid the same, then such a mishap would not have occurred. Furthermore, there was no account of the acts and decision of the crew of the ill-fated ship from 8:00 PM on October 23, 1988 when the Chief Mate left his post until 4:00 AM the next day when he resumed duty. It does not appear what occurred during that time, or what weather reports were received and acted upon by the ship captain. What happened during such time is important in determining what information about the typhoon was gathered and how the ship officers reached their decision to just change course, and not take shelter while a strong typhoon was approaching. Furthermore, the Court doubts the fitness of the ship for the voyage, since at the first sign of bad weather, the ship’s hydraulic system failed and had to be repaired mid-voyage, making the vessel a virtual derelict amidst a raging storm at sea. It is part of the appellee’s extraordinary diligence as a common carrier to make sure that its ships can withstand the forces that bear upon them during a voyage, whether they be the ordinary stress of the sea during a calm voyage or the rage of a storm. The fact that the stud bolts in the ships hydraulic system gave way while the ship was at sea discredits the theory that the appellee exercised due diligence in maintaining the seaworthy condition of the M.V. Doña Marilyn. xxx.4 xxx Aside from these, the defendant must compensate the plaintiffs for moral damages that they suffered as a result of the negligence attending the loss of the M.V. Doña Marilyn. Plaintiffs, have

established that they took great pains to recover, in vain, the body of their brother, at their own cost, while suffering great grief due to the loss of a loved one. Furthermore, Plaintiffs were unable to recover the body of their brother. Moral damages worth ₱100,000.00 is proper. WHEREFORE, premises considered, the appealed decision of the RTC of Naval, Biliran, Branch 16, rendered in Civil Case No. B0851, is hereby SET ASIDE. In lieu thereof, judgment is hereby rendered, finding the defendant-appellee Sulpicio Lines, Inc, to have been negligent in transporting the deceased Cenon E. Curso who was on board the ill-fated M.V. Doña Marilyn, resulting in his untimely death. Defendant-appellee is hereby ordered to pay the plaintiffs heirs of Cenon E. Curso the following: (1) Death indemnity in the amount of ₱50,000.00; (2) Loss of Earning Capacity in the amount of ₱504,241.20; (3) Moral Damages in the amount of ₱100,000.00. (4) Costs of the suit.5

Article 2206. The amount of damages for death caused by a crime or quasi-delict shall be at least three thousand pesos, even though there may have been mitigating circumstances. In addition: (1) The defendant shall be liable for the loss of the earning capacity of the deceased, and the indemnity shall be paid to the heirs of the latter; such indemnity shall in every case be assessed and awarded by the court, unless the deceased on account of permanent physical disability not caused by the defendant, had no earning capacity at the time of his death; (2) If the deceased was obliged to give support according to the provisions of article 291, the recipient who is not an heir called to the decedent's inheritance by the law of testate or intestate succession, may demand support from the person causing the death, for a period not exceeding five years, the exact duration to be fixed by the court; (3) The spouse, legitimate and illegitimate descendants and ascendants of the deceased may demand moral damages for mental anguish by reason of the death of the deceased.

Hence, this appeal, in which the petitioner insists that the CA committed grievous errors in holding that the respondents were entitled to moral damages as the brothers and sisters of the late Dr. Curso; that the CA thereby disregarded Article 1764 and Article 2206 of the Civil Code, and the ruling in Receiver for North Negros Sugar Co., Inc. v. Ybañez,6 whereby the Supreme Court disallowed the award of moral damages in favor of the brothers and sisters of a deceased passenger in an action upon breach of a contract of carriage.7

The foregoing legal provisions set forth the persons entitled to moral damages. The omission from Article 2206 (3) of the brothers and sisters of the deceased passenger reveals the legislative intent to exclude them from the recovery of moral damages for mental anguish by reason of the death of the deceased. Inclusio unius est exclusio alterius.10 The solemn power and duty of the courts to interpret and apply the law do not include the power to correct the law by reading into it what is not written therein. 11 Thus, the CA erred in awarding moral damages to the respondents.

Issues

The petitioner has correctly relied on the holding in Receiver for North Negros Sugar Company, Inc. v. Ybañez, 12 to the effect that in case of death caused by quasi-delict, the brother of the deceased was not entitled to the award of moral damages based on Article 2206 of the Civil Code.

The petitioner raises the following issues: ARE THE BROTHERS AND SISTERS OF A DECEASED PASSENGER IN A CASE OF BREACH OF CONTRACT OF CARRIAGE ENTITLED TO AN AWARD OF MORAL DAMAGES AGAINST THE CARRIER? ASSUMING (THAT) THEY ARE ENTITLED TO CLAIM MORAL DAMAGES, SHOULD THE AWARD BE GRANTED OR GIVEN TO THE BROTHER OR SISTER NOTWITHSTANDING (THE) LACK OF EVIDENCE AS REGARDS HIS OR HER PERSONAL SUFFERING? Ruling

Essentially, the purpose of moral damages is indemnity or reparation, that is, to enable the injured party to obtain the means, diversions, or amusements that will serve to alleviate the moral suffering he has undergone by reason of the tragic event. According to Villanueva v. Salvador,13 the conditions for awarding moral damages are: (a) there must be an injury, whether physical, mental, or psychological, clearly substantiated by the claimant; (b) there must be a culpable act or omission factually established; (c) the wrongful act or omission of the defendant must be the proximate cause of the injury sustained by the claimant; and (d) the award of damages is predicated on any of the cases stated in Article 2219 of the Civil Code.

The petition is meritorious. As a general rule, moral damages are not recoverable in actions for damages predicated on a breach of contract, unless there is fraud or bad faith.8 As an exception, moral damages may be awarded in case of breach of contract of carriage that results in the death of a passenger,9 in accordance with Article 1764, in relation to Article 2206 (3), of the Civil Code, which provide: Article 1764. Damages in cases comprised in this Section shall be awarded in accordance with Title XVIII of this Book, concerning Damages. Article 2206 shall also apply to the death of a passenger caused by the breach of contract by a common carrier.

To be entitled to moral damages, the respondents must have a right based upon law. It is true that under Article 100314 of the Civil Code they succeeded to the entire estate of the late Dr. Curso in the absence of the latter’s descendants, ascendants, illegitimate children, and surviving spouse. However, they were not included among the persons entitled to recover moral damages, as enumerated in Article 2219 of the Civil Code, viz: Article 2219. Moral damages may be recovered in the following and analogous cases: (1) A criminal offense resulting in physical injuries; (2) Quasi-delicts causing physical injuries;

(3) Seduction, abduction, rape or other lascivious acts; (4) Adultery or concubinage; (5) Illegal or arbitrary detention or arrest; (6) Illegal search; (7) Libel, slander or any other form of defamation; (8) Malicious prosecution; (9) Acts mentioned in article 309; (10) Acts and actions referred to in articles 21, 26, 27, 28, 29, 30, 32, 34 and 35. The parents of the female seduced, abducted, raped or abused referred to in No. 3 of this article, may also recover moral damages. The spouse, descendants, ascendants and brothers and sisters may bring the action mentioned in No. 9 of this article, in the order named.1avvphi1 Article 2219 circumscribes the instances in which moral damages may be awarded. The provision does not include succession in the collateral line as a source of the right to recover moral damages. The usage of the phrase analogous cases in the provision means simply that the situation must be held similar to those expressly enumerated in the law in question15 following the ejusdem generis rule. Hence, Article 1003 of the Civil Code is not concerned with recovery of moral damages. In fine, moral damages may be recovered in an action upon breach of contract of carriage only when: (a) where death of a passenger results, or (b) it is proved that the carrier was guilty of fraud and bad faith, even if death does not result. 16 Article 2206 of the Civil Code entitles the descendants, ascendants, illegitimate children, and surviving spouse of the deceased passenger to demand moral damages for mental anguish by reason of the death of the deceased.17 WHEREFORE, the petition for review on certiorari is granted, and the award made to the respondents in the decision dated September 16, 2002 of the Court of Appeals of moral damages amounting to ₱100,000.00 is deleted and set aside. SO ORDERED. LUCAS P. BERSAMIN Associate Justice

FIRST DIVISION G.R. No. 128690 January 21, 1999 ABS-CBN BROADCASTING CORPORATION, petitioner, vs. HONORABLE COURT OF APPEALS, REPUBLIC BROADCASTING CORP, VIVA PRODUCTION, INC., and VICENTE DEL ROSARIO, respondents. DAVIDE, JR., CJ.: In this petition for review on certiorari, petitioner ABS-CBN Broadcasting Corp. (hereafter ABS-CBN) seeks to reverse and set aside the decision 1 of 31 October 1996 and the resolution 2 of 10 March 1997 of the Court of Appeals in CA-G.R. CV No. 44125. The former affirmed with modification the decision 3 of 28 April 1993 of the Regional Trial Court (RTC) of Quezon City, Branch 80, in Civil Case No. Q-92-12309. The latter denied the motion to reconsider the decision of 31 October 1996.

position. Most of the action pictures in the list do not have big action stars in the cast. They are not for primetime. In line with this I wish to mention that I have not scheduled for telecast several action pictures in out very first contract because of the cheap production value of these movies as well as the lack of big action stars. As a film producer, I am sure you understand what I am trying to say as Viva produces only big action pictures. In fact, I would like to request two (2) additional runs for these movies as I can only schedule them in our non-primetime slots. We have to cover the amount that was paid for these movies because as you very well know that non-primetime advertising rates are very low. These are the unaired titles in the first contract. 1. Kontra Persa [sic]. 2. Raider Platoon.

The antecedents, as found by the RTC and adopted by the Court of Appeals, are as follows: In 1990, ABS-CBN and Viva executed a Film Exhibition Agreement (Exh. "A") whereby Viva gave ABS-CBN an exclusive right to exhibit some Viva films. Sometime in December 1991, in accordance with paragraph 2.4 [sic] of said agreement stating that —. 1.4 ABS-CBN shall have the right of first refusal to the next twenty-four (24) Viva films for TV telecast under such terms as may be agreed upon by the parties hereto, provided, however, that such right shall be exercised by ABS-CBN from the actual offer in writing. Viva, through defendant Del Rosario, offered ABS-CBN, through its vice-president Charo Santos-Concio, a list of three(3) film packages (36 title) from which ABS-CBN may exercise its right of first refusal under the afore-said agreement (Exhs. "1" par, 2, "2," "2-A'' and "2B"-Viva). ABS-CBN, however through Mrs. Concio, "can tick off only ten (10) titles" (from the list) "we can purchase" (Exh. "3" - Viva) and therefore did not accept said list (TSN, June 8, 1992, pp. 9-10). The titles ticked off by Mrs. Concio are not the subject of the case at bar except the film ''Maging Sino Ka Man."

3. Underground guerillas 4. Tiger Command 5. Boy de Sabog 6. Lady Commando 7. Batang Matadero 8. Rebelyon I hope you will consider this request of mine. The other dramatic films have been offered to us before and have been rejected because of the ruling of MTRCB to have them aired at 9:00 p.m. due to their very adult themes. As for the 10 titles I have choosen [sic] from the 3 packages please consider including all the other Viva movies produced last year. I have quite an attractive offer to make. Thanking you and with my warmest regards. (Signed)

For further enlightenment, this rejection letter dated January 06, 1992 (Exh "3" - Viva) is hereby quoted: 6 January 1992 Dear Vic, This is not a very formal business letter I am writing to you as I would like to express my difficulty in recommending the purchase of the three film packages you are offering ABS-CBN. From among the three packages I can only tick off 10 titles we can purchase. Please see attached. I hope you will understand my

Charo Santos-Concio On February 27, 1992, defendant Del Rosario approached ABS-CBN's Ms. Concio, with a list consisting of 52 original movie titles (i.e. not yet aired on television) including the 14 titles subject of the present case, as well as 104 reruns (previously aired on television) from which ABS-CBN may choose another 52 titles, as a total of 156 titles, proposing to sell to ABS-CBN airing rights over this package of 52 originals and 52 re-runs for P60,000,000.00 of which P30,000,000.00 will be in cash and P30,000,000.00 worth of television spots (Exh. "4" to "4-C" Viva; "9" -Viva).

On April 2, 1992, defendant Del Rosario and ABS-CBN general manager, Eugenio Lopez III, met at the Tamarind Grill Restaurant in Quezon City to discuss the package proposal of Viva. What transpired in that lunch meeting is the subject of conflicting versions. Mr. Lopez testified that he and Mr. Del Rosario allegedly agreed that ABS-CRN was granted exclusive film rights to fourteen (14) films for a total consideration of P36 million; that he allegedly put this agreement as to the price and number of films in a "napkin'' and signed it and gave it to Mr. Del Rosario (Exh. D; TSN, pp. 24-26, 7778, June 8, 1992). On the other hand, Del Rosario denied having made any agreement with Lopez regarding the 14 Viva films; denied the existence of a napkin in which Lopez wrote something; and insisted that what he and Lopez discussed at the lunch meeting was Viva's film package offer of 104 films (52 originals and 52 re-runs) for a total price of P60 million. Mr. Lopez promising [sic]to make a counter proposal which came in the form of a proposal contract Annex "C" of the complaint (Exh. "1"·- Viva; Exh. "C" - ABS-CBN). On April 06, 1992, Del Rosario and Mr. Graciano Gozon of RBS Senior vice-president for Finance discussed the terms and conditions of Viva's offer to sell the 104 films, after the rejection of the same package by ABS-CBN. On April 07, 1992, defendant Del Rosario received through his secretary, a handwritten note from Ms. Concio, (Exh. "5" - Viva), which reads: "Here's the draft of the contract. I hope you find everything in order," to which was attached a draft exhibition agreement (Exh. "C''- ABS-CBN; Exh. "9" - Viva, p. 3) a counterproposal covering 53 films, 52 of which came from the list sent by defendant Del Rosario and one film was added by Ms. Concio, for a consideration of P35 million. Exhibit "C" provides that ABS-CBN is granted films right to 53 films and contains a right of first refusal to "1992 Viva Films." The said counter proposal was however rejected by Viva's Board of Directors [in the] evening of the same day, April 7, 1992, as Viva would not sell anything less than the package of 104 films for P60 million pesos (Exh. "9" - Viva), and such rejection was relayed to Ms. Concio. On April 29, 1992, after the rejection of ABSCBN and following several negotiations and meetings defendant Del Rosario and Viva's President Teresita Cruz, in consideration of P60 million, signed a letter of agreement dated April 24, 1992. granting RBS the exclusive right to air 104 Viva-produced and/or acquired films (Exh. "7-A" - RBS; Exh. "4" - RBS) including the fourteen (14) films subject of the present case. 4 On 27 May 1992, ABS-CBN filed before the RTC a complaint for specific performance with a prayer for a writ of preliminary injunction and/or temporary restraining order against private respondents Republic Broadcasting Corporation 5 (hereafter RBS ), Viva Production (hereafter VIVA), and Vicente Del Rosario. The complaint was docketed as Civil Case No. Q-92-12309.

On 27 May 1992, RTC issued a temporary restraining order 6 enjoining private respondents from proceeding with the airing, broadcasting, and televising of the fourteen VIVA films subject of the controversy, starting with the film Maging Sino Ka Man, which was scheduled to be shown on private respondents RBS' channel 7 at seven o'clock in the evening of said date. On 17 June 1992, after appropriate proceedings, the RTC issued an order 7 directing the issuance of a writ of preliminary injunction upon ABS-CBN's posting of P35 million bond. ABS-CBN moved for the reduction of the bond, 8 while private respondents moved for reconsideration of the order and offered to put up a counterbound. 9 In the meantime, private respondents filed separate answers with counterclaim. 10 RBS also set up a cross-claim against VIVA.. On 3 August 1992, the RTC issued an order 11 dissolving the writ of preliminary injunction upon the posting by RBS of a P30 million counterbond to answer for whatever damages ABS-CBN might suffer by virtue of such dissolution. However, it reduced petitioner's injunction bond to P15 million as a condition precedent for the reinstatement of the writ of preliminary injunction should private respondents be unable to post a counterbond. At the pre-trial 12 on 6 August 1992, the parties, upon suggestion of the court, agreed to explore the possibility of an amicable settlement. In the meantime, RBS prayed for and was granted reasonable time within which to put up a P30 million counterbond in the event that no settlement would be reached. As the parties failed to enter into an amicable settlement RBS posted on 1 October 1992 a counterbond, which the RTC approved in its Order of 15 October 1992.13 On 19 October 1992, ABS-CBN filed a motion for reconsideration 14 of the 3 August and 15 October 1992 Orders, which RBS opposed. 15 On 29 October 1992, the RTC conducted a pre-trial. 16 Pending resolution of its motion for reconsideration, ABS-CBN filed with the Court of Appeals a petition17challenging the RTC's Orders of 3 August and 15 October 1992 and praying for the issuance of a writ of preliminary injunction to enjoin the RTC from enforcing said orders. The case was docketed as CA-G.R. SP No. 29300. On 3 November 1992, the Court of Appeals issued a temporary restraining order18 to enjoin the airing, broadcasting, and televising of any or all of the films involved in the controversy. On 18 December 1992, the Court of Appeals promulgated a decision 19 dismissing the petition in CA -G.R. No. 29300 for being premature. ABS-CBN challenged the dismissal in a petition for review filed with this Court on 19 January 1993, which was docketed as G.R. No. 108363. In the meantime the RTC received the evidence for the parties in Civil Case No. Q-192-1209. Thereafter, on 28 April 1993, it rendered a decision 20 in favor of RBS and VIVA and against ABSCBN disposing as follows: WHEREFORE, under cool reflection and prescinding from the foregoing, judgments is rendered in favor of defendants and against the plaintiff.

(1) The complaint is hereby dismissed; (2) Plaintiff ABS-CBN is ordered to pay defendant RBS the following:

Aggrieved by the RTC's decision, ABS-CBN appealed to the Court of Appeals claiming that there was a perfected contract between ABS-CBN and VIVA granting ABS-CBN the exclusive right to exhibit the subject films. Private respondents VIVA and Del Rosario also appealed seeking moral and exemplary damages and additional attorney's fees.

a) P107,727.00, the amount of premium paid by RBS to the surety which issued defendant RBS's bond to lift the injunction;

In its decision of 31 October 1996, the Court of Appeals agreed with the RTC that the contract between ABS-CBN and VIVA had not been perfected, absent the approval by the VIVA Board of Directors of whatever Del Rosario, it's agent, might have agreed with Lopez III. The appellate court did not even believe ABS-CBN's evidence that Lopez III actually wrote down such an agreement on a "napkin," as the same was never produced in court. It likewise rejected ABS-CBN's insistence on its right of first refusal and ratiocinated as follows:

b) P191,843.00 for the amount of print advertisement for "Maging Sino Ka Man" in various newspapers;

As regards the matter of right of first refusal, it may be true that a Film Exhibition Agreement was entered into between Appellant ABS-CBN and appellant VIVA under Exhibit "A" in 1990, and that parag. 1.4 thereof provides:

c) Attorney's fees in the amount of P1 million; d) P5 million as and by way of moral damages; e) P5 million as and by way of exemplary damages; (3) For defendant VIVA, plaintiff ABS-CBN is ordered to pay P212,000.00 by way of reasonable attorney's fees. (4) The cross-claim of defendant RBS against defendant VIVA is dismissed. (5) Plaintiff to pay the costs. According to the RTC, there was no meeting of minds on the price and terms of the offer. The alleged agreement between Lopez III and Del Rosario was subject to the approval of the VIVA Board of Directors, and said agreement was disapproved during the meeting of the Board on 7 April 1992. Hence, there was no basis for ABS-CBN's demand that VIVA signed the 1992 Film Exhibition Agreement. Furthermore, the right of first refusal under the 1990 Film Exhibition Agreement had previously been exercised per Ms. Concio's letter to Del Rosario ticking off ten titles acceptable to them, which would have made the 1992 agreement an entirely new contract. On 21 June 1993, this Court denied21 ABS-CBN's petition for review in G.R. No. 108363, as no reversible error was committed by the Court of Appeals in its challenged decision and the case had "become moot and academic in view of the dismissal of the main action by the court a quo in its decision" of 28 April 1993.

1.4 ABS-CBN shall have the right of first refusal to the next twenty-four (24) VIVA films for TV telecast under such terms as may be agreed upon by the parties hereto, provided, however, that such right shall be exercised by ABS-CBN within a period of fifteen (15) days from the actual offer in writing (Records, p. 14). [H]owever, it is very clear that said right of first refusal in favor of ABS-CBN shall still be subject to such terms as may be agreed upon by the parties thereto, and that the said right shall be exercised by ABS-CBN within fifteen (15) days from the actual offer in writing. Said parag. 1.4 of the agreement Exhibit "A" on the right of first refusal did not fix the price of the film right to the twenty-four (24) films, nor did it specify the terms thereof. The same are still left to be agreed upon by the parties. In the instant case, ABS-CBN's letter of rejection Exhibit 3 (Records, p. 89) stated that it can only tick off ten (10) films, and the draft contract Exhibit "C" accepted only fourteen (14) films, while parag. 1.4 of Exhibit "A'' speaks of the next twenty-four (24) films. The offer of V1VA was sometime in December 1991 (Exhibits 2, 2-A. 2-B; Records, pp. 86-88; Decision, p. 11, Records, p. 1150), when the first list of VIVA films was sent by Mr. Del Rosario to ABS-CBN. The Vice President of ABS-CBN, Ms. Charo Santos-Concio, sent a letter dated January 6, 1992 (Exhibit 3, Records, p. 89) where ABS-CBN exercised its right of refusal by rejecting the offer of VIVA.. As aptly observed by the trial court, with the said letter of Mrs. Concio of January 6, 1992, ABS-CBN had lost its right of first refusal. And even if We reckon the fifteen (15) day period from February 27, 1992 (Exhibit 4 to 4-C) when

another list was sent to ABS-CBN after the letter of Mrs. Concio, still the fifteen (15) day period within which ABS-CBN shall exercise its right of first refusal has already expired. 22 Accordingly, respondent court sustained the award of actual damages consisting in the cost of print advertisements and the premium payments for the counterbond, there being adequate proof of the pecuniary loss which RBS had suffered as a result of the filing of the complaint by ABS-CBN. As to the award of moral damages, the Court of Appeals found reasonable basis therefor, holding that RBS's reputation was debased by the filing of the complaint in Civil Case No. Q-92-12309 and by the non-showing of the film "Maging Sino Ka Man." Respondent court also held that exemplary damages were correctly imposed by way of example or correction for the public good in view of the filing of the complaint despite petitioner's knowledge that the contract with VIVA had not been perfected, It also upheld the award of attorney's fees, reasoning that with ABS-CBN's act of instituting Civil Case No, Q92-1209, RBS was "unnecessarily forced to litigate." The appellate court, however, reduced the awards of moral damages to P2 million, exemplary damages to P2 million, and attorney's fees to P500, 000.00. On the other hand, respondent Court of Appeals denied VIVA and Del Rosario's appeal because it was "RBS and not VIVA which was actually prejudiced when the complaint was filed by ABSCBN." Its motion for reconsideration having been denied, ABS-CBN filed the petition in this case, contending that the Court of Appeals gravely erred in I . . . RULING THAT THERE WAS NO PERFECTED CONTRACT BETWEEN PETITIONER AND PRIVATE RESPONDENT VIVA NOTWITHSTANDING PREPONDERANCE OF EVIDENCE ADDUCED BY PETITIONER TO THE CONTRARY. II . . . IN AWARDING ACTUAL AND COMPENSATORY DAMAGES IN FAVOR OF PRIVATE RESPONDENT RBS. III . . . IN AWARDING MORAL AND EXEMPLARY DAMAGES IN FAVOR OF PRIVATE RESPONDENT RBS. IV . . . IN AWARDING ATTORNEY'S FEES IN FAVOR OF RBS. ABS-CBN claims that it had yet to fully exercise its right of first refusal over twenty-four titles under the 1990 Film Exhibition Agreement, as it had chosen only ten titles from the first list. It insists that we give credence to Lopez's testimony that he and Del Rosario met at the Tamarind Grill Restaurant, discussed the terms and conditions of the second list (the 1992 Film Exhibition Agreement) and upon agreement thereon, wrote the same on a paper napkin. It also asserts that the contract has already been

effective, as the elements thereof, namely, consent, object, and consideration were established. It then concludes that the Court of Appeals' pronouncements were not supported by law and jurisprudence, as per our decision of 1 December 1995 in Limketkai Sons Milling, Inc. v. Court of Appeals, 23 which cited Toyota Shaw, Inc. v. Court of Appeals, 24 Ang Yu Asuncion v. Court of Appeals, 25 and Villonco Realty Company v. Bormaheco. Inc.26 Anent the actual damages awarded to RBS, ABS-CBN disavows liability therefor. RBS spent for the premium on the counterbond of its own volition in order to negate the injunction issued by the trial court after the parties had ventilated their respective positions during the hearings for the purpose. The filing of the counterbond was an option available to RBS, but it can hardly be argued that ABS-CBN compelled RBS to incur such expense. Besides, RBS had another available option, i.e., move for the dissolution or the injunction; or if it was determined to put up a counterbond, it could have presented a cash bond. Furthermore under Article 2203 of the Civil Code, the party suffering loss or injury is also required to exercise the diligence of a good father of a family to minimize the damages resulting from the act or omission. As regards the cost of print advertisements, RBS had not convincingly established that this was a loss attributable to the non showing "Maging Sino Ka Man"; on the contrary, it was brought out during trial that with or without the case or the injunction, RBS would have spent such an amount to generate interest in the film. ABS-CBN further contends that there was no clear basis for the awards of moral and exemplary damages. The controversy involving ABS-CBN and RBS did not in any way originate from business transaction between them. The claims for such damages did not arise from any contractual dealings or from specific acts committed by ABS-CBN against RBS that may be characterized as wanton, fraudulent, or reckless; they arose by virtue only of the filing of the complaint, An award of moral and exemplary damages is not warranted where the record is bereft of any proof that a party acted maliciously or in bad faith in filing an action. 27 In any case, free resort to courts for redress of wrongs is a matter of public policy. The law recognizes the right of every one to sue for that which he honestly believes to be his right without fear of standing trial for damages where by lack of sufficient evidence, legal technicalities, or a different interpretation of the laws on the matter, the case would lose ground. 28 One who makes use of his own legal right does no injury. 29 If damage results front the filing of the complaint, it is damnum absque injuria. 30 Besides, moral damages are generally not awarded in favor of a juridical person, unless it enjoys a good reputation that was debased by the offending party resulting in social humiliation.31 As regards the award of attorney's fees, ABS-CBN maintains that the same had no factual, legal, or equitable justification. In sustaining the trial court's award, the Court of Appeals acted in clear disregard of the doctrines laid down in Buan v. Camaganacan 32 that the text of the decision should state the reason why attorney's fees are being awarded; otherwise, the award should be disallowed. Besides, no bad faith has been imputed on, much less proved as having been committed by, ABSCBN. It has been held that "where no sufficient showing of bad faith would be reflected in a party' s persistence in a case other than an erroneous conviction of the righteousness of his cause, attorney's fees shall not be recovered as cost." 33 On the other hand, RBS asserts that there was no perfected contract between ABS-CBN and VIVA absent any meeting of minds between them regarding the object and consideration of the alleged contract. It affirms that the ABS-CBN's claim of a right of first refusal was correctly rejected by the trial court. RBS insist the premium it had paid for the counterbond constituted a pecuniary loss upon which it may recover. It was obliged to put up the counterbound due to the injunction procured by ABS-CBN. Since

the trial court found that ABS-CBN had no cause of action or valid claim against RBS and, therefore not entitled to the writ of injunction, RBS could recover from ABS-CBN the premium paid on the counterbond. Contrary to the claim of ABS-CBN, the cash bond would prove to be more expensive, as the loss would be equivalent to the cost of money RBS would forego in case the P30 million came from its funds or was borrowed from banks. RBS likewise asserts that it was entitled to the cost of advertisements for the cancelled showing of the film "Maging Sino Ka Man" because the print advertisements were put out to announce the showing on a particular day and hour on Channel 7, i.e., in its entirety at one time, not a series to be shown on a periodic basis. Hence, the print advertisement were good and relevant for the particular date showing, and since the film could not be shown on that particular date and hour because of the injunction, the expenses for the advertisements had gone to waste. As regards moral and exemplary damages, RBS asserts that ABSCBN filed the case and secured injunctions purely for the purpose of harassing and prejudicing RBS. Pursuant then to Article 19 and 21 of the Civil Code, ABS-CBN must be held liable for such damages. Citing Tolentino,34 damages may be awarded in cases of abuse of rights even if the act done is not illicit and there is abuse of rights were plaintiff institutes and action purely for the purpose of harassing or prejudicing the defendant. In support of its stand that a juridical entity can recover moral and exemplary damages, private respondents RBS cited People v. Manero,35 where it was stated that such entity may recover moral and exemplary damages if it has a good reputation that is debased resulting in social humiliation. it then ratiocinates; thus: There can be no doubt that RBS' reputation has been debased by ABS-CBN's acts in this case. When RBS was not able to fulfill its commitment to the viewing public to show the film "Maging Sino Ka Man" on the scheduled dates and times (and on two occasions that RBS advertised), it suffered serious embarrassment and social humiliation. When the showing was canceled, late viewers called up RBS' offices and subjected RBS to verbal abuse ("Announce kayo nang announce, hindi ninyo naman ilalabas," "nanloloko yata kayo") (Exh. 3-RBS, par. 3). This alone was not something RBS brought upon itself. it was exactly what ABS-CBN had planned to happen. The amount of moral and exemplary damages cannot be said to be excessive. Two reasons justify the amount of the award. The first is that the humiliation suffered by RBS is national extent. RBS operations as a broadcasting company is [sic] nationwide. Its clientele, like that of ABS-CBN, consists of those who own and watch television. It is not an exaggeration to state, and it is a matter of judicial notice that almost every other person in the country watches television. The humiliation suffered by RBS is multiplied by the number of televiewers who had anticipated the showing of the film "Maging Sino Ka Man" on May 28 and November 3, 1992 but did not see it owing to the cancellation. Added to this are the advertisers who had placed commercial spots for the telecast and to whom RBS had a commitment in consideration of the placement to show the film in the dates and times specified.

The second is that it is a competitor that caused RBS to suffer the humiliation. The humiliation and injury are far greater in degree when caused by an entity whose ultimate business objective is to lure customers (viewers in this case) away from the competition. 36 For their part, VIVA and Vicente del Rosario contend that the findings of fact of the trial court and the Court of Appeals do not support ABS-CBN's claim that there was a perfected contract. Such factual findings can no longer be disturbed in this petition for review under Rule 45, as only questions of law can be raised, not questions of fact. On the issue of damages and attorneys fees, they adopted the arguments of RBS. The key issues for our consideration are (1) whether there was a perfected contract between VIVA and ABS-CBN, and (2) whether RBS is entitled to damages and attorney's fees. It may be noted that the award of attorney's fees of P212,000 in favor of VIVA is not assigned as another error. I. The first issue should be resolved against ABS-CBN. A contract is a meeting of minds between two persons whereby one binds himself to give something or to render some service to another 37 for a consideration. there is no contract unless the following requisites concur: (1) consent of the contracting parties; (2) object certain which is the subject of the contract; and (3) cause of the obligation, which is established.38 A contract undergoes three stages: (a) preparation, conception, or generation, which is the period of negotiation and bargaining, ending at the moment of agreement of the parties; (b) perfection or birth of the contract, which is the moment when the parties come to agree on the terms of the contract; and (c) consummation or death, which is the fulfillment or performance of the terms agreed upon in the contract. 39 Contracts that are consensual in nature are perfected upon mere meeting of the minds, Once there is concurrence between the offer and the acceptance upon the subject matter, consideration, and terms of payment a contract is produced. The offer must be certain. To convert the offer into a contract, the acceptance must be absolute and must not qualify the terms of the offer; it must be plain, unequivocal, unconditional, and without variance of any sort from the proposal. A qualified acceptance, or one that involves a new proposal, constitutes a counter-offer and is a rejection of the original offer. Consequently, when something is desired which is not exactly what is proposed in the offer, such acceptance is not sufficient to generate consent because any modification or variation from the terms of the offer annuls the offer. 40 When Mr. Del Rosario of VIVA met with Mr. Lopez of ABS-CBN at the Tamarind Grill on 2 April 1992 to discuss the package of films, said package of 104 VIVA films was VIVA's offer to ABS-CBN to enter into a new Film Exhibition Agreement. But ABS-CBN, sent, through Ms. Concio, a counter-proposal in the form of a draft contract proposing exhibition of 53 films for a consideration of P35 million. This counter-proposal could be nothing less than the counter-offer of Mr. Lopez during his conference with Del Rosario at Tamarind Grill Restaurant. Clearly, there was no acceptance of

VIVA's offer, for it was met by a counter-offer which substantially varied the terms of the offer.

provisions thereof were not previously agreed upon?

ABS-CBN's reliance in Limketkai Sons Milling, Inc. v. Court of Appeals 41 and Villonco Realty Company v. Bormaheco, Inc., 42 is misplaced. In these cases, it was held that an acceptance may contain a request for certain changes in the terms of the offer and yet be a binding acceptance as long as "it is clear that the meaning of the acceptance is positively and unequivocally to accept the offer, whether such request is granted or not." This ruling was, however, reversed in the resolution of 29 March 1996, 43 which ruled that the acceptance of all offer must be unqualified and absolute, i.e., it "must be identical in all respects with that of the offer so as to produce consent or meeting of the minds."

SECOND, Mr. Lopez claimed that what was agreed upon as the subject matter of the contract was 14 films. The complaint in fact prays for delivery of 14 films. But Exhibit "C" mentions 53 films as its subject matter. Which is which If Exhibits "C" reflected the true intent of the parties, then ABS-CBN's claim for 14 films in its complaint is false or if what it alleged in the complaint is true, then Exhibit "C" did not reflect what was agreed upon by the parties. This underscores the fact that there was no meeting of the minds as to the subject matter of the contracts, so as to preclude perfection thereof. For settled is the rule that there can be no contract where there is no object which is its subject matter (Art. 1318, NCC).

On the other hand, in Villonco, cited in Limketkai, the alleged changes in the revised counter-offer were not material but merely clarificatory of what had previously been agreed upon. It cited the statement in Stuart v. Franklin Life Insurance Co.44 that "a vendor's change in a phrase of the offer to purchase, which change does not essentially change the terms of the offer, does not amount to a rejection of the offer and the tender of a counter-offer." 45However, when any of the elements of the contract is modified upon acceptance, such alteration amounts to a counter-offer. In the case at bar, ABS-CBN made no unqualified acceptance of VIVA's offer. Hence, they underwent a period of bargaining. ABSCBN then formalized its counter-proposals or counter-offer in a draft contract, VIVA through its Board of Directors, rejected such counter-offer, Even if it be conceded arguendo that Del Rosario had accepted the counter-offer, the acceptance did not bind VIVA, as there was no proof whatsoever that Del Rosario had the specific authority to do so. Under Corporation Code,46 unless otherwise provided by said Code, corporate powers, such as the power; to enter into contracts; are exercised by the Board of Directors. However, the Board may delegate such powers to either an executive committee or officials or contracted managers. The delegation, except for the executive committee, must be for specific purposes, 47 Delegation to officers makes the latter agents of the corporation; accordingly, the general rules of agency as to the bindings effects of their acts would apply. 48 For such officers to be deemed fully clothed by the corporation to exercise a power of the Board, the latter must specially authorize them to do so. That Del Rosario did not have the authority to accept ABS-CBN's counter-offer was best evidenced by his submission of the draft contract to VIVA's Board of Directors for the latter's approval. In any event, there was between Del Rosario and Lopez III no meeting of minds. The following findings of the trial court are instructive: A number of considerations militate against ABS-CBN's claim that a contract was perfected at that lunch meeting on April 02, 1992 at the Tamarind Grill. FIRST, Mr. Lopez claimed that what was agreed upon at the Tamarind Grill referred to the price and the number of films, which he wrote on a napkin. However, Exhibit "C" contains numerous provisions which, were not discussed at the Tamarind Grill, if Lopez testimony was to be believed nor could they have been physically written on a napkin. There was even doubt as to whether it was a paper napkin or a cloth napkin. In short what were written in Exhibit "C'' were not discussed, and therefore could not have been agreed upon, by the parties. How then could this court compel the parties to sign Exhibit "C" when the

THIRD, Mr. Lopez [sic] answer to question 29 of his affidavit testimony (Exh. "D") states: We were able to reach an agreement. VIVA gave us the exclusive license to show these fourteen (14) films, and we agreed to pay Viva the amount of P16,050,000.00 as well as grant Viva commercial slots worth P19,950,000.00. We had already earmarked this P16, 050,000.00. which gives a total consideration of P36 million (P19,950,000.00 plus P16,050,000.00. equals P36,000,000.00). On cross-examination Mr. Lopez testified: Q. What was written in this napkin? A. The total price, the breakdown the known Viva movies, the 7 blockbuster movies and the other 7 Viva movies because the price was broken down accordingly. The none [sic] Viva and the seven other Viva movies and the sharing between the cash portion and the concerned spot portion in the total amount of P35 million pesos. Now, which is which? P36 million or P35 million? This weakens ABS-CBN's claim. FOURTH. Mrs. Concio, testifying for ABS-CBN stated that she transmitted Exhibit "C" to Mr. Del Rosario with a handwritten note, describing said Exhibit "C" as a "draft." (Exh. "5" - Viva; tsn pp. 23-24 June 08, 1992). The said draft has a well defined meaning.

Since Exhibit "C" is only a draft, or a tentative, provisional or preparatory writing prepared for discussion, the terms and conditions thereof could not have been previously agreed upon by ABS-CBN and Viva Exhibit "C'' could not therefore legally bind Viva, not having agreed thereto. In fact, Ms. Concio admitted that the terms and conditions embodied in Exhibit "C" were prepared by ABS-CBN's lawyers and there was no discussion on said terms and conditions. . . .

ABS-CBN until and unless its Board of Directors approved it. The complaint, in fact, alleges that Mr. Del Rosario "is the Executive Producer of defendant Viva" which "is a corporation." (par. 2, complaint). As a mere agent of Viva, Del Rosario could not bind Viva unless what he did is ratified by its Board of Directors. (Vicente vs. Geraldez, 52 SCRA 210; Arnold vs. Willetsand Paterson, 44 Phil. 634). As a mere agent, recognized as such by plaintiff, Del Rosario could not be held liable jointly and severally with Viva and his inclusion as party defendant has no legal basis. (Salonga vs. Warner Barner [sic] , COLTA , 88 Phil. 125; Salmon vs. Tan, 36 Phil. 556).

As the parties had not yet discussed the proposed terms and conditions in Exhibit "C," and there was no evidence whatsoever that Viva agreed to the terms and conditions thereof, said document cannot be a binding contract. The fact that Viva refused to sign Exhibit "C" reveals only two [sic] well that it did not agree on its terms and conditions, and this court has no authority to compel Viva to agree thereto.

The testimony of Mr. Lopez and the allegations in the complaint are clear admissions that what was supposed to have been agreed upon at the Tamarind Grill between Mr. Lopez and Del Rosario was not a binding agreement. It is as it should be because corporate power to enter into a contract is lodged in the Board of Directors. (Sec. 23, Corporation Code). Without such board approval by the Viva board, whatever agreement Lopez and Del Rosario arrived at could not ripen into a valid contract binding upon Viva (Yao Ka Sin Trading vs. Court of Appeals, 209 SCRA 763). The evidence adduced shows that the Board of Directors of Viva rejected Exhibit "C" and insisted that the film package for 140 films be maintained (Exh. "7-1" - Viva ). 49

FIFTH. Mr. Lopez understand [sic] that what he and Mr. Del Rosario agreed upon at the Tamarind Grill was only provisional, in the sense that it was subject to approval by the Board of Directors of Viva. He testified: Q. Now, Mr. Witness, and after that Tamarind meeting ... the second meeting wherein you claimed that you have the meeting of the minds between you and Mr. Vic del Rosario, what happened? A. Vic Del Rosario was supposed to call us up and tell us specifically the result of the discussion with the Board of Directors.

The contention that ABS-CBN had yet to fully exercise its right of first refusal over twenty-four films under the 1990 Film Exhibition Agreement and that the meeting between Lopez and Del Rosario was a continuation of said previous contract is untenable. As observed by the trial court, ABS-CBN right of first refusal had already been exercised when Ms. Concio wrote to VIVA ticking off ten films, Thus: [T]he subsequent negotiation with ABS-CBN two (2) months after this letter was sent, was for an entirely different package. Ms. Concio herself admitted on cross-examination to having used or exercised the right of first refusal. She stated that the list was not acceptable and was indeed not accepted by ABS-CBN, (TSN, June 8, 1992, pp. 8-10). Even Mr. Lopez himself admitted that the right of the first refusal may have been already exercised by Ms. Concio (as she had). (TSN, June 8, 1992, pp. 71-75). Del Rosario himself knew and understand [sic] that ABS-CBN has lost its rights of the first refusal when his list of 36 titles were rejected (Tsn, June 9, 1992, pp. 10-11) 50

Q. And you are referring to the so-called agreement which you wrote in [sic] a piece of paper? A. Yes, sir. Q. So, he was going to forward that to the board of Directors for approval? A. Yes, sir. (Tsn, pp. 42-43, June 8, 1992) Q. Did Mr. Del Rosario tell you that he will submit it to his Board for approval? A. Yes, sir. (Tsn, p. 69, June 8, 1992). The above testimony of Mr. Lopez shows beyond doubt that he knew Mr. Del Rosario had no authority to bind Viva to a contract with

II However, we find for ABS-CBN on the issue of damages. We shall first take up actual damages. Chapter 2, Title XVIII, Book IV of the Civil Code is the specific law on actual or compensatory damages. Except as provided by law or by stipulation, one is entitled to compensation for actual damages only for such pecuniary loss suffered by him as he has duly proved. 51 The indemnification shall comprehend not only the value of the loss suffered, but also that of the profits that the obligee failed to obtain. 52 In contracts and quasi-contracts the damages which may be awarded are dependent on whether the obligor acted with good faith or otherwise, It case of good faith, the damages recoverable are

those which are the natural and probable consequences of the breach of the obligation and which the parties have foreseen or could have reasonably foreseen at the time of the constitution of the obligation. If the obligor acted with fraud, bad faith, malice, or wanton attitude, he shall be responsible for all damages which may be reasonably attributed to the non-performance of the obligation. 53 In crimes and quasi-delicts, the defendant shall be liable for all damages which are the natural and probable consequences of the act or omission complained of, whether or not such damages has been foreseen or could have reasonably been foreseen by the defendant.54 Actual damages may likewise be recovered for loss or impairment of earning capacity in cases of temporary or permanent personal injury, or for injury to the plaintiff's business standing or commercial credit.55 The claim of RBS for actual damages did not arise from contract, quasi-contract, delict, or quasi-delict. It arose from the fact of filing of the complaint despite ABS-CBN's alleged knowledge of lack of cause of action. Thus paragraph 12 of RBS's Answer with Counterclaim and Cross-claim under the heading COUNTERCLAIM specifically alleges: 12. ABS-CBN filed the complaint knowing fully well that it has no cause of action RBS. As a result thereof, RBS suffered actual damages in the amount of P6,621,195.32. 56 Needless to state the award of actual damages cannot be comprehended under the above law on actual damages. RBS could only probably take refuge under Articles 19, 20, and 21 of the Civil Code, which read as follows: Art. 19. Every person must, in the exercise of his rights and in the performance of his duties, act with justice, give everyone his due, and observe honesty and good faith. Art. 20. Every person who, contrary to law, wilfully or negligently causes damage to another, shall indemnify the latter for tile same. Art. 21. Any person who wilfully causes loss or injury to another in a manner that is contrary to morals, good customs or public policy shall compensate the latter for the damage. It may further be observed that in cases where a writ of preliminary injunction is issued, the damages which the defendant may suffer by reason of the writ are recoverable from the injunctive bond. 57 In this case, ABS-CBN had not yet filed the required bond; as a matter of fact, it asked for reduction of the bond and even went to the Court of Appeals to challenge the order on the matter, Clearly then, it was not necessary for RBS to file a counterbond. Hence, ABS-CBN cannot be held responsible for the premium RBS paid for the counterbond. Neither could ABS-CBN be liable for the print advertisements for "Maging Sino Ka Man" for lack of sufficient legal basis. The RTC issued a temporary restraining order and later, a writ of preliminary injunction on the basis of its determination that there existed sufficient ground for the issuance thereof. Notably, the RTC did not dissolve the injunction on the ground of lack of legal and factual basis, but because of the plea of RBS that it be allowed to put up a counterbond. As regards attorney's fees, the law is clear that in the absence of stipulation, attorney's fees may be recovered as actual or

compensatory damages under any of the circumstances provided for in Article 2208 of the Civil Code. 58 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.59 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 demands factual, legal, and equitable justification.60Even when 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 no sufficient showing of bad faith could be reflected in a party's persistence in a case other than erroneous conviction of the righteousness of his cause. 61 As to moral damages the law is Section 1, Chapter 3, Title XVIII, Book IV of the Civil Code. Article 2217 thereof defines what are included in moral damages, while Article 2219 enumerates the cases where they may be recovered, Article 2220 provides that moral damages may be recovered in breaches of contract where the defendant acted fraudulently or in bad faith. RBS's claim for moral damages could possibly fall only under item (10) of Article 2219, thereof which reads: (10) Acts and actions referred to in Articles 21, 26, 27, 28, 29, 30, 32, 34, and 35. Moral damages are in the category of an award designed to compensate the claimant for actual injury suffered. and not to impose a penalty on the wrongdoer. 62 The award is not meant to enrich the complainant at the expense of the defendant, but to enable the injured party to obtain means, diversion, or amusements that will serve to obviate then moral suffering he has undergone. It is aimed at the restoration, within the limits of the possible, of the spiritual status quo ante, and should be proportionate to the suffering inflicted. 63 Trial courts must then guard against the award of exorbitant damages; they should exercise balanced restrained and measured objectivity to avoid suspicion that it was due to passion, prejudice, or corruption on the part of the trial court. 64 The award of moral damages cannot be granted in favor of a corporation because, being an artificial person and having existence only in legal contemplation, it has no feelings, no emotions, no senses, It cannot, therefore, experience physical suffering and mental anguish, which call be experienced only by one having a nervous system. 65 The statement in People v. Manero 66 and Mambulao Lumber Co. v. PNB 67 that a corporation may recover moral damages if it "has a good reputation that is debased, resulting in social humiliation" is an obiter dictum. On this score alone the award for damages must be set aside, since RBS is a corporation. The basic law on exemplary damages is Section 5, Chapter 3, Title XVIII, Book IV of the Civil Code. These are imposed by way of example or correction for the public good, in addition to moral, temperate, liquidated or compensatory damages. 68 They are recoverable in criminal cases as part of the civil liability when the crime was committed with one or more aggravating circumstances; 69 in quasi-contracts, if the defendant acted with gross negligence; 70 and in contracts and quasi-contracts, if the defendant acted in a wanton, fraudulent, reckless, oppressive, or malevolent manner.71 It may be reiterated that the claim of RBS against ABS-CBN is not based on contract, quasi-contract, delict, or quasi-delict, Hence, the claims for moral and exemplary damages can only be based on Articles 19, 20, and 21 of the Civil Code. The elements of abuse of right under Article 19 are the following: (1) the existence of a legal right or duty, (2) which is exercised in

bad faith, and (3) for the sole intent of prejudicing or injuring another. Article 20 speaks of the general sanction for all other provisions of law which do not especially provide for their own sanction; while Article 21 deals with acts contra bonus mores, and has the following elements; (1) there is an act which is legal, (2) but which is contrary to morals, good custom, public order, or public policy, and (3) and it is done with intent to injure. 72 Verily then, malice or bad faith is at the core of Articles 19, 20, and 21. Malice or bad faith implies a conscious and intentional design to do a wrongful act for a dishonest purpose or moral obliquity. 73 Such must be substantiated by evidence. 74 There is no adequate proof that ABS-CBN was inspired by malice or bad faith. It was honestly convinced of the merits of its cause after it had undergone serious negotiations culminating in its formal submission of a draft contract. Settled is the rule that the adverse result of an action does not per se make the action wrongful and subject the actor to damages, for the law could not have meant to impose a penalty on the right to litigate. If damages result from a person's exercise of a right, it is damnum absque injuria.75 WHEREFORE, the instant petition is GRANTED. The challenged decision of the Court of Appeals in CA-G.R. CV No, 44125 is hereby REVERSED except as to unappealed award of attorney's fees in favor of VIVA Productions, Inc.1âwphi1.nêt No pronouncement as to costs. SO ORDERED. Melo, Kapunan, Martinez and Pardo JJ., concur.

FIRST DIVISION G.R. No. 141994

January 17, 2005

FILIPINAS BROADCASTING NETWORK, INC., petitioner, vs. AGO MEDICAL AND EDUCATIONAL CENTER-BICOL CHRISTIAN COLLEGE OF MEDICINE, (AMEC-BCCM) and ANGELITA F. AGO, respondents. DECISION CARPIO, J.: The Case This petition for review1 assails the 4 January 1999 Decision2 and 26 January 2000 Resolution of the Court of Appeals in CA-G.R. CV No. 40151. The Court of Appeals affirmed with modification the 14 December 1992 Decision3 of the Regional Trial Court of Legazpi City, Branch 10, in Civil Case No. 8236. The Court of Appeals held Filipinas Broadcasting Network, Inc. and its broadcasters Hermogenes Alegre and Carmelo Rima liable for libel and ordered them to solidarily pay Ago Medical and Educational Center-Bicol Christian College of Medicine moral damages, attorney’s fees and costs of suit. The Antecedents "Exposé" is a radio documentary4 program hosted by Carmelo ‘Mel’ Rima ("Rima") and Hermogenes ‘Jun’ Alegre ("Alegre").5 Exposé is aired every morning over DZRC-AM which is owned by Filipinas Broadcasting Network, Inc. ("FBNI"). "Exposé" is heard over Legazpi City, the Albay municipalities and other Bicol areas.6 In the morning of 14 and 15 December 1989, Rima and Alegre exposed various alleged complaints from students, teachers and parents against Ago Medical and Educational Center-Bicol Christian College of Medicine ("AMEC") and its administrators. Claiming that the broadcasts were defamatory, AMEC and Angelita Ago ("Ago"), as Dean of AMEC’s College of Medicine, filed a complaint for damages7 against FBNI, Rima and Alegre on 27 February 1990. Quoted are portions of the allegedly libelous broadcasts:

would be no instructor for such subject. Students would be informed that course would be moved to a later date because the school is still searching for the appropriate instructor. xxx It is a public knowledge that the Ago Medical and Educational Center has survived and has been surviving for the past few years since its inception because of funds support from foreign foundations. If you will take a look at the AMEC premises you’ll find out that the names of the buildings there are foreign soundings. There is a McDonald Hall. Why not Jose Rizal or Bonifacio Hall? That is a very concrete and undeniable evidence that the support of foreign foundations for AMEC is substantial, isn’t it? With the report which is the basis of the expose in DZRC today, it would be very easy for detractors and enemies of the Ago family to stop the flow of support of foreign foundations who assist the medical school on the basis of the latter’s purpose. But if the purpose of the institution (AMEC) is to deceive students at cross purpose with its reason for being it is possible for these foreign foundations to lift or suspend their donations temporarily. 8 xxx On the other hand, the administrators of AMEC-BCCM, AMEC Science High School and the AMEC-Institute of Mass Communication in their effort to minimize expenses in terms of salary are absorbing or continues to accept "rejects". For example how many teachers in AMEC are former teachers of Aquinas University but were removed because of immorality? Does it mean that the present administration of AMEC have the total definite moral foundation from catholic administrator of Aquinas University. I will prove to you my friends, that AMEC is a dumping ground, garbage, not merely of moral and physical misfits. Probably they only qualify in terms of intellect. The Dean of Student Affairs of AMEC is Justita Lola, as the family name implies. She is too old to work, being an old woman. Is the AMEC administration exploiting the very [e]nterprising or compromising and undemanding Lola? Could it be that AMEC is just patiently making use of Dean Justita Lola were if she is very old. As in atmospheric situation – zero visibility – the plane cannot land, meaning she is very old, low pay follows. By the way, Dean Justita Lola is also the chairman of the committee on scholarship in AMEC. She had retired from Bicol University a long time ago but AMEC has patiently made use of her. xxx

JUN ALEGRE:

MEL RIMA:

Let us begin with the less burdensome: if you have children taking medical course at AMEC-BCCM, advise them to pass all subjects because if they fail in any subject they will repeat their year level, taking up all subjects including those they have passed already. Several students had approached me stating that they had consulted with the DECS which told them that there is no such regulation. If [there] is no such regulation why is AMEC doing the same?

xxx My friends based on the expose, AMEC is a dumping ground for moral and physically misfit people. What does this mean? Immoral and physically misfits as teachers.

xxx

xxx Why did AMEC still absorb her as a teacher, a dean, and chairman of the scholarship committee at that. The reason is practical cost saving in salaries, because an old person is not fastidious, so long as she has money to buy the ingredient of beetle juice. The elderly can get by – that’s why she (Lola) was taken in as Dean.

Second: Earlier AMEC students in Physical Therapy had complained that the course is not recognized by DECS. xxx Third: Students are required to take and pay for the subject even if the subject does not have an instructor - such greed for money on the part of AMEC’s administration. Take the subject Anatomy: students would pay for the subject upon enrolment because it is offered by the school. However there

May I say I’m sorry to Dean Justita Lola. But this is the truth. The truth is this, that your are no longer fit to teach. You are too old. As an aviation, your case is zero visibility. Don’t insist.

xxx

xxx On our end our task is to attend to the interests of students. It is likely that the students would be influenced by evil. When they become members of society outside of campus will be liabilities rather than assets. What do you expect from a doctor who while studying at AMEC is so much burdened with unreasonable imposition? What do you expect from a student who aside from peculiar problems – because not all students are rich – in their struggle to improve their social status are even more burdened with false regulations. xxx9 (Emphasis supplied) The complaint further alleged that AMEC is a reputable learning institution. With the supposed exposés, FBNI, Rima and Alegre "transmitted malicious imputations, and as such, destroyed plaintiffs’ (AMEC and Ago) reputation." AMEC and Ago included FBNI as defendant for allegedly failing to exercise due diligence in the selection and supervision of its employees, particularly Rima and Alegre. On 18 June 1990, FBNI, Rima and Alegre, through Atty. Rozil Lozares, filed an Answer10 alleging that the broadcasts against AMEC were fair and true. FBNI, Rima and Alegre claimed that they were plainly impelled by a sense of public duty to report the "goings-on in AMEC, [which is] an institution imbued with public interest." Thereafter, trial ensued. During the presentation of the evidence for the defense, Atty. Edmundo Cea, collaborating counsel of Atty. Lozares, filed a Motion to Dismiss11 on FBNI’s behalf. The trial court denied the motion to dismiss. Consequently, FBNI filed a separate Answer claiming that it exercised due diligence in the selection and supervision of Rima and Alegre. FBNI claimed that before hiring a broadcaster, the broadcaster should (1) file an application; (2) be interviewed; and (3) undergo an apprenticeship and training program after passing the interview. FBNI likewise claimed that it always reminds its broadcasters to "observe truth, fairness and objectivity in their broadcasts and to refrain from using libelous and indecent language." Moreover, FBNI requires all broadcasters to pass the Kapisanan ng mga Brodkaster sa Pilipinas ("KBP") accreditation test and to secure a KBP permit. On 14 December 1992, the trial court rendered a Decision 12 finding FBNI and Alegre liable for libel except Rima. The trial court held that the broadcasts are libelous per se. The trial court rejected the broadcasters’ claim that their utterances were the result of straight reporting because it had no factual basis. The broadcasters did not even verify their reports before airing them to show good faith. In holding FBNI liable for libel, the trial court found that FBNI failed to exercise diligence in the selection and supervision of its employees. In absolving Rima from the charge, the trial court ruled that Rima’s only participation was when he agreed with Alegre’s exposé. The trial court found Rima’s statement within the "bounds of freedom of speech, expression, and of the press." The dispositive portion of the decision reads: WHEREFORE, premises considered, this court finds for the plaintiff. Considering the degree of damages caused by the controversial utterances, which are not found by this court to be really very serious and damaging, and there being no showing that indeed the enrollment of plaintiff school dropped, defendants Hermogenes "Jun" Alegre, Jr. and Filipinas Broadcasting Network (owner of the radio station DZRC), are hereby jointly and severally ordered to pay plaintiff Ago Medical and Educational Center-Bicol Christian College of Medicine (AMEC-BCCM) the amount of ₱300,000.00 moral damages, plus ₱30,000.00 reimbursement of attorney’s fees, and to pay the costs of suit. SO ORDERED. 13 (Emphasis supplied)

Both parties, namely, FBNI, Rima and Alegre, on one hand, and AMEC and Ago, on the other, appealed the decision to the Court of Appeals. The Court of Appeals affirmed the trial court’s judgment with modification. The appellate court made Rima solidarily liable with FBNI and Alegre. The appellate court denied Ago’s claim for damages and attorney’s fees because the broadcasts were directed against AMEC, and not against her. The dispositive portion of the Court of Appeals’ decision reads: WHEREFORE, the decision appealed from is hereby AFFIRMED, subject to the modification that broadcaster Mel Rima is SOLIDARILY ADJUDGED liable with FBN[I] and Hermo[g]enes Alegre. SO ORDERED.14 FBNI, Rima and Alegre filed a motion for reconsideration which the Court of Appeals denied in its 26 January 2000 Resolution. Hence, FBNI filed this petition.15 The Ruling of the Court of Appeals The Court of Appeals upheld the trial court’s ruling that the questioned broadcasts are libelous per se and that FBNI, Rima and Alegre failed to overcome the legal presumption of malice. The Court of Appeals found Rima and Alegre’s claim that they were actuated by their moral and social duty to inform the public of the students’ gripes as insufficient to justify the utterance of the defamatory remarks. Finding no factual basis for the imputations against AMEC’s administrators, the Court of Appeals ruled that the broadcasts were made "with reckless disregard as to whether they were true or false." The appellate court pointed out that FBNI, Rima and Alegre failed to present in court any of the students who allegedly complained against AMEC. Rima and Alegre merely gave a single name when asked to identify the students. According to the Court of Appeals, these circumstances cast doubt on the veracity of the broadcasters’ claim that they were "impelled by their moral and social duty to inform the public about the students’ gripes." The Court of Appeals found Rima also liable for libel since he remarked that "(1) AMEC-BCCM is a dumping ground for morally and physically misfit teachers; (2) AMEC obtained the services of Dean Justita Lola to minimize expenses on its employees’ salaries; and (3) AMEC burdened the students with unreasonable imposition and false regulations."16 The Court of Appeals held that FBNI failed to exercise due diligence in the selection and supervision of its employees for allowing Rima and Alegre to make the radio broadcasts without the proper KBP accreditation. The Court of Appeals denied Ago’s claim for damages and attorney’s fees because the libelous remarks were directed against AMEC, and not against her. The Court of Appeals adjudged FBNI, Rima and Alegre solidarily liable to pay AMEC moral damages, attorney’s fees and costs of suit.1awphi1.nét Issues FBNI raises the following issues for resolution: I. WHETHER THE BROADCASTS ARE LIBELOUS; II. WHETHER AMEC IS ENTITLED TO MORAL DAMAGES;

III. WHETHER THE AWARD OF ATTORNEY’S FEES IS PROPER; and IV. WHETHER FBNI IS SOLIDARILY LIABLE WITH RIMA AND ALEGRE FOR PAYMENT OF MORAL DAMAGES, ATTORNEY’S FEES AND COSTS OF SUIT. The Court’s Ruling We deny the petition. This is a civil action for damages as a result of the allegedly defamatory remarks of Rima and Alegre against AMEC. 17 While AMEC did not point out clearly the legal basis for its complaint, a reading of the complaint reveals that AMEC’s cause of action is based on Articles 30 and 33 of the Civil Code. Article 3018 authorizes a separate civil action to recover civil liability arising from a criminal offense. On the other hand, Article 3319 particularly provides that the injured party may bring a separate civil action for damages in cases of defamation, fraud, and physical injuries. AMEC also invokes Article 1920 of the Civil Code to justify its claim for damages. AMEC cites Articles 217621 and 218022 of the Civil Code to hold FBNI solidarily liable with Rima and Alegre. I. Whether the broadcasts are libelous A libel23 is a public and malicious imputation of a crime, or of a vice or defect, real or imaginary, or any act or omission, condition, status, or circumstance tending to cause the dishonor, discredit, or contempt of a natural or juridical person, or to blacken the memory of one who is dead.24 There is no question that the broadcasts were made public and imputed to AMEC defects or circumstances tending to cause it dishonor, discredit and contempt. Rima and Alegre’s remarks such as "greed for money on the part of AMEC’s administrators"; "AMEC is a dumping ground, garbage of xxx moral and physical misfits"; and AMEC students who graduate "will be liabilities rather than assets" of the society are libelous per se. Taken as a whole, the broadcasts suggest that AMEC is a money-making institution where physically and morally unfit teachers abound. However, FBNI contends that the broadcasts are not malicious. FBNI claims that Rima and Alegre were plainly impelled by their civic duty to air the students’ gripes. FBNI alleges that there is no evidence that ill will or spite motivated Rima and Alegre in making the broadcasts. FBNI further points out that Rima and Alegre exerted efforts to obtain AMEC’s side and gave Ago the opportunity to defend AMEC and its administrators. FBNI concludes that since there is no malice, there is no libel.

alleged AMEC official who refused to disclose any information. Alegre simply relied on the words of the students "because they were many and not because there is proof that what they are saying is true."28 This plainly shows Rima and Alegre’s reckless disregard of whether their report was true or not. Contrary to FBNI’s claim, the broadcasts were not "the result of straight reporting." Significantly, some courts in the United States apply the privilege of "neutral reportage" in libel cases involving matters of public interest or public figures. Under this privilege, a republisher who accurately and disinterestedly reports certain defamatory statements made against public figures is shielded from liability, regardless of the republisher’s subjective awareness of the truth or falsity of the accusation. 29 Rima and Alegre cannot invoke the privilege of neutral reportage because unfounded comments abound in the broadcasts. Moreover, there is no existing controversy involving AMEC when the broadcasts were made. The privilege of neutral reportage applies where the defamed person is a public figure who is involved in an existing controversy, and a party to that controversy makes the defamatory statement.30 However, FBNI argues vigorously that malice in law does not apply to this case. Citing Borjal v. Court of Appeals,31 FBNI contends that the broadcasts "fall within the coverage of qualifiedly privileged communications" for being commentaries on matters of public interest. Such being the case, AMEC should prove malice in fact or actual malice. Since AMEC allegedly failed to prove actual malice, there is no libel. FBNI’s reliance on Borjal is misplaced. In Borjal, the Court elucidated on the "doctrine of fair comment," thus: [F]air commentaries on matters of public interest are privileged and constitute a valid defense in an action for libel or slander. The doctrine of fair comment means that while in general every discreditable imputation publicly made is deemed false, because every man is presumed innocent until his guilt is judicially proved, and every false imputation is deemed malicious, nevertheless, when the discreditable imputation is directed against a public person in his public capacity, it is not necessarily actionable. In order that such discreditable imputation to a public official may be actionable, it must either be a false allegation of fact or a comment based on a false supposition. If the comment is an expression of opinion, based on established facts, then it is immaterial that the opinion happens to be mistaken, as long as it might reasonably be inferred from the facts.32 (Emphasis supplied) True, AMEC is a private learning institution whose business of educating students is "genuinely imbued with public interest." The welfare of the youth in general and AMEC’s students in particular is a matter which the public has the right to know. Thus, similar to the newspaper articles in Borjal, the subject broadcasts dealt with matters of public interest. However, unlike in Borjal, the questioned broadcasts are not based on established facts. The record supports the following findings of the trial court:

FBNI’s contentions are untenable. Every defamatory imputation is presumed malicious. 25 Rima and Alegre failed to show adequately their good intention and justifiable motive in airing the supposed gripes of the students. As hosts of a documentary or public affairs program, Rima and Alegre should have presented the public issues "free from inaccurate and misleading information."26 Hearing the students’ alleged complaints a month before the exposé,27 they had sufficient time to verify their sources and information. However, Rima and Alegre hardly made a thorough investigation of the students’ alleged gripes. Neither did they inquire about nor confirm the purported irregularities in AMEC from the Department of Education, Culture and Sports. Alegre testified that he merely went to AMEC to verify his report from an

xxx Although defendants claim that they were motivated by consistent reports of students and parents against plaintiff, yet, defendants have not presented in court, nor even gave name of a single student who made the complaint to them, much less present written complaint or petition to that effect. To accept this defense of defendants is too dangerous because it could easily give license to the media to malign people and establishments based on flimsy excuses that there were reports to them although they could not satisfactorily establish it. Such laxity would encourage careless and irresponsible broadcasting which is inimical to public interests. Secondly, there is reason to believe that defendant radio broadcasters, contrary to the mandates of their duties, did not

verify and analyze the truth of the reports before they aired it, in order to prove that they are in good faith.

4. Public affairs program shall present public issues free from personal bias, prejudice and inaccurate and misleading information. x x x Furthermore, the station shall strive to present balanced discussion of issues. x x x.

Alegre contended that plaintiff school had no permit and is not accredited to offer Physical Therapy courses. Yet, plaintiff produced a certificate coming from DECS that as of Sept. 22, 1987 or more than 2 years before the controversial broadcast, accreditation to offer Physical Therapy course had already been given the plaintiff, which certificate is signed by no less than the Secretary of Education and Culture herself, Lourdes R. Quisumbing (Exh. C-rebuttal). Defendants could have easily known this were they careful enough to verify. And yet, defendants were very categorical and sounded too positive when they made the erroneous report that plaintiff had no permit to offer Physical Therapy courses which they were offering. The allegation that plaintiff was getting tremendous aids from foreign foundations like Mcdonald Foundation prove not to be true also. The truth is there is no Mcdonald Foundation existing. Although a big building of plaintiff school was given the name Mcdonald building, that was only in order to honor the first missionary in Bicol of plaintiffs’ religion, as explained by Dr. Lita Ago. Contrary to the claim of defendants over the air, not a single centavo appears to be received by plaintiff school from the aforementioned McDonald Foundation which does not exist. Defendants did not even also bother to prove their claim, though denied by Dra. Ago, that when medical students fail in one subject, they are made to repeat all the other subject[s], even those they have already passed, nor their claim that the school charges laboratory fees even if there are no laboratories in the school. No evidence was presented to prove the bases for these claims, at least in order to give semblance of good faith. As for the allegation that plaintiff is the dumping ground for misfits, and immoral teachers, defendant[s] singled out Dean Justita Lola who is said to be so old, with zero visibility already. Dean Lola testified in court last Jan. 21, 1991, and was found to be 75 years old. xxx Even older people prove to be effective teachers like Supreme Court Justices who are still very much in demand as law professors in their late years. Counsel for defendants is past 75 but is found by this court to be still very sharp and effective.l^vvphi1.net So is plaintiffs’ counsel. Dr. Lola was observed by this court not to be physically decrepit yet, nor mentally infirmed, but is still alert and docile. The contention that plaintiffs’ graduates become liabilities rather than assets of our society is a mere conclusion. Being from the place himself, this court is aware that majority of the medical graduates of plaintiffs pass the board examination easily and become prosperous and responsible professionals.33 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.34 However, the comments of Rima and Alegre were not backed up by facts. Therefore, the broadcasts are not privileged and remain libelous per se. The broadcasts also violate the Radio Code35 of the Kapisanan ng mga Brodkaster sa Pilipinas, Ink. ("Radio Code"). Item I(B) of the Radio Code provides:

xxx 7. The station shall be responsible at all times in the supervision of public affairs, public issues and commentary programs so that they conform to the provisions and standards of this code. 8. It shall be the responsibility of the newscaster, commentator, host and announcer to protect public interest, general welfare and good order in the presentation of public affairs and public issues.36 (Emphasis supplied) The broadcasts fail to meet the standards prescribed in the Radio Code, which lays down the code of ethical conduct governing practitioners in the radio broadcast industry. The Radio Code is a voluntary code of conduct imposed by the radio broadcast industry on its own members. The Radio Code is a public warranty by the radio broadcast industry that radio broadcast practitioners are subject to a code by which their conduct are measured for lapses, liability and sanctions. The public has a right to expect and demand that radio broadcast practitioners live up to the code of conduct of their profession, just like other professionals. A professional code of conduct provides the standards for determining whether a person has acted justly, honestly and with good faith in the exercise of his rights and performance of his duties as required by Article 1937 of the Civil Code. A professional code of conduct also provides the standards for determining whether a person who willfully causes loss or injury to another has acted in a manner contrary to morals or good customs under Article 2138 of the Civil Code. II. Whether AMEC is entitled to moral damages FBNI contends that AMEC is not entitled to moral damages because it is a corporation.39 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.40 The Court of Appeals cites Mambulao Lumber Co. v. PNB, et al.41 to justify the award of moral damages. However, the Court’s statement in Mambulao that "a corporation may have a good reputation which, if besmirched, may also be a ground for the award of moral damages" is an obiter dictum.42 Nevertheless, AMEC’s claim for moral damages falls under item 7 of Article 221943 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. 44

B. PUBLIC AFFAIRS, PUBLIC ISSUES AND COMMENTARIES 1. x x x

Moreover, where the broadcast is libelous per se, the law implies damages.45 In such a case, evidence of an honest mistake or the want of character or reputation of the party libeled goes only in mitigation of damages.46 Neither in such a case is the plaintiff

required to introduce evidence of actual damages as a condition precedent to the recovery of some damages.47 In this case, the broadcasts are libelous per se. Thus, AMEC is entitled to moral damages. However, we find the award of ₱300,000 moral damages unreasonable. The record shows that even though the broadcasts were libelous per se, AMEC has not suffered any substantial or material damage to its reputation. Therefore, we reduce the award of moral damages from ₱300,000 to ₱150,000. III. Whether the award of attorney’s fees is proper FBNI contends that since AMEC is not entitled to moral damages, there is no basis for the award of attorney’s fees. FBNI adds that the instant case does not fall under the enumeration in Article 220848 of the Civil Code. The award of attorney’s fees is not proper because AMEC failed to justify satisfactorily its claim for attorney’s fees. AMEC did not adduce evidence to warrant the award of attorney’s fees. Moreover, both the trial and appellate courts failed to explicitly state in their respective decisions the rationale for the award of attorney’s fees.49 In Inter-Asia Investment Industries, Inc. v. Court of Appeals ,50 we held that: [I]t is an accepted doctrine that the award thereof as an item of damages is the exception rather than the rule, and counsel’s fees 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, without which the award is a conclusion without a premise, its basis being improperly left to speculation and conjecture. In all events, the court must explicitly state in the text of the decision, and not only in the decretal portion thereof, the legal reason for the award of attorney’s fees.51 (Emphasis supplied) While it mentioned about the award of attorney’s fees by stating that it "lies within the discretion of the court and depends upon the circumstances of each case," the Court of Appeals failed to point out any circumstance to justify the award. IV. Whether FBNI is solidarily liable with Rima and Alegre for moral damages, attorney’s fees and costs of suit FBNI contends that it is not solidarily liable with Rima and Alegre for the payment of damages and attorney’s fees because it exercised due diligence in the selection and supervision of its employees, particularly Rima and Alegre. FBNI maintains that its broadcasters, including Rima and Alegre, undergo a "very regimented process" before they are allowed to go on air. "Those who apply for broadcaster are subjected to interviews, examinations and an apprenticeship program." FBNI further argues that Alegre’s age and lack of training are irrelevant to his competence as a broadcaster. FBNI points out that the "minor deficiencies in the KBP accreditation of Rima and Alegre do not in any way prove that FBNI did not exercise the diligence of a good father of a family in selecting and supervising them." Rima’s accreditation lapsed due to his non-payment of the KBP annual fees while Alegre’s accreditation card was delayed allegedly for reasons attributable to the KBP Manila Office. FBNI claims that membership in the KBP is merely voluntary and not required by any law or government regulation.

FBNI’s arguments do not persuade us. The basis of the present action is a tort. Joint tort feasors are jointly and severally liable for the tort which they commit. 52 Joint tort feasors are all the persons who command, instigate, promote, encourage, advise, countenance, cooperate in, aid or abet the commission of a tort, or who approve of it after it is done, if done for their benefit.53Thus, AMEC correctly anchored its cause of action against FBNI on Articles 2176 and 2180 of the Civil Code.1a\^/phi1.net As operator of DZRC-AM and employer of Rima and Alegre, FBNI is solidarily liable to pay for damages arising from the libelous broadcasts. As stated by the Court of Appeals, "recovery for defamatory statements published by radio or television may be had from the owner of the station, a licensee, the operator of the station, or a person who procures, or participates in, the making of the defamatory statements."54 An employer and employee are solidarily liable for a defamatory statement by the employee within the course and scope of his or her employment, at least when the employer authorizes or ratifies the defamation.55 In this case, Rima and Alegre were clearly performing their official duties as hosts of FBNI’s radio program Exposé when they aired the broadcasts. FBNI neither alleged nor proved that Rima and Alegre went beyond the scope of their work at that time. There was likewise no showing that FBNI did not authorize and ratify the defamatory broadcasts. Moreover, there is insufficient evidence on record that FBNI exercised due diligence in the selection andsupervision of its employees, particularly Rima and Alegre. FBNI merely showed that it exercised diligence in the selection of its broadcasters without introducing any evidence to prove that it observed the same diligence in the supervision of Rima and Alegre. FBNI did not show how it exercised diligence in supervising its broadcasters. FBNI’s alleged constant reminder to its broadcasters to "observe truth, fairness and objectivity and to refrain from using libelous and indecent language" is not enough to prove due diligence in the supervision of its broadcasters. Adequate training of the broadcasters on the industry’s 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. FBNI claims that it "has taken all the precaution in the selection of Rima and Alegre as broadcasters, bearing in mind their qualifications." However, no clear and convincing evidence shows that Rima and Alegre underwent FBNI’s "regimented process" of application. Furthermore, FBNI admits that Rima and Alegre had deficiencies in their KBP accreditation, 56 which is one of FBNI’s requirements before it hires a broadcaster. Significantly, membership in the KBP, while voluntary, indicates the broadcaster’s strong commitment to observe the broadcast industry’s rules and regulations. Clearly, these circumstances show FBNI’s lack of diligence in selecting andsupervising Rima and Alegre. Hence, FBNI is solidarily liable to pay damages together with Rima and Alegre. WHEREFORE, we DENY the instant petition. We AFFIRM the Decision of 4 January 1999 and Resolution of 26 January 2000 of the Court of Appeals in CA-G.R. CV No. 40151 with the MODIFICATION that the award of moral damages is reduced from ₱300,000 to ₱150,000 and the award of attorney’s fees is deleted. Costs against petitioner. SO ORDERED. Davide, Jr., C.J., (Chairman), Quisumbing, Ynares-Santiago, and Azcuna, JJ., concur.

SECOND DIVISION G.R. No. 148246

February 16, 2007

REPUBLIC OF THE PHILIPPINES, Petitioner, vs. JUAN C. TUVERA, VICTOR P. TUVERA and TWIN PEAKS DEVELOPMENT CORPORATION, Respondents. DECISION

two days later by Mission Order No. MER-88 (Mission Order), also issued by the PCGG, implementing the aforementioned Writ of Sequestration.5 On 9 December 1988, the PCGG, in behalf of the Republic, filed the Complaint now subject of this Petition. 6Impleaded as defendants in the Complaint7 were Juan and Victor Tuvera, as well as the then-exiled President Marcos. Through the Complaint, the Republic sought to recover funds allegedly acquired by said parties in flagrant breach of trust and fiduciary obligations with grave abuse of right and power in violation of the Constitution and the laws of the Republic of the Philippines. 8

TINGA, J.: The long-term campaign for the recovery of ill-gotten wealth of former President Ferdinand E. Marcos, his wife Imelda, and their associates, has been met with many impediments, some of which are featured in this case, that have led to doubts whether there is still promise in that enterprise. Yet even as the prosecution of those cases have drudged on and on, the era of their final reckoning is just beginning before this Court. The heavy hammer of the law is just starting to fall. The instant action originated from a civil complaint for restitution and damages filed by the Republic of the Philippines against Marcos and his longtime aide Juan Tuvera, as well as Tuvera's son Victor and a corporation the younger Tuvera had controlled. Trial on the case against the Tuveras proceeded separately before the Sandiganbayan. After the Republic had presented its evidence, the Tuveras successfully moved for the dismissal of the case on demurrer to evidence. The demurrer was sustained, and it falls upon this Court to ascertain the absence or existence of sufficient proof to support the relief sought by the Republic against the Tuveras. I. We begin with the facts. Twin Peaks Development Corporation (Twin Peaks) was organized on 5 March 1984 as a corporation with a principal purpose of engaging in the real estate business. There were five incorporating stockholders, including respondent Victor Tuvera (Victor)1 who owned 48% of the shares of the fledgling corporation. Victor was the son of respondent Juan Tuvera, who was then Presidential Executive Assistant of President Marcos. Acting on a letter dated 31 May 1984 of Twin Peaks’ VicePresident and Treasurer Evelyn Fontanilla in behalf of the corporation, President Marcos granted the award of a Timber License Agreement (TLA), more specifically TLA No. 356, in favor of Twin Peaks to operate on 26,000 hectares of forest land with an annual allowable cut of 60,000 cubic meters of timber and to export 10,000 cubic meters of mahogany of the narra species.2 As a result, Twin Peaks was able to engage in logging operations. On 25 February 1986, President Marcos was ousted, and Corazon C. Aquino assumed the presidency. Among her first acts as President was to establish the Philippine Commission on Good Government (PCGG), tasked with tracking down the ill-gotten wealth procured by Marcos, his family, and associates during his 20-year rule. Among the powers granted to the PCGG was the power to issue writs of sequestration.3 On 13 June 1988, the PCGG issued a Writ of Sequestration on all assets, properties, records, documents, and shares of stock of Twin Peaks on the ground that all the assets of the corporation are ill-gotten wealth for having been acquired directly or indirectly through fraudulent and illegal means.4 This was followed

In particular, the Complaint alleged that Juan Tuvera, as Presidential Executive Assistant of President Marcos, took advantage of his relationship to influence upon and connection with the President by engaging in a scheme to unjustly enrich himself at the expense of the Republic and of the Filipino people. This was allegedly accomplished on his part by securing TLA No. 356 on behalf of Twin Peaks despite existing laws expressly prohibiting the exportation of mahogany of the narra species 9 and Twin Peaks’ lack of qualification to be a grantee thereof for lack of sufficient logging equipment to engage in the logging business.10 The Complaint further alleged that Twin Peaks exploited the country’s natural resources by engaging in largescale logging and the export of its produce through its Chinese operators whereby respondents obtained a revenue of approximately ₱45 million. The Complaint prayed that (1) TLA No. 356 be reverted to the State or cancelled; (2) respondents be jointly and severally ordered to pay ₱48 million11 as actual damages; and (3) respondents pay moral, temperate and exemplary damages, litigation expenses, and treble judicial costs.12 It cited as grounds for relief, gross abuse of official position and authority, breach of public trust and fiduciary obligations, brazen abuse of right and power, unjust enrichment, and violation of the Constitution. 13 In their Answer,14 respondents Victor Tuvera and Twin Peaks claimed that Twin Peaks was awarded TLA No. 356 only after its articles of incorporation had been amended enabling it to engage in logging operations,15 that the Republic’s reference to Chinese operations and revenue of approximately ₱45 million were merely imagined,16 and that the PCGG has no statutory authority to institute the action.17 By way of counterclaim, respondents asked that the Republic be ordered to pay Victor Tuvera moral damages and to pay both Victor Tuvera and Twin Peaks exemplary damages, and to reimburse their attorney’s fees. 18 Anent the allegation that Twin Peaks sold about ₱3 million worth of lumber despite the Writ of Sequestration issued by the PCGG, respondents stressed that the Director of Forest Development acted within the scope of his authority and the courts have no supervising power over the actions of the Director of Forest Development and the Secretary of the Department of Environment and Natural Resources (DENR) in the performance of their official duties.19 As an affirmative and special defense, respondents Victor Tuvera and Twin Peaks alleged that after Twin Peaks was granted TLA No. 356 in 24 August 1984, Felipe Ysmael, Jr. and Co., Inc. had filed a motion for the cancellation of the same with the DENR Secretary. When respondents submitted their Answer, the denial by the DENR of the Ysmael motion was under review before the Court.20

Juan Tuvera, who was abroad when the case was filed on 9 December 1988, later submitted his own Answer on 6 December 1989.21 He also denied the allegations of the Republic and alleged that as Presidential Executive Assistant of then President Marcos, he acted within the confines of his duties and had perpetrated no unlawful acts. He merely transmitted communications of approval in the course of his duties and had nothing to do with the decisions of then President Marcos.22 He denied having anything to do with Twin Peaks.

3-C

Resolution, Office of the President, 6 July 1987, O.P. Case No. 3521

3-D

Order, Office of the President, 14 August 1987, I.S. No. 66

3-E

Complaint, PCGG, dated 20 July 1988

3-E-1, 3-E-2, 3-E-3

I.S. No. 66 Affidavit, PCGG, Almario F. Mendoza, Ltv. Ramon F. Mendoza and Affidavit, Isidro Santiago

On 3 May 1989, respondents filed an Omnibus Motion to Nullify Writ of Sequestration and/or the Mission Order. 24The Sandiganbayan issued a Temporary Restraining Order against the PCGG requiring it to cease, refrain and desist from further implementing the Writ of Sequestration and the Mission Order.25 Subsequently, on motion of respondents, the Sandiganbayan granted a Writ of Preliminary Injunction covering the Mission Order. The Sandiganbayan deferred its resolution on the Motion to Lift the Writ of Sequestration. 26

3-F

Counter-Affidavit, Juan C. Tuvera, 17 August 1989

3-F-1

PCGG, Motion to Withdraw, Jose Restituto F. Mendoza, 10 May 1989

3-F-2

Decision, Supreme Court, 18 October 1990

From 1988 to 1993, the proceedings before the Sandiganbayan were delayed owing to the difficulty of acquiring jurisdiction over the person of President Marcos, who was by then already in exile. Thus, upon motion by respondents, the Sandiganbayan granted them a separate pre-trial/trial from President Marcos.27

3-G

Resolution, Supreme Court, 5 June 1991

4

Complaint, DENR, Almario F, Mendoza, 9 March 1990

4-A

Answer/Comment, DENR, Almario F. Mendoza, dated 20 April 1990

4-B

Decision, DENR, dated 28 August 1990

5

Complaint, Ombudsman, etc., Case No. 0-90-0708, 9 March 1990

6, 6-A

Answer/Counter-Affidavit, etc.

6-B

Decision, Ombudsman Case No. 0-90-0708, dated 8 August 1990

Juan Tuvera filed a compulsory counterclaim on the ground that the instant action had besmirched his reputation and caused serious anxiety and mental anguish thus entitling him to moral and exemplary damages and litigation expenses. 23

Respondents submitted their documentary evidence in the PreTrial Conference while the Republic reserved to present the same during trial. After the pre-trial conference, the Sandiganbayan issued a Pre-Trial Order28 dated 3 November 1993, which presented the issues for litigation as follows: Whether or not defendant Juan C. Tuvera who was a Presidential Executive Assistant at the time material to this case, by himself and in concert with his co-defendants Ferdinand E. Marcos and Victor Tuvera, took advantage of his relation and connection with the late Marcos, secure (sic) a timber concession for Twin Peaks Development Corporation and, engage (sic) in a scheme to unjustly enrich himself at the expense of the Republic and the Filipino People.29 The Pre-Trial Order also indicated that the Republic admitted the exhibits by respondents, subject to the presentation of certified true copies thereof. Respondents’ exhibits were as follows:30 Exhibit Nos.

Description

1

Amended Articles of Incorporation dated 31 July 1984

2

TLA No. 356

3

Order, Minister Ernesto M. Maceda, 22 July 1986

3-A

Order, Minister Ernesto M. Maceda, 10 October 1986

3-B

Order, Minister Ernesto M. Maceda, 26 November 1986, O.P. Case No. 3521

The Republic presented three (3) witnesses during the trial. The first witness was Joveniana M. Galicia, Chief of the National Forest Management Division of the Forest Management Bureau. She identified TLA No. 356 of Twin Peaks dated 20 August 1984 and a Memorandum dated 18 July 1984. She testified that TLA No. 356 covers 26,000 hectares of forest land located in the Municipality of Isabela, Province of Quirino.31 The Memorandum dated 18 July 1984 addressed to Director Edmundo Cortez recited then President Marcos’ grant of the timber concession to Twin Peaks. Identified and marked in the same memorandum were the name and signature of Juan Tuvera.32 Upon cross-examination, Galicia stated that she was not yet the chief of the Division when the documents she identified were submitted to the Bureau. She further stated it was her first time to see the aforementioned documents when she was asked to bring the same before the trial court.33 The next witness was Fortunato S. Arcangel, Regional Technical Director III of the DENR. He testified that he is a Technical Director under the Forest Management Services of the DENR. 34 He identified Forestry Administration Order (FAO) No. 11 dated 1 September 1970. He said he was aware of TLA No. 356 of Twin

Peaks35 because at the time it was issued, he was the chief of the Forestry Second Division and his duties included the evaluation and processing of applications for licenses and permits for the disposition and distribution of timber and other forest products.36 Consequently, he was aware of the process by which TLA No. 356 was issued to Twin Peaks.37 According to him, they processed the application insofar as they evaluated the location of the area concerned and its present vegetative state, examined the records, and determined the annual allowable land. After the examination, the license agreement was prepared and submitted for approval.38 He continued that under FAO No. 11, a public bidding is required before any license agreement or permit for the utilization of timber within the forestry land is issued39 but no public bidding was conducted for TLA No. 356.40 He explained that no such bidding was conducted because of a Presidential Instruction not to accept any application for timber licensing as a consequence of which bidding procedures were stopped.41 Upon cross-examination, Arcangel said that at the time TLA No. 356 was issued, the Revised Forestry Code of the Philippines 42 was already in effect but there were still provisions in FAO No. 11 that remained applicable such as the terms and conditions of granting a license. He also stated that the issuance of the license to Twin Peaks emanated from the President of the Philippines. 43

E

Income Tax Return of Evelyn Fontanilla

To prove that Evelyn Fontanilla was not a legitimate stockholder of Twin Peaks Realty Development Corp.

F

Income Tax Return of Feliciano Salvana

To prove that Feliciano Salvana was not a legitimate stockholder of Twin Peaks Realty Development Corp.

G

Articles of Incorporation of Twin Peaks Realty Development Corp. (original)

To prove that Twin Peaks Realty Development Corp. was organized to engage in the real estate business and not in the logging industry.

H

Timber Manifestation Report of [Twin Peaks Realty Development Corp.] consigned to Scala Sawmill46

To show that Twin Peaks Realty Development Corp. lacks equipment to process logs.

I

Timber Manifestation Report of Twin Peaks consigned to La Peña Sawmill47

To show that Twin Peaks Realty Development Corp. lacks equipment to process logs.

The Republic’s third and last witness was Teresita M. Zuñiga, employee of the Bureau of Internal Revenue. She identified the 1986 Income Tax Returns of Victor P. Tuvera, Evelyn Fontanilla and Feliciano O. Salvana, stockholders of Twin Peaks. 44 On 24 June 1994, the Republic rested its case after its formal offer of evidence, as follows:45 Exhibits

Documents

Purpose

A

Timber License Agreement No. 356 of Twin Peaks Realty Development Corp. dated 20 August 1984

To prove that the Timber License Agreement was executed prior to the amendment of the Articles of Incorporation of Twin Peaks Realty Development Corp.

B

Memorandum dated 18 July 1984 of Juan C. Tuvera, Presidential Executive Secretary

To prove the participation of Juan C. Tuvera in the grant of the timber concession of Twin Peaks Realty Development Corp.

C

Forestry Administrative Order No. 11 (Revised)

To prove that Twin Peaks Realty Development Corp. was granted a timber license agreement without following the procedure outlined in the forestry rules and regulation and in violation of law.

D

Income Tax Return of Victor Tuvera

To prove that Victor Tuvera was not a legitimate stockholder of Twin Peaks Realty Development Corp.

Respondents subsequently submitted certified true copies of the exhibits they had presented during the pre-trial conference.48 With leave of court, respondents filed a Demurrer to Evidence. Respondents argued that the Republic failed to present sufficient legal affirmative evidence to prove its claim. In particular, respondents’ demurrer contends that the memorandum (Exh. B) and TLA No. 356 are not "legal evidence" because "legal evidence" is not meant to raise a mere suspicion or doubt. Respondents also claim that income tax returns are not sufficient to show one’s holding in a corporation. Respondents also cited the factual antecedents culminating with the Court’s decision in Felipe Ysmael, Jr. & Corp., Inc. v. Sec. of Environment and Natural Resources.49 The Republic filed a Manifestation, contending that the demurrer is not based on the insufficiency of its evidence but on the strength of the evidence of respondents as shown by their own exhibits. The Republic claimed that the Revised Forestry Code of the Philippines does not dispense with the requirement of public bidding. The Republic added that Sec. 5 of said law clearly provides that all applications for a timber license agreement must be filed before the Bureau of Forest Development and that respondents still have to prove compliance with the requirements for service contracts. 50 Respondents opposed the Manifestation, maintaining that since the Republic admitted the exhibits of respondents during the pretrial, it is bound by its own admission. Further, these same exhibits

contain uncontroverted facts and laws that only magnify the conclusion that the Republic has no right to relief.51 In its Resolution dated 23 May 2001, 52 the Sandiganbayan sustained the demurrer to evidence and referred to the decision of this Court in Ysmael in holding that res judicata applies. The AntiGraft Court also did not give credence to the Republic’s allegations concerning respondents’ abuse of power and/or public trust and consequent liability for damages in view of its failure to establish any violation of Arts. 19, 20 and 21 of the Civil Code. In essence, the Sandiganbayan held that the validity of TLA No. 356 was already fully adjudicated in a Resolution/Order issued by the Office of the President on 14 August 1987, which had become final and executory with the failure of the aggrieved party to seek a review thereof. The Sandiganbayan continued that the above pronouncement is supported by this Court in Ysmael. Consequently, the Sandiganbayan concluded, the Republic is barred from questioning the validity of TLA No. 356 in consonance with the principle of res judicata. The Republic now questions the correctness of the Sandiganbayan’s decision to grant the demurrer to evidence because it was not based solely on the insufficiency of its evidence but also on the evidence of respondent mentioned during the pretrial conference. The Republic also challenges the applicability of res judicata. II. Preliminarily, we observe that respondents had filed before the Sandiganbayan a pleading captioned Motion to Dismiss or Demurrer to Evidence, thus evincing that they were seeking the alternative reliefs of either a motion to dismiss or a demurrer to evidence. However, the Sandiganbayan, in resolving this motion, referred to it as Motion to Dismiss on Demurrer to Evidence, a pleading of markedly different character from a Motion to Dismiss or Demurrer to Evidence. Still, a close reading of the Sandiganbayan Resolution reveals clearly that the Sandiganbayan was treating the motion as a demurrer, following Rule 33, Section 1 of the Rules of Court, rather than a motion to dismiss under Rule 16, Section 1. This notwithstanding, the Sandiganbayan justified the grant of demurrer with res judicata as rationale. Res judicata is an inappropriate ground for sustaining a demurrer to evidence, even as it stands as a proper ground for a motion to dismiss. A demurrer may be granted if, after the presentation of plaintiff’s evidence, it appears upon the facts and the law that the plaintiff has shown no right to relief. In contrast, the grounds for res judicata present themselves even before the presentation of evidence, and it should be at that stage that the defense of res judicata should be invoked as a ground for dismissal. Properly speaking, the movants for demurral who wish to rely on a controlling value of a settled case as a ground for demurrer should invoke the ground of stare decisis in lieu of res judicata. In Domondon v. Lopez,53 we distinguished a motion to dismiss for failure of the complainant to state a cause of action from a motion to dismiss based on lack of cause of action. The first is governed by Rule 16, Section 1(g),54while the second by Rule 3355 of the Rules of Court, to wit: x x x The first [situation where the complaint does not alleged cause of action] is raised in a motion to dismiss under Rule 16 before a responsive pleading is filed and can be determined only from the allegations in the initiatory pleading and not from evidentiary or other matter aliunde. The second [situation where the evidence does not sustain the cause of

action alleged] is raised in a demurrer to evidence under Rule 33 after the plaintiff has rested his case and can be resolved only on the basis of the evidence he has presented in support of his claim. The first does not concern itself with the truth and falsity of the allegations while the second arises precisely because the judge has determined the truth and falsity of the allegations and has found the evidence wanting. Hence, a motion to dismiss based on lack of cause of action is filed by the defendant after the plaintiff has presented his evidence on the ground that the latter has shown no right to the relief sought. While a motion to dismiss under Rule 16 is based on preliminary objections which can be ventilated before the beginning of the trial, a motion to dismiss under Rule 33 is in the nature of a demurrer to evidence on the ground of insufficiency of evidence and is presented only after the plaintiff has rested his case.56 [Emphasis supplied] III. We shall first discuss the question of whether or not a demurrer to evidence may be granted based on the evidence presented by the opposing parties. An examination of the Sandiganbayan’s Resolution shows that dismissal of the case on demurrer to evidence was principally anchored on the Republic’s failure to show its right to relief because of the existence of a prior judgment which consequently barred the relitigation of the same issue. In other words, the Sandiganbayan did not dismiss the case on the insufficiency of the Republic’s evidence nor on the strength of respondents’ evidence. Rather, it based its dismissal on the existence of the Ysmael case which, according to it, would render the case barred by res judicata. Prescinding from this procedural miscue, was the Sandiganbayan correct in applying res judicata to the case at bar? To determine whether or not res judicata indeed applies in the instant case, a review of Ysmael is proper. In brief, Felipe Ysmael, Jr. & Co., Inc. was a grantee of a timber license agreement, TLA No. 87. Sometime in August 1983, the Bureau of Forest Development cancelled TLA No. 87 despite the company’s letter for the reconsideration of the revocation. Barely one year thereafter, one-half (or 26,000 hectares) of the area formerly covered by TLA No. 87 was re-awarded to Twin Peaks under TLA No. 356. In 1986, Felipe Ysmael, Jr. & Co., Inc. sent separate letters to the Office of the President and the Ministry of Natural Resources primarily seeking the reinstatement of TLA No. 87 and the revocation of TLA No. 356. Both offices denied the relief prayed for. Consequently, Felipe Ysmael, Jr. & Co., Inc. filed a petition for review before this Court. The Court, through the late Justice Irene Cortes, held that Ysmael’s letters to the Office of the President and to the Ministry of Natural Resources in 1986 sought the reconsideration of a memorandum order by the Bureau of Forest Development canceling their timber license agreement in 1983 and the revocation of TLA No. 356 subsequently issued by the Bureau in 1984. Ysmael did not attack the administrative actions until after 1986. Since the decision of the Bureau has become final, it has the force and effect of a final judgment within the purview of the doctrine of res judicata. These decisions and orders, therefore, are conclusive upon the rights of the affected parties as though the same had been rendered by a court of general jurisdiction. The Court also denied the petition of Ysmael because it failed to file the special civil action for certiorari under Rule 65 within a reasonable time, as well as in due regard for public policy considerations and

the principle of non-interference by the courts in matters which are addressed to the sound discretion of government agencies entrusted with the regulation of activities coming under the special technical knowledge and training of such agencies. In Sarabia and Leido v. Secretary of Agriculture and Natural Resources, et al.,57 the Court discussed the underlying principle for res judicata, to wit: The fundamental principle upon which the doctrine of res judicata rests is that parties ought not to be permitted to litigate the same issue more than once; that, when a right or fact has been judicially tried and determined by a court of competent jurisdiction, or an opportunity for such trial has been given, the judgment of the court, so long as it remains unreversed, should be conclusive upon the parties and those in privity with them in law or estate. For res judicata to serve as an absolute bar to a subsequent action, the following requisites must concur: (1) the former judgment or order must be final; (2) the judgment or order must be on the merits; (3) it must have been rendered by a court having jurisdiction over the subject matter and parties; and (4) there must be between the first and second actions, identity of parties, of subject matter, and of causes of action. 58 When there is only identity of issues with no identity of causes of action, there exists res judicata in the concept of conclusiveness of judgment. 59 In Ysmael, the case was between Felipe Ysmael Jr. & Co., Inc. and the Deputy Executive Secretary, the Secretary of Environment and Natural Resources, the Director of the Bureau of Forest Development and Twin Peaks Development and Realty Corporation. The present case, on the other hand, was initiated by the Republic of the Philippines represented by the Office of the Solicitor General. No amount of imagination could let us believe that there was an identity of parties between this case and the one formerly filed by Felipe Ysmael Jr. & Co., Inc. The Sandiganbayan held that despite the difference of parties, res judicata nevertheless applies on the basis of the supposed sufficiency of the "substantial identity" between the Republic of the Philippines and Felipe Ysmael, Jr. Co., Inc. We disagree. The Court in a number of cases considered the substantial identity of parties in the application of res judicata in instances where there is privity between the two parties, as between their successors in interest by title60 or where an additional party was simply included in the subsequent case61 or where one of the parties to a previous case was not impleaded in the succeeding case.62 The Court finds no basis to declare the Republic as having substantial interest as that of Felipe Ysmael, Jr. & Co., Inc. In the first place, the Republic’s cause of action lies in the alleged abuse of power on respondents’ part in violation of R.A. No. 3019 63 and breach of public trust, which in turn warrants its claim for restitution and damages. Ysmael, on the other hand, sought the revocation of TLA No. 356 and the reinstatement of its own timber license agreement. Indeed, there is no identity of parties and no identity of causes of action between the two cases. IV. What now is the course of action to take since we cannot affirm the Sandiganbayan’s grant of the demurrer to evidence? Rule 33, Sec. 1 reads: Sec. 1. Effect of judgment on demurrer to evidence. – After the plaintiff has completed the presentation of his evidence, the

defendant may move for dismissal on the ground that upon the facts and the law the plaintiff has shown no right to relief. If his motion is denied, he shall have the right to present evidence. If the motion is granted but on appeal the order of dismissal is reversed he shall have be deemed to have waived the right to present evidence. The general rule is that upon the dismissal of the demurrer in the appellate court, the defendant loses the right to present his evidence and the appellate court shall then proceed to render judgment on the merits on the basis of plaintiff’s evidence. As the Court explained in Generoso Villanueva Transit Co., Inc. v. Javellana: 64 The rationale behind the rule and doctrine is simple and logical. The defendant is permitted, without waiving his right to offer evidence in the event that his motion is not granted, to move for a dismissal (i.e., demur to the plaintiff’s evidence) on the ground that upon the facts as thus established and the applicable law, the plaintiff has shown no right to relief. If the trial court denies the dismissal motion, i.e., finds that plaintiff’s evidence is sufficient for an award of judgment in the absence of contrary evidence, the case still remains before the trial court which should then proceed to hear and receive the defendant’s evidence so that all the facts and evidence of the contending parties may be properly placed before it for adjudication as well as before the appellate courts, in case of appeal. Nothing is lost. The doctrine is but in line with the established procedural precepts in the conduct of trials that the trial court liberally receive all proffered evidence at the trial to enable it to render its decision with all possibly relevant proofs in the record, thus assuring that the appellate courts upon appeal have all the material before them necessary to make a correct judgment, and avoiding the need of remanding the case for retrial or reception of improperly excluded evidence, with the possibility thereafter of still another appeal, with all the concomitant delays. The rule, however, imposes the condition by the same token that if his demurrer is granted by the trial court, and the order of dismissal is reversed on appeal, the movant loses his right to present evidence in his behalf and he shall have been deemed to have elected to stand on the insufficiency of plaintiff’s case and evidence. In such event, the appellate court which reverses the order of dismissal shall proceed to render judgment on the merits on the basis of plaintiff’s evidence.65 It thus becomes the Court's duty to rule on the merits of the complaint, duly taking into account the evidence presented by the Republic, and without need to consider whatever evidence the Tuveras have, they having waived their right to present evidence in their behalf. V. Executive Order No. 14-A66 establishes that the degree of proof required in cases such as this instant case is preponderance of evidence. Section 3 thereof reads: SEC. 3. The civil suits to recover unlawfully acquired property under Republic Act No. 1379 or for restitution, reparation of damages, or indemnification for consequential and other damages or any other civil actions under the Civil Code or other existing laws filed with the Sandiganbayan against Ferdinand E. Marcos, Imelda R. Marcos, members of their immediate family, close relatives, subordinates, close and/or business associates, dummies, agents and nominees, may proceed independently of any criminal proceedings and may be proved by a preponderance of evidence. [Emphasis supplied.] Thus, the Court recently held in Yuchengco v. Sandiganbayan,67 that in establishing the quantum of evidence required for civil cases involving the Marcos wealth held by their

immediate family, close relatives, subordinates, close and/or business associates, dummies, agents and nominees filed before the Sandiganbayan, that "the Sandiganbayan, x x x was not to look for proof beyond reasonable doubt, but to determine, based on the evidence presented, in light of common human experience, which of the theories proffered by the parties is more worthy of credence." In order that restitution may be proper in this case, it must be first established that the grant of the TLA to Twin Peaks was illegal. With the illegality of the grant established as fact, finding Victor Tuvera, the major stockholder of Twin Peaks, liable in this case should be the ineluctable course. In order that Juan Tuvera may be held answerable as well, his own participation in the illegal grant should also be substantiated. Regarding the first line of inquiry, the Complaint adverted to several provisions of law which ostensibly were violated by the grant of the TLA in favor of Twin Peaks. These include R.A. No. 3019, otherwise known as the Anti-Graft and Corrupt Practices Act, and Articles 19, 20 and 21 of the Civil Code. Still, the most organic laws that determine the validity or invalidity of the TLA are those that governed the issuance of timber license agreements in 1984. In that regard, the Republic argues that the absence of a bidding process is patent proof of the irregularity of the issuance of the TLA in favor of Twin Peaks. A timber license agreement authorizes a person to utilize forest resources within any forest land with the right of possession and exclusion of others.68 The Forestry Reform Code prohibits any person from utilizing, exploiting, occupying, possessing or conducting any activity within any forest land unless he had been authorized to do so under a license agreement, lease, license or permit.69 The Code also mandates that no timber license agreement shall be issued unless the applicant satisfactorily proves that he has the financial resources and technical capability not only to minimize utilization, but also to practice forest protection, conservation and development measures to insure the perpetuation of said forest in productive condition. 70 However, the Code is silent as to the procedure in the acquisition of such timber license agreement. Such procedure is more particularly defined under FAO No. 11, dated 1 September 1970, which provides for the "revised forestry license regulations." FAO No. 11 establishes that it is the Director of Forestry who has the power "to grant timber licenses and permits."71It also provides as a general policy that timber license agreements shall be granted through no other mode than public bidding. 72 However, Section 24 of FAO No. 11 does admit that a timber license agreement may be granted through "negotiation," as well as through "public bidding." 26. When license may be issued.–A license under this Regulations may be issued or granted only after an application and an award either through bidding or by negotiation has been made and the Director of Forestry is satisfied that the issuance of such license shall not be inconsistent with existing laws and regulations or prejudicial to public interest, and that the necessary license fee, bond deposit and other requirements of the Bureau of Forestry have been paid and complied with.73 [Emphasis supplied.] However, even a person who is granted a TLA through "negotiation" is still required to submit the same requirements and supporting papers as required for public bidding. The pertinent provisions of FAO No. 11 state:

18. Requirements and supporting papers to be submitted.—The following requirements with accompanying supporting papers or documents shall be submitted in addition to the requirements of Section 12: a. With bid application: The applicant shall support his bid application with the required application fee duly paid and proofs of the following: (1) Capitalization.—Cash deposits and established credit line by applicant in domestic bank certified to by the bank President or any of its authorized officials, duly attested by depositor as his own to be used exclusively in logging and wood processing operations if awarded the area. The bank certificate shall be accompanied by a written consent by the applicant-depositor for the Director of Forestry or his authorized representative to verify such cash deposit with bank authorities. Capitalization and financial statements.— A minimum capitalization of ₱20.00 per cubit meter in cash and an established credit line of ₱150.00 per cubic meter based on the allowable annual cut are required. Financial statements certified by the independent and reputable certified public accountants must accompany the application as proof of the necessary capitalization. Additional capitalization, Real Estate.— In the event that the capitalization of the applicant is less than the minimum or less than that set by the Director of Forestry for the area, the applicant bidder may be asked to submit an affidavit signifying his readiness, should the area be awarded to him, to convert within a specified time any specified unencumbered and titled real estate into cash for use in operating and developing the area. Presentation of real estate should show location by municipality and province, hectarage, title number, latest land tax declaration, assessed value of land and improvements (stating kind of improvements), and encumbrances if any. (2) Logging machinery and equipment.—Evidence of ownership or capacity to acquire the requisite machinery or equipment shall accompany the bid application. The capacity or ability to acquire machineries and equipments shall be determined by the committee on award. Leased equipment or machineries may be considered in the determination by the Committee if expressly authorized in writing by the Director of Forestry. (3) Technical know-how.—To assure efficient operation of the area or concession, the applicant shall submit proof of technical competence and know-how and/or his ability to provide hired services of competent personnel. (4) Operation or development plan.— An appropriate plan of operation and development of the forest area applied for shall be submitted, including phasing plans and the fund requirements therefor, consistent with selective logging methods and the sustained yield policy of the Bureau of Forestry. This plan must be in general agreement with the working unit plan for the area as contained in Chapter III, Section 6(a) hereinabove. (5) Processing plant.—The bidder or applicant shall show evidence of ownership of, or negotiation to acquire, a wood processing plant. The kind and type of plant, such as plywood, veneer, bandmill, etc. shall be specified. The plant should be capable of processing at least 60% of the allowable annual cut. (6) Forestry Department.—The applicant shall submit assurance under oath that he shall put a forestry department composed of trained or experienced foresters to carry out forest management

activities such as selective logging, planting of denuded or loggedover areas within the concessions as specified by the Director of Forestry and establish a forest nursery for the purpose. (7) Statement on sustained yield operations, reforestation, and protection under management plans.— The bidder or applicant shall submit a sworn statement of his agreement and willingness to operate the area under sustained yield to reforest cleared areas and protect the concession or licensed area and under the approved management plan, and to abide with all existing forestry laws, rules and regulations and those that may hereafter be promulgated; and of his agreement that any violation of these conditions shall be sufficient cause for the cancellation of the licenses. (8) Organization plan.–Other important statement connected with sound management and operation of the area, such as the submission among others, of the organizational plan and employment of concession guards, shall be submitted. In this connection, the applicant shall submit a sworn statement to the effect no alien shall be employed without prior approval of proper authorities. (9) Unauthorized use of heave equipment.—The applicant shall give his assurance that he shall not introduce into his area additional heave equipment and machinery without approval of the Director of Forestry. (10) Such other inducements or considerations to the award as will serve public interest may also be required from time to time.

process 10,000 cubic meters of the narra species in the same area."76 A marginal note therein signed by Marcos indicates an approval thereof. Neither the Forestry Reform Code nor FAO No. 11 provide for the submission of an application directly to the Office of the President as a proper mode for the issuance of a TLA. Without discounting the breadth and scope of the President’s powers as Chief Executive, the authority of the President with respect to timber licenses is, by the express terms of the Revised Forestry Code, limited to the amendment, modification, replacement or rescission of any contract, concession, permit, license or any other form of privilege granted by said Code.77 There are several factors that taint this backdoor application for a timber license agreement by Twin Peaks. The forest area covered by the TLA was already the subject of a pre-existing TLA in favor of Ysmael. The Articles of Incorporation of Twin Peaks does not even stipulate that logging was either a principal or secondary purpose of the corporation. Respondents do allege that the Articles was amended prior to the grant in order to accommodate logging as a corporate purpose, yet since respondents have waived their right to present evidence by reason of their resort to demurrer, we cannot consider such allegation as proven. Sec. 18(a)(1) of FAO No. 11 requires that an applicant must have a minimum capitalization of ₱20.00 per cubic meter in cash and an established credit line of ₱150.00 per cubic meter based on the allowable annual cut. TLA No. 356 allowed Twin Peaks to operate on 26,000 hectares of forest land with an annual allowable cut of 60,000 cubic meters of timber. With such annual allowable cut, Twin

xxxx d) With applications for areas to be negotiated.—All the foregoing requirements and supporting papers required for bidding under Section 18(a) hereinabove and of Section 20(b) hereinbelow shall also apply to all areas that may be granted through negotiation. In no case shall an area exceeding 100,000 hectares be granted thru negotiation.74 The rationale underlying the very elaborate procedure that entails prior to the grant of a timber license agreement is to avert the haphazard exploitation of the State's forest resources as it provides that only the most qualified applicants will be allowed to engage in timber activities within the strict limitations of the grant and that cleared forest areas will have to be renewed through reforestation. Since timber is not a readily renewable natural resource, it is essential and appropriate that the State serve and act as a jealous and zealous guardian of our forest lands, with the layers of bureaucracy that encumber the grant of timber license agreements effectively serving as a defensive wall against the thoughtless ravage of our forest resources. There is no doubt that no public bidding occurred in this case. Certainly, respondents did not raise the defense in their respective answers. The absence of such bidding was testified on by prosecution witness Arcangel. Yet even if we consider that Twin Peaks could have acquired the TLA through "negotiation," the prescribed requirements for "negotiation" under the law were still not complied with. It is evident that Twin Peaks was of the frame of mind that it could simply walk up to President Marcos and ask for a timber license agreement without having to comply with the elaborate application procedure under the law. This is indicated by the letter dated 31 May 198475 signed by Twin Peaks’ Vice President and Treasurer Evelyn Fontanilla, addressed directly to then President Marcos, wherein Twin Peaks expressed that "we would like to request a permit to export 20,000 cubic meters of logs and to cut and

Peaks, therefore, must have at least ₱1,200,000.00 in cash as its minimum capitalization, following FAO No. 11. An examination of Twin Peaks’ Articles of Incorporation shows that its paid-up capital was only ₱312,500.00.78 Clearly, Twin Peaks’ paid-up capital is way below the minimum capitalization requirement. Moreover, Sec. 18(5) provides that the bidder or applicant shall show evidence of ownership of, or negotiation to acquire, a wood processing plant. However, although TLA No. 356 was issued to Twin Peaks in 1984, it continued to engage the services of at least two sawmills79 as late as 1988. Four (4) years from the issuance of the license, Twin Peaks remained incapable of processing logs. What could have made Twin Peaks feel emboldened to directly request President Marcos for the grant of Timber License Agreement despite the obvious problems relating to its capacity to engage in timber activities? The reasonable assumption is that the official and personal proximity of Juan Tuvera to President Marcos was a key factor, considering that he was the father of Twin Peaks' most substantial stockholder. The causes of action against respondents allegedly arose from Juan Tuvera’s abuse of his relationship, influence and connection as Presidential Executive Assistant of then President Marcos. Through Juan Tuvera’s position, the Republic claims that Twin Peaks was able to secure a Timber License Agreement despite its lack of qualification and the absence of a public bidding. On account of the unlawful issuance of a timber license agreement, the natural resources of the country were unlawfully exploited at the expense of the Filipino people. Victor Tuvera, as son of Juan Tuvera and a major stockholder of Twin Peaks, was included as respondent for having substantially benefited from this breach of trust. The circumstance of kinship alone may not be enough to disqualify Victor Tuvera from seeking a timber license agreement. Yet the basic ethical principle of delicadeza should have dissuaded Juan Tuvera from any official or unofficial participation or

intervention in behalf of the "request" of Twin Peaks for a timber license. Did Juan Tuvera do the honorable thing and keep his distance from Twin Peaks' "request"? Apparently not. Instead, he penned a Memorandum dated 18 July 1984 in his capacity as Presidential Executive Assistant, directed at the Director of Forestry, the official who, under the law, possessed the legal authority to decide whether to grant the timber license agreements after deliberating on the application and its supporting documents. The Memorandum reads in full: Office of Malacanang

the

President

of

the

Philippines

18 July 1984 74-84 MEMORANDUM to Director Edmundo Bureau of Forest Development

Cortes

I wish to inform you that the President has granted the award to the Twin Peaks Realty Development Corporation, of the concession to manage, operate and develop in accordance with existing policies and regulations half of the timber area in the Province of Quirino covered by TLA No. 87, formerly belonging to the Felipe Ysmael, Jr. & Company and comprising 54,920 hectares, and to export half of the requested 20,000 cubic meters of logs to be gathered from the area. Herewith is a copy of the letter concering (sic) this matter of Ms. Evelyn F. Fontanilla, Vice-President and Treasurer of the Twin Peaks Realty Development Corporation, on which the President indicated such approval in his own hand, which I am furnishing you for your information and appropriate action. (signed) JUAN C. Presidential Executive Assistant80

TUVERA

The Memorandum establishes at the very least that Tuvera knew about the Twin Peaks "request," and of President Marcos's favorable action on such "request." The Memorandum also indicates that Tuvera was willing to convey those facts to the Director of Forestry, the ostensible authority in deciding whether the Twin Peaks "request" should have been granted. If Juan Tuvera were truly interested in preventing any misconception that his own position had nothing to do with the favorable action on the "request" lodged by the company controlled by his son, he would not have prepared or signed the Memorandum at all. Certainly, there were other officials in Malacañang who could have performed that role had the intent of the Memorandum been merely to inform the Director of Forestry of such Presidential action. Delicadeza is not merely a stentorian term evincing a bygone ethic. It is a legal principle as embodied by certain provisions of the Anti-Graft and Corrupt Practices Act. Section 3 of R.A. No. 3019 states in part: Sec. 3. Corrupt practices of public officers.—In addition to acts or omissions of public officers already penalized by existing law, the following shall constitute corrupt practices of any public officer and are hereby declared to be unlawful:

(a) Persuading, inducing or influencing another public officer to perform an act constituting a violation of rules and regulations duly promulgated by competent authority or an offense in connection with the official duties of the latter, or allowing himself to be persuaded, induced or influenced to commit such violation or offense. xxxx (h) Directly or indirectly having financial or pecuniary interest in any business, contract or transaction in connection with which he intervenes or takes part in his official capacity, or in which he is prohibited by the Constitution or by any law from having any interest. The Memorandum signed by Juan Tuvera can be taken as proof that he "persuaded, induced or influenced" the Director of Forestry to accommodate a timber license agreement in favor of Twin Peaks, despite the failure to undergo public bidding, or to comply with the requisites for the grant of such agreement by negotiation, and in favor of a corporation that did not appear legally capacitated to be granted such agreement. The fact that the principal stockholder of Twin Peaks was his own son establishes his indirect pecuniary interest in the transaction he appears to have intervened in. It may have been possible on the part of Juan Tuvera to prove that he did not persuade, induce or influence the Director of Forestry or any other official in behalf of the timber license agreement of Twin Peaks, but then again, he waived his right to present evidence to acquit himself of such suspicion. Certainly, the circumstances presented by the evidence of the prosecution are sufficient to shift the burden of evidence to Tuvera in establishing that he did not violate the provisions of the Anti-Graft and Corrupt Practices Act in relation to the Twin Peaks "request." Unfortunately, having waived his right to present evidence, Juan Tuvera failed to disprove that he failed to act in consonance with his obligations under the Anti-Graft and Corrupt Practices Act. In sum, the backdoor recourse for a hugely priced favor from the government by itself, and more in tandem with other brazen relevant damning circumstances, indicates the impudent abuse of power and the detestable misuse of influence that homologously made the acquisition of ill-gotten wealth a reality. Upon the facts borne out by the evidence for the Republic and guideposts supplied by the governing laws, the Republic has a clear right to the reliefs it seeks. VI. If only the Court's outrage were quantifiable in sums of money, respondents are due for significant pecuniary hurt. Instead, the Court is forced to explain in the next few paragraphs why respondents could not be forced to recompensate the Filipino people in appropriate financial terms. The fault lies with those engaged by the government to litigate this case in behalf of the State. It bears to the most primitive of reasons that an action for recovery of sum of money must prove the amount sought to be recovered. In the case at bar, the Republic rested its case without presenting any evidence, documentary or testimonial, to establish the amount that should be restituted to the State by reason of the illegal acts committed by the respondents. There is the bare allegation in the complaint that the State is entitled to ₱48 million by way of actual damages, but no single proof presented as to why the State is entitled to such amount. Actual damages must be proven, not presumed. 81 The Republic failed to prove damages. It is not enough for the Republic to have established, as it did, the legal travesty that led to the wrongful obtention by Twin Peaks of the TLA. It should have established the

degree of injury sustained by the State by reason of such wrongful act. We fail to comprehend why the Republic failed to present any proof of actual damages. Was it the inability to obtain the necessary financial documents that would establish the income earned by Twin Peaks during the period it utilized the TLA, despite the presence of the discovery processes? Was it mere indolence or sheer incompetence? Whatever the reason, the lapse is inexcusable, and the injury ultimately conduces to the pain of the Filipino people. If the litigation of this case is indicative of the mindset in the prosecution of ill-gotten wealth cases, it is guaranteed to ensure that those who stole from the people will be laughing on their way to the bank. The claim for moral damages deserves short shrift. The claimant in this case is the Republic of the Philippines, a juridical person. We explained in Filipinas Broadcasting v. Ago Medical & Educational Center-Bicol Christian College of Medicine (AMEC-BCCM):82 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 Court's statement in Mambulao that "a corporation may have a good reputation which, if besmirched, may also be a ground for the award of moral damages" is an obiter dictum. Nevertheless, AMEC's claim for moral damages falls under item 7 of Article 2219 of the Civil Code. This provision expressly authorizes the recovery of moral damages in cases of libel, slander or any other form of defamation. Article 2219(7) does not qualify whether the plaintiff is a natural or juridical person. Therefore, a juridical person such as a corporation can validly complain for libel or any other form of defamation and claim for moral damages. 83 As explained, a juridical person is not entitled to moral damages under Article 2217 of the Civil Code. It may avail of moral damages under the analogous cases listed in Article 2219, such as for libel, slander or any other form of defamation. Suffice it to say that the action at bar does not involve any of the analogous cases under Article 2219, and indeed upon an intelligent reading of Article 2219, it is difficult to see how the Republic could sustain any of the injuries contemplated therein. Any lawyer for the Republic who poses a claim for moral damages in behalf of the State stands in risk of serious ridicule. However, there is sufficient basis for an award of temperate damages, also sought by the Republic notwithstanding the fact that a claim for both actual and temperate damages is internally inconsistent. Temperate or moderate damages avail when "the court finds that some pecuniary loss has been suffered but its amount can not from the nature of the case, be proved with certainty."84 The textual language might betray an intent that temperate damages do not avail when the case, by its nature, is susceptible to proof of pecuniary loss; and certainly the Republic could have proved pecuniary loss herein. 85 Still, jurisprudence applying Article 2224 is clear that temperate damages may be awarded even in instances where pecuniary loss could theoretically have been proved with certainty.1awphi1.net In a host of criminal cases, the Court has awarded temperate damages to the heirs of the victim in cases where the amount of actual damages was not proven due to the inadequacy of the evidence presented by the prosecution. These cases include People v. Oliano,86 People v. Suplito,87 People v. De la Tongga,[88] People v. Briones,89 and People v. Plazo.90 In Viron Transportation Co., Inc. v. Delos Santos,91 a civil action for

damages involving a vehicular collision, temperate damages were awarded for the resulting damage sustained by a cargo truck, after the plaintiff had failed to submit competent proof of actual damages. We cannot discount the heavy influence of common law, and its reliance on judicial precedents, in our law on tort and damages. Notwithstanding the language of Article 2224, a line of jurisprudence has emerged authorizing the award of temperate damages even in cases where the amount of pecuniary loss could have been proven with certainty, if no such adequate proof was presented. The allowance of temperate damages when actual damages were not adequately proven is ultimately a rule drawn from equity, the principle affording relief to those definitely injured who are unable to prove how definite the injury. There is no impediment to apply this doctrine to the case at bar, which involves one of the most daunting and noble undertakings of our young democracy–the recovery of ill-gotten wealth salted away during the Marcos years. If the doctrine can be justified to answer for the unlawful damage to a cargo truck, it is a compounded wrath if it cannot answer for the unlawful exploitation of our forests, to the injury of the Filipino people. The amount of ₱1,000,000.00 as temperate damages is proper. The allowance of temperate damages also paves the way for the award of exemplary damages. Under Article 2234 of the Civil Code, a showing that the plaintiff is entitled to temperate damages allows for the award of exemplary damages. Even as exemplary damages cannot be recovered as a matter of right, the courts are empowered to decide whether or not they should be adjudicated. Ill-gotten wealth cases are hornbook demonstrations where damages by way of example or correction for the public good should be awarded. Fewer causes of action deserve the stigma left by exemplary damages, which "serve as a deterrent against or as a negative incentive to curb socially deleterious actions." 92 The obtention of the timber license agreement by Twin Peaks through fraudulent and illegal means was highlighted by Juan Tuvera’s abuse of his position as Presidential Executive Assistant. The consequent exploitation of 26 hectares of forest land benefiting all respondents is a grave case of unjust enrichment at the expense of the Filipino people and of the environment which should never be countenanced. Considering the expanse of forest land exploited by respondents, the volume of timber that was necessarily cut by virtue of their abuse and the estimated wealth acquired by respondents through grave abuse of trust and public office, it is only reasonable that petitioner be granted the amount of ₱1,000,000.00 as exemplary damages. The imposition of exemplary damages is a means by which the State, through its judicial arm, can send the clear and unequivocal signal best expressed in the pithy but immutable phrase, "never again." It is severely unfortunate that the Republic did not exert its best efforts in the full recovery of the actual damages caused by the illegal grant of the Twin Peaks TLA. To the best of our ability, through the appropriate vehicle of exemplary damages, the Court will try to fill in that deficiency. For if there is a lesson that should be learned from the national trauma of the rule of Marcos, it is that kleptocracy cannot pay. As those dark years fade into the backburner of the collective memory, and a new generation emerges without proximate knowledge of how bad it was then, it is useful that the Court serves a reminder here and now. WHEREFORE, the petition is GRANTED. The Resolution of the Sandiganbayan dated 23 May 2001 is REVERSED. Respondents Juan C. Tuvera, Victor P. Tuvera and Twin Peaks Development Corporation are hereby ordered to jointly and severally pay to the Republic of the Philippines One Million (₱1,000,000.00) Pesos, as

and for temperate damages, and One Million (₱1,000,000.00) Pesos, as and for exemplary damages, plus costs of suit. SO ORDERED. DANTE O. TINGA Associate Justice

THIRD DIVISION G.R. No. 178008

October 9, 2013

SAN FERNANDO REGALA TRADING, INC., Petitioner, vs. CARGILL PHILIPPINES, INC., Respondent. x-----------------------x G.R. No. 178042 CARGILL PHILIPPINES, INC., Petitioner, vs. SAN FERNANDO REGALA TRADING, INC., Respondent. DECISION ABAD, J.: These cases pertain to the reciprocal obligations of the parties in a contract of sale to deliver the goods, receive them, and pay the price as stipulated and the consequent effects of breach of such obligations. The facts and the Case Cargill Philippines, Inc. (Cargill) and San Fernando Regala Trading, Inc. (San Fernando) were cane molasses traders that did business with each other for sometime. The present controversy arose when San Fernando claimed that Cargill reneged on its contractual obligations to deliver certain quantities of molasses. Cargill denied this, insisting that San Fernando actually refused to accept the delivery of the goods. This enmity resulted in Cargill’s filing on March 2, 1998 a complaint for sum of money and damages against San Fernando before the Regional Trial Court (RTC) of Makati City in Civil Case 98-493. Cargill alleged that on July 15, 1996 it entered into Contract 50261 covering its sale to San Fernando of 4,000 metric tons (mt) of molasses at the price of ₱3,950.00 per mt. Cargill agreed to deliver the molasses within the months of "April to May 1997" at the wharf of Union Ajinomoto, Inc.(Ajinomoto) along the Pasig River, Metro Manila. This was a risk-taking forward sale in that its execution was to take place about 10 months later when the parties did not yet know what the trading price of molasses would be. Shortly after, Cargill also entered into Contract 50472 covering another sale to San Fernando of 5,000 mt of molasses at ₱2,750.00 per mt. The delivery period under this contract was within "October-November-December 1996," sooner than the delivery period under Contract 5026. Apparently, San Fernando had a deal with Ajinomoto for the supply of these molasses. Cargill further alleged that it offered to deliver the 4,000 mt of molasses as required by Contract 5026 within the months of April and May1997 but San Fernando accepted only 951 mt, refusing to accept the rest. On April 2, 1997 Dolman V, the barge carrying Cargill’s 1,174 mt of molasses, arrived at the Ajinomoto wharf but San Fernando refused to accept the same. The barge stayed at the wharf for 71 days, waiting for San Fernando’s unloading order. Because of the delay, the owner of the barges lapped Cargill with demurrage amounting to ₱920,000.00. Cargill also suffered ₱3,480,000.00 in damages by way of unrealized profits because it had to sell the cargo to another buyer at a loss.

Cargill further alleged that it earlier sought to deliver the molasses covered by Contract 5047 at the Ajinomoto wharf in the months of October, November, and December 1996, but San Fernando failed or refused for unjustified reasons to accept the delivery. Consequently, Cargill suffered damages by way of unrealized profits of ₱360,000.00 from this contract. Apart from asking the RTC for awards of unrealized profits, Cargill also asked for a return of the demurrage it paid, attorney’s fees, and cost of litigation. To substantiate its claim, Cargill presented David Mozo of Dolman Transport Corp. who testified that Cargill chartered its Dolman V barge to carry molasses from Pasacao to the Ajinomoto wharf in Pasig. But the barge was unable to unload its cargo and was placed on stand-by for around 70days, awaiting orders to unload its molasses. Consequently, Dolman Transport charged Cargill for demurrage. Cargill also presented Arthur Gunlao, an employee, who testified that his company was unable to unload the molasses covered by Contracts 5026and 5047 because San Fernando’s President, Quirino Kehyeng, advised them to wait because Ajinomoto’s storage tanks were still full and could not receive the molasses. Because of the prolonged delay in the unloading of the goods, Cargill had no choice but to sell the molasses to another buyer. At the prodding of Kehyeng, Cargill wrote San Fernando on May 14, 1997 proposing changes in the delivery periods of Contract 5026 and 5047,respectively from "April to May 1997" to "May to June 1997" and from" October-November-December 1996" to "MayJune-July 1997."3 The amendments were needed to keep the contracts valid and maintain the good business relations between the two companies. In its Answer with counterclaim, San Fernando pointed out that, except for the 951 mt of molasses that Cargill delivered in March 1997, the latter made no further deliveries for Contract 5026. Indeed, Cargill sent San Fernando a letter dated May 14, 1997 proposing a change in the delivery period for that contract from "April to May 1997" to "May to June 1997."But San Fernando rejected the change since it had a contract to sell the molasses to Ajinomoto for ₱5,300.00 per mt.4 San Fernando expected to earn a ₱5,400,000.00 profit out of Contract 5026. As for Contract 5047, San Fernando maintained that Cargill delivered no amount of molasses in connection with the same. Cargill admitted its inability to deliver the goods when it wrote San Fernando a letter on May 14,1997, proposing to move the delivery period from "October-November-December 1996" to "May-JuneJuly 1997." But San Fernando also rejected the change since it had already contracted to sell the subject molasses to Ajinomoto for ₱4,950.00 per mt.5 San Fernando expected a profit of ₱11,000,000.00 under this contract. To prove its claims, San Fernando presented its President, Kehyeng, who testified that apart from the March 1997 delivery of 951 mt of molasses under Contract 5026, Cargill made no further deliveries. He called Dennis Seah of Cargill several times demanding delivery but nothing came of it. Subsequently, Cargill wrote San Fernando, proposing the extension of the delivery periods provided in their two contracts. But Kehyeng rejected the proposal and refused to sign his conformity at the appropriate spaces on Cargill’s letter. Kehyeng denied that San Fernando had refused to receive deliveries because it bought molasses from Cargill at prices higher than what Ajinomoto was willing to pay. Kehyeng insisted that San Fernando had always received Cargill’s deliveries even on occasions when the prices fluctuated resulting in losses to his company. He claimed that, as a result of Cargill’s violation of Contracts 5026 and 5047, San Fernando was entitled to rescission and awards for unrealized profits of ₱4,115,329.20 and ₱11,000,000.00, respectively, moral and exemplary damages each

in the amount of ₱500,000.00, attorney’s fees of ₱1,000,000.00, and litigation expenses. On December 23, 2003 the RTC dismissed Cargill’s complaint for lack of merit and granted San Fernando’s counterclaims. The RTC did not give credence to Cargill’s claim that San Fernando refused to accept the deliveries of molasses because Ajinomoto’s tanks were full. San Fernando sufficiently proved that Ajinomoto continued receiving molasses from other suppliers during the entire time that Cargill’s chartered barge was put on stand-by at the wharf, supposedly waiting for San Fernando’s unloading orders. It was incomprehensible, said the RTC, for San Fernando to refuse Cargill’s deliveries, considering that Ajinomoto had already agreed to buy the molasses from it. Cargill’s failure to make the required deliveries resulted in San Fernando’s default on its obligations to Ajinomoto, prompting the latter to cancel its orders. As a result, San Fernando lost expected profits of ₱4,115,329.20 representing the remaining undelivered molasses under Contract 5026 and ₱11,000,000.00 under Contract 5047.The RTC awarded San Fernando its claims for unrealized profits,₱500,000.00 in moral damages, another ₱500,000.00 in exemplary damages, attorney’s fees of ₱1,000,000.00, and ₱500,000.00 as cost of litigation. The Court of Appeals (CA) ruled on appeal, however, that Cargill was not entirely in breach of Contract 5026. Cargill made an advance delivery of 951 mt in March 1997. It then actually sent a barge containing 1,174 mt of molasses on April 2, 1997 for delivery at Ajinomoto’s wharf but San Fernando refused to have the cargo unloaded. Consequently, the trial court erred in awarding San Fernando unrealized profits of ₱4,115,329.20 under Contract 5026. The CA also ruled that since San Fernando unjustifiably refused to accept the April 2, 1997 delivery, it should reimburse Cargill the₱892,732.50 demurrage that it paid the owner of the barge.

2. Whether or not the CA erred in ruling that Cargill was guilty of breach of obligation to deliver the 5,000 mt of molasses covered by Contract5047 during the period October, November, and December 1996; and 3. Whether or not the CA erred in deleting the award of moral and exemplary damages, attorney’s fees, and cost of suit in favor of San Fernando. The Rulings of the Court One. The CA held that Cargill committed no breach of Contract 5026 because it had earlier delivered 951 mt of molasses in March 19976 and sent a barge containing 1,174 mt of the goods on April 2, 1997 at the Ajinomoto’s wharf. It was actually San Fernando that refused to accept this delivery on April 2. But Contract 5026 required Cargill to deliver 4,000 mt of molasses during the period "April to May 1997." Thus, anything less than that quantity constitutes breach of the agreement. And since Cargill only delivered a total of 2,125 mt of molasses during the agreed period, Cargill should be regarded as having violated Contract 5026 with respect to the undelivered balance of 1,875 mt of molasses. Notably, Chargill’s chartered barge showed up with 1,174 mt of molasses at the Ajinomoto wharf on April 27, 1997. The barge stayed therefor around 70 days, awaiting orders to unload the cargo. David Mozo of Dolman Transport Corp. attested to this. Dolman V was put on stand-by at the wharf while other barges queued to unload their molasses into Ajinomoto’s storage tanks.7 In failing to accept delivery of Cargill’s 1,174molasses, San Fernando should reimburse Cargill the ₱892,732.50 demurrage that it paid.

The CA, however, found Cargill guilty of breach of Contract 5047which called for delivery of the molasses in "OctoberNovember-December 1996." Since San Fernando did not accede to Cargill’s request to move the delivery period back, Cargill violated the contract when it did not deliver the goods during the previously agreed period. Cargill was liable to San Fernando for unrealized profits of ₱11,000,000.00 that it would have made if it had sold them to Ajinomoto. The CA deleted the award of moral and exemplary damages in favor of San Fernando for its failure to sufficiently establish Cargill’s bad faith in complying with its obligations. The CA also deleted the awards of attorney’s fees and cost of litigation.

Ultimately, what are the liabilities of the parties under Contract 5026?Had San Fernando accepted the delivery of 1,174 mt of molasses on April27, 1997 Cargill would have been entitled to payment of their price of ₱4,637,300.00 at ₱3,950.00 per mt. But, since Cargill succeeded in selling that 1,174 mt of molasses to Schuurmans & Van Ginneken for ₱1,861.92 per mt. 8 Cargill’s unrealized profit then amounted to only ₱2,451,405.59. Thus:

The CA thus ordered: 1) San Fernando to reimburse Cargill the demurrage of ₱892,732.50 that it paid, subject to 6% interest per annum computed from the date of the filing of the complaint until the finality of the decision; and 2) Cargill to pay San Fernando ₱11,000,000.00 in unrealized profits under Contract 5047. The CA deleted the award of moral and exemplary damages, attorney’s fees, and cost of litigation. This prompted both Cargill and San Fernando to appeal to this Court.

Since Cargill failed, however, to deliver the balance of 1,875 mt of molasses under Contract 5026, it must pay San Fernando the ₱2,531,250.00, representing the latter’s unrealized profits had it been able to sell that 1,875mt of molasses to Ajinomoto. Thus:

Issues for Resolution These cases present the following issues: 1. Whether or not the CA erred in ruling that Cargill was not guilty of breach of obligation to deliver the 4,000 mt of molasses covered by Contract 5026 during the period April and May 1997;

₱3,950 per mt – ₱1,861.92 per mt = ₱2,088.09 x 1,174 mt = ₱2,451,405.59

₱5,300 per mt selling price at Ajinomoto – ₱3,950acquisition cost = ₱1,350 profit per mt ₱1,350.00 profit margin per mt x 1,875 mt = ₱2,531,250.00 Cargill, of course, claimed that it had sufficient inventories of molasses to complete its deliveries, implying that had San Fernando accepted its initial delivery of 1,174 mt it would have continued delivering the rest. But it is not enough for a seller to show that he is capable of delivering the goods on the date he agreed to make the delivery. He has to bring his goods and deliver them at the place their agreement called for, i.e., at the Ajinomoto Pasig River wharf. A stipulation designating the place and manner of delivery is controlling on the contracting parties.9 The thing sold can only be

understood as delivered to the buyer when it is placed in the buyer’s control and possession at the agreed place of delivery.10 Cargill presented no evidence that it attempted to make other deliveries to complete the balance of Contract 5026. Two. The CA correctly ruled that Cargill was in breach of Contract 5047 which provided for delivery of the molasses within the months of October, November, and December 1996. Thus, when Cargill wrote San Fernando on May 14, 1997 proposing to move the delivery dates of this contract to May, June, and July, 1997, it was already in default. San Fernando’s refusal to signify its conformity at the proper space on Cargill’s letter-proposal regarding Contract 5047 signifies that it was not amenable to the change. San Fernando had good reason for this: it had already agreed to supply Ajinomoto the molasses covered by Contract 5047 at the rate of ₱4,950.00 per mt.11 Consequently, Cargill’s failure to deliver the 5,000 mt of molasses on "October-November-December 1996" makes it liable to San Fernando for ₱11,000,000.00 in unrealized profits. Thus: ₱4,950 per mt selling price to Ajinomoto – ₱2,750acquisition cost = ₱2,200 profit per mt

WHEREFORE, the Court PARTIALLY GRANTS the petitions and MODIFIES the Court of Appeals Decision on January 19, 2007 in CA-G.R.CV 81993 as follows: 1. San Fernando Regala Trading, Inc. is ORDERED to pay Cargill Philippines, Inc. (a) ₱892,732.50 representing the demurrage that the latter incurred and (b) ₱2,451,405.59 representing its unrealized profit on the rejected delivery of 1,174 mt of molasses, both under Contract 5026, for a total of ₱3,344,138.09, with interest at 6% per annum computed from the date of the filing of the complaint until the same is fully paid; and 2. Cargill Philippines, Inc. is ORDERED to pay San Fernando Regala Trading, Inc. the latter’s unrealized profits of ₱2,531,250.00 for the breach of Contract 5026 and ₱11,000,000.00 for the breach of Contract 5047, for a total of P 13,531,250.00, with interest at 6% per annum computed from the date of the tiling of the answer with counterclaim until the same is fully paid. The Court of Appeals' deletion of the awards of moral and exemplary damages, attorney's fees, and costs of litigation stands. SO ORDERED.

₱2,200 per mt x 5,000 mt = ₱11,000,000.00 In failing to make any delivery under Contract 5047, Cargill should pay San Fernando the profit that it lost because of such breach. Cargill of course points out that San Fernando never wrote a demand letter respecting its failure to make any delivery under that contract. But demand was not necessary since Cargill’s obligation under the contract specified the date and place of delivery, i.e., "October-November-December 1996," at the Ajinomoto wharf in Pasig.12 Three. The Court concurs with the CA’s deletion of the RTC’s award of moral damages to San Fernando.1âwphi1 As a rule, moral damages are not awarded to a corporation unless it enjoyed good reputation that the offender debased and besmirched by his actuations.13 San Fernando failed to prove by sufficient evidence that it fell within this exception. Besides, moral damages are, as a rule, also not recoverable in culpa contractual except when bad faith had been proved.14 San Fernando failed to show that Cargill was motivated by bad faith or ill will when it failed to deliver the molasses as agreed. The Court rules that the CA correctly deleted the award of exemplary damages to San Fernando. In breach of contract, the court may only award exemplary damages if the defendant acted in a wanton, fraudulent, reckless, oppressive, or malevolent manner.15 The evidence has not sufficiently established that Cargill’s failure to deliver the molasses on time was attended by such wickedness. Lastly, the CA correctly deleted the award of attorney’s fees and cost of litigation to San Fernando. Attorney’s fees and expenses of litigation under Article 2208 of the Civil Code are proper only when exemplary damages are awarded. Here, the Court has ruled that San Fernando is not entitled to an award of exemplary damages. Both parties actually committed shortcomings in complying with their contractual obligations. San Fernando failed in Contract 5026 to accept Cargill’s delivery of 1,174 mt of molasses; Cargill only complied partially with its undertakings under Contract 5026and altogether breached its obligations under Contract 5047. For these, they must bear their own expenses of litigation.

ROBERTO A. ABAD Associate Justice

EN BANC G.R. No. L-22415

error of its employees. It also interposed a counterclaim for attorney's fees of P25,000.

March 30, 1966

FERNANDO LOPEZ, ET AL., plaintiffs-appellants, vs. PAN AMERICAN WORLD AIRWAYS, defendant-appellant. Ross, Selph and Carrascoso for the defendant-appellant. Vicente J. Francisco for the plaintiffs-appellants. BENGZON, J.P., J.: Plaintiffs and defendant appeal from a decision of the Court of First Instance of Rizal. Since the value in controversy exceeds P200,000 the appeals were taken directly to this Court upon all questions involved (Sec. 17, par. 3[5], Judiciary Act). Stated briefly the facts not in dispute are as follows: Reservations for first class accommodations in Flight No. 2 of Pan American World Airways — hereinafter otherwise called PAN-AM — from Tokyo to San Francisco on May 24, 1960 were made with PAN-AM on March 29, 1960, by "Your Travel Guide" agency, specifically, by Delfin Faustino, for then Senator Fernando Lopez, his wife Maria J. Lopez, his son-in-law Alfredo Montelibano, Jr., and his daughter, Mrs. Alfredo Montelibano, Jr., (Milagros Lopez Montelibano). PAN-AM's San Francisco head office confirmed the reservations on March 31, 1960. First class tickets for the abovementioned flight were subsequently issued by PAN-AM on May 21 and 23, 1960, in favor of Senator Lopez and his party. The total fare of P9,444 for all of them was fully paid before the tickets were issued. As scheduled Senator Lopez and party left Manila by Northwest Airlines on May 24, 1960, arriving in Tokyo at 5:30 P.M. of that day. As soon as they arrived Senator Lopez requested Minister Busuego of the Philippine Embassy to contact PAN-AM's Tokyo office regarding their first class accommodations for that evening's flight. For the given reason that the first class seats therein were all booked up, however, PAN-AM's Tokyo office informed Minister Busuego that PAN-AM could not accommodate Senator Lopez and party in that trip as first class passengers. Senator Lopez thereupon gave their first class tickets to Minister Busuego for him to show the same to PAN-AM's Tokyo office, but the latter firmly reiterated that there was no accommodation for them in the first class, stating that they could not go in that flight unless they took the tourist class therein. Due to pressing engagements awaiting Senator Lopez and his wife, in the United States — he had to attend a business conference in San Francisco the next day and she had to undergo a medical check-up in Mayo Clinic, Rochester, Minnesota, on May 28, 1960 and needed three days rest before that in San Francisco — Senator Lopez and party were constrained to take PAN-AM's flight from Tokyo to San Francisco as tourist passengers. Senator Lopez however made it clear, as indicated in his letter to PANAM's Tokyo office on that date (Exh. A), that they did so "under protest" and without prejudice to further action against the airline.1äwphï1.ñët Suit for damages was thereafter filed by Senator Lopez and party against PAN-AM on June 2, 1960 in the Court of First Instance of Rizal. Alleging breach of contracts in bad faith by defendant, plaintiffs asked for P500,000 actual and moral damages, P100,000 exemplary damages, P25,000 attorney's fees plus costs. PAN-AM filed its answer on June 22, 1960, asserting that its failure to provide first class accommodations to plaintiffs was due to honest

Subsequently, further pleadings were filed, thus: plaintiffs' answer to the counterclaim, on July 25, 1960; plaintiffs' reply attached to motion for its admittance, on December 2, 1961; defendant's supplemental answer, on March 8, 1962; plaintiffs' reply to supplemental answer, on March 10, 1962; and defendant's amended supplemental answer, on July 10, 1962. After trial — which took twenty-two (22) days ranging from November 25, 1960 to January 5, 1963 — the Court of First Instance rendered its decision on November 13, 1963, the dispositive portion stating: In view of the foregoing considerations, judgment is hereby rendered in favor of the plaintiffs and against the defendant, which is accordingly ordered to pay the plaintiffs the following: (a) P100,000.00 as moral damages; (b) P20,000.00 as exemplary damages; (c) P25,000.00 as attorney's fees, and the costs of this action. So ordered. Plaintiffs, however, on November 21, 1963, moved for reconsideration of said judgment, asking that moral damages be increased to P400,000 and that six per cent (6%) interest per annum on the amount of the award be granted. And defendant opposed the same. Acting thereon the trial court issued an order on December 14, 1963, reconsidering the dispositive part of its decision to read as follows: In view of the foregoing considerations, judgment is hereby rendered in favor of the plaintiffs and against the defendant, which is accordingly ordered to pay the plaintiffs the following: (a) P150,000.00 as moral damages; (b) P25,000.00 as exemplary damages; with legal interest on both from the date of the filing of the complaint until paid; and (c) P25,000.00 as attorney's fees; and the costs of this action. So ordered. It is from said judgment, as thus reconsidered, that both parties have appealed. Defendant, as stated, has from the start admitted that it breached its contracts with plaintiffs to provide them with first class accommodations in its Tokyo-San Francisco flight of May 24, 1960. In its appeal, however, it takes issue with the finding of the court a quo that it acted in bad faith in the branch of said contracts. Plaintiffs, on the other hand, raise questions on the amount of damages awarded in their favor, seeking that the same be increased to a total of P650,000. Anent the issue of bad faith the records show the respective contentions of the parties as follows. According to plaintiffs, defendant acted in bad faith because it deliberately refused to comply with its contract to provide first class accommodations to plaintiffs, out of racial prejudice against Orientals. And in support of its contention that what was done to plaintiffs is an oftrepeated practice of defendant, evidence was adduced relating to two previous instances of alleged racial discrimination by defendant against Filipinos in favor of "white" passengers. Said previous occasions are what allegedly happened to (1) Benito Jalbuena and (2) Cenon S. Cervantes and his wife.

And from plaintiffs' evidence this is what allegedly happened; Jalbuena bought a first class ticket from PAN-AM on April 13, 1960; he confirmed it on April 15, 1960 as to the Tokyo-Hongkong flight of April 20, 1960; PAN-AM similarly confirmed it on April 20, 1960. At the airport he and another Oriental — Mr. Tung — were asked to step aside while other passengers - including "white" passengers — boarded PAN-AM's plane. Then PAN-AM officials told them that one of them had to stay behind. Since Mr. Tung was going all the way to London, Jalbuena was chosen to be left behind. PAN-AM's officials could only explain by saying there was "some mistake". Jalbuena thereafter wrote PAN-AM to protest the incident (Exh. B). As to Cenon S. Cervantes it would appear that in Flight No. 6 of PAN-AM on September 29, 1958 from Bangkok to Hongkong, he and his wife had to take tourist class, although they had first class tickets, which they had previously confirmed, because their seats in first class were given to "passengers from London." Against the foregoing, however, defendant's evidence would seek to establish its theory of honest mistake, thus: The first class reservations of Senator Lopez and party were made on March 29, 1960 together with those of four members of the Rufino family, for a total of eight (8) seats, as shown in their joint reservation card (Exh. 1). Subsequently on March 30, 1960, two other Rufinos secured reservations and were given a separate reservation card (Exh. 2). A new reservation card consisting of two pages (Exhs. 3 and 4) was then made for the original of eight passengers, namely, Senator Lopez and party and four members of the Rufino family, the first page (Exh. 3) referring to 2 Lopezes, 2 Montelibanos and 1 Rufino and the second page (Exh. 4) referring to 3 Rufinos. On April 18, 1960 "Your Travel Guide" agency cancelled the reservations of the Rufinos. A telex message was thereupon sent on that date to PAN-AM's head office at San Francisco by Mariano Herranz, PAN-AM's reservations employee at its office in Escolta, Manila. (Annex A-Acker's to Exh. 6.) In said message, however, Herranz mistakenly cancelled all the seats that had been reserved, that is, including those of Senator Lopez and party. The next day — April 1960 — Herranz discovered his mistake, upon seeing the reservation card newly prepared by his coemployee Pedro Asensi for Sen. Lopez and party to the exclusion of the Rufinos (Exh. 5). It was then that Herranz sent another telex wire to the San Francisco head office, stating his error and asking for the reinstatement of the four (4) first class seats reserved for Senator Lopez and party (Annex A-Velasco's to Exh. 6). San Francisco head office replied on April 22, 1960 that Senator Lopez and party are waitlisted and that said office is unable to reinstate them (Annex B-Velasco's to Exh. 6). Since the flight involved was still more than a month away and confident that reinstatement would be made, Herranz forgot the matter and told no one about it except his co-employee, either Armando Davila or Pedro Asensi or both of them (Tsn., 123-124, 127, Nov. 17, 1961). Subsequently, on April 27, 1960, Armando Davila, PAN-AM's reservations employee working in the same Escolta office as Herranz, phoned PAN-AM's ticket sellers at its other office in the Manila Hotel, and confirmed the reservations of Senator Lopez and party. PAN-AM's reservations supervisor Alberto Jose, discovered Herranz's mistake after "Your Travel Guide" phone on May 18, 1960 to state that Senator Lopez and party were going to depart as scheduled. Accordingly, Jose sent a telex wire on that date to PAN-AM's head office at San Francisco to report the error and asked said office to continue holding the reservations of Senator

Lopez and party (Annex B-Acker's to Exh. 6). Said message was reiterated by Jose in his telex wire of May 19, 1960 (Annex CAcker's to Exh. 6). San Francisco head office replied on May 19, 1960 that it regrets being unable to confirm Senator Lopez and party for the reason that the flight was solidly booked (Exh. 7). Jose sent a third telex wire on May 20, 1960 addressed to PANAM's offices at San Francisco, New York (Idlewild Airport), Tokyo and Hongkong, asking all-out assistance towards restoring the cancelled spaces and for report of cancellations at their end (Annex D-Acker's to Exh. 6). San Francisco head office reiterated on May 20, 1960 that it could not reinstate the spaces and referred Jose to the Tokyo and Hongkong offices (Exh. 8). Also on May 20, the Tokyo office of PAN-AM wired Jose stating it will do everything possible (Exh. 9). Expecting that some cancellations of bookings would be made before the flight time, Jose decided to withhold from Senator Lopez and party, or their agent, the information that their reservations had been cancelled. Armando Davila having previously confirmed Senator Lopez and party's first class reservations to PAN-AM's ticket sellers at its Manila Hotel office, the latter sold and issued in their favor the corresponding first class tickets on the 21st and 23rd of May, 1960. From the foregoing evidence of defendant it is in effect admitted that defendant — through its agents — first cancelled plaintiffs, reservations by mistake and thereafter deliberately and intentionally withheld from plaintiffs or their travel agent the fact of said cancellation, letting them go on believing that their first class reservations stood valid and confirmed. In so misleading plaintiffs into purchasing first class tickets in the conviction that they had confirmed reservations for the same, when in fact they had none, defendant wilfully and knowingly placed itself into the position of having to breach its a foresaid contracts with plaintiffs should there be no last-minute cancellation by other passengers before flight time, as it turned out in this case. Such actuation of defendant may indeed have been prompted by nothing more than the promotion of its self-interest in holding on to Senator Lopez and party as passengers in its flight and foreclosing on their chances to seek the services of other airlines that may have been able to afford them first class accommodations. All the time, in legal contemplation such conduct already amounts to action in bad faith. For bad faith means a breach of a known duty through some motive of interest or ill-will (Spiegel vs. Beacon Participations, 8 NE 2d 895, 907). As stated in Kamm v. Flink, 113 N.J.L. 582, 175 A. 62, 99 A.L.R. 1, 7: "Self-enrichment or fraternal interest, and not personal ill-will, may well have been the motive; but it is malice nevertheless." As of May 18, 1960 defendant's reservations supervisor, Alberto Jose knew that plaintiffs' reservations had been cancelled. As of May 20 he knew that the San Francisco head office stated with finality that it could not reinstate plaintiffs' cancelled reservations. And yet said reservations supervisor made the "decision" — to use his own, word — to withhold the information from the plaintiffs. Said Alberto Jose in his testimony: Q Why did you not notify them? A Well, you see, sir, in my fifteen (15) years of service with the air lines business my experience is that even if the flights are solidly booked months in advance, usually the flight departs with plenty of empty seats both on the first class and tourist class. This is due to late cancellation of passengers, or because passengers do not show up in the airport, and it was our hope others come in from another flight and, therefore, are delayed and, therefore, missed their connections. This experience of mine, coupled with that wire from Tokyo that they

would do everything possible prompted me to withhold the information, but unfortunately, instead of the first class seat that I was hoping for and which I anticipated only the tourists class was open on which Senator and Mrs. Lopez, Mr. and Mrs. Montelibano were accommodated. Well, I fully realize now the gravity of my decision in not advising Senator and Mrs. Lopez, Mr. and Mrs. Montelibano nor their agents about the erroneous cancellation and for which I would like them to know that I am very sorry. xxx

xxx

xxx

Q So it was not your duty to notify Sen. Lopez and parties that their reservations had been cancelled since May 18, 1960? A As I said before it was my duty. It was my duty but as I said again with respect to that duty I have the power to make a decision or use my discretion and judgment whether I should go ahead and tell the passenger about the cancellation. (Tsn., pp. 17-19, 28-29, March 15, 1962.) At the time plaintiffs bought their tickets, defendant, therefore, in breach of its known duty, made plaintiffs believe that their reservation had not been cancelled. An additional indication of this is the fact that upon the face of the two tickets of record, namely, the ticket issued to Alfredo Montelibano, Jr. on May 21, 1960 (Exh. 22) and that issued to Mrs. Alfredo Montelibano, Jr., on May 23, 1960 (Exh. 23), the reservation status is stated as "OK". Such willful-non-disclosure of the cancellation or pretense that the reservations for plaintiffs stood — and not simply the erroneous cancellation itself — is the factor to which is attributable the breach of the resulting contracts. And, as above-stated, in this respect defendant clearly acted in bad faith. As if to further emphasize its bad faith on the matter, defendant subsequently promoted the employee who cancelled plaintiffs' reservations and told them nothing about it. The record shows that said employee — Mariano Herranz — was not subjected to investigation and suspension by defendant but instead was given a reward in the form of an increase of salary in June of the following year (Tsn., 86-88, Nov. 20, 1961). At any rate, granting all the mistakes advanced by the defendant, there would at least be negligence so gross and reckless as to amount to malice or bad faith (Fores vs. Miranda, L-12163, March 4, 1959; Necesito v. Paras, L-10605-06, June 30, 1958). Firstly, notwithstanding the entries in the reservation cards (Exhs. 1 & 3) that the reservations cancelled are those of the Rufinos only, Herranz made the mistake, after reading said entries, of sending a wire cancelling all the reservations, including those of Senator Lopez and party (Tsn., pp. 108-109, Nov. 17, 1961). Secondly, after sending a wire to San Francisco head office on April 19, 1960 stating his error and asking for reinstatement, Herranz simply forgot about the matter. Notwithstanding the reply of San Francisco head Office on April 22, 1960 that it cannot reinstate Senator Lopez and party (Annex B-Velasco's to Exh. 6), it was assumed and taken for granted that reinstatement would be made. Thirdly, Armando Davila confirmed plaintiff's reservations in a phone call on April 27, 1960 to defendant's ticket sellers, when at the time it appeared in plaintiffs' reservation card (Exh. 5) that they were only waitlisted passengers. Fourthly, defendant's ticket sellers issued plaintiffs' tickets on May 21 and 23, 1960, without first checking their reservations just before issuing said tickets. And, finally, no one among defendant's agents notified Senator Lopez and party that their reservations had been cancelled, a precaution that could have averted their entering with defendant into contracts that the latter had already placed beyond its power to perform.

Accordingly, there being a clear admission in defendant's evidence of facts amounting to a bad faith on its part in regard to the breach of its contracts with plaintiffs, it becomes unnecessary to further discuss the evidence adduced by plaintiffs to establish defendant's bad faith. For what is admitted in the course of the trial does not need to be proved (Sec. 2, Rule 129, Rules of Court). Addressing ourselves now to the question of damages, it is well to state at the outset those rules and principles. First, moral damages are recoverable in breach of contracts where the defendant acted fraudulently or in bad faith (Art. 2220, New Civil Code). Second, in addition to moral damages, exemplary or corrective damages may be imposed by way of example or correction for the public good, in breach of contract where the defendant acted in a wanton, fraudulent, reckless, oppressive or malevolent manner (Articles 2229, 2232, New Civil Code). And, third, a written contract for an attorney's services shall control the amount to be paid therefor unless found by the court to be unconscionable or unreasonable (Sec. 24, Rule 138, Rules of Court). First, then, as to moral damages. As a proximate result of defendant's breach in bad faith of its contracts with plaintiffs, the latter suffered social humiliation, wounded feelings, serious anxiety and mental anguish. For plaintiffs were travelling with first class tickets issued by defendant and yet they were given only the tourist class. At stop-overs, they were expected to be among the first-class passengers by those awaiting to welcome them, only to be found among the tourist passengers. It may not be humiliating to travel as tourist passengers; it is humiliating to be compelled to travel as such, contrary to what is rightfully to be expected from the contractual undertaking. Senator Lopez was then Senate President Pro Tempore. International carriers like defendant know the prestige of such an office. For the Senate is not only the Upper Chamber of the Philippine Congress, but the nation's treaty-ratifying body. It may also be mentioned that in his aforesaid office Senator Lopez was in a position to preside in impeachment cases should the Senate sit as Impeachment Tribunal. And he was former Vice-President of the Philippines. Senator Lopez was going to the United States to attend a private business conference of the Binalbagan-Isabela Sugar Company; but his aforesaid rank and position were by no means left behind, and in fact he had a second engagement awaiting him in the United States: a banquet tendered by Filipino friends in his honor as Senate President Pro Tempore (Tsn., pp. 14-15, Nov. 25, 1960). For the moral damages sustained by him, therefore, an award of P100,000.00 is appropriate. Mrs. Maria J. Lopez, as wife of Senator Lopez, shared his prestige and therefore his humiliation. In addition she suffered physical discomfort during the 13-hour trip,(5 hours from Tokyo to Honolulu and 8 hours from Honolulu to San Francisco). Although Senator Lopez stated that "she was quite well" (Tsn., p. 22, Nov. 25, 1960) — he obviously meant relatively well, since the rest of his statement is that two months before, she was attackedby severe flu and lost 10 pounds of weight and that she was advised by Dr. Sison to go to the United States as soon as possible for medical check-up and relaxation, (Ibid). In fact, Senator Lopez stated, as shown a few pages after in the transcript of his testimony, that Mrs. Lopez was sick when she left the Philippines: A. Well, my wife really felt very bad during the entire trip from Tokyo to San Francisco. In the first place, she was sick when we left the Philippines, and then with that discomfort which she [experienced] or suffered during that evening, it was her worst experience. I myself, who was not sick, could not sleep because of the discomfort. (Tsn., pp. 27-28, Nov. 25, 1960). It is not hard to see that in her condition then a physical discomfort sustained for thirteen hours may well be considered a physical

suffering. And even without regard to the noise and trepidation inside the plane — which defendant contends, upon the strengh of expert testimony, to be practically the same in first class and tourist class — the fact that the seating spaces in the tourist class are quite narrower than in first class, there beingsix seats to a row in the former as against four to a row in the latter, and that in tourist class there is very little space for reclining in view of the closer distance between rows (Tsn., p. 24, Nov. 25, 1960), will suffice to show that the aforesaid passenger indeed experienced physical suffering during the trip. Added to this, of course, was the painfull thought that she was deprived by defendant — after having paid for and expected the same — of the most suitable, place for her, the first class, where evidently the best of everything would have been given her, the best seat, service, food and treatment. Such difference in comfort between first class and tourist class is too obvious to be recounted, is in fact the reason for the former's existence, and is recognized by the airline in charging a higher fare for it and by the passengers in paying said higher rate Accordingly, considering the totality of her suffering and humiliation, an award to Mrs. Maria J. Lopez of P50,000.00 for moral damages will be reasonable. Mr. and Mrs. Alfredo Montelibano, Jr., were travelling as immediate members of the family of Senator Lopez. They formed part of the Senator's party as shown also by the reservation cards of PAN-AM. As such they likewise shared his prestige and humiliation. Although defendant contends that a few weeks before the flight they had asked their reservations to be charged from first class to tourist class — which did not materialize due to alleged full booking in the tourist class — the same does not mean they suffered no shared in having to take tourist class during the flight. For by that time they had already been made to pay for first class seats and therefore to expect first class accommodations. As stated, it is one thing to take the tourist class by free choice; a far different thing to be compelled to take it notwithstanding having paid for first class seats. Plaintiffs-appellants now ask P37,500.00 each for the two but we note that in their motion for reconsideration filed in the court a quo, they were satisfied with P25,000.00 each for said persons. (Record on Appeal, p. 102). For their social humiliation, therefore, the award to them of P25,000.00 each is reasonable. The rationale behind exemplary or corrective damages is, as the name implies, to provide an example or correction for public good. Defendant having breached its contracts in bad faith, the court, as stated earlier, may award exemplary damages in addition to moral damages (Articles 2229, 2232, New Civil Code). In view of its nature, it should be imposed in such an amount as to sufficiently and effectively deter similar breach of contracts in the future by defendant or other airlines. In this light, we find it just to award P75,000.00 as exemplary or corrective damages. Now, as to attorney's fees, the record shows a written contract of services executed on June 1, 1960 (Exh. F) whereunder plaintiffsappellants engaged the services of their counsel — Atty. Vicente J. Francisco — and agreedto pay the sum of P25,000.00 as attorney's fees upon the termination of the case in the Court of First Instance, and an additional sum of P25,000.00 in the event the case is appealed to the Supreme Court. As said earlier, a written contract for attorney's services shall control the amount to be paid therefor unless found by the court to be unconscionable or unreasonable. A consideration of the subject matter of the present controversy, of the professional standing of the attorney for plaintiffs-appellants, and of the extent of the service rendered by him, shows that said amount provided for in the written agreement is reasonable. Said lawyer — whose prominence in the legal profession is well known — studied the case, prepared and filed the complaint, conferred with witnesses, analyzed documentary evidence, personally appeared at the trial of the case in twenty-two days, during a period of three years, prepared four sets of cross-

interrogatories for deposition taking, prepared several memoranda and the motion for reconsideration, filed a joint record on appeal with defendant, filed a brief for plaintiffs as appellants consisting of 45 printed pages and a brief for plaintiffs as appellees consisting of 265 printed pages. And we are further convinced of its reasonableness because defendant's counsel likewise valued at P50,000.00 the proper compensation for his services rendered to defendant in the trial court and on appeal. In concluding, let it be stressed that the amount of damages awarded in this appeal has been determined by adequately considering the official, political, social, and financial standing of the offended parties on one hand, and the business and financial position of the offender on the other (Domingding v. Ng, 55 O.G. 10). And further considering the present rate of exchange and the terms at which the amount of damages awarded would approximately be in U.S. dollars, this Court is all the more of the view that said award is proper and reasonable. Wherefore, the judgment appealed from is hereby modified so as to award in favor of plaintiffs and against defendant, the following: (1) P200,000.00 as moral damages, divided among plaintiffs, thus: P100,000.00 for Senate President Pro Tempore Fernando Lopez; P50,000.00 for his wife Maria J. Lopez; P25,000.00 for his son-inlaw Alfredo Montelibano, Jr.; and P25,000.00 for his daughter Mrs. Alfredo Montelibano, Jr.; (2) P75,000.00 as exemplary or corrective damages; (3) interest at the legal rate of 6% per annum on the moral and exemplary damages aforestated, from December 14, 1963, the date of the amended decision of the court a quo, until said damages are fully paid; (4) P50,000.00 as attorney's fees; and (5) the costs. Counterclaim dismissed.So ordered. Bengzon, C.J., Bautista Angelo, Concepcion, Reyes, J.B.L., Barrera, Regala, Makalintal, Zaldivar and Sanchez, JJ., concur. Dizon, J., is on leave.