Torts 5th Set Cases

VILLO, Viktoria Mary Antonette P. Torts 5th set

VIII. DAMAGES A. CONCEPT/KINDS OF DAMAGES Article 2197. Damages may be: (1) Actual or compensatory; (2) Moral; (3) Nominal; (4) Temperate or moderate; (5) Liquidated; or (6) Exemplary or corrective. 1. [G.R. No. 117103. January 21, 1999.] Spouses RENATO S. ONG and FRANCIA N. ONG, petitioners, vs. COURT OF APPEALS, INLAND TRAILWAYS, INC. and PHILTRANCO SERVICE ENTERPRISE, INC., respondents. FACTS: On February 9, 1987, petitioners boarded as paying passengers Bus No. 101 with Plate No. EVB-508 ("Inland bus," for convenience), which was owned and operated by Inland Trailways under a Lease Agreement with Philtranco. It was driven by Calvin Coronel. Around 3:50 in the morning of said date, when the Inland bus slowed down to avoid a stalled cargo truck in Tiaong, Quezon, it was bumped from the rear by another bus, owned and operated by Philtranco and driven by Apolinar Miralles. Francia sustained wounds and fractures in both of her legs and her right arm, while Renato suffered injuries on his left chest, right knee, right arm and left eye. They were brought to the San Pablo City District Hospital for treatment and were confined there from February 9 to 18, 1987. On December 22, 1988, petitioners filed an action for damages against Philtranco and Inland. In their Complaint, they alleged that they suffered injuries, preventing Francia from operating a sari-sari store at Las Piñas, Metro Manila, where she derived a daily income of P200; and Renato from continuing his work as an overseas contract worker (pipe welder) with a monthly salary of $690. Stating that they incurred P10,000 as medical and miscellaneous expenses, they also claimed moral damages of P500,000 each, exemplary and corrective damages of P500,000 each, and compensatory damages of P500,000 each plus 35 percent thereof as attorney's fees. Philtranco defense Philtranco answered that the Inland bus with Plate No. EVB-508 (which had transported petitioners) was registered and owned by Inland; that its driver, Calvin Coronel, was an employee of Inland; that Philtranco was merely leasing its support facilities, including the use of its bus tickets, to Inland; and that under their Agreement, Inland would be solely liable for all claims and liabilities arising from the operation of said bus. Inland defense Inland answered that, according to the Police Report, it was Apolinar Miralles, the driver of the Philtranco bus, who was at fault, as shown by his flight from the situs of the accident, bus was registered and owned by Philtranco; and that the driver of the Inland bus exercised extraordinary diligence as testified to by its passengers. Inland and Philtranco filed cross-claims against each other. This is a petition for review on certiorari of the decision dated May 20, 1993 and the resolution dated June 8, 1994 both promulgated by the Court of Appeals modifying the decision of the trial court in an action for damages filed by petitioners spouses Ong against Philtranco Service Enterprise, Inc. and Inland Trailways, Inc. DECISION OF LOWER COURTS: Trial Court Court of Appeals judgment is hereby rendered in favor of the [petitioners] absolving Inland Trailways, Inc., from any liability whatsoever, and against . . . Philtranco Service Enterprise, Inc., ordering the latter to pay the [petitioners] — 1) P10,000.00 as actual damages for medical and miscellaneous expenses; 2) P50,000.00 as compensatory damages for the [diminution] of the use of the right arm of [petitioner]-wife; 3) P48,000.00 as unrealized profit or income; 4) P50,000.00 as moral damages; 5) 25% of the foregoing as contingent attorney's fees; and 6) the costs."

WHEREFORE, the appealed decision is hereby MODIFIED by ordering INLAND TRAILWAYS, INC. to pay [petitioners] 1) P3,977.00 for actual damages, 2) P30,000.00 as moral damages and 3) ten (10) percent as contingent attorney's fees and to 4) pay the costs of the suit Philtranco's liability for damages could not be predicated upon the Police Report which had not been formally offered in evidence. The report was merely annexed to the answer of Inland, and petitioner did not adopt or offer it as evidence. Consequently, it had no probative value and, thus, Philtranco should be absolved from liability

Reason for reduction The liability of Inland for medical and miscellaneous expenses was reduced, as the evidence on record showed that petitioners spent only P3,977. Deemed self-serving was Francia's testimony that the use of her right arm was diminished and that she lost income. Thus, the award for unearned income was disallowed and the amount of moral damages was reduced to P30,000. ISSUE: 1. Whether the police report, which was not formally offered in evidence, could be used to establish a claim against Philtranco based on culpa aquiliana, and 2. whether the reduction in the amount of damages awarded was proper. RULING: 1. No. The Supreme Court found the petition devoid of merit. Section 34, Rule 132 of the Rules of Court provides that

the court shall consider no evidence which has not been formally offered. In the case at bar, respondent Inland's failure to identify the police investigation report formally offered it before the trial court was clearly fatal because said document was the basis for finding Philtranco liable. Such absence made Philtranco exonerated from liability. Hence, the appellate court cannot be faulted in reversing the trial court's decision.


2. Anent the issue of damages, the Court has ruled that the award of actual damages lacks basis, as this was not amply proven in the trial court. Likewise, the Court found the deletion by the appellate court of the award for unrealized profit proper because petitioners failed to substantiate their claims. However, with respect to moral damages, the Court raised the amount of P50,000.00 for Francia and P30,000.00 for Renato Ong as it was sufficiently shown that petitioners suffered mental anguish and anxiety. In view thereof, the Court affirmed the decision of the appellate court with the modification that Renato and Francia Ong are separately awarded moral damages in the amount of P30,000.00 and P50,000.00, respectively. It maintained the award of attorney's fees of 10% which shall be based on the total modified award.

Actual Damages 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. Except as provided by law or by stipulation, a party is entitled to adequate compensation only for such pecuniary loss as he has duly proven. To be recoverable, actual damages must be pleaded and proven in Court. In no instance may the trial judge award more than those so pleaded and proven. Damages cannot be presumed. The award thereof must be based on the evidence presented, not on the personal knowledge of the court; and certainly not on flimsy, remote, speculative and nonsubstantial proof. Article 2199 of the Civil Code expressly mandates that "[e]xcept 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." The lack of basis for such award was patent in the trial court Decision: "The records will show that from the documentary evidence, [petitioners] have jointly spent the sum of P3,977.00. [Respondent] Philtranco has not presented any evidence that it has advanced any amount for medicine, hospitalization and doctor's fees, but on the contrary, [petitioners] have testified that they paid for their expenses except at the initial stage wherein a representative of [respondent] Philtranco went to the hospital to get the receipts of medicines only and paid. Considering the claim of the [petitioners], as alleged in their complaint they spent P10,000.00 representing medical and miscellaneous expenses[;] considering that they have gone for consultation to at least two (2) different doctors, this Court may take judicial notice of the fact that miscellaneous expenses [are] bound to be incurred to cover transportation and food, and therefore, finds the amount of P10,000.00 as actual damages to be reasonable." Damages, after all, are not intended to enrich the complainant at the expense of the defendant. Moral Damages and Diminution of Use of Francia's Arm A person is entitled to the physical integrity of his or her body, and if that integrity is violated, damages are due and assessable. However, physical injury, like loss or diminution of use of an arm or a limb, is not a pecuniary loss. Indeed, it is not susceptible of exact monetary estimation. Thus, the usual practice is to award moral damages for physical injuries sustained. In Mayo v. People, the Court held that the permanent scar on the forehead and the loss of the use of the right eye entitled the victim to moral damages. The victim, in said case, was devastated by mental anguish, wounded feelings and shock, which she experienced as a result of her false eye and the scar on her forehead. Furthermore, the loss of vision in her right eye hampered her professionally for the rest of her life. In the case at bar, it was sufficiently shown during the trial that Francia's right arm could not function in a normal manner and that, as a result, she suffered mental anguish and anxiety. Thus, an increase in the amount of moral damages awarded, from P30,000 to P50,000, appears to be reasonable and justified. Renato also suffered mental anxiety and anguish from the accident. Thus, he should be separately awarded P30,000 as moral damages. The Court awards the cost of medical procedures to restore the injured person to his or her former condition. However, this award necessitates expert testimony on the cost of possible restorative medical procedure. Unrealized Income Although actual damages include indemnification for profits which the injured party failed to obtain (lucro cesante or lucrum cesans), the rule requires that said person produce the "best evidence of which his case is susceptible." The bare and unsubstantiated assertion of Francia that she usually earned P200 a day from her market stall is not the best evidence to prove her claim of unrealized income for the eight-month period that her arm was in plaster cast. Her testimony that it was their lessor who filed their income tax returns and obtained business licenses for them does not justify her failure to present more credible evidence of her income. Attorney’s fees Counsel for petitioner deeply laments the reduction in the award of attorney's fees. He alleges that he had to use his own money for transportation, stenographic transcriptions and other court expenses, and for such reason, avers that the award of 25 percent attorney's fees made by the trial court was proper. Under the Civil Code, an award of attorney's fees is an indemnity for damages ordered by a court to be paid by the losing party to the prevailing party, based on any of the cases authorized by law. It is payable not to the lawyer but to the client, unless the two have agreed that the award shall pertain to the lawyer as additional compensation or as part thereof. The Court has established a set of standards in fixing the amount of attorney's fees: " (1) [T]he amount and character of the services rendered; (2) labor, time and trouble involved; (3) the nature and importance of the litigation or business in which the services were rendered; (4) the responsibility imposed; (5) the amount of money or the value of the property affected by the controversy or involved in the employment; (6) the skill and experience called for in the performance of the services; (7) the professional character and social standing of the attorney; (8) the results secured, it being a recognized rule that an attorney may properly charge a much larger fee when it is contingent than when it is not." Counsel's performance, however, does not justify the award of 25 percent attorney's fees. It is well-settled that such award is addressed to sound judicial discretion and subject to judicial control. In fact, the appellate court had been generous to petitioners' counsel, considering that the nature of the case was not exceptionally difficult, and he was not required to exert Herculean efforts. All told, his handling of the case was sorely inadequate, as shown by his failure to follow elementary norms of civil procedure and evidence.


B. GENERAL PRINCIPLES OF RECOVERY 2. [G.R. No. 76093. March 21, 1989.]AIR FRANCE, petitioner, vs. THE COURT OF APPEALS AND NARCISO O. MORALES, respondents. SUFFICIENT PROOF OF EXISTENCE OF FACTUAL BASIS OF DAMAGES AND ITS CAUSAL CONNECTION TO DEFENDANT'S ACTIONS, ESSENTIAL BEFORE GRANT OF AWARD THEREOF. — With a claim for a large amount of damages, the Court finds it unusual for respondent, a lawyer, to easily forget vital information to substantiate his plea. It is also essential before an award of damages that the claimant must satisfactorily prove during the trial the existence of the factual basis of the damages and its causal connection to defendant's acts. REFUSAL TO ACCEDE TO A PASSENGER'S WISHES, IN THE ABSENCE OF BAD FAITH, NOT A STRONG CAUSE FOR AN AWARD OF DAMAGES. —

Unlike in the KLM case where the breach of contract was aggravated by the discourteous and arbitrary conduct of an official of the Aer Lingus which the KLM had engaged to transport the respondents, here, Air France employees in Hamburg informed private respondent that his tickets were partly stamped "non-endorsable" and "valid on Air France only." Mere refusal to accede to the passenger's wishes does not necessarily translate into damages in the absence of bad faith. To our mind, respondent has failed to show wanton, malevolent or reckless misconduct imputable to petitioner in its refusal to reroute.

FACTS: Sometime in October 1977, private respondent Narciso Morales thru his representative, Ms. Janet Tolentino, purchased an airline ticket from Aspac Management Corporation, petitioner's General Sales Agent in Makati, for P9,426.00 plus P413.90 travel tax, of which P413.90 were later refunded to Ms. Tolentino. The itinerary covered by the ticket included several cities, with certain segments thereof restricted by markings of "non endorsable" and "valid on AF (meaning Air France) only", While in New York, U.S.A. on 3 November 1977, private respondent Morales obtained three (3) medical certificates (Exhibits G, G-1, G-2) attesting to an ear infection which necessitated medical treatment. From New York, he flew to Paris, Stockholm and then Copenhagen where he made representations with petitioner's office to shorten his trip by deleting some of the cities in the itinerary. Respondent Morales was informed that, as a matter of procedure, confirmation of petitioner's office in Manila (as ticketing office) must be secured before shortening of the route (already paid for). As there was no immediate response to the telex, respondent proceeded to Hamburg where he was informed of AF Manila's negative reply. After reiterating his need to flying home on a shorter route due to his ear infection, and presentation of supporting medical certificates, again, the airline office made the necessary request to Manila. Still, the request was denied. Despite respondent's protest and offer to pay any fare difference, petitioner did not relent in its position. Respondent, therefore, had to buy an entirely new set of tickets, paying 1,914 German marks for the homeward route. Upon arrival in Manila, respondent sent a letter-complaint to Air France dated 20 December 1977 thru Aspac Management Corporation. Respondent Morales was advised to surrender the unused flight coupons for a refund of its value, but he kept the same and, instead, filed a complaint for breach of contract of carriage and damages.

DECISION OF LOWER COURTS: 1. CFI - found Air France in evident bad faith for violation of the contract of carriage, aggravated by the threatening attitude of its employees in Hamburg Court of First Instance Court of Appeals (1) the sum of 1,914 German Marks, in its equivalent in

Philippine Peso, as actual damages, (2) the sum of P1,000,000.00 as moral damages, and (3) the further sum of P800,000.00 as exemplary

damages, with legal interest thereon from date of the filing of the complaint until fully paid,

(4) plus the sum equal to 20% thereof as attorney's fees, with costs against the plaintiff."

(1) 1,914 German Marks in its equivalent in Philippine peso at prevailing rate of exchange as actual damages, with legal interest thereon from the date of the filing of the complaint until fully paid;

(2) P500,000.00, as moral damages;

(3) P150,000.00, as exemplary damages; and

(4) 5% of the amount of actual, moral and exemplary damages which are recoverable, as attorney's fees." 5

ISSUE: was there really a breach of contract of carriage on the part of the petitioner, as to justify the award to private respondent of actual, moral and exemplary damages? RULING: No.


Private respondent wanted a rerouting to Hamburg, Geneva, Rome, Hongkong and Manila 9 which shortened the original itinerary on the ticket issued by AF Manila through ASPAC, its general sales agent. Considering the original restrictions on the ticket, it was not unreasonable for Air France to deny the request.

Besides, a recurring ear infection was pleaded as reason necessitating urgent return to Manila. Assuming arguendo a worsening pain or discomfort, private respondent appears to have still proceeded to four (4) other cities covering a period of at least six (6) days and leaving open his date of departure from Hongkong to Manila. 10 And, even if he claimed to have undergone medical examination upon arrival in Manila, no medical certificate was presented. He failed to even remember his date of arrival in Manila.

Omissions by ordinary passengers may be condoned but more is expected of members of the bar who cannot feign ignorance of such limitations and restrictions. An award of moral and exemplary damages cannot be sustained under the circumstances, but petitioner has to refund the unused coupons in the Air France ticket to the private respondent.

3. [G.R. No. 55613. December 10, 1990.] ERNESTO DICHOSO, petitioner, vs. The HONORABLE COURT OF APPEALS and TEODOLFO RAMOS, respondents.

Actual or compensatory damages cannot be presumed, but must be duly proved, and proved with reasonable degree of certainty. A court cannot rely on speculation, conjecture or guesswork as to the fact and amount of damages, but must depend upon competent proof that they have suffered and on evidence of the actual amount thereof FACTS: The spouses Gaspar Prila and Maria Beldad, owned a 16.8716 hectare parcel of land at Cagmanaba, Ocampo, Camarines Sur, surveyed in the name of Gaspar Prila under Plan Psu-61453 (Exhibit "2"). Upon the death of Maria Beldad in 1925, the eastern half thereof was given to Vivencia Prila, their only daughter, and when Gaspar Prila died in 1943, the 1/2 portion pertaining to him was divided into three: one third to Vivencia Prila, one third to Asuncion Pacamara and the other one-third to Custodia Parcia, as reflected in the Extra-judicial Settlement of Estate executed on November 22, 1945. Under the terms of said settlement, 4/6 of the entire land or 11.2477 hectares was adjudicated to Vivencia Prila, 1/6 or 2.8119 hectares to Asuncion Pacamara and another 1/6 or 2.8119 hectares to Custodio Parcia. In 1955, Vivencia Prila sold her 4/6 portion with an area of 11.2477 hectares to the petitioner Ernesto Dichoso who had been, ever since, in actual physical possession thereof, exercising various acts of ownership thereon.

On the other hand, in a Deed of Sale dated June 17, 1948, Asuncion Pacamara sold to the wife of private respondent Teodolfo Ramos her 1/6 share, but the deed mentions the area of the lot sold as 4.1250 hectares; obviously in excess of Pacamara's 1/6 share in the property of 2.8119 hectares. Herein respondent Teodolfo Ramos took possession of the contested riceland upon its purchase. It yielded an average harvest of 20 sacks of palay per planting which was twice a year. One-third of the harvest went to Ramos and the remaining two-thirds was the tenant's share Sometime in 1962, Teodolfo Ramos, in the company of a constabulary soldier and two policemen from Ocampo, allegedly seized the produce of the land consisting of 50 cavans of palay from the tenant of herein petitioner.

In retaliation, petitioner Dichoso also brought along with him in 1963, a constabulary soldier and appropriated 6 cavans of the produce. On December 12, 1967, respondent Ramos filed a complaint for quieting of title over the 4.1250 hectare riceland before the then Court of First Instance of Camarines Sur DECISION OF LOWER COURTS: CFI & CA – WHEREFORE, judgment is hereby rendered declaring the plaintiff owner of the land described in paragraph 2 of the complaint; and ordering the defendants, Ernesto Dichoso and Marcelino Enciso, to restitute the possession of the land to the plaintiff and to deliver to the plaintiff 40 cavans of palay for every year from 1964 until the land in question is returned to the latter or their equivalent value of P15.00 per cavan of palay. ISSUES: 1. WHETHER THE COURT OF APPEALS ERRED IN FINDING THAT PRIVATE RESPONDENT TEODOLFO RAMOS IS THE OWNER OF THE 4.1250 HECTARE LAND IN QUESTION.

2. WHETHER THE HONORABLE COURT OF APPEALS ERRED IN REQUIRING THE PETITIONER TO DELIVER FORTY (40) CAVANS ANNUALLY TO PRIVATE RESPONDENT DESPITE ITS FINDING THAT ONLY ONE-THIRD (1/3) OF THE PRODUCE "WENT TO" THE PLAINTIFF (RAMOS), TWO-THIRDS (2/3) BEING FOR HIS TENANT.

RULING: 1. Yes. This Court has held that in cases of conflict between areas and boundaries, it is the latter which should prevail. What really defines a piece of ground is not the area, calculated with more or less certainty, mentioned in its description, but the boundaries therein laid down, as enclosing the land and indicating its limits. area of the land awarded to herein respondent Ramos is hereby LIMITED to 2.8119 hectares in accordance with the boundaries indicated in the deed of sale in favor of his wife 2. It is undisputed that the land in question yields an average of twenty (20) sacks of palay per planting and that it is planted to palay twice a year. Ramos' share of the harvest is only one-third (1/3). In view of his dispossession from 1964 and the fact that his tenant has vacated the land that same year (TSN, Hearing of February 10, 1971, pp. 2-3), he cannot allege that his tenant is entitled to his two-thirds (2/3) share.


4. [G.R. No. 106664. March 8, 1995.] PHILIPPINE AIR LINES, petitioner, vs. FLORANTE A. MIANO, respondent.

MORAL DAMAGES; "BAD FAITH" MUST BE SUBSTANTIATED BY EVIDENCE; APPLICATION IN CASE OF CONTRACT OF CARRIAGE. —

Bad faith means a breach of a known duty through some motive of interest or ill will (Lopez, et al. vs. Pan American World Airways, No. L-22415, March 30, 1996, 16 SCRA 431). Bad faith must be substantiated by evidence. In LBC vs. Court of Appeals, (G.R. No. 108670, September 21, 1994), this Court ruled: "Bad faith under the law cannot be presumed; it must be established by clear and convincing evidence. Again, the unbroken jurisprudence is that in breach of contract cases where the defendant is not shown to have acted fraudulently or in bad faith, liability for damages is limited to the natural and probable consequences of the breach of the obligation which the parties had foreseen or could reasonably have foreseen. The damages, however, will not include liability for moral damages."

ID.; ID.; WHEN AVAILABLE; RULE; NOT APPLICABLE IN CASE AT BAR. —

In breach of contract of carriage by air, moral damages are awarded only if the defendant acted fraudulently or in bad faith (Civil Code, Article 220). The established facts evince that petitioner's late delivery of the baggage for eleven (11) days was not motivated by ill will or bad faith. In fact, it immediately coordinated with its Central Baggage Services to trace private respondent's suitcase and succeeded in finding it. At the hearing, petitioner's Manager for Administration of Airport Services Department Miguel Ebio testified that their records disclosed that Manila, the originating station, did not receive any tracer telex. A tracer telex, an airline lingo, is an action of any station that the airlines operate from whom a passenger may complain or have not received his baggage upon his arrival. It was reasonable to presume that the handling of the baggage was normal and regular. Upon inquiry from their Frankfurt Station, it was however discovered that the interline tag of private respondent's baggage was accidentally taken off. According to Mr. Ebio, it was customary for destination stations to hold a tagless baggage until properly identified. The tracer telex, which contained information on the baggage, is matched with the tagless luggage for identification. Without the tracer telex, the color and the type of baggage are used as basis for the matching. Thus, the delay.

ID.; ID.; EXEMPLARY DAMAGES; PREREQUISITES IN AWARDING THEREOF. — The prerequisite for the award of exemplary damages in cases of contract or quasi-contract (Civil Code, Article 2232) is that the defendant acted in wanton, fraudulent, reckless, oppressive, or malevolent manner. (Albenson Enterprises Corp. vs. Court of Appeals, G.R. No. 88694, January 11, 1993, 217 SCRA 16) The undisputed facts do not so warrant the characterization of the action of petitioner.

ID.; ID.; ATTORNEY'S FEES; CANNOT BE RECOVERED AS PART OF DAMAGES; REASON THEREFOR. — The award of attorney's fees must also be disallowed for lack of legal leg to stand on. The fact that private respondent was compelled to litigate and incur expenses to protect and enforce his claim did not justify the award of attorney's fees. The general rule is that attorney's fees cannot be recovered as part of damages because of the policy that no premium should be placed on the right to litigate (Firestone Tire & Rubber Company of the Philippines vs. Ines Chaves, No. L-17106, October 19, 1966, 18 SCRA 356). Petitioner is willing to pay the just claim of $200.00 as a result of the delay in the transportation of the luggage in accord with the Warsaw Convention. Needless to say, the award of attorney's fees must be deleted where the award of moral and exemplary damages are eliminated.

FACTS: On August 31, 1988, private respondent took petitioner's flight PR 722, Mabuhay Class, bound for Frankfurt, Germany. He had an immediate onward connecting flight via Lufthansa flight LH 1452 to Vienna, Austria. At the Ninoy Aquino International Airport, he checked-in one brown suitcase weighing twenty (20) kilograms 2 but did not declare a higher valuation. He claimed that his suitcase contained money, documents, one Nikkon camera with zoom lens, suits, sweaters, shirts, pants, shoes, and other accessories.

Upon private respondent's arrival at Vienna via Lufthansa flight LH 1452, his checked-in baggage was missing. He reported the matter to the Lufthansa authorities. After three (3) hours of waiting in vain, he proceeded to Piestany, Czechoslovakia. Eleven (11) days after or on September 11, 1988, his suitcase was delivered to him in his hotel in Piestany, Czechoslovakia. He claimed that because of the delay in the delivery of his suitcase, he was forced to borrow money to buy some clothes, to pay $200.00 for the transportation of his baggage from Vienna to Piestany, and lost his Nikkon camera.

In November 1988, private respondent wrote to petitioner a letter demanding: (1) P10,000.00 cost of allegedly lost Nikkon camera; (2) $200.00 for alleged cost of transporting luggage from Vienna to Piestany; and (3) P100,000.00 as damages.

Private respondent felt his demand letter was left unheeded. He instituted an action for Damages docketed as Civil Case No. 89-3496 before the Regional Trial Court of Makati.

DECISION OF LOWER COURT (Trial Court only):

Observed that petitioner's actuation was not attended by bad faith. Nevertheless, it awarded private respondent damages and attorney's fees, the dispositive portion of which reads:

"WHEREFORE, judgment is hereby rendered in favor of the plaintiff (private respondent) and against the defendant (petitioner), thereby ordering the latter to pay the following:


(a) U.S. $200.00 as cost of transporting the suitcase from Vienna to Czechoslovakia; (b) P40,000.00 as moral damages; (c) P20,000.00 as exemplary damages; and (d) P15,000.00 as attorney's fees.

ISSUE: Whether the award of damages is proper RULING: No. In breach of contract of carriage by air, moral damages are awarded only if the defendant acted fraudulently or in bad faith.

Petitioner is willing to pay the just claim of $200.00 as a result of the delay in the transportation of the luggage in accord with the Warsaw Convention. Needless to say, the award of attorney's fees must be deleted where the award of moral and exemplary damages are eliminated.

IN VIEW WHEREOF, the assailed Decision of July 29, 1992 is MODIFIED deleting the award of moral and exemplary damages and attorney's fees. No costs.

(See discussion above for reason of deletion of award of damages)

5. [G.R. No. 118342. January 5, 1998.] DEVELOPMENT BANK OF THE PHILIPPINES, petitioner, vs. COURT OF APPEALS and LYDIA CUBA, respondents.

CIVIL LAW; DAMAGES; ACTUAL OR COMPENSATORY DAMAGES; MUST BE DULY PROVED. — Actual or compensatory damages cannot be presumed, but must be proved with reasonable degree of certainty. A court cannot rely on speculations, conjectures, or guesswork as to the fact and amount of damages, but must depend upon competent proof that they have been suffered by the injured party and on the best obtainable evidence of the actual amount thereof. It must point out specific facts which could afford a basis for measuring whatever compensatory or actual damages' are borne.

ID.; ID.; ID.; ID.; CASE AT BAR. — In the present case, the trial court awarded in favor of CUBA P1,067,500 as actual damages consisting of P550,000 which represented the value of the alleged lost articles of CUBA and P517,500 which represented the value of the 230,000 pieces of bangus allegedly stocked in 1979 when DBP first ejected CUBA from the fishpond and the adjoining house. This award was affirmed by the Court of Appeals. We find that the alleged lost of personal belongings and equipment was not proved by clear evidence. Other than the testimony of CUBA and her caretaker, there was no proof as to the existence of those items before DBP took over the fishpond in question. With regard to the award of P517,000 representing the value of the alleged 230,000 pieces of bangus which died when DBP took possession of the fishpond in March 1979, the same was not called for. Such loss was not duly proved; besides, the claim therefor was delayed unreasonably. From 1979 until after the filing of her complaint in court in May 1985, CUBA did not bring to the attention of DBP the alleged loss. The award of actual damages should, therefore, be struck down for lack of sufficient basis.

ID.; ID.; MORAL DAMAGES; AWARD PROPER WHERE ASSAILED ACT IS CONTRARY TO LAW. — In view, however, of DBP's act of appropriating CUBA's leasehold rights which was contrary to law and public policy, as well as its false representation to the then Ministry of Agriculture and Natural Resources that it had "foreclosed the mortgage," an award of moral damages in the amount of P50,000 is in order conformably with Article 2219(10), in relation to Article 21, of the Civil Code.

ID.; ID.; EXEMPLARY OR CORRECTIVE DAMAGES; AWARDED IN CASE AT BAR. — Exemplary or corrective damages in the amount of P25,000 should likewise be awarded by way of example or correction for the public good.

ID.; ID.; ATTORNEY'S FEE; RECOVERABLE WHERE THERE IS AWARD OF EXEMPLARY DAMAGES. — There being an award of exemplary damages, attorney's fees are also recoverable.

FACTS:

Lydia P. Cuba (Cuba) obtained from the Development Bank of the Philippines (DBP) three separate loans, each of which was covered by a promissory note. As a security for said loans, Cuba executed two Deeds of Assignment of her Leasehold Rights over her 44-hectare fishpond. For failure of Cuba to pay her loans, DBP appropriated her Leasehold Rights over the fishpond without foreclosure proceedings. Subsequently, Cuba offered and agreed to repurchase her leasehold rights from DBP. For failure to pay the monthly amortizations stipulated in the deed of conditional sale executed by DBP in favor of Cuba, DBP took possession of the leasehold right and subsequently sold the same to Agripina Capera. Cuba filed a complaint with the Regional Trial Court seeking declaration of nullity DBP's appropriation of her leasehold rights without foreclosure proceedings which is contrary to Article 2088 of the Civil Code.

DECISION OF LOWER COURT: 1. The trial court - resolved the issue in favor of Cuba and declared invalid the deed of assignment for being a clear case of pactum commissorium. 2. On appeal, the Court of Appeals - reverse the decision of the trial court and declared that the deed of assignment was an express authority from Cuba for DBP to sell whatever right she had over the fishpond. The appellate court likewise held that the deed of assignment amounted to a novation of the promissory note.


Trial Court Court of Appeals ORDERING defendant Development Bank of the Philippines to pay to plaintiff the following amounts: a) The sum of ONE MILLION SIXTY-SEVEN THOUSAND FIVE HUNDRED PESOS (P1,067,500.00), as and for actual damages; b) The sum of ONE HUNDRED THOUSAND (P100,000.00) PESOS as moral damages; c) The sum of FIFTY THOUSAND (P50,000.00) PESOS, as and for exemplary damages; d) And the sum of ONE HUNDRED THOUSAND (P100,000.00) PESOS, as and for attorney's fees; 6. And ORDERING defendant Development Bank of the Philippines to reimburse and pay to defendant Agripina Caperal the sum of ONE MILLION FIVE HUNDRED THIRTY-TWO THOUSAND SIX HUNDRED TEN PESOS AND SEVENTY-FIVE CENTAVOS (P1,532,610.75) representing the amounts paid by defendant Agripina Caperal to defendant Development Bank of the Philippines under their Deed of Conditional Sale.

then ordered DBP to turn over possession of the property to Caperal as lawful holder of the leasehold rights and to pay CUBA the following amounts: (a) P1,067,500 as actual damages; P50,000 as moral damages; and P50,000 as attorney's fees.

ISSUE: 1. What is the nature of the deed of assignment? 2. Whether the award of damages was proper

RULING:

1. The Supreme Court ruled that the deed of assignment of leasehold rights was a mortgage contract. The assignment, being in its essence a mortgage, was but a security and not a satisfaction of indebtedness. DBP's act of appropriating Cuba's rights was violative of Article 2088 of the Civil Code, which forbids a creditor from appropriating, or disposing of, the thing given as security for the payment of debt. DBP cannot take refuge in the deed of assignment to justify its act of appropriating the leasehold rights since the said deed did not provide that the leasehold rights would automatically pass to DBP upon Cuba's failure to pay the loans on time. It merely provided for the appointment of DBP as attorney-in-fact with authority, among other things, to sell or otherwise dispose of the said real rights, in case of default by Cuba, and to apply the proceeds to the payment of the loan. The Supreme Court likewise found no merit in the contention that the assignment novated the promissory notes in that the obligation to pay a sum of money was substituted by the assignment of the rights over the fishpond. The said assignment merely complemented or supplemented the promissory notes. The obligation to pay a sum of money remained, and the assignment merely served as security for the loans covered by the promissory notes.

2. Actual damages No, as regards actual damages. the trial court awarded in favor of CUBA P1,067,500 as actual damages consisting of P550,000 which represented the value of the alleged lost articles of CUBA and P517,500 which represented the value of the 230,000 pieces of bangus allegedly stocked in 1979 when DBP first ejected CUBA from the fishpond and the adjoining house. This award was affirmed by the Court of Appeals.

We find that the alleged loss of personal belongings and equipment was not proved by clear evidence. Other than the testimony of CUBA and her caretaker, there was no proof as to the existence of those items before DBP took over the fishpond in question. As pointed out by DBP, there was no "inventory of the alleged lost items before the loss which is normal in a project which sometimes, if not most often, is left to the care of other persons." Neither was a single receipt or record of acquisition presented.

Moral damages In view however, of DBP's act of appropriating CUBA's leasehold rights which was contrary to law and public policy, as well as its false representation to the then Ministry of Agriculture and Natural Resources that it had "foreclosed the mortgage," an award of moral damages in the amount of P50,000 is in order conformably with Article 2219(10),

Exemplary Exemplary or corrective damages in the amount of P25,000 should likewise be awarded by way of example or correction for the public good. 20 There being an award of exemplary damages, attorney's fees are also recoverable.

DISPOSITIVE WHEREFORE, the 25 May 1994 Decision of the Court of Appeals in CA-G.R. CV No. 26535 is hereby REVERSED, except as to the award of P50,000 as moral damages, which is hereby sustained. The 31 January 1990 Decision of the Regional Trial Court of Pangasinan, Branch 54, in Civil Case No. A-1574 is MODIFIED setting aside the finding that condition no. 12 of the deed of assignment constituted pactum commissorium and the award of actual damages; and by reducing the amounts of moral damages from P100,000 to P50,000; the exemplary damages, from P50,000 to P25,000; and the attorney's fees, from P100,000 to P20,000. The Development Bank of the Philippines is hereby ordered to render an accounting of the income derived from the operation of the fishpond in question.

C. ACTUAL DAMAGES (ARTICLE 2199-2203; 2207, 2209)

CHAPTER 2

Actual or Compensatory Damages


Article 2199. Except as provided by law or by stipulation, one is entitled to an adequate compensation only for such pecuniary loss

suffered by him as he has duly proved. Such compensation is referred to as actual or compensatory damages.

Article 2200. Indemnification for damages shall comprehend not only the value of the loss suffered, but also that of the profits which the obligee failed to obtain. (1106)

Article 2201. In contracts and quasi-contracts, the damages for which the obligor who acted in good faith is liable shall be those that are the natural and probable consequences of the breach of the obligation, and which the parties have foreseen or could have reasonably foreseen at the time the obligation was constituted.

In case of fraud, bad faith, malice or wanton attitude, the obligor shall be responsible for all damages which may be reasonably attributed to the non-performance of the obligation. (1107a)

Article 2202. 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. It is not necessary that such damages have been foreseen or could have reasonably been foreseen by the defendant.

Article 2203. The party suffering loss or injury must exercise the diligence of a good father of a family to minimize the damages resulting from the act or omission in question.

Article 2207. If the plaintiff's property has been insured, and he has received indemnity from the insurance company for the injury or loss arising out of the wrong or breach of contract complained of, the insurance company shall be subrogated to the rights of the insured against the wrongdoer or the person who has violated the contract. If the amount paid by the insurance company does not fully cover the injury or loss, the aggrieved party shall be entitled to recover the deficiency from the person causing the loss or injury.

Article 2209. If the obligation consists in the payment of a sum of money, and the debtor incurs in delay, the indemnity for damages, there being no stipulation to the contrary, shall be the payment of the interest agreed upon, and in the absence of stipulation, the legal interest, which is six per cent per annum. (1108)

1. damnum emergens/lucrum cessans 2. Disability 3. Indemnity for death 4. interest 5. Attorney’s fees (Article 2208)

Article 2208. In the absence of stipulation, attorney's fees and expenses of litigation, other than judicial costs, cannot be recovered, except:

(1) When exemplary damages are awarded; (2) When the defendant's act or omission has compelled the plaintiff to litigate with third persons or to incur expenses to protect his interest; (3) In criminal cases of malicious prosecution against the plaintiff; (4) In case of a clearly unfounded civil action or proceeding against the plaintiff; (5) Where the defendant acted in gross and evident bad faith in refusing to satisfy the plaintiff's plainly valid, just and demandable claim; (6) In actions for legal support; (7) In actions for the recovery of wages of household helpers, laborers and skilled workers; (8) In actions for indemnity under workmen's compensation and employer's liability laws; (9) In a separate civil action to recover civil liability arising from a crime; (10) When at least double judicial costs are awarded; (11) In any other case where the court deems it just and equitable that attorney's fees and expenses of litigation should be recovered.

In all cases, the attorney's fees and expenses of litigation must be reasonable.

6. [G.R. No. 107518. October 8, 1998.]

PNOC SHIPPING AND TRANSPORT CORPORATION, petitioner, vs. HONORABLE COURT OF APPEALS and MARIA EFIGENIA FISHING CORPORATION, respondents.

FACTS:

in the early morning of September 21, 1977, the M/V Maria Efigenia XV , owned by private respondent Maria Efigenia Fishing Corporation, was navigating the waters near Fortune Island in Nasugbu, Batangas on its way to Navotas, Metro Manila when it collided with the vessel Petroparcel which at the time was owned by the Luzon Stevedoring Corporation (LSC).

After investigation was conducted by the Board of Marine Inquiry, Philippine Coast Guard Commandant Simeon N. Alejandro rendered a decision finding the Petroparcel at fault. Based on this finding by the Board and after unsuccessful demands on petitioner, 7 private respondent sued the LSC and the Petroparcel captain, Edgardo Doruelo, before the then Court of First Instance of Caloocan City. In particular, private respondent prayed for an award of P692,680.00, allegedly representing the value of the fishing nets, boat equipment and cargoes of M/V Maria Efgenia XV , with interest at the legal


rate plus 25% thereof as attorney's fees. Meanwhile, during the pendency of the case, petitioner PNOC Shipping and Transport Corporation sought to be substituted in place of LSC as it had already acquired ownership of the Petroparcel. 9

For its part, private respondent later sought the amendment of its complaint on the ground that the original complaint failed to plead for the recovery of the lost value of the hull of M/V Maria Efgenia XV . 10 Accordingly, in the amended complaint, private respondent averred that M/V Maria Efigenia XV had an actual value of P800,000.00 and that, after deducting the insurance payment of P200,000.00, the amount of P600,000.00 should likewise be claimed. The amended complaint also alleged that inflation resulting from the devaluation of the Philippine peso had affected the replacement value of the hull of the vessel, its equipment and its lost cargoes, such that there should be a reasonable determination thereof. Furthermore, on account of the sinking of the vessel, private respondent supposedly incurred unrealized profits and lost business opportunities that would thereafter be proven.

DECISION OF LOWER COURTS 1. Trial Court - "WHEREFORE, and in view of the foregoing, judgment is hereby rendered in favor of the plaintiff and against the defendant PNOC Shipping & Transport Corporation, to pay the plaintiff:

a. The sum of P6,438,048.00 representing the value of the fishing boat with interest from the date of the filing of the complaint at the rate of 6% per annum;

b. The sum of P50,000.00 as and for attorney's fees; and

c. The costs of suit.

ISSUE: Whether the award of damages was proper

RULING: No. A party is entitled to adequate compensation only for such pecuniary loss actually suffered and duly proved. Indeed, basic is the rule that to recover actual damages, the amount of loss must not only be capable of proof but must actually be proven with a reasonable degree of certainty, premised upon competent proof or best evidence obtainable of the actual amount thereof. The claimant is duty-bound to point out specific facts that afford a basis for measuring whatever compensatory damages are borne. A court cannot merely rely on speculations, conjectures, or guesswork as to the fact and amount of damages as well as hearsay or uncorroborated testimony whose truth is suspect.

For this reason, Del Rosario's claim that private respondent incurred losses in the total amount of P6,438,048 00 should be admitted with extreme caution considering that, because it was a bare assertion, it should be supported by independent evidence. Moreover, because he was the owner of private respondent corporation.

Actual damages

Under Article 2199 of the Civil Code, actual or compensatory damages are those awarded in satisfaction of, or in recompense for, loss or injury sustained. They proceed from a sense of natural justice and are designed to repair the wrong that has been done, to compensate for the injury inflicted and not to impose a penalty. In actions based on torts or quasi-delicts, actual damages include all the natural and probable consequences of the act or omission complained of. There are two kinds of actual or compensatory damages; one is the loss of what a person already possesses (daño emergente), and the other is the failure to receive as a benefit that which would have pertained to him (lucro cesante).

Nominal damages

Nominal damages are awarded in every obligation arising from law, contracts, quasi-contracts, acts or omissions punished by law, and quasi-delicts, or in every case where property right has been invaded. Under Article 2223 of the Civil Code, "(t)he adjudication of nominal damages shall preclude further contest upon the right involved and all accessory questions, as between the parties to the suit, or their respective heirs and assigns." Actually, nominal damages are damages in name only and not in fact. Where these are allowed, they are not treated as an equivalent of a wrong inflicted but simply in recognition of the existence of a technical injury. However, the amount to be awarded as nominal damages shall be equal or at least commensurate to the injury sustained by private respondent considering the concept and purpose of such damages. The amount of nominal damages to be awarded may also depend on certain special reasons extant in the case.

Applying now such principles to the instant case, we have on record the fact that petitioner's vessel Petroparcel was at fault as well as private respondent's complaint claiming the amount of P692,680.00 representing the fishing nets, boat equipment and cargoes that sunk with the M/V Maria Efigenia XV. In its amended complaint, private respondent alleged that the vessel had an actual value of P800,000.00 but it had been paid insurance in the amount of P200,000.00 and, therefore, it claimed only the amount of P600,000.00. Ordinarily, the receipt of insurance payments should diminish the total value of the vessel quoted by private respondent in his complaint considering that such payment is causally related to the loss for which it claimed compensation. This Court believes that such allegations in the original and amended complaints can be the basis for determination of a fair amount of nominal damages inasmuch as a complaint alleges the ultimate facts constituting the plaintiff's cause of action. Private respondent should be bound by its allegations on the amount of its claims.

DISPOSITIVE WHEREFORE, the challenged decision of the Court of Appeals dated October 14, 1992 in CA-G.R. CV No. 26680


affirming that of the Regional Trial Court of Caloocan City, Branch 121, is hereby MODIFIED insofar as it awarded actual damages to private respondent Maria Efigenia Fishing Corporation in the amount of P6,438,048.00 for lack of evidentiary bases therefor. Considering the fact, however, that (1) technically petitioner sustained injury but which, unfortunately, was not adequately and properly proved, and (2) this case has dragged on for almost two decades, we believe that an award of Two Million (P2,000.000.00) 59 in favor of private respondent as and for nominal damages is in order.

7. [G.R. No. 97412. July 12, 1994.]

EASTERN SHIPPING LINES, INC., petitioner, vs. HON. COURT OF APPEALS AND MERCANTILE INSURANCE COMPANY, INC., respondents.

FACTS: On December 4, 1981, two fiber drums of riboflavin were shipped from Yokohama, Japan for delivery vessel `SS EASTERN COMET' owned by defendant Eastern Shipping Lines under Bill of Lading No. YMA-8 (Exh. B). The shipment was insured under plaintiff's Marine Insurance Policy No. 81/01177 for P36,382,466.38.

"Upon arrival of the shipment in Manila on December 12, 1981, it was discharged unto the custody of defendant Metro Port Services, Inc. The latter excepted to one drum, said to be in bad order, which damage was unknown to plaintiff.

"On January 7, 1982 defendant Allied Brokerage Corporation received the shipment from defendant Metro Port Service, Inc., one drum opened and without seal (per 'Request for Bad Order Survey.' (Exh. D).

"On January 8 and 14, 1982, defendant Allied Brokerage Corporation made deliveries of the shipment to the consignees' warehouse. The latter excepted to one drum which contained spillages, while the rest of the contents was adulterated/fake. This is an action against defendants shipping company, arrastre operator and broker-forwarded for damages sustained by a shipment while in defendants' custody, filed by the insurer-subrogee who paid the consignee the value of such losses/damages

DECISION OF LOWER COURTS: Both trial court & CA - Ordering defendants to pay plaintiff, jointly and severally:

1. The amount of P19,032.95 with the present legal interest of 12% per annum from October 1, 1982, the date of filing of this complaints, until fully paid (the liability of defendant Eastern Shipping, Inc. shall not exceed US$500 per case or the CIF value of the loss, whichever is lesser, while the liability of defendant Metro Port Service, Inc. shall be to the extent of the actual invoice value of each package, crate box or container in no case to exceed P5,000.00 each, pursuant to Section 6.01 of the Management Contract); 2. P3,000.00 as attorney's fees, and 3. Costs.

ISSUES: (a) whether or not a claim for damage sustained on a shipment of goods can be a solidary, or joint and several, liability of the common carrier, the arrastre operator and the customs broker; (b) whether the payment of legal interest on an award of loss or damage is to be computed from the time the complaint is filed or from the date the decision appealed from is rendered; and (c) whether the applicable rate of interest, referred to above, is twelve percent (12%) or six percent (6%)

RULING:

a. The liability is solidary based on recent jurisprudence. b. The Court reiterated that the 6% interest per annum on the damages should be computed from the time the complaint

was filed until the amount is fully paid.

It is easily discernible in these cases that there has been a consistent holding that the Central Bank Circular imposing the 12% interest per annum applies only to loans or forbearance 16 of money, goods or credits, as well as to judgments involving such loan or forbearance of money, goods or credits, and that the 6% interest under the Civil Code governs when the transaction involves the payment of indemnities in the concept of damage arising from the breach of a delay in the performance of obligations in general. Observe, too, that in these cases, a common time frame in the computation of the 6% interest per annum has been applied, i.e., from the time the complaint is filed until the adjudged amount is fully paid.

c. Interest

Nonetheless, it may not be unwise, by way of clarification and reconciliation, to suggest the following rules of thumb for future guidance.

I. When an obligation, regardless of its source, i.e., law, contracts, quasi-contracts, delicts or quasi-delicts 18 is breached, the contravenor can be held liable for damages. The provisions under Title XVIII on "Damages" of the Civil Code govern in determining the measure of recoverable damages.


II. With regard particularly to an award of interest in the concept of actual and compensatory damages, the rate of interest, as well as the accrual thereof, is imposed, as follows:

1. When the obligation is breached, and it consists in the payment of a sum of money, i.e., a loan or forbearance of money, the interest due should be that which may have been stipulated in writing. Furthermore, the interest due shall itself earn legal interest from the time it is judicially demanded. In the absence of stipulation, the rate of interest shall be 12% per annum to be computed from default, i.e., from judicial or extrajudicial demand under and subject to the provisions of Article 1169 of the Civil Code.

2. When a obligation, not constituting a loan or forbearance of money, is breached, an interest on the amount of damages awarded may be imposed at the discretion of the court at the rate of 6% per annum. No interest, however, shall be adjudged on unliquidated claims or damages except when or until the demand can be established with reasonable certainty. Accordingly,

• Where the demand is established with reasonable certainty - The interest shall begin to run from the time the claim is made judicially or extrajudicially (Art. 1169, Civil Code) but

• When such certainty cannot be so reasonably established at the time the demand is made – The interest shall begin to run only from the date of the judgment of the court is made (at which time the quantification of damages may be deemed to have been reasonably ascertained). The actual base for the computation of legal interest shall, in any case, be on the amount of finally adjudged.

3. When the judgment of the court awarding a sum of money becomes final and executory, the rate of legal interest, whether the case falls under paragraph 1 or paragraph 2, above, shall be 12% per annum from such finality until its satisfaction, this interim period being deemed to be by then an equivalent to a forbearance of credit.

WHEREFORE, the petition is partly GRANTED. The appealed decision is AFFIRMED with the MODIFICATION that the legal interest to be paid is SIX PERCENT(6%) on the amount due computed from the decision, dated 03 February 1988, of the court a quo. A TWELVE PERCENT (12%) interest, in lieu of SIX PERCENT (6%), shall be imposed on such amount upon finality of this decision until the payment thereof.

New rate of interest

BSP 799 Effectivity - July 1, 2013

Section 1. The rate of interest for the loan or forbearance of any money, goods or credits and the rate allowed in judgments, in the absence of an express contract as to such rate of interest shall be 6% per annum.

8. [G.R. No. 151339. January 31, 2006.] EDITHA M. FRANCISCO, petitioner, vs. ROQUE CO and/or MARIANO CO, respondents.

FACTS: The legal controversy was first sparked after the death of Pastora Baetiong in 1975 by a complaint for accion publiciana filed against the heirs of Baetiong, including petitioner, by respondents Roque Co and Mariano Co, involving the above-mentioned parcel of land.

The said complaint was settled when the parties entered into a Compromise Agreement dated 10 November 1983, which was duly approved by the Branch 101. 2 In the Compromise Agreement, the parties acknowledged the heirs of Baetiong as the owner of the subject properties. Further, it was agreed upon that the heirs of Baetiong would lease to respondents a portion of the properties, totaling between 25,000 square meters to 30,000 square meters, covering land then already occupied by respondents. The lease agreement, which was contained in a Contract of Lease, was to subsist for 15 years commencing retroactively from 1 October 1983.

Five (5) years after the execution of the Compromise Agreement and Contract of Lease, the heirs of Baetiong filed a Motion with the Quezon City, RTC, Branch 101, wherein they alleged that respondents were actually occupying a larger portion of their land than the 30,000 square meter limit agreed upon in the Compromise Agreement. They prayed that a commission be constituted for the proper enforcement of the Compromise Agreement.

The parcel of land that lies at the center of this case is covered by Transfer Certificate of Title (TCT) No. 44546, issued by the Quezon City Register of Deeds registered in the name of Pastora Baetiong. 1 It has spawned at least three (3) different cases involving the parties, spanning the course of three (3) decades. Before this Court is the third of the cases, the resolution of which ultimately hearkens back to the pronouncements made in the first two (2) cases.

1st set of DECISIONS OF LOWER COURTS - 1. RTC – granted the motion 2. CA - concluded that the constitution of a commission for the purpose of delineating the bounds of the leased portion of the property would serve no purpose, considering that the Compromise Agreement itself mandated that the parties immediately conduct a delineation of the subject property for proper inclusion in the Contract of Lease

Four (4) years later, or on 24 July 1995, petitioner filed a complaint for forcible entry against respondents before the Metropolitan Trial Court (MeTC) of Quezon City, docketed as Civil Case No. 13158.


2nd set of DECISION OF LOWER COURTS - 1. MetC & RTC - ruled in favor of petitioner and ordered the respondents to pay petitioner the amount of P500.00 per day beginning 21 July 1995 as reasonable compensation until the vacation of the property. 2. CA -ruled that the complaint for forcible entry was indeed barred by res judicata. concluded that due to malicious prosecution, respondents were liable for moral damages of P30,000.00, exemplary damages of P20,000.00, and attorney's fees of P20,000.00.

ISSUES: 1. Whether the petition is barred by res judicata 2. Whether the award of damages was proper RULING:

1. Yes. 2. No.

The Court is not wont to uphold awards of moral damages based on haphazard conjectures on the awardee's resultant mental state. We cannot agree with the appellate court that bad faith on the part of petitioner had been preponderantly established in this case. Bad faith does not simply connote bad judgment or negligence, but it imports a dishonest purpose or some moral obliquity and conscious doing of a wrong. It should be established by clear and convincing evidence since the law always presumes good faith. In ascertaining the intention of the person accused of acting in bad faith, the courts must carefully examine the evidence as to the conduct and outward acts from which the inward motive may be determined. Certainly, it does not appear that the Court of Appeals has conducted the mandated careful examination of evidence that would sustain the award of moral damages. Nothing in the record establishes any right to moral damages by respondents.

Neither should exemplary damages avail under the circumstances. The plaintiff must show that he is entitled to moral, temperate or compensatory damages before the court may consider the question of whether exemplary damages should be awarded. If the court has no proof or evidence upon which the claim for moral damages could be based, such indemnity could not be outrightly awarded. The same holds true with respect to the award of exemplary damages where it must be shown that the party acted in a wanton, oppressive or malevolent manner. Furthermore, this specie of damages is allowed only in addition to moral damages such that no exemplary damages can be awarded unless the claimant first establishes his clear right to moral damages.

Contrary to the pronouncement of the Court of Appeals, the mere fact that petitioners were constrained to litigate in order to protect and assert their rights does not ipso facto entitle them to attorney's fees. What Article 2208 (2) of the Civil Code provides, in order that attorney's fees may be awarded, is that "the defendant's act or omission has compelled the plaintiff to litigate with third persons or to incur expenses to protect his interest". It is settled that the fact that the party was "compelled to litigate and incur expenses to protect and enforce their claim does not justify the award of attorney's fees. The general rule is that attorney's fees cannot be recovered as part of damages because of the public policy that no premium should be placed on the right to litigate. The award of attorney's fees must be deleted where the award of moral and exemplary damages are eliminated."

9. [G.R. No. 152040. March 31, 2006.]

MARIKINA AUTO LINE TRANSPORT CORPORATION and FREDDIE L. SUELTO, petitioners, vs. PEOPLE OF THE PHILIPPINES and ERLINDA V. VALDELLON, respondents.

FACTS:

Erlinda V. Valdellon is the owner of a two-door commercial apartment located at No. 31 Kamias Road, Quezon City. The Marikina Auto Line Transport Corporation (MALTC) is the owner-operator of a passenger bus with Plate Number NCV-849. Suelto, its employee, was assigned as the regular driver of the bus. 2

At around 2:00 p.m. on October 3, 1992, Suelto was driving the aforementioned passenger bus along Kamias Road, Kamuning, Quezon City, going towards Epifanio de los Santos Avenue (EDSA). The bus suddenly swerved to the right and struck the terrace of the commercial apartment owned by Valdellon located along Kamuning Road.

Upon Valdellon's request, the court ordered Sergio Pontiveros, the Senior Building Inspection Officer of the City Engineer's Office, to inspect the damaged terrace. Photographs 6 of the damaged terrace were taken. Valdellon commissioned Engr. Jesus R. Regal, Jr. to estimate the cost of repairs, inclusive of labor and painting, and the latter pegged the cost at P171,088.46.

In a letter dated October 19, 1992 addressed to the bus company and Suelto, Valdellon demanded payment of P148,440.00, within 10 days from receipt thereof, to cover the cost of the damage to the terrace. 8 The bus company and Suelto offered a P30,000.00 settlement which Valdellon refused.

Valdellon filed a criminal complaint for reckless imprudence resulting in damage to property against Suelto. Valdellon also filed a separate civil complaint against Suelto and the bus company for damages.


The trial court conducted an ocular inspection of the damaged terrace, where defendants offered to have it repaired and restored to its original state. Valdellon, however, disagreed because she wanted the building demolished to give way for the construction of a new one

DECISION OF LOWER COURTS: 1. Trial Court - On April 28, 1994, the trial court rendered judgment finding Suelto guilty beyond reasonable doubt of reckless imprudence resulting in damage to property, and ordered MALTC and Suelto to pay, jointly and severally, P150,000.00 to Valdellon, by way of actual and compensatory damages, as well as attorney's fees and costs of suit. 2. CA - On June 20, 2000, the CA rendered judgment affirming the decision of the trial court, but the award for actual damages was reduced to P100,000.00.

ISSUE: Whether the amount of damages was proper

RULING: No. We agree with the contention of petitioners that respondents failed to prove that the damages to the terrace caused by the incident amounted to P100,000.00. The only evidence adduced by respondents to prove actual damages claimed by private respondent were the summary computation of damage made by Engr. Jesus R. Regal, Jr. amounting to P171,088.46 and the receipt issued by the BB Construction and Steel Fabricator to private respondent for P35,000.00 representing cost for carpentry works, masonry, welding, and electrical works. Respondents failed to present Regal to testify on his estimation. In its five-page decision, the trial court awarded P150,000.00 as actual damages to private respondent but failed to state the factual basis for such award. Indeed, the trial court merely declared in the decretal portion of its decision that the "sum of P150,000.00 as reasonable compensation sustained by plaintiff for her damaged apartment." The appellate court, for its part, failed to explain how it arrived at the amount of P100,000.00 in its three-page decision. Under Article 2199 of the New Civil Code, actual damages include all the natural and probable consequences of the act or omission complained of, classified as one for the loss of what a person already possesses (daño emergente) and the other, for the failure to receive, as a benefit, that which would have pertained to him (lucro cesante). The burden of proof is on the party who would be defeated if no evidence would be presented on either side. The burden is to establish one's case by a preponderance of evidence which means that the evidence, as a whole, adduced by one side, is superior to that of the other. Actual damages are not presumed. The claimant must prove the actual amount of loss with a reasonable degree of certainty premised upon competent proof and on the best evidence obtainable. Specific facts that could afford a basis for measuring whatever compensatory or actual damages are borne must be pointed out. Actual damages cannot be anchored on mere surmises, speculations or conjectures.

The Court further declared that "where goods are destroyed by the wrongful act of defendant, the plaintiff is entitled to their value at the time of the destruction, that is, normally, the sum of money which he would have to pay in the market for identical or essentially similar goods, plus in a proper case, damages for the loss of the use during the period before replacement. While claimants' bare testimonial assertions in support of their claims for damages should not be discarded altogether, however, the same should be admitted with extreme caution. Their testimonies should be viewed in light of claimants' self-interest, hence, should not be taken as gospel truth. Such assertion should be buttressed by independent evidence. In the language of the Court: For this reason, Del Rosario's claim that private respondent incurred losses in the total amount of P6,438,048.00 should be admitted with extreme caution considering that, because it was a bare assertion, it should be supported by independent evidence. Moreover, because he was the owner of private respondent corporation whatever testimony he would give with regard to the value of the lost vessel, its equipment and cargoes should be viewed in the light of his self-interest therein. We agree with the Court of Appeals that his testimony as to the equipment installed and the cargoes loaded on the vessel should be given credence considering his familiarity thereto. However, we do not subscribe to the conclusion that his valuation of such equipment, cargo, and the vessel itself should be accepted as gospel truth. We must, therefore, examine the documentary evidence presented to support Del Rosario's claim as regards the amount of losses. An estimate of the damage cost will not suffice: Private respondents failed to adduce adequate and competent proof of the pecuniary loss they actually incurred. It is not enough that the damage be capable of proof but must be actually proved with a reasonable degree of certainty, pointing out specific facts that afford a basis for measuring whatever compensatory damages are borne. Private respondents merely sustained an estimated amount needed for the repair of the roof of their subject building. What is more, whether the necessary repairs were caused only by petitioner's alleged negligence in the maintenance of its school building, or included the ordinary wear and tear of the house itself, is an essential question that remains indeterminable. We note, however, that petitioners adduced evidence that, in their view, the cost of the damage to the terrace of private respondent would amount to P55,000.00. Accordingly, private respondent is entitled to P55,000.00 actual damages.

DISPOSITIVE –

IN LIGHT OF ALL THE FOREGOING, the petition is PARTIALLY GRANTED. The joint decision of the Regional Trial Court of Quezon City is AFFIRMED WITH THE MODIFICATION that petitioner Suelto is sentenced to pay a fine of P55,000.00 with subsidiary imprisonment in case of insolvency. Petitioners are ORDERED to pay to Erlinda V. Valdellon, jointly and severally, the total amount of P55,000.00 by way of actual damages, and P20,000.00 by way of exemplary damages.

10. [G.R. No. 132659. February 12, 2007.]

CONRADO MAGBANUA and ROSEMARIE MAGBANUA-TABORADA, the latter assisted by her husband ARTEMIO TABORADA, petitioners, vs. PILAR S. JUNSAY, assisted by her husband VICENTE JUNSAY, IBARRA LOPEZ, and JUANITO JACELA, respondents.


FACTS:

Petitioner Rosemarie Magbanua, who worked as a housemaid in the residence of complainant and herein respondent Pilar S. Junsay was charged as a co-accused with the crime of Robbery before the RTC, Branch XLI of Bacolod City.

DECISION OF LOWER COURTS: 1. RTC - On 20 December 1985, the RTC, Branch XLI of Bacolod City, rendered a Decision, 4 acquitting petitioner Rosemarie of the crime of Robbery

On 9 March 1987, petitioner Rosemarie, assisted by Artemio Taborada, and together with co-petitioner Conrado Magbanua (Rosemarie's father) filed with the RTC, Branch 51, Bacolod City, a Complaint for Damages 7 against respondent Pilar The Complaint, alleged, inter alia, that by reason of respondents' false, malicious, and illegal actuations in filing Criminal Case No. 28 for Robbery against petitioner Rosemarie, the latter suffered untold pain, shame, humiliation, worry, and mental anguish, which if assessed in monetary terms will not be less than P200,000.00. Subsequently, petitioners filed a Petition to litigate as pauper which the RTC granted in its Order dated 9 March 1987, it appearing that they had no means to prosecute their action.

DECISION OF LOWER COURTS: 1. RTC - On 25 July 1995, the RTC rendered a Decision dismissing the Complaint 2. CA - affirmed the RTC in toto

ISSUE: whether petitioners are entitled to damages for malicious prosecution.

RULING: No. This Court has drawn the four elements that must be shown to concur to recover damages for malicious prosecution. Therefore, for a malicious prosecution suit to prosper, the plaintiff must prove the following: (1) the prosecution did occur, and the defendant was himself the prosecutor or that he instigated its commencement; (2) the criminal action finally ended with an acquittal; (3) in bringing the action, the prosecutor acted without probable cause; and (4) the prosecution was impelled by legal malice — an improper or a sinister motive. The gravamen of malicious prosecution is not the filing of a complaint based on the wrong provision of law, but the deliberate initiation of an action with the knowledge that the charges were false and groundless.

Finally, in an action to recover damages based on malicious prosecution, it must be established that the prosecution was impelled by legal malice. There is necessity of proof that the suit was so patently malicious as to warrant the award of damages under Articles 19 to 21, 48 of the Civil Code, or that the suit was grounded on malice or bad faith. Moreover, it is a doctrine well-entrenched in jurisprudence that the mere act of submitting a case to the authorities for prosecution does not make one liable for malicious prosecution, for the law would not have meant to impose a penalty on the right to litigate. There can be no evil motive that should be attributed to one, who, as victim of a crime institutes the necessary legal proceedings.

As was clear from the outset, the instant case is a suit seeking damages for malicious prosecution, and not for the violations and maltreatment that respondents allegedly committed against petitioner Rosemarie in extracting the admission from her. At any rate, the RTC had ruled that the instant case is not an action on the injuries allegedly suffered by petitioner Rosemarie, but rather for malicious prosecution. Otherwise, an action seeking damages for her injuries should have been deemed prescribed.

11. [G.R. No. 141011. July 19, 2001.] CITYTRUST BANKING CORPORATION (now Bank of the Philippine Islands), petitioner, vs. ISAGANI C. VILLANUEVA, respondent.

Actual damages Both the Court of Appeals and the trial court have ascertained that Villanueva was unable to prove his demand for compensatory damages arising from loss. His evidence thereon was found inadequate, uncorroborated, speculative, hearsay and not the best evidence. Basic is the jurisprudential principle that in determining actual damages, the court cannot rely on mere assertions, speculations, conjectures or guesswork but must depend on competent proof and on the best obtainable evidence of the actual amount of the loss. Actual damages cannot be presumed but must be duly proved with reasonable certainty. The unanimity of the factual ascertainment on this point by the trial court and the Court of Appeals barred Court from supplanting their finding and substituting it with their own assessment.

Moral damages The Court deleted the award of moral damages. Moral damages include physical suffering, mental anguish, fright, serious anxiety, besmirched reputation, wounded feelings, moral shock, social humiliation, and similar injury. Although incapable of pecuniary computation, moral damages may be recovered if they are the proximate result of the defendant's wrongful act or omission. Thus, case law establishes the requisites for the award of moral damages, viz:

(1) there must be an injury, whether physical, mental or psychological, clearly sustained by the claimant; (2) there must be a culpable act or omission factually established;


(3) the wrongful act or omission of the defendant is the proximate cause of the injury sustained by the claimant; and (4) the award of damages is predicated on any of the cases stated in Article 2219 of the Civil Code.

As Villanueva failed to support his claim therefore. None of the circumstances mentioned in Article 2219 of the Civil Code exists to sanction the award for moral damages.

Attorney’s fees Anent the award of attorney's fees, the Court deleted the same. Attorney's fees may not be awarded where there is no sufficient showing of bad faith in the parties' persistence of a case other than an erroneous conviction of the righteousness of his cause. Accordingly, the Court reinstated the judgment of the trial court.

— It is beyond cavil that VILLANUEVA had sufficient funds for the check. Had his account number been correct, the check would not have been dishonored. Hence, we can say that VILLANUEVA's injury arose from the dishonor of his well-funded check. We have already ruled that the dishonor of the check does not entitle him to compensatory damages. But, could the dishonor result in his alleged "intolerable physical inconvenience and discomfort, extreme humiliation, indignities, etc. which he had borne before his peers, trading partners and officers of Kingly Commodities?" True, we find that under the circumstances of this case, VILLANUEVA might have suffered some form of inconvenience and discomfort as a result of the dishonor of his check. However, the same could not have been so grave or intolerable as he attempts to portray or impress upon us. Further, it is clear from the records that the BANK was able to remedy the caveat of Kingly Commodities to VILLANUEVA that his trading account would be closed at 5:30 p.m. on 26 June 1986. The BANK was able to issue a manager's check in favor of Kingly Commodities before the deadline. It was able to likewise explain to Kingly Commodities the circumstances surrounding the unfortunate situation. Verily, the alleged embarrassment or inconvenience caused to VILLANUEVA as a result of the incident was timely and adequately contained, corrected, mitigated, if not entirely eradicated. VILLANUEVA, thus, failed to support his claim for moral damages. In short, none of the circumstances mentioned in Article 2219 of the Civil Code exists to sanction the award for moral damages.

In view of the foregoing discussion, we need not deliberate on the dispute as to whether it was the BANK's or VILLANUEVA's negligence which was the proximate cause of the latter's injury because, in the first place, he did not sustain any compensable injury. If any damage had been suffered at all, it could be equivalent to damnum absque injuria, i.e., damage without injury or damage or injury inflicted without injustice, or loss or damage without violation of a legal right, or a wrong done to a man for which the law provides no remedy.

FACTS: Isagani Villanueva filed a complaint for damages based on breach of contract and/or quasi-delict before the Regional Trial Court of Makati City against City Trust Banking Corporation. Villanueva alleged in his complaint that the bank breached its contractual obligation to him as a depositor because of its repeated dishonor of his valid and well-funded check. The breach arose from the bank's gross negligence and culpable recklessness in supplying the wrong account number. The account number assigned to Villanueva's new checkbook was the account number of another depositor also named "Isagani Villanueva," but with a different middle initial. Villanueva, therefore, prayed for the award of actual, moral and exemplary damages, and attorney's fees, litigation expenses and costs of the suit.

The bank asserted, among others, that Villanueva's negligence to remember his current account number was the proximate cause of his self-proclaimed injury. It claimed that it acted in good faith when it twice dishonored the check and interposed counterclaims.

After due proceedings, the trial court rendered a decision which dismissed the complaint and the compulsory counterclaim for lack of merit. The trial court held that Villanueva's negligence set the chain of events, which resulted in his alleged losses and damages. Hence, he must bear the consequent damages and losses he allegedly suffered. With respect to Villanueva's claim for actual damages in the form of loss of profits, the court found the evidence in support thereof hearsay, unreliable and not the best evidence. On appeal, the Court of Appeals found the bank negligent and awarded moral damages and attorney's fees to Villanueva despite its findings that the bank's negligence was not attended with malice and bad faith. The appellate court, however, rejected Villanueva's claim for compensatory damages and affirmed the trial court's finding thereon. Both Villanueva and the bank appealed to the Supreme Court by way of a petition for review.

ISSUE: whether Villanueva suffered actual or compensatory damages in the form of loss of profits

RULING:

No.

12. REPEATED CASE [G.R. No. 117103. January 21, 1999.] Spouses RENATO S. ONG and FRANCIA N. ONG, petitioners, vs. COURT OF APPEALS, INLAND TRAILWAYS, INC. and PHILTRANCO SERVICE ENTERPRISE, INC., respondents. Actual Damages 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. Except as provided by law or by stipulation, a party is entitled to adequate


compensation only for such pecuniary loss as he has duly proven. To be recoverable, actual damages must be pleaded and proven in Court. In no instance may the trial judge award more than those so pleaded and proven. Damages cannot be presumed. The award thereof must be based on the evidence presented, not on the personal knowledge of the court; and certainly not on flimsy, remote, speculative and nonsubstantial proof. Article 2199 of the Civil Code expressly mandates that "[e]xcept 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." The lack of basis for such award was patent in the trial court Decision: "The records will show that from the documentary evidence, [petitioners] have jointly spent the sum of P3,977.00. [Respondent] Philtranco has not presented any evidence that it has advanced any amount for medicine, hospitalization and doctor's fees, but on the contrary, [petitioners] have testified that they paid for their expenses except at the initial stage wherein a representative of [respondent] Philtranco went to the hospital to get the receipts of medicines only and paid. Considering the claim of the [petitioners], as alleged in their complaint they spent P10,000.00 representing medical and miscellaneous expenses[;] considering that they have gone for consultation to at least two (2) different doctors, this Court may take judicial notice of the fact that miscellaneous expenses [are] bound to be incurred to cover transportation and food, and therefore, finds the amount of P10,000.00 as actual damages to be reasonable." Damages, after all, are not intended to enrich the complainant at the expense of the defendant. Moral Damages and Diminution of Use of Francia's Arm A person is entitled to the physical integrity of his or her body, and if that integrity is violated, damages are due and assessable. However, physical injury, like loss or diminution of use of an arm or a limb, is not a pecuniary loss. Indeed, it is not susceptible of exact monetary estimation. Thus, the usual practice is to award moral damages for physical injuries sustained. In Mayo v. People, the Court held that the permanent scar on the forehead and the loss of the use of the right eye entitled the victim to moral damages. The victim, in said case, was devastated by mental anguish, wounded feelings and shock, which she experienced as a result of her false eye and the scar on her forehead. Furthermore, the loss of vision in her right eye hampered her professionally for the rest of her life. In the case at bar, it was sufficiently shown during the trial that Francia's right arm could not function in a normal manner and that, as a result, she suffered mental anguish and anxiety. Thus, an increase in the amount of moral damages awarded, from P30,000 to P50,000, appears to be reasonable and justified. Renato also suffered mental anxiety and anguish from the accident. Thus, he should be separately awarded P30,000 as moral damages. The Court awards the cost of medical procedures to restore the injured person to his or her former condition. However, this award necessitates expert testimony on the cost of possible restorative medical procedure. Unrealized Income Although actual damages include indemnification for profits which the injured party failed to obtain (lucro cesante or lucrum cesans), the rule requires that said person produce the "best evidence of which his case is susceptible." The bare and unsubstantiated assertion of Francia that she usually earned P200 a day from her market stall is not the best evidence to prove her claim of unrealized income for the eight-month period that her arm was in plaster cast. Her testimony that it was their lessor who filed their income tax returns and obtained business licenses for them does not justify her failure to present more credible evidence of her income. Attorney’s fees Counsel for petitioner deeply laments the reduction in the award of attorney's fees. He alleges that he had to use his own money for transportation, stenographic transcriptions and other court expenses, and for such reason, avers that the award of 25 percent attorney's fees made by the trial court was proper. Under the Civil Code, an award of attorney's fees is an indemnity for damages ordered by a court to be paid by the losing party to the prevailing party, based on any of the cases authorized by law. It is payable not to the lawyer but to the client, unless the two have agreed that the award shall pertain to the lawyer as additional compensation or as part thereof. The Court has established a set of standards in fixing the amount of attorney's fees: " (1) [T]he amount and character of the services rendered; (2) labor, time and trouble involved; (3) the nature and importance of the litigation or business in which the services were rendered; (4) the responsibility imposed; (5) the amount of money or the value of the property affected by the controversy or involved in the employment; (6) the skill and experience called for in the performance of the services; (7) the professional character and social standing of the attorney; (8) the results secured, it being a recognized rule that an attorney may properly charge a much larger fee when it is contingent than when it is not." Counsel's performance, however, does not justify the award of 25 percent attorney's fees. It is well-settled that such award is addressed to sound judicial discretion and subject to judicial control. In fact, the appellate court had been generous to petitioners' counsel, considering that the nature of the case was not exceptionally difficult, and he was not required to exert Herculean efforts. All told, his handling of the case was sorely inadequate, as shown by his failure to follow elementary norms of civil procedure and evidence. FACTS: On February 9, 1987, petitioners boarded as paying passengers Bus No. 101 with Plate No. EVB-508 ("Inland bus," for convenience), which was owned and operated by Inland Trailways under a Lease Agreement with Philtranco. It was driven by Calvin Coronel. Around 3:50 in the morning of said date, when the Inland bus slowed down to avoid a stalled cargo truck in Tiaong, Quezon, it was bumped from the rear by another bus, owned and operated by Philtranco and driven by Apolinar Miralles. Francia sustained wounds and fractures in both of her legs and her right arm, while Renato suffered injuries on his left chest, right knee, right arm and left eye. They were brought to the San Pablo City District Hospital for treatment and were confined there from February 9 to 18, 1987. On December 22, 1988, petitioners filed an action for damages against Philtranco and Inland. In their Complaint, they alleged that they suffered injuries, preventing Francia from operating a sari-sari store at Las Piñas, Metro Manila, where she derived a daily income of P200; and Renato from continuing his work as an overseas contract worker (pipe welder) with a monthly salary of $690. Stating that they incurred P10,000 as medical and miscellaneous expenses, they also claimed moral damages of P500,000 each, exemplary and corrective damages of P500,000 each, and compensatory damages of P500,000 each plus 35 percent thereof as attorney's fees.


Philtranco defense Philtranco answered that the Inland bus with Plate No. EVB-508 (which had transported petitioners) was registered and owned by Inland; that its driver, Calvin Coronel, was an employee of Inland; that Philtranco was merely leasing its support facilities, including the use of its bus tickets, to Inland; and that under their Agreement, Inland would be solely liable for all claims and liabilities arising from the operation of said bus. Inland defense Inland answered that, according to the Police Report, it was Apolinar Miralles, the driver of the Philtranco bus, who was at fault, as shown by his flight from the situs of the accident, bus was registered and owned by Philtranco; and that the driver of the Inland bus exercised extraordinary diligence as testified to by its passengers. Inland and Philtranco filed cross-claims against each other. This is a petition for review on certiorari of the decision dated May 20, 1993 and the resolution dated June 8, 1994 both promulgated by the Court of Appeals modifying the decision of the trial court in an action for damages filed by petitioners spouses Ong against Philtranco Service Enterprise, Inc. and Inland Trailways, Inc. DECISION OF LOWER COURTS: Trial Court Court of Appeals judgment is hereby rendered in favor of the [petitioners] absolving Inland Trailways, Inc., from any liability whatsoever, and against . . . Philtranco Service Enterprise, Inc., ordering the latter to pay the [petitioners] — 1) P10,000.00 as actual damages for medical and miscellaneous expenses; 2) P50,000.00 as compensatory damages for the [diminution] of the use of the right arm of [petitioner]-wife; 3) P48,000.00 as unrealized profit or income; 4) P50,000.00 as moral damages; 5) 25% of the foregoing as contingent attorney's fees; and 6) the costs."

WHEREFORE, the appealed decision is hereby MODIFIED by ordering INLAND TRAILWAYS, INC. to pay [petitioners] 5) P3,977.00 for actual damages, 6) P30,000.00 as moral damages and 7) ten (10) percent as contingent attorney's fees and to 8) pay the costs of the suit Philtranco's liability for damages could not be predicated upon the Police Report which had not been formally offered in evidence. The report was merely annexed to the answer of Inland, and petitioner did not adopt or offer it as evidence. Consequently, it had no probative value and, thus, Philtranco should be absolved from liability

Reason for reduction The liability of Inland for medical and miscellaneous expenses was reduced, as the evidence on record showed that petitioners spent only P3,977. Deemed self-serving was Francia's testimony that the use of her right arm was diminished and that she lost income. Thus, the award for unearned income was disallowed and the amount of moral damages was reduced to P30,000. ISSUE: 1. Whether the police report, which was not formally offered in evidence, could be used to establish a claim against Philtranco based on culpa aquiliana, and 2. whether the reduction in the amount of damages awarded was proper. RULING: 1. No. The Supreme Court found the petition devoid of merit. Section 34, Rule 132 of the Rules of Court provides that

the court shall consider no evidence which has not been formally offered. In the case at bar, respondent Inland's failure to identify the police investigation report formally offered it before the trial court was clearly fatal because said document was the basis for finding Philtranco liable. Such absence made Philtranco exonerated from liability. Hence, the appellate court cannot be faulted in reversing the trial court's decision.

2. Anent the issue of damages, the Court has ruled that the award of actual damages lacks basis, as this was not amply proven in the trial court. Likewise, the Court found the deletion by the appellate court of the award for unrealized profit proper because petitioners failed to substantiate their claims. However, with respect to moral damages, the Court raised the amount of P50,000.00 for Francia and P30,000.00 for Renato Ong as it was sufficiently shown that petitioners suffered mental anguish and anxiety. In view thereof, the Court affirmed the decision of the appellate court with the modification that Renato and Francia Ong are separately awarded moral damages in the amount of P30,000.00 and P50,000.00, respectively. It maintained the award of attorney's fees of 10% which shall be based on the total modified award.

13. OLD CASE RAMOS v CA (1999) Medical Negligence/malpractice [G.R. No. 124354. December 29, 1999.]

ROGELIO E. RAMOS and ERLINDA RAMOS, in their own behalf and as natural guardians of the minors, ROMMEL RAMOS, ROY RODERICK RAMOS and RON RAYMOND RAMOS, petitioners, vs. COURT OF APPEALS, DELOS SANTOS MEDICAL CENTER, DR. ORLINO HOSAKA and DRA. PERFECTA GUTIERREZ, respondents.

CIVIL LAW; DAMAGES; EXCEPTIONAL NEGLIGENCE AND PROFESSIONAL IRRESPONSIBILITY IN THE MEDICAL FIELD IN CASE AT BAR. — Respondent Dra. Gutierrez' act of seeing her patient for the first time only an hour before the scheduled operative procedure was therefore, an act of exceptional negligence and professional irresponsibility. The measures cautioning prudence and vigilance in dealing with human lives lie at the core of the physician's centuries-old Hippocratic Oath. Her failure to follow this medical procedure is, therefore, a clear indicia of her negligence.

ID.; ID.; ID. — As the so-called "captain of the ship," it is the surgeon's responsibility to see to it that those under him perform their task in the proper manner. Respondent Dr. Hosaka's negligence can be found in his failure to exercise the proper authority (as the "captain" of the operative team) in not determining if his anesthesiologist observed proper anesthesia protocols. In fact, no evidence on record exists to show that respondent Dr. Hosaka verified if respondent Dra.


Gutierrez properly intubated the patient. Furthermore, it does not escape us that respondent Dr. Hosaka had scheduled another procedure in a different hospital at the same time as Erlinda's cholecystectomy, and was in fact over three hours late for the latter's operation. Because of this, he had little or no time to confer with his anesthesiologist regarding the anesthesia delivery. This indicates that he was remiss in his professional duties towards his patient. Thus, he shares equal responsibility for the events which resulted in Erlinda's condition.

DAMAGES; ACTUAL AND TEMPERATE DAMAGES; PROPER IN CASE AT BAR. — The amount of actual damages recoverable in suits arising from negligence should at least reflect the correct minimum cost of proper care, not the cost of the care the family is usually compelled to undertake at home to avoid bankruptcy. However, the provisions of the Civil Code on actual or compensatory damages present us with some difficulties. Well-settled is the rule that actual damages which may be claimed by the plaintiff are those suffered by him as he has duly proved. Our rules on actual or compensatory damages generally assume that at the time of litigation, the injury suffered as a consequence of an act of negligence has been completed and that the cost can be liquidated. However, these provisions neglect to take into account those situations, as in this case, where the resulting injury might be continuing and possible future complications directly arising from the injury, while certain to occur, are difficult to predict. In these cases, the amount of damages which should be awarded, if they are to adequately and correctly respond to the injury caused, should be one which compensates for pecuniary loss incurred and proved, up to the time of trial; and one which would meet pecuniary loss certain to be suffered but which could not, from the nature of the case, be made with certainty. In other words, temperate damages can and should be awarded on top of actual or compensatory damages in instances where the injury is chronic and continuing. And because of the unique nature of such cases, no incompatibility arises when both actual and temperate damages are provided for. The reason is that these damages cover two distinct phases. As it would not be equitable — and certainly not in the best interests of the administration of justice — for the victim in such cases to constantly come before the courts and invoke their aid in seeking adjustments to the compensatory damages previously awarded — temperate damages are appropriate. The amount given as temperate damages, though to a certain extent speculative, should take into account the cost of proper care. In the instant case, petitioners were able to provide only homebased nursing care for a comatose patient who has remained in that condition for over a decade. Having premised our award for compensatory damages on the amount provided by petitioners at the onset of litigation, it would be now much more in step with the interests of justice if the value awarded for temperate damages would allow petitioners to provide optimal care for their loved one in a facility which generally specializes in such care. They should not be compelled by dire circumstances to provide substandard care at home without the aid of professionals, for anything less would be grossly inadequate.

ID.; ID.; PROPER MORAL DAMAGES. — The actual physical, emotional and financial cost of the care of petitioner would be virtually impossible to quantify. Even the temperate damages herein awarded would be inadequate if petitioner's condition remains unchanged for the next ten years. We recognized that the victim's actual injury would not even scratch the surface of the resulting moral damage because it would be highly speculative to estimate the amount of emotional and moral pain, psychological damage and injury suffered by the victim or those actually affected by the victim's condition. The husband and the children, all petitioners in this case, will have to live with the day to day uncertainty of the patient's illness, knowing any hope of recovery is close to nil. They have fashioned their daily lives around the nursing care of petitioner, altering their long term goals to take into account their life with a comatose patient. They, not the respondents, are charged with the moral responsibility of the care of the victim. The family's moral injury and suffering in this case is clearly a real one. For the foregoing reasons, an award of P2,000,000.00 in moral damages would be appropriate.

ID.; ID.; EXEMPLARY DAMAGES AND ATTORNEY'S FEES. — By way of example, exemplary damages in the amount of P100,000.00 are hereby awarded. Considering the length and nature of the instant suit we are of the opinion that attorney's fees valued at P100,000.00 are likewise proper. Our courts face unique difficulty in adjudicating medical negligence cases because physicians are not insurers of life and, they rarely set out to intentionally cause injury or death to their patients. However, intent is immaterial in negligence cases because where negligence exists and is proven, the same automatically gives the injured a right to reparation for the damage caused. Established medical procedures and practices, though in constant flux are devised for the purpose of preventing complications. A physician's experience with his patients would sometimes tempt him to deviate from established community practices, and he may end a distinguished career using unorthodox methods without incident. However, when failure to follow established procedure results in the evil precisely sought to be averted by observance of the procedure and a nexus is made between the deviation and the injury or damage, the physician would necessarily be called to account for it. In the case at bar, the failure to observe pre- operative assessment protocol which would have influenced the intubation in a salutary way was fatal to private respondents' case.

FACTS:

In the morning of June 17, 1985, Erlinda Ramos, a 47-year old, was brought into the operating room of the Delos Santos Medical Center for a cholecystectomy (surgical removal of gallbladder). She was then a robust woman, normal as any other except for occasional complaints of discomfort due to pains allegedly caused by the presence of stones in her gall bladder. Rogelio E. Ramos, Erlinda’s husband, however, asked Dr. Hosaka to look for a good anesthesiologist. Dr. Hosaka, in turn, assured Rogelio that he will get a good anesthesiologist, who was Dr. Gutierrez. On the day of the operation, the patient's nailbed became bluish and the patient was placed in a trendelenburg position — a position where the head of the patient is placed in a position lower than her feet which is an indication that there is a decrease of blood supply to the patient's brain.

Plaintiff presented the testimonies of Dean Herminda Cruz and Dr. Mariano Gavino to prove that the damage sustained by Erlinda was due to lack of oxygen in her brain caused by the faulty management of her airway by private respondents during the anesthesia phase.

At around 3:00 p.m. of that day, Erlinda was taken to the Intensive Care unit of the hospital, comatose. On January 8, 1986, Erlinda's husband filed a civil case for damages against said hospital and Drs. Orlino Hosaka and Perfecta


Gutierrez.

DECISION OF LOWER COURTS:

1. Regional Trial Court: ruled in favor of the plaintiffs.

2. Court of Appeals: reversed the decision of the lower court and ordered the dismissal of the complaint.

Hence, this petition.

ISSUE:

1. Whether private respondents were negligent in the care of Erlinda during the anesthesia phase of the operation and, if in the affirmative, whether the alleged negligence was the proximate cause of Erlinda's comatose condition 2. Whether the hospital is responsible for the incident

RULING:

1. With regard to Dra. Gutierrez, we find her negligent in the care of Erlinda during the anesthesia phase. As borne by the records, respondent Dra. Gutierrez failed to properly intubate the patient. It was the faulty intubation which was the proximate cause of Erlinda's comatose condition.

Although witness Cruz, is not an anesthesiologist, she can very well testify upon matters on which she is capable of observing such as, Do you know the reason why the patient was placed in that trendelenburg position? As far as I know, when a patient is in that position, there is a decrease of blood supply to the statements and acts of the physician and surgeon, external appearances, and manifest conditions which are observable by any one. This is precisely allowed under the doctrine of res ipsa loquitur where the testimony of expert witnesses is not required.

The doctrine of res ipsa loquitur is a recognition of the postulate that, as a matter of common knowledge and experience, the very nature of certain types of occurrences may justify an inference of negligence on the part of the person who controls the instrumentality causing the injury in the absence of some explanation by the defendant who is charged with negligence. The damage sustained by Erlinda in her brain prior to a scheduled gall bladder operation presents a case for the application of res ipsa loquitur.

Brain damage, which Erlinda sustained is an injury which does not normally occur in the process of a gall bladder operation. In fact, this kind of situation does not happen in the absence of negligence of someone in the administration of anesthesia and in the use of endotracheal tube. Moreover, the instruments used in the administration of anesthesia, including the endotracheal tube, were all under the exclusive control of private respondents, who are the physicians-in- charge.

CIVIL LAW; DOCTRINE OF RES IPSA LOQUITUR; ELUCIDATED. — Res ipsa loquitur is a Latin phrase which literally means "the thing or the transaction speaks for itself." The phrase "res ipsa loquitur" is a maxim for the rule that the fact of the occurrence of an injury, taken with the surrounding circumstances, may permit an inference or raise a presumption of negligence, or make out a plaintiffs prima facie case, and present a question of fact for defendant to meet with an explanation. Where the thing which caused the injury complained of is shown to be under the management of the defendant or his servants and the accident is such as in ordinary course of things does not happen if those who have its management or control use proper care, it affords reasonable evidence, in the absence of explanation by the defendant, that the accident arose from or was caused by the defendant's want of care. The doctrine of res ipsa loquitur is simply a recognition of the postulate that, as a matter of common knowledge and experience, the very nature of certain types of occurrences may justify an inference of negligence on the part of the person who controls the instrumentality causing the injury in the absence of some explanation by the defendant who is charged with negligence. It is grounded in the superior logic of ordinary human experience and on the basis of such experience or common knowledge, negligence may be deduced from the mere occurrence of the accident itself. Hence, res ipsa loquitur is applied in conjunction with the doctrine of common knowledge. However, much has been said that res ipsa loquitur is not a rule of substantive law and, as such, does not create or constitute an independent or separate ground of liability. Instead, it is considered as merely evidentiary or in the nature of a procedural rule. It is regarded as a mode of proof, or a mere procedural convenience since it furnishes a substitute for, and relieves a plaintiff of, the burden of producing specific proof of negligence. In other words, mere invocation and application of the doctrine does not dispense with the requirement of proof of negligence. It is simply a step in the process of such proof, permitting the plaintiff to present along with the proof of the accident, enough of the attending circumstances to invoke the doctrine, creating an inference or presumption of negligence, and to thereby place on the defendant the burden of going forward with the proof. Still, before resort to the doctrine may be allowed, the following requisites must be satisfactorily shown:

1. The accident is of a kind which ordinarily does not occur in the absence of someone's negligence; 2. It is caused by an instrumentality within the exclusive control of the defendant or defendants; and 3. The possibility of contributing conduct which would make the plaintiff responsible is eliminated.

In the above requisites, the fundamental element is the "control of the instrumentality" which caused the damage. Such element of control must be shown to be within the dominion of the defendant. In order to have the benefit of the rule, a plaintiff, in addition to proving injury or damage, must show a situation where it is applicable, and must establish that the essential elements of the doctrine were present in a particular incident.

APPLICATION IN MEDICAL MALPRACTICE. — Medical malpractice cases do not escape the application of this doctrine. Thus, res ipsa loquitur has been applied when the circumstances attendant upon the harm are themselves of such a character as to justify an inference of negligence as the cause of that harm. The application of res ipsa loquitur in medical negligence cases presents a question of law since it is a judicial function to determine whether a certain set of circumstances does, as a matter of law, permit a given inference.


Although generally, expert medical testimony is relied upon in malpractice suits to prove that a physician has done a negligent act or that he has deviated from the standard medical procedure, when the doctrine of res ipsa loquitur is availed by the plaintiff, the need for expert medical testimony is dispensed with because the injury itself provides the proof of negligence. The reason is that the general rule on the necessity of expert testimony applies only to such matters clearly within the domain of medical science, and not to matters that are within the common knowledge of mankind which may be testified to by anyone familiar with the facts.

Ordinarily, only physicians and surgeons of skill and experience are competent to testify as to whether a patient has been treated or operated upon with a reasonable degree of skill and care. However, testimony as to the statements and acts of physicians and surgeons, external appearances, and manifest conditions which are observable by any one may be given by non-expert witnesses. Hence, in cases where the res ipsa loquitur is applicable, the court is permitted to find a physician negligent upon proper proof of injury to the patient, without the aid of expert testimony, where the court from its fund of common knowledge can determine the proper standard of care. Where common knowledge and experience teach that a resulting injury would not have occurred to the patient if due care had been exercised, an inference of negligence may be drawn giving rise to an application of the doctrine of res ipsa loquitur without medical evidence, which is ordinarily required to show not only what occurred but how and why it occurred. When the doctrine is appropriate, all that the patient must do is prove a nexus between the particular act or omission complained of and the injury sustained while under the custody and management of the defendant without need to produce expert medical testimony to establish the standard of care. Resort to res ipsa loquitur is allowed because there is no other way, under usual and ordinary conditions, by which the patient can obtain redress for injury suffered by him. Thus, courts of other jurisdictions have applied the doctrine in the following situations: leaving of a foreign object in the body of the patient after an operation, injuries sustained on a healthy part of the body which was not under, or in the area, of treatment, removal of the wrong part of the body when another part was intended, knocking out a tooth while a patient's jaw was under anesthetic for the removal of his tonsils, and loss of an eye while the patient plaintiff was under the influence of anesthetic, during or following an operation for appendicitis, among others. Nevertheless, despite the fact that the scope of res ipsa loquitur has been measurably enlarged, it does not automatically apply to all cases of medical negligence as to mechanically shift the burden of proof to the defendant to show that he is not guilty of the ascribed negligence. Res ipsa loquitur is not a rigid or ordinary doctrine to be perfunctorily used but a rule to be cautiously applied, depending upon the circumstances of each case. It is generally restricted to situations in malpractice cases where a layman is able to say, as a matter of common knowledge and observation, that the consequences of professional care were not as such as would ordinarily have followed if due care had been exercised. A distinction must be made between the failure to secure results, and the occurrence of something more unusual and not ordinarily found if the service or treatment rendered followed the usual procedure of those skilled in that particular practice. It must be conceded that the doctrine of res ipsa loquitur can have no application in a suit against a physician or surgeon which involves the merits of a diagnosis or of a scientific treatment. The physician or surgeon is not required at his peril to explain why any particular diagnosis was not correct, or why any particular scientific treatment did not produce the desired result. Thus, res ipsa loquitur is not available in a malpractice suit if the only showing is that the desired result of an operation or treatment was not accomplished. The real question, therefore, is whether or not in the process of the operation any extraordinary incident or unusual event outside of the routine performance occurred which is beyond the regular scope of customary professional activity in such operations, which, if unexplained would themselves reasonably speak to the average man as the negligent cause or causes of the untoward consequence. If there were such extraneous interventions, the doctrine of res ipsa loquitur may be utilized and the defendant is called upon to explain the matter, by evidence of exculpation, if he could.

Ordinarily a person being put under anesthesia is not rendered decerebrate as a consequence of administering such anesthesia in the absence of negligence.

4. ID.; ID.; APPLICABLE IN CASE AT BAR. — We find the doctrine of res ipsa loquitur appropriate in the case at bar. . . . Brain damage, which Erlinda sustained, is an injury which does not normally occur in the process of a gall bladder operation. In fact, this kind of situation does not happen in the absence of negligence of someone in the administration of anesthesia and in the use of endotracheal tube. Normally, a person being put under anesthesia is not rendered decerebrate as a consequence of administering such anesthesia if the proper procedure was followed. Furthermore, the instruments used in the administration of anesthesia, including the endotracheal tube, were all under the exclusive control of private respondents, who are the physicians-in-charge.

ID.; ID.; CONTRIBUTORY NEGLIGENCE. — Petitioner Erlinda could not have been guilty of contributory negligence because she was under the influence of anesthetics which rendered her unconscious. Considering that a sound and unaffected member of the body (the brain) is injured or destroyed while the patient is unconscious and under the immediate and exclusive control of the physicians, we hold that a practical administration of justice dictates the application of res ipsa loquitur. Upon these facts and under these circumstances the Court would be able to say, as a matter of common knowledge and observation, if negligence attended the management and care of the patient. Moreover, the liability of the physicians and the hospital in this case is not predicated upon an alleged failure to secure the desired results of an operation nor on an alleged lack of skill in the diagnosis or treatment as in fact no operation or treatment was ever performed on Erlinda. Thus, upon all these initial determination a case is made out for the application of the doctrine of res ipsa loquitur.

Respondent Dra. Gutierrez' act of seeing her patient for the first time only an hour before the scheduled operative procedure was therefore, an act of exceptional negligence and professional irresponsibility.

Private respondents repeatedly hammered the view that the cerebral anoxia which led to Erlinda's coma was due to bronchospasm mediated by her allergic response to the drug, Thiopental Sodium, introduced into her system, as provided by the testimony of Dr. Jamora. Dr. Jamora cannot be considered an authority in the field of anesthesiology simply because he is not an anesthesiologist. Since Dr. Jamora is a pulmonologist, he could not have been capable of properly enlightening the court about anesthesia practice and procedure and their complications.

2. For the purpose of allocating responsibility in medical negligence cases, an employer-employee relationship in effect exists between hospitals and their attending and visiting physicians.

While the burden of proving negligence rests on the plaintiffs, once negligence is shown, the burden shifts to the


respondents (parent, guardian, teacher or employer) who should prove that they observed the diligence of a good father of a family to prevent damage.

ID.; EXTRA-CONTRACTUAL OBLIGATIONS; QUASI-DELICTS; EMPLOYER-EMPLOYEE RELATIONSHIP EXISTS BETWEEN HOSPITALS AND CONSULTANTS FOR THE PURPOSE OF ALLOCATING RESPONSIBILITY IN MEDICAL NEGLIGENCE CASES. — Hospitals exercise significant control in the hiring and firing of consultants and in the conduct of their work within the hospital premises. Doctors who apply for "consultant" slots, visiting or attending, are required to submit proof of completion of residency, their educational qualifications; generally, evidence of accreditation by the appropriate board (diplomate), evidence of fellowship in most cases, and references. These requirements are carefully scrutinized by members of the hospital administration or by a review committee set up by the hospital who either accept or reject the application. This is particularly true with respondent hospital. After a physician is accepted, either as a visiting or attending consultant, he is normally required to attend clinico- pathological conferences, conduct bedside rounds for clerks, interns and residents, moderate grand rounds and patient audits and perform other tasks and responsibilities, for the privilege of being able to maintain a clinic in the hospital, and/or for the privilege of admitting patients into the hospital. In addition to these, the physician's performance as a specialist is generally evaluated by a peer review committee on the basis of mortality and morbidity statistics, and feedback from patients, nurses, interns and residents. A consultant remiss in his duties, or a consultant who regularly falls short of the minimum standards acceptable to the hospital or its peer review committee, is normally politely terminated. In other words, private hospitals, hire, fire and exercise real control over their attending and visiting "consultant" staff. While "consultants" are not, technically employees, a point which respondent hospital asserts in denying all responsibility for the patient's condition, the control exercised, the hiring, and the right to terminate consultants all fulfill the important hallmarks of an employer-employee relationship, with the exception of the payment of wages. In assessing whether such a relationship in fact exists, the control test is determining. Accordingly, on the basis of the foregoing, we rule that for the purpose of allocating responsibility in medical negligence cases, an employer- employee relationship in effect exists between hospitals and their attending and visiting physicians. DCTSEA

12. ID.; ID.; ID.; EMPLOYERS LIABLE FOR THE DAMAGES CAUSED BY THEIR EMPLOYEES. — The basis for holding an employer solidarily responsible for the negligence of its employee is found in Article 2180 of the Civil Code which considers a person accountable not only for his own acts but also for those of others based on the former's responsibility under a relationship of patria potestas. Such responsibility ceases when the persons or entity concerned prove that they have observed the diligence of a good father of the family to prevent damage. In other words, while the burden of proving negligence rests on the plaintiffs, once negligence is shown, the burden shifts to the respondents (parent, guardian, teacher or employer) who should prove that they observed the diligence of a good father of a family to prevent damage. In the instant case, respondent hospital, apart from a general denial of its responsibility over respondent physicians, failed to adduce evidence showing that it exercised the diligence of a good father of a family in the hiring and supervision of the latter. It failed to adduce evidence with regard to the degree of supervision which it exercised over its physicians. In neglecting to offer such proof, or proof of a similar nature, respondent hospital thereby failed to discharge its burden under the last paragraph of Article 2180. Having failed to do this, respondent hospital is consequently solidarily responsible with its physicians for Erlinda's condition.

14. [G.R. No. 136722. April 12, 2000.] INDUSTRIAL INSURANCE COMPANY, Inc., petitioner, vs. PABLO BONDAD and LIGORIO BONDAD, respondents.

CIVIL LAW; DAMAGES; MORAL DAMAGES; REQUISITES; AWARD THEREOF PROPER IN CASE AT BAR. — In the same vein, we affirm the award of moral damages. To sustain this award, it must be shown that (1) the claimant suffered injury, and (2) such injury sprung from any of the cases listed in Articles 2219 and 2220 of the Civil Code. It is not enough that the claimant alleges mental anguish, serious anxiety, wounded feelings, social humiliation, and the like as a result of the acts of the other party. It is necessary that such acts be shown to have been tainted with bad faith or ill motive. In the case at bar, it has been shown that the petitioner acted in bad faith in compelling respondents to litigate an unfounded claim. As a result, Respondent Ligorio Bondad "could no longer concentrate on his job." Moreover, Pablo Bondad became sick and even suffered a mild stroke. Indeed, respondents' anxiety is not difficult to understand. They were innocently attending to a flat tire on the shoulder of the road; the next thing they knew, they were already being blamed for an accident. Worse, they were forced to commute all the way from Laguna to Makati in order to attend the hearings. Under the circumstances of this case, the award of moral damages is justified.

ID.; ID.; EXEMPLARY DAMAGES; AWARDED PROPERLY. — Likewise, we affirm the award of exemplary damages because petitioner's conduct needlessly dragged innocent bystanders into an unfounded litigation. Indeed, exemplary damages are imposed by way of example or correction for the public good, in addition to moral, temperate, liquidated or compensatory damages.

FACTS: On April 12, 1985, petitioner Industrial Insurance Company, Inc. and Grace L. Morales filed before the Regional Trial Court of Makati a complaint for damages against D.M. Transit Corporation, Eduardo Diaz, Pablo Bondad and Ligorio Bondad for the accident suffered by Grace Morales on December 17, 1984 due to the gross and wanton negligence, carelessness and imprudence of both defendant drivers Eduardo Diaz and Ligorio Bondad, who failed to exercise and observe the diligence required by law in the management and operation of their respective vehicles and by their defendant employers; D.M. Transit Corporation and Pablo Bondad, respectively, for their failure to exercise the diligence required of them by law in the selection and supervision of their employees including their aforementioned involved drivers.


The present Petition finds its roots in an incident which involved three vehicles: a Galant Sigma car driven by Grace Ladaw Morales, a packed passenger jeepney originally driven by Ligorio Bondad, and a DM Transit Bus driven by Eduardo Mendoza.

Pfc. Agapito L. Domingo of the Southern Police District investigated the accident and filed the following report:

"Investigation disclosed that shortly before the accident took place, V-3 (D.M. Transit Bus) was traveling along South Expressway coming from Alabang towards the general direction of Makati. When upon reaching a place at KM Post 14 [in front] of Merville Subd., said V-3 hit and bumped the rear left side portion of V-1 [Bondads' jeepney] which was then at [stop] position due to flat tire[;] due to the severe impact cause by V-3 it swerved to the left and collided with the right side portion of V-2 [Morales' car] which was travelling [in] the same direction taking the innermost lane[;] V-2 was dragged to its left side and hit the concrete wall. All vehicles incurred damages and sustaining injuries to the occupant of V-1 and the passengers of V-3. Victims were brought to the hospital for treatment."

On June 6, 1985, respondents Pablo and Ligorio Bondad filed their answer denying any responsibility or liability to petitioner and Morales. They asserted that their vehicle was on full stop because of a flat tire. Thus, it was the bus which hit Morales' car. In their Counterclaim, they contended that petitioner had acted in bad faith in impleading them and that, contrary to its allegation, no prior demand had been made upon them. After due hearing, the trial court rendered a decision declaring that D.M. Transit was liable for the accident that happened but exculpated the Bondads. Likewise the lower court ordered herein petitioners to pay the Bondads actual, moral and exemplary damages, as well as attorney's fees. Petitioner appealed to the Court of Appeals questioning the awards given to herein respondents, but the appellate court affirmed the ruling of the trial court with modification. Hence, this petition for review.

DECISION OF LOWER COURTS: 1. RTC - the trial court exculpated the Bondads and ordered petitioner to pay them actual, moral and exemplary damages, as well as attorney's fees. 2. CA – affirmed the trial court

ISSUE: Whether the award for damages was proper

RULING: Yes.

The Supreme Court found the petition not meritorious. The Court ruled that questions regarding the cause of accident and the persons responsible for it are factual issues, which the Court cannot pass upon. It is jurisprudentially settled that the jurisdiction of the Court is limited to a review of errors of law allegedly committed by the appellate court. It is not bound to analyze and weigh all over again the evidence already considered in the proceedings below. Accordingly, the petition was denied and the assailed decision awarding moral and exemplary damages, attorney's fees and litigation expenses was affirmed.

DISPOSITIVE: "WHEREFORE, from all the foregoing findings, the Court hereby renders judgment as follows:

1. Ordering the defendants D.M. Transit Corporation, D.M. Consortium Inc. and Eduardo Diaz y Mendoza jointly and severally, to pay plaintiff Industrial Insurance Co., Inc.: (a) The sum of P29,800.00 representing the amount it had to pay to Grace Ladaw Morales under its Insurance Policy No. 00857, with interest thereon at the legal rate from April 12, 1985 until fully paid; (b) The sum of P2,000 as litigation and adjustment expenses; and (c) The sum of P15,000.00 as and for attorney's fees;

2. Ordering the plaintiff Industrial Insurance Co., Inc., to pay to the defendants-counterclaimants Pablo Bondad and Ligorio Bondad jointly and severally: (a) The sum of P15,000.00 representing their attorney's fees, and P6,300.00 as appearance fees; (b) The sum of P10,500.00 representing their expenses for the twenty-one hearings consisting of jeepney hire and meals; (c) The sum of P75,000.00 in the concept of moral damages for their having been recklessly and without basis, impleaded by the plaintiff inspite of the clear language in the Traffic Investigation Report (Exhibit "1-A") submitted by Pfc. Agapito Domingo; and (d) The sum of P25,000.00 by way of exemplary damages.

3. Ordering the cross-defendants jointly and severally to pay the cross-claimants Bondads the sum of P8,000.00 representing the cost of repairs of the jeepney, with interest at the legal rate from April 2, 1985 until fully paid.

4. Dismissed for lack of merit are: (a) the cross-claim against the Bondads;

(b) the third party complaint against the GSIS; (c) the cross-claims against the GSIS; and (d) the counterclaim interposed by the defendants except that of the Bondads.


5. The claim made by plaintiff Grace Ladaw Morales is likewise dismissed for lack of evidence in support thereof. She is not held liable in favor of Pablo Bondad and Ligorio Bondad for lack of proof that she authorized the filing of this suit."

15. OLD CASE PESTAŃO v SUMAYANG (2000) Owners & managers of enterprises [G.R. No. 139875. December 4, 2000.]

GREGORIO PESTAÑO and METRO CEBU AUTOBUS CORPORATION, petitioners, vs. Spouses TEOTIMO SUMAYANG and PAZ C. SUMAYANG, respondents.

ID.; DAMAGES; INDEMNITY FOR DEATH CAUSED BY A QUASI-DELICT FIXED AT P50,000.00. — The indemnity for death caused by a quasi-delict used to be pegged at P3,000, based on Article 2206 of the Civil Code. However, the amount has been gradually increased through the years because of the declining value of our currency. At present, prevailing jurisprudence fixes the amount at P50,000.

ID.; ID.; LOSS OF EARNING CAPACITY; COMPUTATION THEREOF IS BASED ON LIFE EXPECTANCY OF DECEASED. — The Court has consistently computed the loss of earning capacity based on the life expectancy of the deceased, and not on that of the heir. Even Villa Rey Transit did likewise.

ID.; ID.; ID.; FACTORS IN THE AWARD THEREOF. — The award for loss of earning capacity is based on two factors:

(1) the number of years on which the computation of damages is based and (2) the rate at which the loss sustained by the heirs is fixed.

The first factor refers to the life expectancy, which takes into consideration the nature of the victim's work, lifestyle, age and state of health prior to the accident. The second refers to the victim's earning capacity minus the necessary living expenses. Stated otherwise, the amount recoverable is that portion of the earnings of the deceased which the beneficiary would have received — the net earnings of the deceased.

FACTS: On August 9, 1986, at around 2:00 o'clock P.M., Ananias Sumayang was riding a motorcycle along the national highway in Ilihan, Tabagon, Cebu. Riding with him was his friend Manuel Romagos. As they came upon a junction, a passenger bus driven by petitioner Gregorio Pestaño and owned by Petitioner Metro Cebu Autobus Corporation hit them. The bus had tried to overtake them sending the motorcycle and its passengers hurtling upon the pavement. Both Ananias Sumayang and Manuel Romagos died.

Paz Sumayang, as heirs of Ananias Sumayang, filed this civil action for damages against Gregorio Pestaño, as driver of the passenger bus that rammed the deceased's motorcycle, Metro Cebu, as owner and operator of the said bus, and Perla Compania de Seguros, as insurer of Metro Cebu.

DECISION OF LOWER COURTS: (1) Regional Trial Court: found petitioners liable for death indemnity, loss of earning capacity of the deceased Ananias Sumayang, and for necessary interment expenses. (2) Court of Appeals: affirmed petitioners' liability for the accident and for Sumayang's death. It agreed with the trial court that the vehicular collision was caused by Pestaño's negligence when he attempted to overtake the motorcycle. The appellate court opined that petitioner Metro Bus had shown laxity in the conduct of its operations and in the supervision of its employees when it allowed petitioner Pestaño to ply his route despite the defective speedometer. Having failed to observe the extraordinary diligence required of public transportation companies, it was held vicariously liable to the victims of the vehicular accident. The appellate court, however, raised to P50,000 the granted indemnity for the death of the victim in accordance with prevailing jurisprudence. It also affirmed the award of loss of earning capacity based on his life expectancy.


ISSUE: Whether petitioners are liable

RULING: The Supreme Court finds no cogent reason to reverse or modify the Court of Appeals' factual findings. Factual findings of the CA affirming those of the trial court are conclusive and binding on this Court. In quasi-delicts, such findings are crucial because negligence is largely a matter of evidence. Eyewitness Ignacio Neis testified that as the two vehicles approached the junction, the victim raised his left arm to signal that he was turning left to Tabagon, but that the latter and his companion were thrown off the motorcycle after it was bumped by the overspeeding bus.

When an injury is caused by the negligence of a servant or an employee, the master or employer is presumed to be negligent either in the selection or in the supervision of that employee. This presumption may be overcome only by


satisfactorily showing that the employer exercised the care and the diligence of a good father of a family in the selection and the supervision of its employee. The negligence alluded to here is in its supervision over its driver, not in that which directly caused the accident. The fact that Pestaño was able to use a bus with a faulty speedometer shows that Metro Cebu was remiss in the supervision of its employees and in the proper care of its vehicles. It had thus failed to conduct its business with the diligence required by law. The Court, therefore, affirmed the decision of the appellate court

CIVIL LAW; QUASI-DELICT; PRESUMPTION OF EMPLOYER'S NEGLIGENCE IN SELECTION OR SUPERVISION OF EMPLOYEE, WHEN ARISES; HOW MAY BE OVERCOME. — Under Articles 2180 and 2176 of the Civil Code, owners and managers are responsible for damages caused by their employees. When an injury is caused by the negligence of a servant or an employee, the master or employer is presumed to be negligent either in the selection or in the supervision of that employee. This presumption may be overcome only by satisfactorily showing that the employer exercised the care and the diligence of a good father of a family in the selection and the supervision of its employee.

D. MORAL DAMAGES (ARTICLE 2217-2220)

Article 2217. Moral damages include physical suffering, mental anguish, fright, serious anxiety, besmirched reputation, wounded feelings, moral shock, social humiliation, and similar injury. Though incapable of pecuniary computation, moral damages may be recovered if they are the proximate result of the defendant's wrongful act for omission.

Article 2218. In the adjudication of moral damages, the sentimental value of property, real or personal, may be considered.

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.

Article 2220. Willful injury to property may be a legal ground for awarding moral damages if the court should find that, under the circumstances, such damages are justly due. The same rule applies to breaches of contract where the defendant acted fraudulently or in bad faith.

16. [G.R. No. 139436. January 25, 2006.] ENRICO B. VILLANUEVA and EVER PAWNSHOP, petitioners, vs. SPS. ALEJO SALVADOR and VIRGINIA SALVADOR, respondents.

FACTS: On December 20, 1991, herein respondents, the spouses Alejo Salvador and Virginia Salvador (Salvadors, collectively), secured a loan of P7,650.00 from petitioner Ever Pawnshop owned and managed by co-petitioner Enrico B. Villanueva (Villanueva). On January 23, 1992, the Salvadors took out a second loan of P5,400.00 pledging, just like in the first loan transaction, jewelry items. Pawnshop Ticket No. 29919, covering the first loan, indicated April 10, 1992 as the last day to redeem the jewelries pawned, whereas the redemption period for the items given as security for the second loan under Pawnshop Ticket No. 30792 fell on May 22, 1992.

The separate redemption periods came and went, but the Salvadors failed to redeem the pawned pieces of jewelry. Nonetheless, on June 1, 1992, their son paid Ever Pawnshop P7,000.00, the amount to be applied against the first loan of P7,650.00. On account of this development, Pawnshop Ticket No. 29919 was cancelled and replaced by Pawnshop Ticket No. 34932. Vis-à-vis the second loan, Ever Pawnshop agreed to the extension of the maturity date to June 30, 1992, provided the Salvadors pay 20% of their second loan obligation on or before June 4, 1992, failing which the securing items shall be auctioned as scheduled. Unlike in the first loan, however, a new pawn ticket was not issued for the second loan.

In the meantime, Ever Pawnshop issued a notice announcing the public auction sale on June 4, 1992 of all January 1 to 31, 1992 unredeemed pledges. The notice appeared in the Classified Ads Section of the Manila Bulletin on June 4, 1992, the very day of the auction itself.

On July 1, 1992, the Salvadors repaired to the pawnshop in a bid to renew the second loan by tendering the aforesaid 20% of the amount due thereon, only to be informed that the pledged jewelry had already been auctioned as scheduled on June 4, 1992.


Such was the state of things when, on August 11, 1992, at the RTC-Pasig City, the Salvadors filed a complaint for damages against Villanueva and Ever Pawnshop arising from the sale without notice of the two (2) sets of jewelry pledged as security for both loans.

DECISION OF LOWER COURTS - 1. RTC - WHEREFORE, the Court hereby renders judgment in favor of the plaintiffs [Salvadors] and against the defendants [Villanueva and Ever Pawnshop]. Defendants are hereby ordered to pay to the plaintiffs:

1. The sum of P20,000.00 by way of moral damages; 2. The sum of P5,400.00 as the value of the jewelry sold under the second loan; 3. The sum of P5,000.00 as and for attorney's fees; and 4. The costs of suit.

2. CA- affirmed in toto that of the trial court

ISSUE:

Whether the award of P20,000.00 as moral damages and P5,000.00 as attorneys fees are proper

RULING: No.

Moral damages — The conditions required in awarding moral damages are: (1) there must be an injury, whether physical, mental or psychological, clearly sustained by the claimant; (2) there must be a culpable act or omission factually established; (3) the wrongful act or omission of the defendant must be the proximate cause of the injury sustained by the claimant; and (4) the award of damages is predicated on any of the cases stated in Article 2219 of the Civil Code.

While there need not be a showing that the defendant acted in a wanton or malevolent manner, as this is a requirement for an award of exemplary damages, there must still be proof of fraudulent action or bad faith for a claim for moral damages to succeed. Then, too, moral damages are generally not recoverable in culpa contractual except when bad faith supervenes and is proven. 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 the fraud. And to the person claiming moral damages rests the onus of proving by convincing evidence the existence of bad faith, for good faith is presumed. The CA's reliance on Article 2220 of the Civil Code in affirming the award of moral damages is misplaced. Said article provides: Art. 2220. Willful injury to property may be a legal ground for awarding moral damages if the court should find that, under the circumstances, such damages are justly due. The same rule applies to breaches of contract where the defendant acted fraudulently or in bad faith. Clear it is from the above that before moral damages may be assessed thereunder, the defendant's act must be vitiated by bad faith or that there is willful intent to injure. Simply put, moral damages cannot arise from simple negligence.

Attorney’s fees

As a matter of sound practice, an award of attorney's fee has always been regarded as the exception rather than the rule. Counsel's fees are, to be sure, not awarded every time a party prevails in a suit because of the policy that no premium should be placed on the right to litigate. Attorney's fees, as part of damages, are assessed only in the instances specified in Article 2208 of the Civil Code. And it is necessary for the trial court to make express findings of fact and law that would bring the case within the exception. In short, the factual, legal or equitable justification for the award must be set forth in the text of the decision. The matter of attorney's fees cannot be touched only in the fallo of the decision, else the award should be thrown out for being speculative and conjectural. Certainly not lost on the Court is the fact that petitioners, after being served with summons, made an attempt to obviate litigation by offering to accept tender of payment and return the jewelry. This offer, however belated, could have saved much expense on the part of both parties, as well as the precious time of the court itself. The respondents chose to turn down this offer and pursue judicial recourse. With this in mind, it hardly seems fair to award them attorneys fees at petitioners' expense.

17. [G.R. No. 127957. February 21, 2001.]

COLLIN A. MORRIS and THOMAS P. WHITTIER, petitioners, vs. COURT OF APPEALS (Tenth Division) and SCANDINAVIAN AIRLINES SYSTEM, respondents.

FACTS:

Petitioners were booked as first class passengers in respondent airline on the February 14, 1978, 3:50 P.M. Manila-Tokyo flight. They checked in at 3:10 p.m. but were informed that they could no longer be accommodated as the flight manifest had been closed at their seats, three (3) minutes before closing, were given to economy class passengers who were upgraded to first class. At the supervisor's desk, they saw that their names had been crossed-out and the symbols "NOSH" meaning NO SHOW written after their names. Petitioners sued for damages claiming that they were bumped off despite a confirmed booking. Witnesses for respondent airline testified that the flight manifest was closed at 3:10 p.m. and that nothing could be done for them as petitioners arrived late and their seats given to upgraded passengers.


DECISION OF LOWER COURTS: 1. The trial court rendered judgment in favor of petitioners

"WHEREFORE, in view of the foregoing, the Court hereby renders judgment in favor of the plaintiffs and against defendant, ordering the latter to pay the former the following:

1) Moral damages to plaintiff Collin A. Morris in the amount of P1,000,000.00 and to plaintiff Thomas P. Whittier the sum of P750,000.00;

2) Exemplary damages in the sum of P200,000.00;

3) Attorney's fees in the amount of P300,000.00, plus the costs of suit.

2. Trial court (motion for reconsideration ) - "WHEREFORE, in view of the foregoing, the Court hereby grants the "Motion for Reconsideration". The dispositive portion of the "Decision" is hereby amended with respect to the amount of moral damages, ordering the defendant to pay moral damages to Collin Morris in the amount of P1,500,000.00 and to Thomas Whittier the amount of P1,000,000.00.

2. Court of Appeals – reversed the trial court and dismissed the complaint. The appellate court found that it was petitioner's fault, in arriving late, that they were denied boarding the flight. Hence, this recourse.

ISSUE: Whether petitioners are entitled to damages

RULING:

No. A contract of air carriage generates a relation attended with a public duty and neglect or malfeasance of the carrier's employees could give ground for an action for damages. However, the airline cannot be held liable for damages where denial for accommodation was grounded on passengers' failure to check-in on time.

Moral damages

"In awarding moral damages for breach of contract of carriage, the breach must be wanton and deliberately injurious or the one responsible acted fraudulently or with malice or bad faith." "Where in breaching the contract of carriage the defendant airline is not shown to have acted fraudulently or in bad faith, liability for damages is limited to the natural and probable consequences of the breach of obligation which the parties had foreseen or could have reasonably foreseen. In that case, such liability does not include moral and exemplary damages." "Moral damages are generally not recoverable in culpa contractual except when bad faith had been proven. However, the same damages may be recovered when breach of contract of carriage results in the death of a passenger."

"The rule is that moral damages are recoverable in a damage suit predicated upon a breach of contract of carriage only where (a) the mishap results in the death of a passenger and (b) it is proved that the carrier was guilty of fraud and bad faith even if death does not result." For having arrived at the airport after the closure of the flight manifest, respondent's employee could not be faulted for not entertaining petitioners' tickets and travel documents for processing, as the checking in of passengers for SAS Flight SK 893 was finished. There was no fraud or bad faith as would justify the court's award of moral damages. In the instant case, respondent's denial of petitioners' boarding on SAS Flight SK 893 was not attended by bad faith or malice. To the contrary, facts revealed that they were not allowed to board the plane due to their failure to check-in on time. Petitioner Morris admitted that they were at the check-in counter at around 3:10, exactly the same time that the flight manifest was closed, but still too late to be accommodated on the plane. Respondent's supervisor, Raul C. Basa, testified that he met petitioners at about 3:20 in the afternoon after receiving a radio call from the ground staff regarding petitioners' complaints. Clearly, petitioners did not arrive on time for check-in

Exemplary damages

"The award of exemplary damages has likewise no factual basis. It is a requisite that the act must be accompanied by bad faith or done in wanton, fraudulent or malevolent manner — circumstances which are absent in this case. In addition, exemplary damages cannot be awarded as the requisite element of compensatory damages was not present."

ID.; ID.; CASE AT BAR — In the instant case, assuming arguendo that breach of contract of carriage may be attributed to respondent, petitioners' travails were directly traceable to their failure to check-in on time, which led to respondent's refusal to accommodate them on the flight.

As we find petitioners not entitled to moral damages, "an award of exemplary damages is likewise baseless." "Where the award of moral and exemplary damages is eliminated, so must the award for attorney's fees be deleted."

18. [G.R. No. 142029. 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.

FACTS: On November 19, 1992 respondents Rebecca Lo and her daughter Annette Ferrer ordered a three-layered wedding cake from petitioners to be delivered at 5:00 o'clock in the afternoon at the Cebu Country Club, Cebu City, on December 14, 1992. Petitioners, however, failed to deliver the wedding cake on time. After several follow-ups, petitioners informed respondents that they could no longer deliver the wedding cake because the order slip got lost. Hence, respondents were compelled to buy a substitute wedding cake. At 10:00 o'clock in the evening, petitioners delivered a two-layered wedding cake, but respondents already declined to accept it. Subsequently, petitioners offered an apology and sent check worth P5,000.00 to respondents. Respondents however, refused to receive the same because they felt it was inadequate. Respondents then filed with the Regional Trial Court of Cebu City an action for breach of contract with damages against petitioners. After due trial, the trial court rendered a decision in favor of respondents and directed petitioners to pay the cost of wedding cake, moral damages and attorney's fees. On appeal, the Court of Appeals modified the appealed decision. It increased the award of moral damages and granted respondents exemplary damages.

Hence, the appeal via certiorari questioning the award of moral exemplary damages.

DECISION OF LOWER COURTS: 1. RTC - judgment is hereby rendered in favor of the plaintiffs and against Erlinda Francisco.

"Directing the latter to pay the former the following: "1. The cost of the wedding cake in the amount of P3,175.00; "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.

2. CA - 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; "2. Attorney's fees in the amount of P10,000.00; and "3. Cost of litigation."

ISSUE:

Whether the award of moral and exemplary damages was proper

RULING:

The Supreme Court granted the petition and deleted the award of moral and exemplary damages.

Moral damages

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. 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, and serious anxiety as the result of the actuation's of the other party. Invariably such action must be shown to have been willfully done in bad faith or with ill motive.

"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."

"Bad faith does not simply connote bad judgment or negligence, it imports a dishonest purpose or some moral obliquity and conscious doing of a wrong, a breach of known duty through some motive or interest or ill will that partakes of the nature of fraud." In this case, "[w]e find no such fraud or bad faith." "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 actuation of the other party. Invariably such action must be shown to have been willfully done in bad faith or with ill motive." "Mere allegations of besmirched reputation, embarrassment and sleepless nights are insufficient to warrant an award for moral damages. It must be shown that the proximate cause thereof was the unlawful act or omission of the [private respondent] petitioners."

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

(1) first, there must be an injury, whether physical, mental or psychological, clearly sustained by the claimant; (2) second, there must be culpable act or omission factually established; (3) third, the wrongful act or omission of the defendant is the proximate cause of the injury sustained by the claimant; and (4) fourth, the award of damages is predicated on any of the cases stated in Article 2219" of the Civil Code.


In the same fashion, to warrant the award of exemplary damages, the 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.

"It must again be stressed that moral damages are emphatically not intended to enrich a plaintiff at the expense of the defendant." "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" or appellate court justices.

In this case, the Court found no such fraud or bad faith.

Nevertheless, the Court found petitioners liable for the payment of nominal damages for their insensitivity, inadvertence or inattention to their customer's anxiety and need of the hour. In addition, petitioners were directed to pay respondents the cost of the wedding cake and attorney's fees.

Exemplary damages

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." "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."

Nominal damages

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.'" 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."

DISPOSITIVE 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.

19. [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.

FACTS: "Exposé" is a radio documentary 4 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.

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 damages 7 against FBNI, Rima and Alegre on 27 February 1990.

On 18 June 1990, FBNI, Rima and Alegre, through Atty. Rozil Lozares, filed an Answer 10 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."

DECISION OF LOWER COURTS: 1. 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.

: hereby jointly and severally ordered to pay plaintiff Ago Medical and Educational Center-Bicol Christian College of Medicine (AMEC-BCCM) the amount of P300,000.00 moral damages, plus P30,000.00 reimbursement of attorney's fees, and to pay the costs of suit.

2. CA - 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.


RULING: Yes. Every defamatory imputation is presumed malicious. Rima and Alegre failed to show adequately their good intention and justifiable motive in airing the supposed gripes of the students Moral damages

A juridical person is generally not entitled to moral damages because, unlike a natural person, it cannot experience physical suffering or such sentiments as wounded feelings, serious anxiety, mental anguish or moral shock. The Court of Appeals cites Mambulao Lumber Co. v. PNB, et al. to justify the award of moral damages. However, the 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. Moreover, where the broadcast is libelous per se, the law implies damages. 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. 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. In this case, the broadcasts are libelous per se. Thus, AMEC is entitled to moral damages.

Attorney’s fees 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. 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.

DISPOSITIVE

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 P300,000 to P150,000 and the award of attorney's fees is deleted. Costs against petitioner.

20. [G.R. No. 130030. June 25, 1999.] EXPERTRAVEL & TOURS, INC., petitioner, vs. THE HON. COURT OF APPEALS and RICARDO LO, respondents.

CIVIL LAW; DAMAGES; MORAL DAMAGES; BASIS OF AWARD. –

Moral damages are not punitive in nature but are designed to compensate and alleviate in some way the physical suffering, mental anguish, fright, serious anxiety, besmirched reputation, wounded feelings, moral shock, social humiliation, and similar injury unjustly caused to a person. Although incapable of pecuniary computation, moral damages, nevertheless, must somehow be proportional to and in approximation of the suffering inflicted. Such damages, to be recoverable, must be the proximate result of a wrongful act or omission the factual basis for which is satisfactorily established by the aggrieved party

ID.; ID.; ID.; CONDITIONS FOR AWARD. — 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.

ID.; ID.; ID.; LEGAL PROVISIONS MANDATING AWARD. — 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.

By special rule in Article 1764, in relation to Article 2206, of the Civil Code, moral damages may also be awarded in case the death of a passenger results from a breach of carriage. In culpa aquiliana, or quasi-delict,

(a) when an act or omission causes physical injuries, or (b) where the defendant is guilty of intentional tort, moral damages may aptly be recovered.

This rule also applies, as aforestated, to contracts when breached by tort. In culpa criminal, moral damages could be lawfully due when the accused is found guilty of physical injuries, lascivious acts, adultery or concubinage, illegal or arbitrary detention, illegal arrest, illegal search, or defamation. 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.

ID.; ID.; ID.; NOT RECOVERABLE ON CLEARLY UNFOUNDED SUIT; RATIONALE. — Although the institution of a clearly unfounded civil suit can at times be a legal justification for an award of attorney's fees, such filing, however, has almost invariably been held not to be a ground for an award of moral damages. 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. If the rule were otherwise, then moral damages must every time be awarded in favor of the prevailing defendant against an unsuccessful plaintiff.

FACTS: As culled from the records, petitioner Expertravel and Tours, Inc. filed a suit for recovery of a sum of money plus damages against private respondent Ricardo Lo for four round-trip plane tickets for Hongkong petitioner issued to respondent Lo, together with hotel accommodations and transfers, for a total cost of P39,677.20 which respondent Lo failed to pay. Respondent Lo in his answer alleged that his account with petitioner 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 rendered judgment dismissing the suit and ordering petitioner to pay moral damages. According to said court, payment made by the private respondent to petitioner's chairperson was valid and binding on petitioner. The Court of Appeals affirmed the judgment in toto. Hence, this petition for review on certiorari, wherein Expertravel sought for the deletion of the moral damages awarded the respondent.

DECISION OF LOWER COURTS: "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.

ISSUE: Whether moral damages is recoverable

RULING:

No. Moral damages are not punitive in nature but are designed to compensate and alleviate in some way the physical suffering, mental anguish, social humiliation and similar injury unjustly caused to a person.

Although the institution of a clearly unfounded civil suit can at times be a legal justification for an award of attorney's fees, such filing, however, has almost invariably been held not to be a ground for an award of moral damages. The law could not have meant to impose a penalty on the right to litigate.

DISPOSITIVE: 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.

21. REPEATED CASE G.R. No. 142029. 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.

Moral damages

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. 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, and serious anxiety as the result of the actuation's of the other party. Invariably such action must be shown to have been willfully done in bad faith or with ill motive.

"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."

"Bad faith does not simply connote bad judgment or negligence, it imports a dishonest purpose or some moral obliquity and conscious doing of a wrong, a breach of known duty through some motive or interest or ill will that partakes of the nature of fraud." In this case, "[w]e find no such fraud or bad faith." "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 actuation of the other party. Invariably such action must be shown to have been willfully done in bad faith or with ill motive." "Mere allegations of besmirched reputation, embarrassment and sleepless nights are insufficient to warrant an award for moral damages. It must be shown that the proximate cause thereof was the unlawful act or omission of the [private respondent] petitioners."

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

(1) first, there must be an injury, whether physical, mental or psychological, clearly sustained by the claimant; (2) second, there must be culpable act or omission factually established; (3) third, the wrongful act or omission of the defendant is the proximate cause of the injury sustained by the claimant; and (4) fourth, the award of damages is predicated on any of the cases stated in Article 2219" of the Civil Code.

In the same fashion, to warrant the award of exemplary damages, the 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.

"It must again be stressed that moral damages are emphatically not intended to enrich a plaintiff at the expense of the defendant." "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" or appellate court justices.

In this case, the Court found no such fraud or bad faith.

Nevertheless, the Court found petitioners liable for the payment of nominal damages for their insensitivity, inadvertence or inattention to their customer's anxiety and need of the hour. In addition, petitioners were directed to pay respondents the cost of the wedding cake and attorney's fees.

FACTS: On November 19, 1992 respondents Rebecca Lo and her daughter Annette Ferrer ordered a three-layered wedding cake from petitioners to be delivered at 5:00 o'clock in the afternoon at the Cebu Country Club, Cebu City, on December 14, 1992. Petitioners, however, failed to deliver the wedding cake on time. After several follow-ups, petitioners informed respondents that they could no longer deliver the wedding cake because the order slip got lost. Hence, respondents were compelled to buy a substitute wedding cake. At 10:00 o'clock in the evening, petitioners delivered a two-layered wedding cake, but respondents already declined to accept it. Subsequently, petitioners offered an apology and sent check worth P5,000.00 to respondents. Respondents however, refused to receive the same because they felt it was inadequate. Respondents then filed with the Regional Trial Court of Cebu City an action for breach of contract with damages against petitioners. After due trial, the trial court rendered a decision in favor of respondents and directed petitioners to pay the cost of wedding cake, moral damages and attorney's fees. On appeal, the Court of Appeals modified the appealed decision. It increased the award of moral damages and granted respondents exemplary damages.

Hence, the appeal via certiorari questioning the award of moral exemplary damages.

DECISION OF LOWER COURTS: 1. RTC - judgment is hereby rendered in favor of the plaintiffs and against Erlinda Francisco.

"Directing the latter to pay the former the following: "1. The cost of the wedding cake in the amount of P3,175.00; "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.

2. CA - 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; "2. Attorney's fees in the amount of P10,000.00; and "3. Cost of litigation."


ISSUE:

Whether the award of moral and exemplary damages was proper

RULING:

The Supreme Court granted the petition and deleted the award of moral and exemplary damages.

Exemplary damages

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." "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."

Nominal damages

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.'" 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."

DISPOSITIVE 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.

22. REPEATED CASE RAMOS v CA

OLD CASE RAMOS v CA (1999) Medical Negligence/malpractice [G.R. No. 124354. December 29, 1999.]

ROGELIO E. RAMOS and ERLINDA RAMOS, in their own behalf and as natural guardians of the minors, ROMMEL RAMOS, ROY RODERICK RAMOS and RON RAYMOND RAMOS, petitioners, vs. COURT OF APPEALS, DELOS SANTOS MEDICAL CENTER, DR. ORLINO HOSAKA and DRA. PERFECTA GUTIERREZ, respondents.

PROPER MORAL DAMAGES. — The actual physical, emotional and financial cost of the care of petitioner would be virtually impossible to quantify. Even the temperate damages herein awarded would be inadequate if petitioner's condition remains unchanged for the next ten years. We recognized that the victim's actual injury would not even scratch the surface of the resulting moral damage because it would be highly speculative to estimate the amount of emotional and moral pain, psychological damage and injury suffered by the victim or those actually affected by the victim's condition. The husband and the children, all petitioners in this case, will have to live with the day to day uncertainty of the patient's illness, knowing any hope of recovery is close to nil. They have fashioned their daily lives around the nursing care of petitioner, altering their long term goals to take into account their life with a comatose patient. They, not the respondents, are charged with the moral responsibility of the care of the victim. The family's moral injury and suffering in this case is clearly a real one. For the foregoing reasons, an award of P2,000,000.00 in moral damages would be appropriate.

FACTS:

In the morning of June 17, 1985, Erlinda Ramos, a 47-year old, was brought into the operating room of the Delos Santos Medical Center for a cholecystectomy (surgical removal of gallbladder). She was then a robust woman, normal as any other except for occasional complaints of discomfort due to pains allegedly caused by the presence of stones in her gall bladder. Rogelio E. Ramos, Erlinda’s husband, however, asked Dr. Hosaka to look for a good anesthesiologist. Dr. Hosaka, in turn, assured Rogelio that he will get a good anesthesiologist, who was Dr. Gutierrez. On the day of the operation, the patient's nailbed became bluish and the patient was placed in a trendelenburg position — a position where the head of the patient is placed in a position lower than her feet which is an indication that there is a decrease of blood supply to the patient's brain.


Plaintiff presented the testimonies of Dean Herminda Cruz and Dr. Mariano Gavino to prove that the damage sustained by Erlinda was due to lack of oxygen in her brain caused by the faulty management of her airway by private respondents during the anesthesia phase.

At around 3:00 p.m. of that day, Erlinda was taken to the Intensive Care unit of the hospital, comatose. On January 8, 1986, Erlinda's husband filed a civil case for damages against said hospital and Drs. Orlino Hosaka and Perfecta Gutierrez.

DECISION OF LOWER COURTS:

1. Regional Trial Court: ruled in favor of the plaintiffs.

2. Court of Appeals: reversed the decision of the lower court and ordered the dismissal of the complaint.


ISSUE:

1. Whether private respondents were negligent in the care of Erlinda during the anesthesia phase of the operation and, if in the affirmative, whether the alleged negligence was the proximate cause of Erlinda's comatose condition 2. Whether the hospital is responsible for the incident

RULING:

1. With regard to Dra. Gutierrez, we find her negligent in the care of Erlinda during the anesthesia phase. As borne by the records, respondent Dra. Gutierrez failed to properly intubate the patient. It was the faulty intubation which was the proximate cause of Erlinda's comatose condition.

Although witness Cruz, is not an anesthesiologist, she can very well testify upon matters on which she is capable of observing such as, Do you know the reason why the patient was placed in that trendelenburg position? As far as I know, when a patient is in that position, there is a decrease of blood supply to the statements and acts of the physician and surgeon, external appearances, and manifest conditions which are observable by any one. This is precisely allowed under the doctrine of res ipsa loquitur where the testimony of expert witnesses is not required.

The doctrine of res ipsa loquitur is a recognition of the postulate that, as a matter of common knowledge and experience, the very nature of certain types of occurrences may justify an inference of negligence on the part of the person who controls the instrumentality causing the injury in the absence of some explanation by the defendant who is charged with negligence. The damage sustained by Erlinda in her brain prior to a scheduled gall bladder operation presents a case for the application of res ipsa loquitur.

Brain damage, which Erlinda sustained is an injury which does not normally occur in the process of a gall bladder operation. In fact, this kind of situation does not happen in the absence of negligence of someone in the administration of anesthesia and in the use of endotracheal tube. Moreover, the instruments used in the administration of anesthesia, including the endotracheal tube, were all under the exclusive control of private respondents, who are the physicians-in- charge.

CIVIL LAW; DOCTRINE OF RES IPSA LOQUITUR; ELUCIDATED. — Res ipsa loquitur is a Latin phrase which literally means "the thing or the transaction speaks for itself." The phrase "res ipsa loquitur" is a maxim for the rule that the fact of the occurrence of an injury, taken with the surrounding circumstances, may permit an inference or raise a presumption of negligence, or make out a plaintiffs prima facie case, and present a question of fact for defendant to meet with an explanation. Where the thing which caused the injury complained of is shown to be under the management of the defendant or his servants and the accident is such as in ordinary course of things does not happen if those who have its management or control use proper care, it affords reasonable evidence, in the absence of explanation by the defendant, that the accident arose from or was caused by the defendant's want of care. The doctrine of res ipsa loquitur is simply a recognition of the postulate that, as a matter of common knowledge and experience, the very nature of certain types of occurrences may justify an inference of negligence on the part of the person who controls the instrumentality causing the injury in the absence of some explanation by the defendant who is charged with negligence. It is grounded in the superior logic of ordinary human experience and on the basis of such experience or common knowledge, negligence may be deduced from the mere occurrence of the accident itself. Hence, res ipsa loquitur is applied in conjunction with the doctrine of common knowledge. However, much has been said that res ipsa loquitur is not a rule of substantive law and, as such, does not create or constitute an independent or separate ground of liability. Instead, it is considered as merely

evidentiary or in the nature of a procedural rule. It is regarded as a mode of proof, or a mere procedural convenience since it furnishes a substitute for, and relieves a plaintiff of, the burden of producing specific proof of negligence. In other words, mere invocation and application of the doctrine does not dispense with the requirement of proof of negligence. It is simply a step in the process of such proof, permitting the plaintiff to present along with the proof of the accident, enough of the attending circumstances to invoke the doctrine, creating an inference or presumption of negligence, and to thereby place on the defendant the burden of going forward with the proof. Still, before resort to the doctrine may be allowed, the following requisites must be satisfactorily shown:

1. The accident is of a kind which ordinarily does not occur in the absence of someone's negligence; 2. It is caused by an instrumentality within the exclusive control of the defendant or defendants; and 3. The possibility of contributing conduct which would make the plaintiff responsible is eliminated.

In the above requisites, the fundamental element is the "control of the instrumentality" which caused the damage. Such element of control must be shown to be within the dominion of the defendant. In order to have the benefit of the rule, a


plaintiff, in addition to proving injury or damage, must show a situation where it is applicable, and must establish that the essential elements of the doctrine were present in a particular incident.

APPLICATION IN MEDICAL MALPRACTICE. — Medical malpractice cases do not escape the application of this doctrine. Thus, res ipsa loquitur has been applied when the circumstances attendant upon the harm are themselves of such a character as to justify an inference of negligence as the cause of that harm. The application of res ipsa loquitur in medical negligence cases presents a question of law since it is a judicial function to determine whether a certain set of circumstances does, as a matter of law, permit a given inference.

Although generally, expert medical testimony is relied upon in malpractice suits to prove that a physician has done a negligent act or that he has deviated from the standard medical procedure, when the doctrine of res ipsa loquitur is availed by the plaintiff, the need for expert medical testimony is dispensed with because the injury itself provides the proof of negligence. The reason is that the general rule on the necessity of expert testimony applies only to such matters clearly within the domain of medical science, and not to matters that are within the common knowledge of mankind which may be testified to by anyone familiar with the facts.

Ordinarily, only physicians and surgeons of skill and experience are competent to testify as to whether a patient has been treated or operated upon with a reasonable degree of skill and care. However, testimony as to the statements and acts of physicians and surgeons, external appearances, and manifest conditions which are observable by any one may be given by non-expert witnesses. Hence, in cases where the res ipsa loquitur is applicable, the court is permitted to find a physician negligent upon proper proof of injury to the patient, without the aid of expert testimony, where the court from its fund of common knowledge can determine the proper standard of care. Where common knowledge and experience teach that a resulting injury would not have occurred to the patient if due care had been exercised, an inference of negligence may be drawn giving rise to an application of the doctrine of res ipsa loquitur without medical evidence, which is ordinarily required to show not only what occurred but how and why it occurred. When the doctrine is appropriate, all that the patient must do is prove a nexus between the particular act or omission complained of and the injury sustained while under the custody and management of the defendant without need to produce expert medical testimony to establish the standard of care. Resort to res ipsa loquitur is allowed because there is no other way, under usual and ordinary conditions, by which the patient can obtain redress for injury suffered by him. Thus, courts of other jurisdictions have applied the doctrine in the following situations: leaving of a foreign object in the body of the patient after an operation, injuries sustained on a healthy part of the body which was not under, or in the area, of treatment, removal of the wrong part of the body when another part was intended, knocking out a tooth while a patient's jaw was under anesthetic for the removal of his tonsils, and loss of an eye while the patient plaintiff was under the influence of anesthetic, during or following an operation for appendicitis, among others. Nevertheless, despite the fact that the scope of res ipsa loquitur has been measurably enlarged, it does not automatically apply to all cases of medical negligence as to mechanically shift the burden of proof to the defendant to show that he is not guilty of the ascribed negligence. Res ipsa loquitur is not a rigid or ordinary doctrine to be perfunctorily used but a rule to be cautiously applied, depending upon the circumstances of each case. It is generally restricted to situations in malpractice cases where a layman is able to say, as a matter of common knowledge and observation, that the consequences of professional care were not as such as would ordinarily have followed if due care had been exercised. A distinction must be made between the failure to secure results, and the occurrence of something more unusual and not ordinarily found if the service or treatment rendered followed the usual procedure of those skilled in that particular practice. It must be conceded that the doctrine of res ipsa loquitur can have no application in a suit against a physician or surgeon which involves the merits of a diagnosis or of a scientific treatment. The physician or surgeon is not required at his peril to explain why any particular diagnosis was not correct, or why any particular scientific treatment did not produce the desired result. Thus, res ipsa loquitur is not available in a malpractice suit if the only showing is that the desired result of an operation or treatment was not accomplished. The real question, therefore, is whether or not in the process of the operation any extraordinary incident or unusual event outside of the routine performance occurred which is beyond the regular scope of customary professional activity in such operations, which, if unexplained would themselves reasonably speak to the average man as the negligent cause or causes of the untoward consequence. If there were such extraneous interventions, the doctrine of res ipsa loquitur may be utilized and the defendant is called upon to explain the matter, by evidence of exculpation, if he could.

Ordinarily a person being put under anesthesia is not rendered decerebrate as a consequence of administering such anesthesia in the absence of negligence.

4. ID.; ID.; APPLICABLE IN CASE AT BAR. — We find the doctrine of res ipsa loquitur appropriate in the case at bar. . . . Brain damage, which Erlinda sustained, is an injury which does not normally occur in the process of a gall bladder operation. In fact, this kind of situation does not happen in the absence of negligence of someone in the administration of anesthesia and in the use of endotracheal tube. Normally, a person being put under anesthesia is not rendered decerebrate as a consequence of administering such anesthesia if the proper procedure was followed. Furthermore, the instruments used in the administration of anesthesia, including the endotracheal tube, were all under the exclusive control of private respondents, who are the physicians-in-charge.

ID.; ID.; CONTRIBUTORY NEGLIGENCE. — Petitioner Erlinda could not have been guilty of contributory negligence because she was under the influence of anesthetics which rendered her unconscious. Considering that a sound and unaffected member of the body (the brain) is injured or destroyed while the patient is unconscious and under the immediate and exclusive control of the physicians, we hold that a practical administration of justice dictates the application of res ipsa loquitur. Upon these facts and under these circumstances the Court would be able to say, as a matter of common knowledge and observation, if negligence attended the management and care of the patient. Moreover, the liability of the physicians and the hospital in this case is not predicated upon an alleged failure to secure the desired results of an operation nor on an alleged lack of skill in the diagnosis or treatment as in fact no operation or treatment was ever performed on Erlinda. Thus, upon all these initial determination a case is made out for the application of the doctrine of res ipsa loquitur.

Respondent Dra. Gutierrez' act of seeing her patient for the first time only an hour before the scheduled operative procedure was therefore, an act of exceptional negligence and professional irresponsibility.

Private respondents repeatedly hammered the view that the cerebral anoxia which led to Erlinda's coma was due to


bronchospasm mediated by her allergic response to the drug, Thiopental Sodium, introduced into her system, as provided by the testimony of Dr. Jamora. Dr. Jamora cannot be considered an authority in the field of anesthesiology simply because he is not an anesthesiologist. Since Dr. Jamora is a pulmonologist, he could not have been capable of properly enlightening the court about anesthesia practice and procedure and their complications.

2. For the purpose of allocating responsibility in medical negligence cases, an employer-employee relationship in effect exists between hospitals and their attending and visiting physicians.

While the burden of proving negligence rests on the plaintiffs, once negligence is shown, the burden shifts to the respondents (parent, guardian, teacher or employer) who should prove that they observed the diligence of a good father of a family to prevent damage.

ID.; EXTRA-CONTRACTUAL OBLIGATIONS; QUASI-DELICTS; EMPLOYER-EMPLOYEE RELATIONSHIP EXISTS BETWEEN HOSPITALS AND CONSULTANTS FOR THE PURPOSE OF ALLOCATING RESPONSIBILITY IN MEDICAL NEGLIGENCE CASES. — Hospitals exercise significant control in the hiring and firing of consultants and in the conduct of their work within the hospital premises. Doctors who apply for "consultant" slots, visiting or attending, are required to submit proof of completion of residency, their educational qualifications; generally, evidence of accreditation by the appropriate board (diplomate), evidence of fellowship in most cases, and references. These requirements are carefully scrutinized by members of the hospital administration or by a review committee set up by the hospital who either accept or reject the application. This is particularly true with respondent hospital. After a physician is accepted, either as a visiting or attending consultant, he is normally required to attend clinico- pathological conferences, conduct bedside rounds for clerks, interns and residents, moderate grand rounds and patient audits and perform other tasks and responsibilities, for the privilege of being able to maintain a clinic in the hospital, and/or for the privilege of admitting patients into the hospital. In addition to these, the physician's performance as a specialist is generally evaluated by a peer review committee on the basis of mortality and morbidity statistics, and feedback from patients, nurses, interns and residents. A consultant remiss in his duties, or a consultant who regularly falls short of the minimum standards acceptable to the hospital or its peer review committee, is normally politely terminated. In other words, private hospitals, hire, fire and exercise real control over their attending and visiting "consultant" staff. While "consultants" are not, technically employees, a point which respondent hospital asserts in denying all responsibility for the patient's condition, the control exercised, the hiring, and the right to terminate consultants all fulfill the important hallmarks of an employer-employee relationship, with the exception of the payment of wages. In assessing whether such a relationship in fact exists, the control test is determining. Accordingly, on the basis of the foregoing, we rule that for the purpose of allocating responsibility in medical negligence cases, an employer- employee relationship in effect exists between hospitals and their attending and visiting physicians. DCTSEA

12. ID.; ID.; ID.; EMPLOYERS LIABLE FOR THE DAMAGES CAUSED BY THEIR EMPLOYEES. — The basis for holding an employer solidarily responsible for the negligence of its employee is found in Article 2180 of the Civil Code which considers a person accountable not only for his own acts but also for those of others based on the former's responsibility under a relationship of patria potestas. Such responsibility ceases when the persons or entity concerned prove that they have observed the diligence of a good father of the family to prevent damage. In other words, while the burden of proving negligence rests on the plaintiffs, once negligence is shown, the burden shifts to the respondents (parent, guardian, teacher or employer) who should prove that they observed the diligence of a good father of a family to prevent damage. In the instant case, respondent hospital, apart from a general denial of its responsibility over respondent physicians, failed to adduce evidence showing that it exercised the diligence of a good father of a family in the hiring and supervision of the latter. It failed to adduce evidence with regard to the degree of supervision which it exercised over its physicians. In neglecting to offer such proof, or proof of a similar nature, respondent hospital thereby failed to discharge its burden under the last paragraph of Article 2180. Having failed to do this, respondent hospital is consequently solidarily responsible with its physicians for Erlinda's condition.

23. REPEATED CASE [G.R. No. 136722. April 12, 2000.] INDUSTRIAL INSURANCE COMPANY, Inc., petitioner, vs. PABLO BONDAD and LIGORIO BONDAD, respondents.

CIVIL LAW; DAMAGES; MORAL DAMAGES; REQUISITES; AWARD THEREOF PROPER IN CASE AT BAR. — In the same vein, we affirm the award of moral damages. To sustain this award, it must be shown that (1) the claimant suffered injury, and (2) such injury sprung from any of the cases listed in Articles 2219 and 2220 of the Civil Code. It is not enough that the claimant alleges mental anguish, serious anxiety, wounded feelings, social humiliation, and the like as a result of the acts of the other party. It is necessary that such acts be shown to have been tainted with bad faith or ill motive. In the case at bar, it has been shown that the petitioner acted in bad faith in compelling respondents to litigate an unfounded claim. As a result, Respondent Ligorio Bondad "could no longer concentrate on his job." Moreover, Pablo Bondad became sick and even suffered a mild stroke. Indeed, respondents' anxiety is not difficult to understand. They were innocently attending to a flat tire on the shoulder of the road; the next thing they knew, they were already being blamed for an accident. Worse, they were forced to commute all the way from Laguna to Makati in order to attend the hearings. Under the circumstances of this case, the award of moral damages is justified.

FACTS: On April 12, 1985, petitioner Industrial Insurance Company, Inc. and Grace L. Morales filed before the Regional Trial Court of Makati a complaint for damages against D.M. Transit Corporation, Eduardo Diaz, Pablo Bondad and Ligorio Bondad for the accident suffered by Grace Morales on December 17, 1984 due to the gross and wanton negligence, carelessness and imprudence of both defendant drivers Eduardo Diaz and Ligorio Bondad, who failed to exercise and observe the diligence required by law in the management and operation of their respective vehicles and by their defendant employers; D.M. Transit Corporation and Pablo Bondad, respectively, for their failure to exercise the diligence


required of them by law in the selection and supervision of their employees including their aforementioned involved drivers.

The present Petition finds its roots in an incident which involved three vehicles: a Galant Sigma car driven by Grace Ladaw Morales, a packed passenger jeepney originally driven by Ligorio Bondad, and a DM Transit Bus driven by Eduardo Mendoza.

Pfc. Agapito L. Domingo of the Southern Police District investigated the accident and filed the following report:

"Investigation disclosed that shortly before the accident took place, V-3 (D.M. Transit Bus) was traveling along South Expressway coming from Alabang towards the general direction of Makati. When upon reaching a place at KM Post 14 [in front] of Merville Subd., said V-3 hit and bumped the rear left side portion of V-1 [Bondads' jeepney] which was then at [stop] position due to flat tire[;] due to the severe impact cause by V-3 it swerved to the left and collided with the right side portion of V-2 [Morales' car] which was travelling [in] the same direction taking the innermost lane[;] V-2 was dragged to its left side and hit the concrete wall. All vehicles incurred damages and sustaining injuries to the occupant of V-1 and the passengers of V-3. Victims were brought to the hospital for treatment."

On June 6, 1985, respondents Pablo and Ligorio Bondad filed their answer denying any responsibility or liability to petitioner and Morales. They asserted that their vehicle was on full stop because of a flat tire. Thus, it was the bus which hit Morales' car. In their Counterclaim, they contended that petitioner had acted in bad faith in impleading them and that, contrary to its allegation, no prior demand had been made upon them. After due hearing, the trial court rendered a decision declaring that D.M. Transit was liable for the accident that happened but exculpated the Bondads. Likewise the lower court ordered herein petitioners to pay the Bondads actual, moral and exemplary damages, as well as attorney's fees. Petitioner appealed to the Court of Appeals questioning the awards given to herein respondents, but the appellate court affirmed the ruling of the trial court with modification. Hence, this petition for review.

DECISION OF LOWER COURTS: 1. RTC - the trial court exculpated the Bondads and ordered petitioner to pay them actual, moral and exemplary damages, as well as attorney's fees. 2. CA – affirmed the trial court

ISSUE: Whether the award for damages was proper

RULING: Yes.

The Supreme Court found the petition not meritorious. The Court ruled that questions regarding the cause of accident and the persons responsible for it are factual issues, which the Court cannot pass upon. It is jurisprudentially settled that the jurisdiction of the Court is limited to a review of errors of law allegedly committed by the appellate court. It is not bound to analyze and weigh all over again the evidence already considered in the proceedings below. Accordingly, the petition was denied and the assailed decision awarding moral and exemplary damages, attorney's fees and litigation expenses was affirmed.

DISPOSITIVE: "WHEREFORE, from all the foregoing findings, the Court hereby renders judgment as follows:

1. Ordering the defendants D.M. Transit Corporation, D.M. Consortium Inc. and Eduardo Diaz y Mendoza jointly and severally, to pay plaintiff Industrial Insurance Co., Inc.: (a) The sum of P29,800.00 representing the amount it had to pay to Grace Ladaw Morales under its Insurance Policy No. 00857, with interest thereon at the legal rate from April 12, 1985 until fully paid; (b) The sum of P2,000 as litigation and adjustment expenses; and (c) The sum of P15,000.00 as and for attorney's fees;

2. Ordering the plaintiff Industrial Insurance Co., Inc., to pay to the defendants-counterclaimants Pablo Bondad and Ligorio Bondad jointly and severally: (a) The sum of P15,000.00 representing their attorney's fees, and P6,300.00 as appearance fees; (b) The sum of P10,500.00 representing their expenses for the twenty-one hearings consisting of jeepney hire and meals; (c) The sum of P75,000.00 in the concept of moral damages for their having been recklessly and without basis, impleaded by the plaintiff inspite of the clear language in the Traffic Investigation Report (Exhibit "1-A") submitted by Pfc. Agapito Domingo; and (d) The sum of P25,000.00 by way of exemplary damages.

3. Ordering the cross-defendants jointly and severally to pay the cross-claimants Bondads the sum of P8,000.00 representing the cost of repairs of the jeepney, with interest at the legal rate from April 2, 1985 until fully paid.

4. Dismissed for lack of merit are: (a) the cross-claim against the Bondads;


(b) the third party complaint against the GSIS; (c) the cross-claims against the GSIS; and (d) the counterclaim interposed by the defendants except that of the Bondads.

5. The claim made by plaintiff Grace Ladaw Morales is likewise dismissed for lack of evidence in support thereof. She is not held liable in favor of Pablo Bondad and Ligorio Bondad for lack of proof that she authorized the filing of this suit."

24. OLD CASE

Calalas v CA. G.R. No. 122039 May 31, 2000 VICENTE CALALAS, petitioner, vs. COURT OF APPEALS, ELIZA JUJEURCHE SUNGA and FRANCISCO SALVA, respondents.

DAMAGES; MORAL DAMAGES; WHEN IT MAY BE RECOVERED. — As a general rule, moral damages are not recoverable in actions for damages predicated on a breach of contract for it is not one of the items enumerated under Art. 2219 of the Civil Code. As an exception, such damages are recoverable: (1) in cases in which the mishap results in the death of a passenger, as provided in Art. 1764, in relation to Art. 2206 (3) of the Civil Code; and (2) in the cases in which the carrier is guilty of fraud or bad faith, as provided in Art. 2220.

FACTS: At 10 o'clock in the morning of August 23, 1989, private respondent Eliza Jujeurche G. Sunga, then a college freshman majoring in Physical Education at the Siliman University, took a passenger jeepney owned and operated by petitioner Vicente Calalas. As the jeepney was filled to capacity of about 24 passengers, Sunga was given by the conductor an "extension seat," a wooden stool at the back of the door at the rear end of the vehicle.

On the way to Poblacion Sibulan, Negros Occidental, the jeepney stopped to let a passenger off. As she was seated at the rear of the vehicle, Sunga gave way to the outgoing passenger. Just as she was doing so, an Isuzu truck driven by Iglecerio Verena and owned by Francisco Salva bumped the left rear portion of the jeepney. As a result, Sunga was injured.

On October 9, 1989, Sunga filed a complaint for damages against Calalas, alleging violation of the contract of carriage by the former in failing to exercise the diligence required of him as a common carrier. Calalas, on the other hand, filed a third-party complaint against Francisco Salva, the owner of the Isuzu truck

DECISION OF LOWER COURTS: 1. RTC – Dumaguete – rendered judgment against Salva holding that the driver of the Isuzu truck was responsible It took cognizance of another case (Civil Case No. 3490), filed by Calalas against Salva and Verena, for quasi-delict, in which Branch 37 of the same court held Salva and his driver Verena jointly liable to Calalas for the damage to his jeepney. 2. CA – reversed the RTC, awarding damages instead to Sunga as plaintiff in an action for breach of contract of carriage since the cause of action was based on such and not quasi delict. Hence, current petition for review on certiorari.

ISSUE: Whether (per ruling in Civil Case) negligence of Verena was the proximate cause of the accident negates his liability and that to rule otherwise would be to make the common carrier an insurer of the safety of its passengers In relation thereto, does the principle of res judicata apply?

RULING: No. The issue in Civil Case No. 3490 was whether Salva and his driver Verena were liable for quasi-delict for the damage caused to petitioner's jeepney. On the other hand, the issue in this case is whether petitioner is liable on his contract of carriage.

In case of death or injuries to passengers, Art. 1756 of the Civil Code provides that common carriers are presumed to have been at fault or to have acted negligently unless they prove that they observed extraordinary diligence as defined in Arts. 1733 and 1755 of the Code. This provision necessarily shifts to the common carrier the burden of proof.

Hence, Vicente Calalas (operator) is liable since he did not exercise utmost diligence. 1. Jeepney was not properly parked; 2. Overloading of passengers.

25. [G.R. No. 98458. July 17, 1996.]

COCOLAND DEVELOPMENT CORPORATION, petitioner, vs. NATIONAL LABOR RELATIONS COMMISSION and JEREMIAS MAGO, respondents.

NLRC'S AWARD OF MORAL AND EXEMPLARY DAMAGES TO PRIVATE RESPONDENT UNJUSTIFIED DESPITE HIS WRONGFUL DISMISSAL; REASON. — While private respondent was wrongfully dismissed by petitioner without valid cause, this does not automatically mean that petitioner is liable to private respondent for moral or other damages. In Primero vs. Intermediate Appellate Court, this Court held that ". . . an award (of moral damages) cannot be justified solely upon the premise (otherwise sufficient for redress under the Labor Code) that the employer fired his employee without just cause or due process. Additional facts must be pleaded and proven to warrant the grant of moral damages under the Civil Code, these being, to repeat, that the act of dismissal was attended by bad faith or fraud, or was oppressive to labor, or done in a manner contrary to morals, good customs, or public policy; and of course, that social humiliation, wounded feelings, grave anxiety, etc., resulted therefrom." This was reiterated in Garcia vs. NLRC, where the Court added that exemplary damages may be awarded only if the dismissal was shown to have been effected in a wanton, oppressive or malevolent manner. This the private respondent failed to do. Because no evidence was adduced to show that petitioner company acted in bad faith or in a wanton or fraudulent manner in dismissing the private respondent, the labor arbiter did not award any moral and exemplary damages in his decision. Respondent NLRC


therefore had no factual or legal basis to award such damages in the exercise of its appellate jurisdiction. However, the Court sustains the award of attorney's fees equivalent to five percent (5%) of the total monetary award as authorized by the Labor Code.

FACTS:

In the early part of 1980, petitioner corporation, which was engaged in the production of coffee, coconut, cacao and black pepper at its plantation in Lamitan, Basilan, hired private respondent, an agriculturist by profession, as Field Supervisor. His work "consisted of servicing the agricultural needs of respondent" company at its plantation. He was compensated for days actually worked, and was off-duty Sundays, rest days and holidays.

Sometime in January 1989, petitioner corporation came to know that private respondent was engaged in extending technical services and advice to small farmers without prior clearance from management. On account thereof, the company, through its vice president for operations, Alfredo C. de la Cruz, issued a memorandum dated January 12, 1989, charging private respondent with reportedly imparting company technology in coffee propagation techniques by "rendering professional services to outside parties without the knowledge/consent of the management"

DECISION OF LOWER COURTS –

1. Labor arbiter - "WHEREFORE, premises considered, judgment is hereby rendered declaring complainant's dismissal illegal. Complainant, in lieu of reinstatement, is awarded separation pay in the amount of Fifteen Thousand Six Hundred Pesos (P15,600.00); backwages of Thirty-One Thousand Two Hundred Pesos (P31,200.00); and attorney's fees of Two Thousand Three Hundred Forty Pesos (P2,340.00).


RULING: No. See above for reason.

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