Damages Concept of Damages HEIRS OF BOLADO vs. Vda.deBulan Facts:Borlado sold a parcel of land to Bacero for P300.00. When Francisco died, his heirs sold the lot to Sps. Bulan. Bulan declared the lot in her name and paid the corresponding taxes. Bulan had been in continuous, peaceful, uninterrupted, adverse, and exclusive possession of the land when the heirs of Borlado forcibly entered and wrested physical possession of the land from them. Bulan filed a complaint for ejectment and was granted by the trial court. The heirs of Borlado were ordered to vacate the lot. 1100 cavans of palay was awarded as damages. Issue: Is the award of palay for damages proper? Ruling: No. Palay is not legal tender currency in the Philippines. [NOT RELEVANT TO THE SUBJECT: appellants contended that the trial court was wrong in awarding ownership of the land to Bulan. The SC said that it was a question of fact. Thus, it cannot rule on the matter] CHIANG YIA MIN VS. RCBC
FACTS: This petition is for the recovery of an amount of $100,000.00 and damages. The said US$100,000.00 was sent by Hang Lung Bank Ltd. of Hong Kong on February 7, 1979 to respondent bank’s head office.The remittance was for petitioners own account and was intended to qualify him as a foreign investor under
Philippine laws. As found by the trial court, it was sent by petitioner himself prior to his arrival in the Philippines.When petitioner checked on his money sometime in mid-1985, he found out that that the dollar deposit was transferred to the Shaw Boulevard branch of respondent bank and converted to a peso account, which had a balance of only P1,362.10 as of October 29, 1979. A letter of respondent bank dated August 9, 1985 stated that petitioners Current Account No. 12-2009 was opened on February 8, 1979, with an initial deposit of P729,752.20; a total of P728,390.00 was withdrawn by way of five checks respectively dated February 13, 19 and 23, 1979 and October 5 and 29, 1979, apparently issued by petitioner in favor of PaperconPhils. Inc., one of the respondents and a business venture of Tom Pek.Petitioner insisted that he did not cause the transfer of his money to the Shaw Boulevard branch of RCBC, as his instructions in the telegraphic transfer were for the money to be remitted to the RCBC head office in Makati, nor its conversion to pesos and the subsequent withdrawals. Nor did he authorize anyone to perform these acts. Tom Pek and Papercon did not deny receiving the checks worth P712,700.00 but argued that unless proven otherwise, the said checks should be presumed to have been issued in their favor for a sufficient and valuable consideration. The trial court determined that the withdrawals were not made by petitioner nor authorized by him, and held respondent bank liable for the US$100,000.00, and the interest from date of filing of the complaint, damages, attorneys fees, and costs. CA reversed trial court. SC affirmed CA.
ISSUE: Whether or not petitioner has proved that respondent bank connived with private respondents and third party defendants Papercon and Tom Pek in allowing thewithdrawals, knowing them to be unauthorized by the petitioner, and with the purpose of defrauding him, thereby warranting an award for damages.
RULING: NO. There is no evidence to show that RCBC, Papercon, Tom Pek colluded to defraud petitioner of his money. Petitioners allegation that he did not authorize the opening of the current account and the issuance of the checks was countered by private respondents by a witnessed they presented who testified that the issuance of the questioned checks were all upon the instructions of the petitioner. The evidence stands unrebutted that petitioner instructed the opening of the said account and signed the pertinent application forms. Quite contrary to petitioners insinuations of fraud or negligence, the evidence indicates that the reason why respondent bank relaxed its rules in handling petitioners application was because, in addition to having been referred by a well-known client, petitioner was in a hurry to have the remittance credited to his account. The person who alleges fraud or negligence must prove it, because the general presumption is that men act with care and prudence. Good faith is always presumed and it is the burden of the party claiming otherwise to adduce clear and convincing evidence to the contrary. No judgment for damages could arise where the source of injury, be it fraud, fault, or negligence, was not affirmatively established by competent evidence.
KINDS OF DAMAGES ACTUAL OR COMPENSATORY a.) As to actual loss suffered PRODUCERS BANK OF THE PHILIPPINES, petitioner, vs .COURT OF APPEALS and SPOUSES SALVADOR Y. CHUA and EMILIA U. CHUA, respondents. Topic: actual damages, exemplary damages Facts: The spouses Chua, engaged in several businesses including gasoline proprietorship, obtained a P2-million loan from Producer’s Bank secured by a real estate mortgage and payable within 3 years or from 1982 to 1985. In January 1984, the spouses deposited the total sum of P960,000 which was duly entered in their account. However, the bank failed to credit the deposit because its branch manager absconded with the bank's money. The bank dishonored their checks for insufficiency of funds despite their remaining balance of more than a million pesos and denied their request for copies of their account ledgers. Thus, the action for damages by respondent spouses against petitioner. (You can stop here for your digests.) Meanwhile, in October 1984, PB applied for extrajudicial foreclosure of the real estate mortgage including 2 other loans not covered by the mortgage. With this, the spouses filed a complaint for injunction and damages alleging that the foreclosure was maliciously instituted to harass them. The trial court found that the spouses, who were constantly paying their loan, were not in default; that the loan, with a 3 year period, is not yet due and demandable; and that the foreclosure proceedings was initiated in evident bad faith. Judgment was rendered in favor of the spouses ordering PB to
render an accounting, to allow the off-setting of the obligation and awarding them moral damages, actual damages on unrealized profits, exemplary damages and attorney's fees. On appeal, the Court of Appeals upheld the findings of the trial court but reduced the amount of damages awarded. A motion for partial reconsideration having been denied, hence, this recourse with PB mainly assailing the factual findings of the Court of Appeals. Issue: Are the spouses entitled to actual damages and exemplary damages? Ruling: The spouses are entitled to exemplary damages but not actual damages based on unrealized profits. Foreclosure is but a necessary consequence of nonpayment of a mortgage indebtedness and that the mortgage can be foreclosed only when the debt remains unpaid at the time it is due. The application for extrajudicial foreclosure of the mortgage which is not due and demandable was premature. This entitles the mortgagor to moral and exemplary damages and attorney's fees. However, the award of actual damages based on unrealized profits merely on the basis of the sole testimony of one of the parties, was insufficient. The same must be supported by independent evidence. (Short form for your digests) Exemplary damages The award of exemplary damages is in order in view of the malicious and unwarranted application for extrajudicial foreclosure by petitioner which was obviously done to harass, embarrass, annoy, or ridicule private respondents. Likewise, petitioner, in its application for extrajudicial foreclosure, included the other loans of private respondents which were not covered by the real estate mortgage agreement, such
as the loan of P175,000 which was a time loan, and the amount of P400,000.00 which was a clean loan. Moreover, petitioner unjustifiably refused to give private respondents copies of their account ledgers which would show the deposits made by them. Also, petitioner bank's failure to credit the deposit in the account of private respondents constituted gross negligence in the performance of its contractual obligation which amounts to evident bad faith. Verily, all these acts of petitioner were accompanied by bad faith and done in wanton, fraudulent and malevolent manner warranting the award of exemplary damages in favor of private respondents, in accordance with Article 2232 of the Civil Code. Actual damages Under Articles 2199 and 2200 of the Civil Code, actual or compensatory damages are those awarded in satisfaction of, or in recompense for, loss or injury sustained. They proceed from a sense of natural justice and are designed to repair the wrong that has been done. There are two kinds of actual or compensatory damages: one is the loss of what a person already possesses, and the other is the failure to receive as a benefit that which would have pertained to him. In the latter instance, the familiar rule is that damages consisting of unrealized profits, frequently referred as "ganaciasfrustradas" or lucrumcessans," are not to be granted on the basis of mere speculation, conjecture, or surmise, but rather by reference to some reasonably definite standard such as market value, established experienced, or direct inference from known circumstances. Anent the award of actual damages, the Court of Appeals granted private respondents the amount of P18,000 per month representing private respondents'
unrealized profits from his gasoline station business, to commence from October 16, 1984. In the case at bar, actual damages in the form of unrealized profits were awarded on the basis of the sole testimony of private respondent Salvador Chua. However, other than the testimony of Salvador Chua, private respondents failed to present documentary evidence which is necessary to substantiate their claim for actual or compensatory damages. In order to recover this kind of damages, the injured party must prove his case. Applying the foregoing test to the instant case, the Court finds the evidence of private respondents insufficient to be considered within the purview of "best evidence." The bare assertion of private respondent Salvador Chua that he lost an average of P18,000 per month is inadequate if not speculative and should be admitted with extreme caution especially because it is not supported by independent evidence. Private respondents could have presented such evidence as reports on the average actual profits earned by their gasoline business, their financial statements, and other evidence of profitability which could aid the court in arriving with reasonable certainty at the amount of profits which private respondents failed to earn. Private respondents did not even present any instrument or deed evidencing their claim that they have transferred their right to operate their gasoline station to their relatives. We cannot, therefore, sustain the award of P18,000 a month as unrealized profits commencing from October 16, 1984 because this amount is not amply justified by the evidence on record. Further, well-settled is the rule that even if the petition for extrajudicial foreclosure filed by petitioner against private respondents is clearly unfounded, this does not necessarily mean, in the absence of specific facts proving damages, that actual damage has been sustained. The Court cannot rely on speculations as to the fact and amount of damages. It
must depend on actual proof of the damages alleged to have been suffered.
DE VERA VS. SAN DIEGO CONSTRUCTION 18 October 2001 Facts: For Digest: San Diego Construction, Inc. (QPSDCI), owned a parcel of land located on which it built Lourdes I Condominium. To finance its construction and development, QPSDCI entered into a Syndicate Loan Agreement with respondents Asiatrust Development Bank (ASIATRUST), Second Laguna Development Bank (LAGUNA) and Capitol City Development Bank (FUNDERS). Gregorio de Vera Jr. and QPSDCI entered into a Condominium Reservation Agreement where De Vera bought a condominium unit for P325,000.00 under the following agreed terms of payment: (a) an option money of P5,000.00 payable upon signing of the agreement to form part of the purchase price; (b) a full downpayment of P175,675.00 broken down into the reservation fee of P5,000.00 and three (3) equal monthly installments payable beginning the month after the signing of the contract; and, (c) the remaining balance of P160,000.00 to be secured through petitioner's Pag-IBIG and Open-Housing Loan. Pending release of the loan, petitioner was to avail of a bridge financing loan with ASIATRUST or any accredited originating bank of the Pag-IBIG program. QPSDCI failed to pay its obligations to the FUNDERS. ASIATRUST extrajudicially foreclosed the mortgage on twenty-seven (27) condominium units, including that of petitioner De Vera Jr. The units were sold at public auction, with the FUNDERS as the highest bidder. Petitioner, upon discovering that the FUNDERS had already published a notice of extrajudicial
foreclosure of the mortgage, filed a complaint for damages and injunction with urgent prayer for issuance of a writ of preliminary injunction, annulment of mortgage based on fraud, with urgent prayer for the issuance of a writ of preliminary attachment and specific performance. The trial court rendered judgment "directing the respondents to pay to the petitioner jointly and severally the sum equivalent to the penalties and charges plus whatever amount may be necessary to redeem Unit 211-2C from any lien and encumbrances so that the title may be released and delivered to the plaintiff, free from any lien and encumbrances, subject only to the deduction of his unpaid balance of P139,000.00, which the plaintiff should pay out of his own funds, plus exemplary damages of P100,000.00 each and to pay plaintiff attorney's fees jointly and severally x xx P50,000.00 plus the expenses of litigation." The lower court denied plaintiff's prayer for moral damages and dismissed defendants' counterclaim against the plaintiff and cross-claims against each other. The Court of Appeals affirmed the decision of the trial court with the modification that respondents were ordered solidarily to pay petitioner P50,000.00 as nominal damages, but the award for actual and exemplary damages was deleted. Issue: WON Court of Appeals is correct in deleting the award of actual and exemplary damages and attorney's fees in favor of De Vera? Ruling: In deleting the award for damages, the Court of Appeals explained - As earlier found, QPSDCI failed to comply with its warranties as seller. Unfortunately, plaintiff-appellee posits the propriety of the award of actual damages only in the probable sense: that such award is to the amount of interests, penalties and other charges as plaintiff may stand liable for by reason of the
non-payment of the purchase price. In other words, plaintiff-appellee admits not having suffered damages in consequence of non-compliance of seller's warranties. Since actual damages are predicated on such pecuniary loss as duly proved, the award of the lower court therefor is plainly not in order x xx (citations omitted). We agree with the respondent Court of Appeals on this point. Petitioner did not present any proof that he suffered any damage as a result of the breach of seller's warranty. He did not lose possession of his condominium unit, although the same had not yet been registered in his name. In his Consolidated Reply, petitioner came up with this feeble argument for claiming actual damages, a rehash of his motion for reconsideration with the Court of Appeals - Petitioner reiterates that the compensatory damages awarded is to the amount of interests, penalties and other charges as (he) may stand liable for by reason of the non-payment of the balance of the purchase price of Unit #211 in consequence of the respondent's fault or negligence as evidenced by Exhs. S and S-1. The compensation is the same amount as whatever the liability may be and therefore merely offsets the liability x xxx The cost of clearing the CCT of liens and encumbrances and transferring it to the name of the petitioner are also part of the actual or compensatory damages and are its own proof. Article 2199 of the Civil Code provides that one is entitled to adequate compensation only for such pecuniary loss suffered by him as is "duly proved." This provision denies the grant of speculative damages, or such damage not actually proved to have existed and to have been caused to the party claiming the same. Actual damages, to be recoverable, must not only be capable of proof, but must actually be proved with reasonable degree of certainty. Courts cannot simply rely on speculation, conjecture or guesswork in determining the fact and amount of damages.
This does not mean however that petitioner is liable to private respondents for penalties, interests and other charges that accrued by reason of non-payment of the balance of the purchase price. Respondent ASIATRUST had made several representations to petitioner that his loan had been approved. The tenor of the letters sent by ASIATRUST would lead a reasonable man to believe that there was nothing left to do but await the release of the loan. ASIATRUST cannot hide behind the pithy excuse that the grant of the bridge financing loan was subject to the release of the Pag-IBIG loan. The essence of bridge financing loans is to obtain funds through an interim loan while the Pag-IBIG funds are not yet available. To await the release of the PagIBIG loan would render any bridge financing nugatory. Thus, we agree with the trial court when it said that "the conclusion is inevitable that although the plaintiff was not able to pay, he was a victim of circumstances and his failure was not due to his own fault." For Recit: Respondent Q. P. San Diego Construction, Inc. (QPSDCI), owned a parcel of land located on which it built Lourdes I Condominium. To finance its construction and development, QPSDCI entered into a Syndicate Loan Agreement with respondents Asiatrust Development Bank (ASIATRUST), Second Laguna Development Bank (LAGUNA) and Capitol City Development Bank (CAPITOL, hereafter collectively known as FUNDERS). QPSDCI mortgaged to the creditor banks as security the property and the condominium constructed, it was registered with the Register of Deeds and annotated on the individual condominium certificates of title (CCT) of each condominium unit. Petitioner Gregorio de Vera Jr. and QPSDCI, through its authorized agent Fil-Estate Realty Corporation (FIL-ESTATE), entered into a Condominium Reservation Agreement where petitioner undertook to buy a condominium unit for P325,000.00 under the
following agreed terms of payment: (a) an option money of P5,000.00 payable upon signing of the agreement to form part of the purchase price; (b) a full downpayment of P175,675.00 broken down into the reservation fee of P5,000.00 and three (3) equal monthly installments payable beginning the month after the signing of the contract; and, (c) the remaining balance of P160,000.00 to be secured through petitioner's Pag-IBIG and OpenHousing Loan. Pending release of the loan, petitioner was to avail of a bridge financing loan with ASIATRUST or any accredited originating bank of the Pag-IBIG program. Petitioner paid the reservation fee of P5,000.00, and the balance of the downpayment of P167,000.00, well before the due date. As incentive, petitioner was given a full discount on cash payment by QPSDCI to bring the total payment to P184,040.00. Pursuant to their Condominium Reservation Agreement, petitioner submitted through FIL-ESTATE his application for the Pag-IBIG loan. On 28 December 1983 ASIATRUST as originating bank notified FIL-ESTATE that petitioner's Pag-IBIG loan application had been approved. In a letter dated 18 January 1984 QPSDCI President Quintin P. San Diego forwarded the letter to petitioner. However, the amount approved was only P139,100.00 and not P160,000.00. Additional charges further reduced the amount to P117,043.33. Petitioner De Vera Jr. approached QPSDCI to have the P12,040.00 discount credited to his additional equity. Since the resultant net loan of P117,043.33 was insufficient to cover the balance of the purchase price, De Vera Jr. negotiated with QPSDCI to defer payment of the P23,916.67 deficiency until the project was completed and the unit was ready for turnover. QPSDCI agreed. The condominium project was substantially completed in June 1984 and the unit was turned over to De Vera Jr. the following month. Petitioner paid QPSDCI the
P23,916.67 shortfall between the balance and the granted loan. On 26 June 1984 ASIATRUST through its VicePresident Pedro V. Lucero and Manager Nicanor T. Villanueva wrote to QPSDCI asking the unit buyers to pay in advance the costs of the transfer of titles and registration of their Pag-IBIG loan mortgages. QPSDCI forwarded the letter to De Vera Jr. and requested that he pay the amount to QPSDCI. As ASIATRUST indicated that the amount be paid directly to it, De Vera Jr. went to the bank for clarification. On 23 August 1983, after learning that ASIATRUST was in possession of the certificate of title, De Vera Jr. paid the transfer expenses directly to ASIATRUST. On 17 September 1984 ASIATRUST sent another notice of approval to QPSDCI and De Vera Jr. with the notation, "additional equity of all accounts have (sic) to be paid directly to the Bank." On 3 October 1984 ASIATRUST wrote another letter asking QPSDCI to advise the unit buyers, among others, to pay all additional and remaining equities on 10 October 1984; that their PagIBIG loan mortgages would be registered only upon payment of those equities; and, that loan mortgages registered after 31 October 1984 would be subject to the increased Pag-IBIG interest rates. On 12 October 1984 ASIATRUST also wrote a letter to petitioner and signed by its Assistant Manager Leticia R. de la Cruz informing him that his housing loan would only be implemented upon the following conditions: (a) Payment of the remaining equity directly to ASIATRUST Development Bank; and (b) Signing of all Pag-IBIG documents not later than 20 October 1984, so his mortgages could be registered on or before 31 October 1984. Mortgages registered beyond said date shall subject the Pag-IBIG loan to the increased interest rates of the National Home Mortgage Finance Corp. (per Circular #27 dated June 21, 1984).
The letter came as a total surprise to the petitioner; all the while he thought that his loan had already been released to QPSDCI and the titles transferred to his name; he promptly wrote ASIATRUST to seek clarification; ASIATRUST responded by informing De Vera Jr. that the developmental loan agreement between QPSDCI and the three (3) banks, under which the individual titles of the condominium units were mortgaged in favor of the FUNDERS to secure the loan, shall be paid out of the net proceeds of the Pag-IBIG loans of the buyers; that the total amount of loan from the FUNDERS was distributed among all condominium units such that each unit had to bear a certain portion of the total loan, or a "loan value;" that per agreement with QPSDCI, ASIATRUST would only grant the Pag-IBIG Housing Loan with the release of the mortgage liens, which could not be released unless the buyers fully paid their respective loan values; and that petitioner's equity payments to QPSDCI had not been remitted to the bank. On 30 May 1985 ASIATRUST informed QPSDCI that it could no longer extend the bridge financing loan to some of the buyers, including petitioner, for various reasons, among which was that petitioner had already exceeded the age limit, hence, he was disqualified. After learning of the disapproval of his loan, petitioner wrote the president of QPSDCI to make arrangements to settle his balance. Since petitioner had already invested a substantial amount in remodeling and improving his unit, rescinding the sale was no longer a viable option. Consequently, he only asked the president of QPSDCI for some assurance that the title would be turned over to him upon full payment. As petitioner failed to obtain the housing loan, he was not able to pay the balance of the purchase price. QPSDCI sent him a letter dated 6 August 1987 presenting him with two options: (a) to pay the remaining balance of the purchase price, with interest, which had already ballooned to P263,751.63, on or before 15 August 1987;
or, (b) to pay rent for the use of the unit from 28 July 1984 to June 1987. On 20 May 1988 petitioner, upon discovering that the FUNDERS had already published a notice of extrajudicial foreclosure of the mortgage, filed a complaint against respondents for damages and injunction with urgent prayer for issuance of a writ of preliminary injunction, annulment of mortgage based on fraud, with urgent prayer for the issuance of a writ of preliminary attachment and specific performance. Meanwhile, QPSDCI failed to pay its obligations to the FUNDERS. On 23 May 1988 ASIATRUST extrajudicially foreclosed the mortgage on twenty-seven (27) condominium units, including that of petitioner De Vera Jr. The units were sold at public auction, with the FUNDERS as the highest bidder. The certificate of sale was issued and annotated on the CCTs. On 3 March 1992 the trial court rendered judgment "directing the defendants (herein respondents) to pay to the plaintiff (herein petitioner) jointly and severally the sum equivalent to the penalties and charges plus whatever amount may be necessary to redeem Unit 211-2C from any lien and encumbrances so that the title may be released and delivered to the plaintiff, free from any lien and encumbrances, subject only to the deduction of his unpaid balance of P139,000.00, which the plaintiff should pay out of his own funds, plus exemplary damages of P100,000.00 each and to pay plaintiff attorney's fees jointly and severally x xx P50,000.00 plus the expenses of litigation." The lower court denied plaintiff's prayer for moral damages and dismissed defendants' counterclaim against the plaintiff and cross-claims against each other. The Court of Appeals affirmed the decision of the trial court with the modification that respondents were ordered solidarily to pay petitioner P50,000.00 as nominal damages, but
the award for actual and exemplary damages was deleted. MERALCO vs. TEAM Electronics Corp. ET AL FACTS: Respondent Technology Electronics Assembly and Management Pacific Corporation (TPC) wholly own Respondent T.E.A.M. Electronics Corporation (TEC). On the other hand, petitioner Manila Electric Company (Meralco) is a utility company supplying electricity in the Metro Manila area. MERALCO alleges that TEC tampered the electric meters in its buildings and should thus be liable for differential billings. For failure of TEC to pay such differential billing, petitioner disconnected the electricity supply to said buildings. TEC and TPC filed a complaint for damages against MERALCO before the RTC Pasig. The RTC ruled in favor of TEC-TPC and ordered MERALCO to pay the former Actual Damages, Moral damages, Exemplary Damages and Attorney’s Fees. The court found the evidence of petitioner insufficient to prove that TEC was guilty of tampering the meter installations. The CA affirmed the RTC decision with modifications, hence this petition for review on certiorari under Rule 45. ISSUE 1: RULING 1: As to the damages awarded by the CA, SC modified the same. Actual damages are compensation for an injury that will put the injured party in the position where it was before the injury. They pertain to such injuries or losses that are actually sustained and susceptible of measurement. Except as provided by law or by stipulation, a party is entitled to adequate compensation only for such pecuniary loss as is duly proven. Basic is the rule that to recover actual damages, not only must the amount of loss be capable of proof; it must also be actually proven with a
reasonable degree of certainty, premised upon competent proof or the best evidence obtainable. Respondent TEC sufficiently established, and petitioner in fact admitted, that the former paid P1,000,000.00 and P280,813.72 under protest, the amounts representing a portion of the latter's claim of differential billing. With the finding that no tampering was committed and, thus, no differential billing due, the aforesaid amounts should be returned by petitioner, with interest, as ordered by the Court of Appeals and pursuant to the guidelines set forth by the Court.46 However, despite the appellate court's conclusion that no tampering was committed, it held Ultra solidarily liable with petitioner for P1,000,000.00, only because the former, as occupant of the building, promised to settle the claims of the latter. This ruling is erroneous. Ultra's promise was conditioned upon the finding of defect or tampering of the meters. It did not acknowledge any culpability and liability, and absent any tampered meter, it is absurd to make the lawful occupant liable. It was petitioner who received the P1 million; thus, it alone should be held liable for the return of the amount. ISSUE 2: is the award of MD proper? RULING 2: NO. SC deems it proper to delete the award of moral damages. TEC’s claim was premised allegedly on the damage to its goodwill and reputation. As a rule, a corporation is not entitled to moral damages because, not being a natural person, it cannot experience physical suffering or sentiments like wounded feelings, serious anxiety, mental anguish and moral shock. The only exception to this rule is when the corporation has a reputation that is debased, resulting in its humiliation in the business realm. But in such a case, it is imperative for the claimant to present proof to justify the award. It is essential to prove the existence of the factual basis of
the damage and its causal relation to petitioner’s acts. In the present case, the records are bereft of any evidence that the name or reputation of TEC/TPC has been debased as a result of petitioner’s acts b.)
As to earnings
Pleyto vs Lomboy FACTS:A head-on collision between a bus and a car along McArthur Highway in Gerona, Tarlac happened on May 16, 1995 at around 11:30am. Petitioner Philippine Rabbit Bus Lines, Inc (PRBL), bound for Vigan, Ilocos Sur at the time of the accident, is engaged in carrying passengers and goods for a fare servicing various routes in Central and Northern Luzon. Its driver was Ernesto Pleyto. Ricardo Lomboy was a passenger to a Mitsubishi Lancer car driven by Arnulfo Asuncion, Ricardo’s brother-in-law. Carmela, the daughter of Ricardo, also a passenger to said car, suffered injuries requiring hospitalization. But her father Ricardo Lomboy died. Ricardo’s heirs filed an action for damages against Pleyto and PRBL. A witness and one of the bus passengers, RollyOrpilla, testified that Pleyto tried to overtake a tricycle but hit it instead. Pleyto then swerved in to the left opposite lane and smashed the Manila-bound car killing Arnulfo and Ricardo Lomboy while the other passengers, Carmela and friend Rhino Daba suffered injuries. According to Pleyto, the tricycle suddenly stopped without warning to which Pleyto stepped on the brakes and bus lost speed but swerved to the other lane to avoid hitting the tricycle. Unfortunately, it collided with the Manila-bound Mitsubishi car. The trial court rendered decision in favor of the plaintiffs awarding P1,642,521.00 for lost earnings of Ricardo Lomboy. It found that Pleyto is negligent and lacked
precaution when he overtook the tricycle disregarding completely the approaching car in the other lane. Pleyto should have been more prudent in overtaking considering the slippery road. The court held that Pleyto violated traffic rules and regulations and was negligent under Article 2185 of the Civil Code and PRBL liable as owner of the bus and as employer of Pleyto under Article 2180 of the Civil Code for its failure to observe the required diligence in its supervision of its employees and the safe maintenance of its buses. CA affirmed the trial court’s decision with modification in the award of damages reducing the award for loss of earning capacity to P1,152,000.00 and took note of the amounts that were duly supported by receipts only. Petitioners moved for reconsideration but the appellate court denied it. Hence, this petition. ISSUE: Whether the CA erred in pegging the monthly living expenses at 50% of gross earnings considering that no substantial proof was presented to prove Lomboy’s gross income RULING:No reversible error may be attributed to the court in fixing the loss of earning capacity at the amount P1,152,000.00. In considering the earning capacity of the victim as an element of damages, the net earnings, which is computed by deducting necessary expenses from the gross earnings, and not the gross earnings, is to be utilized in the computation. The amount of net earnings was arrived at after deducting the necessary expenses (pegged at 50% of gross income) from the gross annual income. This computation is in accord with settled jurisprudence. (Villa Rey case) The testimony of the wife, Maria Lomboy, that her husband was earning a monthly income of P8,000.00 is sufficient to establish a basis for an estimate of damages for loss of earning capacity. Jurisprudence provides that the factors that should be
taken into account in determining the compensable amount of lost earnings are: the number of years for which the victim would otherwise have lived; and, the rate of loss sustained by the heirs of the deceased. Factor No. 1 Life expectancy is computed by applying the formula (2/3 x [80-age at death]) adopted from the American Expectancy Table of Mortality or the Actuarial Combined Experience Table of Mortality. Factor No. 2 Multiply the life expectancy by the net earnings of the deceased, i.e, the total earnings less expenses necessary in the creation of such earnings or income and less living and other incidental expenses. The net earning is ordinarily computed at fifty percent of the gross earnings. Thus, in the given case, the formula used by this Court in computing loss of earning capacity is: Net Earning Capacity = [2/3 x (80 – age at the time of death) x (gross annual income – reasonable and necessary living expenses)] = = = =
[2/3 x (80 – 44)] x [(P96,000 – 50%of P96,000)] [2/3 x (36)] x [(P96,000 – P48,000)] 24 x P48,000 P1,152,000.00
Moral damages are awarded to enable the injured party to obtain means, diversions or amusements that will serve to alleviate the moral suffering he/she has undergone, by reason of the defendant’s culpable action. Its award is aimed at restoration of the spiritual
proportionate to the suffering inflicted. Thus, moral damages of P500,000 is reduced to P100,000 in keeping with the purpose of the law and jurisprudence in allowing moral damages. Lambert v. Heirs of Castillon Facts: In the evening of January 13, 1991, Ray Castillon visited the house of his brother Joel Castillon and borrowed his motorcycle. He then invited his friend, Sergio Labang, to roam around Iligan City. Ray drove the motorcycle with Sergio as the backrider. At around past 10:00 p.m., after eating supper at Hona’s Restaurant and imbibing a bottle of beer, they traversed the highway towards Tambo at a high speed. Upon reaching Brgy.Sto. Rosario, they figured in an accident with a Tamarawjeepney, owned by petitioner Nelen Lambert and driven by Reynaldo Gamot, which was traveling on the same direction but made a sudden left turn. The incident resulted in the instantaneous death of Ray and injuries to Sergio. Respondents, the heirs of Ray Castillon, filed an action for damages. On June 29, 1993, after a full-blown trial, the court rendered a decision in favor of the Castillon heirs but reduced Lambert’s liability by 20% in view of the contributory negligence of Ray. The sum of P633,091Php, representing loss of support, death indemnity, funeral and related expenses, moral damages and attorney’s fees was awarded to the heirs. The CA affirmed the decision of the trial court. Upon petition to the SC, Lambert assigns as error the trial court’s computation as to the loss of earning capacity of Ray Castillon because the computation is contrary to the formula enunciated by the Court in the case of Villa Rey Transit, Inc. vs. The Honorable Court of Appeals Issue: WON the trial court erred in the computation the loss of earning capacity of the deceased Castillon?
Ruling:Yes. In considering the earning capacity of the victim as an element of damages, the following factors are considered in determining the compensable amount of lost earnings: (1) the number of years for which the victim would otherwise have lived; and (2) the rate of loss sustained by the heirs of the deceased. Jurisprudence provides that the first factor, i.e., life expectancy, is computed by applying the formula (2/3 x [80 - age at death]) adopted in the American Expectancy Table of Mortality or the Actuarial Combined Experience Table of Mortality. As to the second factor, it is computed by multiplying the life expectancy by the net earnings of the deceased, i.e., the total earnings less expenses necessary in the creation of such earnings or income and less living and other incidental expenses. The net earning is ordinarily computed at fifty percent (50%) of the gross earnings. Thus, the formula used by the Court in computing loss of earning capacity is: Net Earning Capacity = [2/3 x (80 age at time of death) x (gross annual income reasonable and necessary living expenses)]. It was established that Ray was 35 at the time of his death and was earning a gross annual income of P31,876.00 as a driver at the Mindanao State University. In arriving at the net earnings, the trial court deducted from the gross annual income the annual living expenses in the amount of P9,672.00, broken down as follows: P20.00 a day for travel or P520.00 per month; P60.00 a month for cigarettes; P26.00 for drinks; and other personal expenses like clothing, toiletries, etc. estimated at P200.00 per month. The amount of P9,672.00, however, appears unrealistic, and constitutes only 30.34% of the gross earnings. It even includes expenses for cigarettes which by no means can be classified as a necessary expense. Using the cited formula with the net earnings computed at 50% of the gross earnings, a detailed computation is as follows:
NET EARNING = LIFE EXPECTANCY x GROSS CAPACITY (X) [2/3 (80-age at the ANNUAL INCOME time of death)] (GAI)
X
= [2/3 (80-35)]
x [P31,876.00
X
= [2/3 (45)]
x [P31,876.00
X
= 30
x 15,938.00
X
= P478,140.00 c.)As to requisites for extraordinary inflation
Equitable PCI Bank vs Ng Sheung Ngor, GR No. 171545, December 19, 2007 Facts: Ng Sheung Ngor doing business under the name of Ken Marketing, Ken Appliance Division and Benjamin Go went into an agreement with Equitable Bank to avail of their peso and dollar credit facilities because they had low interest rates. The group then signed the promissory notes on various dates beginning on 1996. However, they were unaware of the escalation clauses in the documents which allowed Equitable Bank to increase the interest rates at their pleasure, so they filed an action for annulment and/or reformation of the document. The group did not pay the interest due on February 9, 2001 as well as the amount due on July 9, 2001. So Equitable then set-off their deposits with the interest and principal due them. The RTC ruled that the group should pay their obligations based on the date they contracted the obligation (which was in 1996) instead of on the date of maturity since there was extraordinary deflation. However, it also ruled that the business reputation of the group was severely damaged when Equitable froze their accounts so it awarded moral and exemplary damages to them.
Issue1: What are the requisites of deflation? Was it present in this case?
extraordinary
Ruling: No. The elements are: 1. that there was an official declaration of extraordinary inflation or deflation from the Bangko Sentral ng Pilipinas (BSP) 2. that the obligation was contractual in nature and 3. that the parties expressly agreed to consider the effects of the extraordinary inflation or deflation. Despite the devaluation of the peso, the BSP never declared a situation of extraordinary inflation. Moreover, although the obligation in this instance arose out of a contract, the parties did not agree to recognize the effects of extraordinary inflation (or deflation). The RTC never mentioned that there was such stipulation either in the promissory note or loan agreement. The general rule is that the basis of payment will be the value of the currency at the date of the maturity of the obligation. The exception is when under Article 1250, there is extraordinary inflation or deflation in which the basis of the payment will be the value of the currency at the making of the obligation. Since there was no deflation, they should pay at the dollar exchange rate on the day of maturity. Note: Extraordinary inflation exists when there is an unusual decrease in the purchasing power of currency (that is, beyond the common fluctuation in the value of currency) and such decrease could not be reasonably foreseen or was manifestly beyond the contemplation of
the parties at the time of the obligation. Extraordinary deflation, on the other hand, involves an inverse situation Issue2: Can a depositor claim moral and exemplary damages when the bank set-off his deposits with his obligations because he failed to pay them? Ruling: No. The elements for a grant of moral damages are: a) that he or she suffered besmirched reputation, or physical, mental or psychological suffering sustained by the claimant; b) that the defendant committed a wrongful act or omission c)that the wrongful act or omission was the proximate cause of the damages the claimant sustained d) The case is predicated on any of the instances in Articles 2219 and 2220. In culpa contractual or breach of contract, moral damages are recoverable only if the defendant acted in fraudulently or in bad faith or in wanton disregard of his contractual obligations. In this case, it was only right for Equitable to set-off the deposits with their debt since they have a creditor-debtor relationship. Thus, any damage suffered by the group was purely the consequence of their failure to pay the loan. Since they were not entitled to moral damages, they were also not entitled to exemplary damages. (And since they were not entitled to both moral and exemplary damages, they
could also not be awarded attorney’s fees and litigation expenses.) d.)
Attorney’s Fees
JOSE V. LAGON vs. HOOVEN COMALCO INDUSTRIES, INC FACTS:Sometime in April 1981 Lagon, a businessman and HOOVEN entered into two (2) contracts, denominated Proposal, whereby for a total consideration of P104,870.00 HOOVEN agreed to sell and install various aluminum materials in Lagon’s commercial building in Tacurong, Sultan Kudarat. HOOVEN filed an action against Lagon claiming that the latter failed to pay his due despite HOOVEN’s performance of its obligation. Lagon, in his answer, denied liability and averred that HOOVEN was the party guilty of breach of contract by failing to deliver and install some of the materials specified in the proposals; that as a consequence he was compelled to procure the undelivered materials from other sources; that as regards the materials duly delivered and installed by HOOVEN, they were fully paid. ISSUE:Who among the parties is entitled to damages? RULING:HOOVEN's bad faith lies not so much on its breach of contract - as there was no showing that its failure to comply with its part of the bargain was motivated by ill will or done with fraudulent intent - but rather on its appalling temerity to sue petitioner for payment of an alleged unpaid balance of the purchase price notwithstanding knowledge of its failure to make complete delivery and installation of all the materials under their contracts. Although petitioner was found to be liable to respondent to the extent of P6,377.66, petitioner's right to withhold full payment of the
purchase price prior to the delivery and installation of all the merchandise cannot be denied since under the contracts the balance of the purchase price became due and demandable only upon the completion of the project. Consequently, the resulting social humiliation and damage to petitioner's reputation as a respected businessman in the community, occasioned by the filing of this suit provide sufficient grounds for the award of P50,000.00 as moral damages. On the part of Lagon, he is ordered by the court to pay HOOVEN the amount corresponding to the value of the materials admittedly delivered to him. SCC Chemicals vs State Investment (2001) Facts:SCC Chemicals Corporation (SCC) obtained a loan from State Investment House In. (State Investment) amounting to P129,824.48. The chairman and vice president of SCC executed a Comprehensive Surety Agreement (similar to promissory note) binding themselves to pay the obligation on maturity date. SCC failed to pay when it matured. State Investment sent demand letters but no payment was made. State Investment filed a case for recovery of money. SCC contended that the promissory note was null and void for lack of consideration. Trial court ruled in favor of State Investment. CA affirmed. Note: There are two issues in this case. First on the topic of attorney’s fees and the other the substantial issue (for recit purposes ang 2 nd issue in case maam will ask) Issue 1: Does the award by CA of attorneys fees proper? Ruling:No. SCC contended that CA sustained RTC award of attorney’s fees even if RTC did not state the reason for the award. Citing Radio Communications vs Rodriguez, when attorneys fees are awarded, the reason
for the award must be stated in the text of the courts decision. Award of attorneys fess is the exception rather than the rule, hence it is necessary for the trial court to make findings of fact and law, which would bring the case within the exception and justify the grant of the award. Since the failure of explicitly stating the rationale for the award, is shall be disallowed. Issue 2: Does State Investment sufficiently proved authenticity of promissory note? Ruling: Yes. SCC failed to appear several times on hearing dates despite notice and was unable to crossexamine the only witness of State investment. Thus, SCC cannot claim that the testimony of witness is hearsay since under ROC, when a party failed to object to a hearsay evidence, the same is admissible. Furthermore, SCC cannot claim that State Investment needs to present the original documents because SCC already admitted during pre-trial of the existence and execution of the promissory note and receipt of the demand letter. It is now too late to question the authenticity of the presented documents. e.)
Temperate damages
BPI INVESTMENT COMMERCIAL CORP.
CORP.
vs. D.G.
CARREON
Facts:BPI Investment Corporation was engaged in money market operations. D. G. Commercial Corporation was a client of petitioner and started its money market placements in September, 1978. BPI Investments paid D. G. Carreon twice in interest of the amount of P323,518.22, representing a single money market placement, the first on December 12, 1979, and the second on December 17, 1979. According to petitioner, their bookkeeper made an error in posting
12-17 on the sales order slip for 12-12. BPI Investments claimed that the same placement was also booked as maturing on December 12, 1979. Aurora Carreon instructed BPI Investments to roll over the whole amount of P323,518.22 for another thirty days, or up to January 11, 1980, at 19% interest. BPI Investments claimed that roll overs were subsequently made from maturing payments on which BPI Investments had made over payments at a total amount of P410,937.09.
Moral Damages of a)P1,000,000.00 to the late Daniel G. Carreon or his estate represented by Aurora J. Carreon; b)P1,000,000.00 to Aurora J. Carreon; P500,000.00 to the late Josefa M. Jeceil or her estate represented by Aurora J. Carreon; Compensatory Damages of P1,500,000.00 to D. G. Carreon Commercial Corporation; Exemplary Damages ofP1,000,000.00 to all defendants; Attorneys Fees of P500,000.00 to all defendants.
BPI Investments wrote respondents Daniel Carreon and Aurora Carreon, demanding the return of the overpayment of P410,937.09. The respondents asserted that there was no overpayment and asked for time to look for the papers. Upon the request of BPI Investments, the spouses Daniel and Aurora Carreon sent to BPI Investments a proposed memorandum of agreement. Howver, BPI Investments, without responding to the memorandum and proposal of D. G. Carreon filed with the Court of First Instance of Rizal, Branch 36, Makati, a complaint for recovery of a sum of money against D. G. Carreon with preliminary attachment. The trial court issued an order for preliminary attachment after submission of affidavit of merit to support the petition, and the posting of a bond in the amount of P200,000.00. Susequently, the trial court lifted the writ of attachment. BPI Investments moved for reconsideration, but the trial court denied the motion after finding the absence of double payment to the defendants. Both parties appealed to the CA. After due proceedings, the CA promulgated a decision ordering plaintiff BPI to pay the following amounts of damages:
ISSUE: Whether or not BPI is guilty of gross negligence in the handling of momey market placement and the award for dames was proper? HELD: No.Gross negligence implies a want or absence of or failure to exercise slight care or diligence, or the entire absence of care. It evinces a thoughtless disregard of consequences without exerting any effort to avoid them. However, while petitioner BPI Investments may not be guilty of gross negligence, it failed to prove by clear and convincing evidence that D. G. Carreon indeed received money in excess of what was due them. The alleged payments in the complaint were admitted by plaintiff itself to be withdrawals from validly issued commercial papers, duly verified and signed by at least two authorized high-ranking officers of BPI Investments. Exemplary damages are imposed by way of example or correction for the public good, in addition to moral, temperate, liquidated, or compensatory damages. They are recoverable in criminal cases as part of the civil liability when the crime was committed with one or more aggravating circumstances; in quasi-delicts, if the defendant acted with gross negligence; and in contracts and quasi-contracts, if the defendant acted in
a wanton, fraudulent, reckless, oppressive, or malevolent manner. BPI Investments did not act in a wanton, fraudulent, reckless, oppressive, or malevolent manner, when it asked for preliminary attachment. It was just exercising a legal option. The sheriff of the issuing court did the execution and the attachment. Hence, BPI Investments is not to be blamed for the excessive and wrongful attachment. The award of moral damages and attorneys fees is also not in keeping with existing jurisprudence. Moral damages may be awarded in a breach of contract when the defendant acted in bad faith, or was guilty of gross negligence amounting to bad faith, or in wanton disregard of his contractual obligation. There is no doubt, however, that the damages sustained by respondents were due to petitioners fault or negligence, short of gross negligence. Temperate or moderate damages may be recovered when the court finds that some pecuniary loss has been suffered but its amount cannot, from the nature of the case, be proved with certainty. The Court deems it prudent to award reasonable temperate damages to respondents under the circumstances.
MORAL DAMAGES ALFONSO L. IRINGAN vs. HON. COURT OF APPEALS and ANTONIO PALAO, represented by his Attorney-in-Fact, FELISA P. DELOS SANTOS
Facts: On March 22, 1985, private respondent Antonio Palao sold to petitioner Alfonso Iringan, an undivided portion of lot at the Poblacion of Tuguegarao and covered by Transfer Certificate of Title. The parties executed a Deed of Sale on the same date with the purchase price of P295,000.00, payable as follows: P10,000.00 - upon the execution of the instrument; P140,000.00 - on or before April 30, 1985; and P145,000.00 - on or before December 31, 1985. When the second payment was due, Iringan paid only P40,000. Thus, on July 18, 1985, Palao sent a letter to Iringan stating that he considered the contract as rescinded. On August 20, 1985, Iringan through his counsel Atty. Hilarion L. Aquino, replied that they were not opposing the revocation of the Deed of Sale but asked for the reimbursement of P50,000.00 - cash paid P3,200.00 - geodetic engineer's fee; P500.00 attorney's fee; and the current interest. Palao stated in a letter that he was not amenable to the reimbursements. After correspondence through letters, the parties still failed to arrive at an agreement. Palao filed a Complaint for Judicial Confirmation of Rescission of Contract and Damages against Iringan and his wife. RTC ruled in favor of Palao and affirmed the rescission of the contract and ordering, among others, to pay P50,000.00 as moral damages; P10,000.00 as exemplary damages; and P50,000.00 as attorney's fee; and to pay the costs of suit.CA affirmed the above decision. ISSUE: Is the award of moral and exemplary damages proper? HELD: Yes.
Petitioner claims that the Court of Appeals erred in finding bad faith on his part when he resisted the rescissionand claimed he was ready to pay but never actually paid respondent, notwithstanding that he knew that appellee's principal motivation for selling the lot was to raise money to pay his SSS loan. Petitioner would have us reverse the said CA findings based on the exception that these findings were made on a misapprehension of facts. The records do not support petitioner's claims. First, per the records, petitioner knew respondent's reason for selling his property. As testified to by petitionerand in the deposition of respondent, such fact was made known to petitioner during their negotiations as well as in the letters sent to petitioner by Palao. Second, petitioner adamantly refused to formally execute an instrument showing their mutual agreement to rescind the contract of sale, notwithstanding that it was petitioner who plainly breached the terms of their contract when he did not pay the stipulated price on time, leaving private respondent desperate to find other sources of funds to payoff his loan. Lastly, petitioner did not substantiate by clear and convincing proof, his allegation that he was ready and willing to pay respondent. We are more inclined to believe his claim of readiness to pay was an afterthought intended to evade the consequence of his breach. There is no record to show the existence of such amount, which could have been reflected, at the very least, in a bank account in his name, if indeed one existed; or, alternatively, the proper deposit made in court which could serve as a formal tender of payment. Thus, SC finds the award of
moral and exemplary damages proper. Petition is denied.
CITY TRUST VS VILLANUEVA FACTS:Isagani Villanueva filed a complaint for damages based on breach of contract and/or quasi-delict before the Regional Trial Court of Makati City against City Trust Banking Corporation. Villanueva alleged in his complaint that the bank breached its contractual obligation to him as a depositor because of its repeated dishonor of his valid and well-funded check. The breach arose from the bank's gross negligence and culpable recklessness in supplying the wrong account number. The account number assigned to Villanueva's new checkbook was the account number of another depositor also named "Isagani Villanueva," but with a different middle initial. Villanueva, therefore, prayed for the award of actual, moral and exemplary damages, and attorney's fees, litigation expenses and costs of the suit. The bank asserted, among others, that Villanueva's negligence to remember his current account number was the proximate cause of his self-proclaimed injury. It claimed that it acted in good faith when it twice dishonored the check and interposed counterclaims. After due proceedings, the trial court rendered a decision which dismissed the complaint and the compulsory counterclaim for lack of merit. The trial court held that Villanueva's negligence set the chain of events, which resulted in his alleged losses and damages. Hence, he must bear the consequent damages and losses he allegedly suffered. With respect to Villanueva's claim for actual damages in the form of loss of profits, the court found the evidence in support thereof hearsay, unreliable and not the best evidence. On appeal, the Court of Appeals found the bank negligent and awarded moral damages and attorney's fees to Villanueva
despite its findings that the bank's negligence was not attended with malice and bad faith. The appellate court, however, rejected Villanueva's claim for compensatory damages and affirmed the trial court's finding thereon. Both Villanueva and the bank appealed to the Supreme Court by way of a petition for review. ISSUE: Whether or not Villanueva suffered actual compensatory damages in the form of loss of profits
or
RULING: Both the Court of Appeals and the trial court have ascertained that Villanueva was unable to prove his demand for compensatory damages arising from loss. The unanimity of the factual ascertainment on this point by the trial court and the Court of Appeals barred Court from supplanting their finding and substituting it with their own assessment. The Court deleted the award of moral damages since Villanueva failed to support his claim. None of the circumstances mentioned in Article 2219 of the Civil Code exists to sanction the award for moral damages. Anent the award of attorney's fees, the Court deleted the same. Attorney's fees may not be awarded where there is no sufficient showing of bad faith in the parties' persistence of a case other than an erroneous conviction of the righteousness of his cause. Accordingly, the Court reinstated the judgment of the trial court. FOR RECIT LANG PO 1. CIVIL LAW; DAMAGES; ACTUAL DAMAGES; CANNOT BE PRESUMED BUT MUST BE PROVED WITH REASONABLE CERTAINTY. — The issue of whether VILLANUEVA suffered actual or compensatory damages in the form of loss of profits is factual. Both the Court of Appeals and
the trial court have ascertained that VILLANUEVA was unable to prove his demand for compensatory damages arising from loss. His evidence thereon was found inadequate, uncorroborated, speculative, hearsay and not the best evidence. Basic is the jurisprudential principle that in determining actual damages, the court cannot rely on mere assertions, speculations, conjectures or guesswork but must depend on competent proof and on the best obtainable evidence of the actual amount of the loss. Actual damages cannot be presumed but must be duly proved with reasonable certainty. 2. ID.; ID.; MORAL DAMAGES; REQUISITES FOR AWARD THEREOF. — Moral damages include physical suffering, mental anguish, fright, serious anxiety, besmirched reputation, wounded feelings, moral shock, social humiliation, and similar injury. Although incapable of pecuniary computation, moral damages may be recovered if they are the proximate result of the defendant's wrongful act or omission. Thus, case law establishes the requisites for the award of moral damages, viz: (1) there must be an injury, whether physical, mental or psychological, clearly sustained by the claimant; (2) there must be a culpable act or omission factually established; (3) the wrongful act or omission of the defendant is the proximate cause of the injury sustained by the claimant; and (4) the award of damages is predicated on any of the cases stated in Article 2219 of the Civil Code. 3. ID.; ID.; ID.; JUSTIFICATION FOR AWARD, NOT PRESENT IN CASE AT BAR. — It is beyond cavil that VILLANUEVA had sufficient funds for the check. Had his account number been correct, the check would not have been dishonored. Hence, we can say that VILLANUEVA's injury arose from the dishonor of his well-funded check. We have already ruled that the dishonor of the check does not entitle him to compensatory damages. But, could the dishonor result in his alleged "intolerable
physical inconvenience and discomfort, extreme humiliation, indignities, etc. which he had borne before his peers, trading partners and officers of Kingly Commodities?" True, we find that under the circumstances of this case, VILLANUEVA might have suffered some form of inconvenience and discomfort as a result of the dishonor of his check. However, the same could not have been so grave or intolerable as he attempts to portray or impress upon us. Further, it is clear from the records that the BANK was able to remedy the caveat of Kingly Commodities to VILLANUEVA that his trading account would be closed at 5:30 p.m. on 26 June 1986. The BANK was able to issue a manager's check in favor of Kingly Commodities before the deadline. It was able to likewise explain to Kingly Commodities the circumstances surrounding the unfortunate situation. Verily, the alleged embarrassment or inconvenience caused to VILLANUEVA as a result of the incident was timely and adequately contained, corrected, mitigated, if not entirely eradicated. VILLANUEVA, thus, failed to support his claim for moral damages. In short, none of the circumstances mentioned in Article 2219 of the Civil Code exists to sanction the award for moral damages. 4. ID.; ID.; ATTORNEY'S FEES NOT AWARDED ABSENT BAD FAITH. — The award of attorney's fees should likewise be deleted. The general rule is that attorney's fees cannot be recovered as part of damages because of the policy that no premium should be placed on the right to litigate. They are not to be awarded every time a party wins a suit. The power of the court to award attorney's fees under Article 2208 of the Civil Code demands factual, legal and equitable justification. Even when a claimant is compelled to litigate with third persons or to incur expenses to protect his rights, still attorney's fees may not be awarded where there is no sufficient showing of bad faith in the parties' persistence
of a case other than an erroneous conviction of the righteousness of his cause.
Filipinas Broadcasting Network vs. Ago Medical and Educational Center Facts: "Exposé" is a radio documentary program aired every morning over DZRC-AM which is owned by Filipinas Broadcasting Network, Inc. ("FBNI"). It is heard over Legazpi City, the Albay municipalities and other Bicol areas. In the morning of December 14 and 15, 1989, the hosts of the program exposed various alleged complaints from students, teachers and parents against Ago Medical and Educational Center-Bicol Christian College of Medicine ("AMEC") and its administrators. The alleged complaint include issues like requiring students to take and pay for the subject even if the subject does not have an instructor and that AMEC is a dumping ground for moral and physically misfit people. Claiming that the broadcasts were defamatory, AMEC and Angelita Ago ("Ago"), as Dean of AMEC’s College of Medicine, filed a complaint for damages against FBNI including the hosts. The complaint further alleged that AMEC is a reputable learning institution and with the supposed exposé, FBNI and the hosts transmitted malicious imputations, and as such, destroyed AMEC’s and Ago’s reputation. AMEC and Ago included FBNI as defendant for allegedly failing to exercise due diligence in the selection and supervision of its employees, particularly the hosts. The Court of Appeals affirmed the trial court’s decision, making FBNI and the hosts liable for libel. In holding FBNI liable for libel, the lower court found that FBNI failed to exercise diligence in the selection and supervision of its employees.
Issues: 1: Whether or not the broadcasts are libelous 2: Whether or not AMEC is entitled to moral damages Ruling: 1 The broadcasts are libelous. Every defamatory imputation is presumed malicious. The hosts failed to show adequately their good intention and justifiable motive in airing the supposed gripes of the students. As hosts of a documentary or public affairs program, they should have presented the public issues free from inaccurate and misleading information. Hearing the students alleged complaints a month before the exposé, they had sufficient time to verify their sources and information. However, they hardly made a thorough investigation of the students’ alleged gripes. Had the comments been an expression of opinion based on established facts, it is immaterial that the opinion happens to be mistaken, as long as it might reasonably be inferred from the facts. However, the comments of said hosts were not backed up by facts. Therefore, the broadcasts are not privileged and remain libelous per se. Moreover, there is insufficient evidence on record that FBNI exercised due diligence in the selection and supervision of its employees, FBNI did not show how it exercised diligence in supervising its broadcasters. FBNI’s alleged constant reminder to its broadcasters to "observe truth, fairness and objectivity and to refrain from using libelous and indecent language" is not enough to prove due diligence in the supervision of its broadcasters. Adequate training of the broadcasters on the industry’s code of conduct, sufficient information on libel laws, and continuous evaluation of the broadcasters’ performance are but a few of the many
ways of showing diligence in the supervision of broadcasters. 2 AMEC is entitled to moral damages. A juridical person is generally not entitled to moral damages because, unlike a natural person, it cannot experience physical suffering or such sentiments as wounded feelings, serious anxiety, mental anguish or moral shock. The Court of Appeals cites Mambulao Lumber Co. v. PNB, et al. to justify the award of moral damages. However, the Courts statement in Mambulao that a corporation may have a good reputation which, if besmirched, may also be a ground for the award of moral damages is an obiter dictum or only a judge's incidental expression of opinion. Nevertheless, AMECs claim for moral damages falls under item 7 of Article 2219 of the Civil Code. This provision expressly authorizes the recovery of moral damages in cases of libel, slander or any other form of defamation. Article 2219(7) does not qualify whether the plaintiff is a natural or juridical person. Therefore, a juridical person such as a corporation can validly complain for libel or any other form of defamation and claim for moral damages. MERALCO vs. TEAM ELECTRONICS (see previous case) Exemplary damages (Refer to previous cases) BPI Investment vs DG Carreon Producers Bank vs. Chua Nominal Damages Pedrosa v Rodriguez Facts: Spouses Miguel and Rosalina de Rodriguez adopted Maria Elena Rodriguez Pedrosa. Years later,
Miguel died intestate. Private respondents filed an action to annul the adoption of Maria Elena. The RTC upheld the validity of the adoption. While the case is pending on appeal in the Court of Appeals, the Rodriguezes entered into a Deed of Extrajudicial Settlement and Partition with respondent Rosalina for the partition of the estate of Miguel and of another sister, Pilar. Rosalina acted as the representative of the heirs of Miguel Rodriguez. New TCTs under the name of the respondents were subsequently issued. Maria Elena then sent her daughter to claim their share of the properties from the Rodriguezes. The latter refused saying that Maria Elena and Loreto were not heirs since they were not their blood relatives. Maria Elena filed a complaint to annul the partition. Issue: Can damages?
Elena
Rodriguez
claim
for
nominal
Ruling: YES. Petitioner asks for the award of damages. No receipts, agreements or any other documentary evidence was presented to justify such claim for damages. Actual damages, to be recoverable, must be proved with a reasonable degree of certainty. Courts cannot simply rely on speculation, conjecture or guesswork in determining the fact and amount of damages. The same is true for moral damages. These cannot be awarded in the absence of any factual basis. The unsubstantiated testimony of
Loreto Jocelyn Pedrosa is hearsay and has no probative value. It is settled in jurisprudence that damages may not be awarded on the basis of hearsay evidence. Nonetheless, the failure of the petitioner to substantiate her claims for damages does not mean that she will be totally deprived of any damages. Under the law, nominal damages are awarded, so that a plaintiffs right, which has been invaded or violated by defendants may be vindicated and recognized. Considering that (1) technically, petitioner sustained injury but which, unfortunately, was not adequately and properly proved, (2) petitioner was unlawfully deprived of her legal participation in the partition of the estate of Miguel, her adoptive father, (3) respondents had transferred portions of the properties involved to third parties, and (4) this case has dragged on for more than a decade, we find it reasonable to grant in petitioners favor nominal damages in recognition of the existence of a technical injury. The amount to be awarded as such damages should at least commensurate to the injury sustained by the petitioner considering the concept and purpose of said damages. Such award is given in view of the peculiar circumstances cited and the special reasons extant in this case. Thus, the grant of ONE HUNDRED THOUSAND (P100,000.00) PESOS to petitioner as damages is proper in view of the technical injury she has suffered.
