PEOPLE OF THE PHILIPPINES, Plaintiff-Appellee, v. IRENEO JUGUETA Accused-Appellant.

DECISION

This resolves the appeal from the Decision1 of the Court of Appeals (CA) dated January 30, 2012 in CA-G.R.
CR HC No. 03252. The CA affirmed the judgments of the Regional Trial Court (RTC), Branch 61, Gumaca,
Quezon, finding accused-appellant Ireneo Jugueta y Flores guilty beyond reasonable doubt of Double
Murder in Criminal Case No. 7698-G and Multiple Attempted Murder in Criminal Case No. 7702-G.

In Criminal Case No. 7698-G, appellant was charged with Double Murder, defined and penalized under
Article 248 of the Revised Penal Code, allegedly committed as follows:

That on or about the 6th day of June 2002, at about 9:00 o'clock in the evening, at Barangay Caridad Ilaya,
Municipality of Atimonan, Province of Quezon, Philippines, and within the jurisdiction of this Honorable
Court, the above-named accused, armed with a caliber .22 firearm, with intent to kill, qualified by
treachery and evident premeditation, did then and there willfully, unlawfully and feloniously attack,
assault and shoot with said firearm Mary Grace Divina, a minor, 13 years old, who suffered the following:
chanRoblesvirtualLawlibrary
"Gunshot wound -

Point of Entry - lower abdomen, right, 2 cm. from the midline and 6 cm. from the level of the umbilicus,
directed upward toward the left upper abdomen."
and Claudine Divina, a minor, 3 V% years of age, who suffered the following:

That the crime committed in the dwelling of the offended party who had not given provocation for the
attack and the accused took advantage of nighttime to facilitate the commission of the offense.

Contrary to law.2ChanRoblesVirtualawlibrary

In Criminal Case No. 7702-G, appellant, together with Gilbert Estores and Roger San Miguel, was
charged with Multiple Attempted Murder, allegedly committed as follows:

That on or about 9:00 o'clock in the evening of 6th day of June, 2002, at Barangay Caridad Ilaya,
Municipality of Atimonan, Province of Quezon, Philippines and within the jurisdiction of this Honorable
Court,the above-named accused, conspiring and confederating together and mutually helping one
another, armed with short firearms of undetermined calibres, with intent to kill, qualified by treachery,
with evident premeditation and abuse of superior strength, did then and there wilfully, unlawfully and
feloniously attack, assault, and shoot with the said firearms the house occupied by the family of Norberto
Divina, thereby commencing the commission of the crime of Murder, directly by overt acts, but did not
perform all the acts of execution which would have produced it by reason of some cause or accident other
than the spontaneous desistance of the accused, that is, the occupants Norberto Divina, his wife Maricel
Divina and children Elizabeth Divina and Judy Ann Divina, both elementary pupils and who are minors,
were not hit.

CONTRARY TO LAW.3

Roger San Miguel, however, moved for reinvestigation of the case against them. At said proceedings,
one Danilo Fajarillo submitted his sworn statement stating that on June 6, 2002, he saw appellant with a
certain "Hapon" and Gilbert Estores at the crime scene, but it was only appellant who was carrying a
firearm while the other two had no participation in the shooting incident. Fajarillo further stated that
Roger San Miguel was not present at the crime scene. Based on the sworn statement of Fajarillo, the
Provincial Prosecutor found no prima facie case against Gilbert Estores and Roger San Miguel.4 Thus,
upon motion of the prosecution, the case for Attempted Murder against Gilbert Estores and Roger San
Miguel was dismissed, and trial proceeded only as to appellant.5

At the trial, the prosecution presented the testimonies of Norberto Divina, the victim, and Dr. Lourdes
Taguinod who executed the Medico-Legal Certificate and confirmed that the children of Norberto,
namely, Mary Grace and Claudine, died from gunshot wounds. Dr. Taguinod noted that the trajectory of
the bullet wounds showed that the victims were at a higher location than the shooter, but she could not
tell what kind of ammunitions were used.6

Norberto testified that the appellant is his brother-in-law. He recounted that in the evening of June 6,
2002, as his entire family lay down on the floor of their one-room nipa hut to sleep, the "sack" walling of
their hut was suddenly stripped off, and only the supporting bamboo (fences) remained. With the
covering of the wall gone, the three (3) men responsible for the deed came into view. Norberto clearly
saw their faces which were illuminated by the light of a gas lamp hanging in their small hut. Norberto
identified the 3 men as appellant, Gilbert Estores and Roger San Miguel.

The 3 men ordered Norberto to come down from his house, but he refused to do so. The men then
uttered, "Magdasal ka na at katapusan mo na ngayon" Norberto pleaded with them, saying, "Maawa
kayo sa amin, matanda na ako at marami akong anak. Anong kasalanan ko sa inyo?" Despite such plea
for mercy, a gunshot was fired, and Norberto immediately threw his body over his children and wife in
an attempt to protect them from being hit. Thereafter, he heard successive gunshots being fired in the
direction where his family huddled together in their hut.7

When the volley of shots ceased and the three (3) men left, Norberto saw that his two (2) young
daughters were wounded. His wife went out of their house to ask for help from neighbors, while he and
his older daughter carried the two (2) wounded children out to the street. His daughter Mary Grace died
on the way to the hospital, while Claudine expired at the hospital despite the doctors' attempts to revive
her.8

In answer to questions of what could have prompted such an attack from appellant, Norberto replied
that he had a previous altercation with appellant who was angered by the fact that he (Norberto) filed a
case against appellant's two other brothers for molesting his daughter.9

On the other hand, appellant was only able to proffer denial and alibi as his defense. Appellant's
testimony, along with those of Gilbert Estores, Roger San Miguel, Isidro San Miguel and Ruben Alegre,
was that he (appellant) was just watching TV at the house of Isidro San Miguel, where he had been living
for several years, at the time the shooting incident occurred. However, he and the other witnesses
admitted that said house was a mere five-minute walk away from the crime scene.10

Finding appellant's defense to be weak, and ascribing more credence to the testimony of Norberto, the
trial court ruled that the evidence clearly established that appellant, together with two other assailants,
conspired to shoot and kill the family of Norberto. Appellant was then convicted of Double Murder in
Criminal Case No. 7698-G and Multiple Attempted Murder in Criminal Case No. 7702-G.

The dispositive portion of the trial court's judgment in Criminal Case No. 7698-G reads:

WHEREFORE and in view of all the foregoing, the Court finds accused Ireneo Jugueta guilty beyond
reasonable doubt for Double Murder defined and punished under Article 248 of the Revised Penal Code
and is hereby sentenced to suffer Reclusion Perpetua for the death of Mary Grace Divina and to indemnify
her heirs in the amount of Php50,000.00 and another to suffer Reclusion Perpetua for the death of
Claudine Divina and accused is further ordered to indemnify the heirs of Claudine Divina in the sum of
Php50,000.00. In addition, he is hereby ordered to pay the heirs of the victims actual damages in the
amount of Php16,150.00 and to pay for the costs,

SO ORDERED.11ChanRoblesVirtualawlibrary

On the other hand, the dispositive portion of the trial court's judgment in Criminal Case No. 7702-G,
reads:

WHEREFORE and in view of all the foregoing, the Court finds accused Ireneo Jugueta guilty beyond
reasonable doubt for Multiple Attempted Murder defined and penalized under Article 248 in relation to
Article 51 of the Revised Penal Code and is hereby sentenced to suffer the penalty of FOUR (4) YEARS and
TWO (2) MONTHS of Prision Correctional as minimum to EIGHT (8) YEARS and ONE (1) DAY of Prision
Mayor as maximum for each of the offended parties; Norberto Divina, Maricel Divina, Elizabeth Divina
and Judy Ann Divina. Further, accused is ordered to pay for the costs of the suit.

SO ORDERED.12

Aggrieved by the trial court's judgments, appellant appealed to the CA. On January 30, 2012, the CA
rendered a Decision affirming appellant's conviction for the crimes charged.13

Dissatisfied with the CA Decision, appellant elevated the case to this Court. On July 30, 2012, the Court
issued a Resolution14 notifying the parties that they may submit their respective Supplemental Briefs.
Both parties manifested that they will no longer submit supplemental briefs since they had exhaustively
discussed their positions before the CA.15

The main issue advanced in the Appellant's Brief deals with the inconsistencies in Norberto's testimony,
such as his failure to state from the beginning that all three assailants had guns, and to categorically
identify appellant as the one holding the gun used to kill Norberto's children.

The appeal is unmeritorious.

At the outset, it must be stressed that factual findings of the trial court, its assessment of the credibility
of witnesses and the probative weight of their testimonies, and the conclusions based on these factual
findings are to be given the highest respect. Thus, generally, the Court will not recalibrate and re-
examine evidence that had been analyzed and ruled upon by the trial court and affirmed by the CA.16

The evidence on record fully supports the trial court's factual finding, as affirmed by the CA, that
appellant acted in concert with two other individuals, all three of them carrying firearms and
simultaneously firing at Norberto and his family, killing his two young daughters. Norberto clearly saw all
of the three assailants with their firearms as there is illumination coming from a lamp inside their house
that had been laid bare after its walling was stripped off, to wit:

Appellant and the two other malefactors are equally responsible for the death of Norberto's daughters
because, as ruled by the trial court, they clearly conspired to kill Norberto's family. Conspiracy exists
when two or more persons come to an agreement regarding the commission of a crime and decide to
commit it. Proof of a prior meeting between the perpetrators to discuss the commission of the crime is
not necessary as long as their concerted acts reveal a common design and unity of purpose. In such case,
the act of one is the act of all.18 Here, the three men undoubtedly acted in concert as they went to the
house of Norberto together, each with his own firearm. It is, therefore, no longer necessary to identify
and prove that it is the bullet particularly fired from appellant's firearm that killed the children.
Murder is defined under Article 248 of the Revised Penal Code as the unlawful killing of a person, which
is not parricide or infanticide, attended by circumstances such as treachery or evident
premeditation.19 The presence of any one of the circumstances enumerated in Article 248 of the Code is
sufficient to qualify a killing as murder.20 The trial court correctly ruled that appellant is liable for murder
because treachery attended the killing of Norberto's two children, thus:

xxx Evidence adduced show that the family of Norberto Divina, were all lying down side by side about to
sleep on June 6, 2002 at around 9:00 o'clock in the evening, when suddenly their wall made of sack was
stripped off by [appellant] Ireneo Jugueta, Roger San Miguel and Gilbcrto Alegre (sic) [Gilbert Estores].
They ordered him to go out of their house and when he refused despite his plea for mercy, they fired at
them having hit and killed his two (2) daughters. The family of Norberto Divina were unarmed and his
children were at very tender ages. Mary Grace Divina and Claudine who were shot and killed were 13
years old and 3 lA years old respectively. In this case, the victims were defenseless and manifestly
overpowered by armed assailants when they were gunned down. There was clear showing that the attack
was made suddenly and unexpectedly as to render the victims helpless and unable to defend themselves.
Norberto and his wife and his children could have already been asleep at that time of the night, xxx21

Verily, the presence of treachery qualified the killing of the hapless children to murder. As held in People
v. Fallorina,22 the essence of treachery is the sudden and unexpected attack on an unsuspecting victim
without the slightest provocation on his part. Minor children, who by reason of their tender years,
cannot be expected to put up a defense. When an adult person illegally attacks a child, treachery exists.

As to the charge of multiple attempted murder, the last paragraph of Article 6 of the Revised Penal Code
states that a felony is attempted when the offender commences the commission of a felony directly by
overt acts, and does not perform all the acts of execution which should produce the felony by reason of
some cause or accident other than his own spontaneous desistance. In Esqueda v. People,23 the Court
held:

If one inflicts physical injuries on another but the latter survives, the crime committed is either
consummated physical injuries, if the offender had no intention to kill the victim, or frustrated or
attempted homicide or frustrated murder or attempted murder if the offender intends to kill the victim.
Intent to kill may be proved by evidence of: (a) motive; (b) the nature or number of weapons used in the
commission of the crime; (c) the nature and number of wounds inflicted on the victim; (d) the manner the
crime was committed; and (e) the words uttered by the offender at the time the injuries are inflicted by
him on the victim.

In this case, the prosecution has clearly established the intent to kill on the part of appellant as shown
by the use of firearms, the words uttered24 during, as well as the manner of, the commission of the
crime. The Court thus quotes with approval the trial court's finding that appellant is liable for attempted
murder, viz.:

In the case at bar, the perpetrators who acted in concert commenced the felony of murder first by
suddenly stripping off the wall of their house, followed by successive firing at the intended victims when
Norberto Divina refused to go out of the house as ordered by them. If only there were good in aiming
their target, not only Mary Grace and Claudine had been killed but surely all the rest of the family would
surely have died. Hence, perpetrators were liable for Murder of Mary Grace Divina and Claudine Divina
but for Multiple Attempted Murder for Norberto Divina, Maricel Divina, Elizabeth Divina and Judy Ann
Divina. But as [appellant] Ireneo Jugueta was the only one charged in this case, he alone is liable for the
crime committed.25

Meanwhile, the supposed inconsistencies in Norberto's testimony, i.e., that he failed to state from the
very beginning that all three assailants were carrying firearms, and that it was the shots from appellant's
firearm that killed the children, are too trivial and inconsequential to put a dent on said witness's
credibility. An examination of Norberto's testimony would show that there are no real inconsistencies to
speak of. As ruled in People v. Cabtalan,26 "[m]inor inconsistencies and discrepancies pertaining to trivial
matters do not affect the credibility of witnesses, as well as their positive identification of the accused as
the perpetrators of the crime."27 Both the trial court and the CA found Norberto's candid and
straightforward testimony to be worthy of belief and this Court sees no reason why it should not
conform to the principle reiterated in Medina, Jr. v. People28 that:

Time and again, this Court has deferred to the trial court's factual findings and evaluation of the credibility
of witnesses, especially when affirmed by the CA, in the absence of any clear showing that the trial court
overlooked or misconstrued cogent facts and circumstances that would justify altering or revising such
findings and evaluation. This is because the trial court's determination proceeds from its first-hand
opportunity to observe the demeanor of the witnesses, their conduct and attitude under grilling
examination, thereby placing the trial court in unique position to assess the witnesses' credibility and to
appreciate their truthfulness, honesty and candor x x x.29

The records of this case, particularly the testimonies of the witnesses, reveal no outstanding or
exceptional circumstance to justify a deviation from such long-standing principle. There is no cogent
reason to overturn the trial court's ruling that the prosecution evidence, particularly the testimony of
Norberto Divina identifying appellant as one of the assailants, is worthy of belief. Thus, the prosecution
evidence established beyond any reasonable doubt that appellant is one of the perpetrators of the
crime.

However, the Court must make a clarification as to the nomenclature used by the trial court to identify
the crimes for which appellant was penalized. There is some confusion caused by the trial court's use of
the terms "Double Murder" and "Multiple Attempted Murder" in convicting appellant, and yet imposing
penalties which nevertheless show that the trial court meant to penalize appellant for two (2) separate
counts of Murder and four (4) counts of Attempted Murder.

The facts, as alleged in the Information in Criminal Case No. 7698-G, and as proven during trial, show
that appellant is guilty of 2 counts of the crime of Murder and not Double Murder, as the killing of the
victims was not the result of a single act but of several acts of appellant and his cohorts. In the same
vein, appellant is also guilty of 4 counts of the crime of Attempted Murder and not Multiple Attempted
Murder in Criminal Case No. 7702-G. It bears stressing that the Informations in this case failed to comply
with the requirement in Section 13, Rule 110 of the Revised Rules of Court that an information must
charge only one offense.

As a general rule, a complaint or information must charge only one offense, otherwise, the same is
defective. The reason for the rule is stated in People of the Philippines and AAA v. Court of Appeals,
21st Division, Mindanao Station, et al.,30 thus:

The rationale behind this rule prohibiting duplicitous complaints or informations is to give the accused the
necessary knowledge of the charge against him and enable him to sufficiently prepare for his defense.
The State should not heap upon the accused two or more charges which might confuse him in his defense.
Non-compliance with this rule is a ground for quashing the duplicitous complaint or information under
Rule 117 of the Rules on Criminal Procedure and the accused may raise the same in a motion to quash
before he enters his plea, otherwise, the defect is deemed waived.

However, since appellant entered a plea of not guilty during arraignment and failed to move for the
quashal of the Informations, he is deemed to have waived his right to question the same. Section 9 of
Rule 117 provides that "[t]he failure of the accused to assert any ground of a motion to quash before he
pleads to the complaint or information, either because he did not file a motion to quash or failed to
allege the same in said motion, shall be deemed a waiver of any objections except those based on the
grounds provided for in paragraphs (a), (b), (g), and (i) of Section 3 of this Rule."

It is also well-settled that when two or more offenses are charged in a single complaint or information
but the accused fails to object to it before trial, the court may convict him of as many offenses as are
charged and proved, and impose upon him the proper penalty for each offense.31 Appellant can
therefore be held liable for all the crimes alleged in the Informations in Criminal Case Nos. 7698-G and
7702-G, i.e., 2 counts of murder and 4 counts of attempted murder, respectively, and proven during
trial.

Meanwhile, in People v. Nelmida,32 the Court explained the concept of a complex crime as defined in
Article 4833 of the Revised Penal Code, thus:

In a complex crime, two or more crimes are actually committed, however, in the eyes of the law and in
the conscience of the offender they constitute only one crime, thus, only one penalty is imposed. There
are two kinds of complex crime. The first is known as a compound crime, or when a single act constitutes
two or more grave or less grave felonies while the other is known as a complex crime proper, or when an
offense is a necessary means for committing the other. The classic example of the first kind is when a
single bullet results in the death of two or more persons. A different rule governs where separate and
distinct acts result in a number killed. Deeply rooted is the doctrine that when various victims expire from
separate shot, such acts constitute separate and distinct crimes.34

Here, the facts surrounding the shooting incident clearly show that appellant and the two others, in
firing successive and indiscriminate shots at the family of Norberto from their respective firearms,
intended to kill not only Norberto, but his entire family. When several gunmen, as in this case,
indiscriminately fire a series of shots at a group of people, it shows their intention to kill several
individuals. Hence, they are committing not only one crime. What appellant and his cohorts committed
cannot be classified as a complex crime because as held in People v. Nelmida,35 "each act by each
gunman pulling the trigger of their respective firearms, aiming each particular moment at different
persons constitute distinct and individual acts which cannot give rise to a complex crime."36

Furthermore, the Court notes that both the trial court and the CA failed to take into account dwelling as
an ordinary, aggravating circumstance, despite the fact that the Informations in Criminal Case Nos.
7698-G and 7702-G contain sufficient allegations to that effect, to wit:

Criminal Case No. 7698-G for Double Murder:

That the crime was committed in the dwelling of the offended party who had not given provocation for
the attack and the accused took advantage of nighttime to facilitate the commission of the
offense.37ChanRoblesVirtualawlibrary

Criminal Case No. 7702-G for Multiple Attempted Murder:

xxx the above-named accused, conspiring and confederating together and mutually helping one another,
armed with short firearms of undetermined calibres, with intent to kill, qualified by treachery, with
evident premeditation and abuse of superior strength, did then and there wilfully, unlawfully and
feloniously attack, assault, and shoot with the said firearms the house occupied by the family of Norberto
Divina, thereby commencing the commission of the crime of Murder, directly by overt acts, but did not
perform all the acts of execution which would have produced it by reason of some cause or accident other
than the spontaneous desistance of the accused x x x38ChanRoblesVirtualawlibrary

In People v. Agcanas,39 the Court stressed that "[i]t has been held in a long line of cases that dwelling is
aggravating because of the sanctity of privacy which the law accords to human abode. He who goes to
another's house to hurt him or do him wrong is more guilty than he who offends him elsewhere."
Dwelling aggravates a felony where the crime is committed in the dwelling of the offended party
provided that the latter has not given provocation therefor.40 The testimony of Norberto established the
fact that the group of appellant violated the victims' home by destroying the same and attacking his
entire family therein, without provocation on the part of the latter. Hence, the trial court should have
appreciated dwelling as an ordinary aggravating circumstance.

In view of the attendant ordinary aggravating circumstance, the Court must modify the penalties
imposed on appellant. Murder is punishable by reclusion perpetua to death, thus, with an ordinary
aggravating circumstance of dwelling, the imposable penalty is death for each of two (2) counts of
murder.41 However, pursuant to Republic Act (RA) No. 9346, proscribing the imposition of the death
penalty, the penalty to be imposed on appellant should be reclusion perpetua for each of the two (2)
counts of murder without eligibility for parole. With regard to the four (4) counts of attempted murder,
the penalty prescribed for each count is prision mayor. With one ordinary aggravating circumstance, the
penalty should be imposed in its maximum period. Applying the Indeterminate Sentence Law, the
maximum penalty should be from ten (10) years and one (1) day to twelve (12) years of prision mayor,
while the minimum shall be taken from the penalty next lower in degree, i.e., prision correccional, in any
of its periods, or anywhere from six (6) months and one (1) day to six (6) years. This Court finds it apt to
impose on appellant the indeterminate penalty of four (4) years, two (2) months and one (1) day
of prision correccional, as minimum, to ten (10) years and one (1) day of prision mayor, as minimum, for
each of the four (4) counts of attempted murder.

Anent the award of damages, the Court deems it proper to address the matter in detail as regards
criminal cases where the imposable penalty is reclusion perpetua to death. Generally, in these types of
criminal cases, there are three kinds of damages awarded by the Court; namely: civil indemnity, moral,
and exemplary damages. Likewise, actual damages may be awarded or temperate damages in some
instances.

First, civil indemnity ex delicto is the indemnity authorized in our criminal law for the offended party, in
the amount authorized by the prevailing judicial policy and apart from other proven actual damages,
which itself is equivalent to actual or compensatory damages in civil law.42

This award stems from Article 100 of the RPC which states, "Every person criminally liable for a felony is
also civilly liable."

It is to be noted that civil indemnity is, technically, not a penalty or a fine; hence, it can be increased by
the Court when appropriate.43 Article 2206 of the Civil Code provides:
Art. 2206. The amount of damages for death caused by a crime or quasi-delict shall be at least three
thousand pesos, even though there may have been mitigating circumstances. In addition:

(1) The defendant shall be liable for the loss of the earning capacity of the deceased, and the indemnity
shall be paid to the heirs of the latter; such indemnity shall in every case be assessed and awarded by the
court, unless the deceased on account of permanent physical disability not caused by the defendant, had
no earning capacity at the time of his death;

(2) If the deceased was obliged to give support according to the provisions of Article 291, the recipient
who is not an heir called to the decedent's inheritance by the law of testate or intestate succession, may
demand support from the person causing the death, for a period not exceeding five years, the exact
duration to be fixed by the court;

(3) The spouse, legitimate and illegitimate descendants and ascendants of the deceased may demand
moral damages for mental anguish by reason of the death of the deceased.

In our jurisdiction, civil indemnity is awarded to the offended party as a kind of monetary restitution or
compensation to the victim for the damage or infraction that was done to the latter by the accused,
which in a sense only covers the civil aspect. Precisely, it is civil indemnity. Thus, in a crime where a
person dies, in addition to the penalty of imprisonment imposed to the offender, the accused is also
ordered to pay the victim a sum of money as restitution. Also, it is apparent from Article 2206 that the
law only imposes a minimum amount for awards of civil indemnity, which is P3,000.00. The law did not
provide for a ceiling. Thus, although the minimum amount for the award cannot be changed, increasing
the amount awarded as civil indemnity can be validly modified and increased when the present
circumstance warrants it.44

The second type of damages the Court awards are moral damages, which are also compensatory in
nature. Del Mundo v. Court of Appeals45 expounded on the nature and purpose of moral damages, viz.:

Moral damages, upon the other hand, may be awarded to compensate one for manifold injuries such as
physical suffering, mental anguish, serious anxiety, besmirched reputation, wounded feelings and social
humiliation. These damages must be understood to be in the concept of grants, not punitive or corrective
in nature, calculated to compensate the claimant for the injury suffered. Although incapable of exactness
and no proof of pecuniary loss is necessary in order that moral damages may be awarded, the amount of
indemnity being left to the discretion of the court, it is imperative, nevertheless, that (1) injury must have
been suffered by the claimant, and (2) such injury must have sprung from any of the cases expressed in
Article 221946 and Article 222047 of the Civil Code, x x x.

Similarly, in American jurisprudence, moral damages are treated as "compensatory damages awarded
for mental pain and suffering or mental anguish resulting from a wrong."48 They may also be considered
and allowed "for resulting pain and suffering, and for humiliation, indignity, and vexation suffered by the
plaintiff as result of his or her assailant's conduct, as well as the factors of provocation, the
reasonableness of the force used, the attendant humiliating circumstances, the sex of the victim, [and]
mental distress."49

The rationale for awarding moral damages has been explained in Lambert v. Heirs ofRey Castillon: "[T]he
award of moral damages is aimed at a restoration, within the limits possible, of the spiritual status quo
ante; and therefore, it must be proportionate to the suffering inflicted."50

Corollarily, moral damages under Article 222051 of the Civil Code also does not fix the amount of
damages that can be awarded. It is discretionary upon the court, depending on the mental anguish or
the suffering of the private offended party. The amount of moral damages can, in relation to civil
indemnity, be adjusted so long as it does not exceed the award of civil indemnity.52

Finally, the Civil Code of the Philippines provides, in respect to exemplary damages, thus:

ART. 2229. Exemplary or corrective damages are imposed, by way of example or correction for the public
good, in addition to the moral, temperate, liquidated or compensatory damages.

ART. 2230. In criminal offenses, exemplary damages as a part of the civil liability may be imposed when
the crime was committed with one or more aggravating circumstances. Such damages are separate and
distinct from fines and shall be paid to the offended party.

Also known as "punitive" or "vindictive" damages, exemplary or corrective damages are intended to
serve as a deterrent to serious wrong doings, and as a vindication of undue sufferings and wanton
invasion of the rights of an injured or a punishment for those guilty of outrageous conduct. These terms
are generally, but not always, used interchangeably. In common law, there is preference in the use of
exemplary damages when the award is to account for injury to feelings and for the sense of indignity
and humiliation suffered by a person as a result of an injury that has been maliciously and wantonly
inflicted,53 the theory being that there should be compensation for the hurt caused by the highly
reprehensible conduct of the defendant

SPS. CRISTINO & EDNA CARBONELL, Petitioners, v. METROPOLITAN BANK AND TRUST
COMPANY, Respondent.

DECISION

The petitioners assail the decision promulgated on December 7, 2006,1 whereby the Court of Appeals
(CA) affirmed with modification the decision rendered on May 22, 19982 by the Regional Trial Court,
Branch 157, in Pasig City (RTC) dismissing the petitioners' complaint in Civil Case No. 65725 for its lack of
merit, and awarded attorney's fees under the respondent's counterclaim.

Antecedents

The petitioners initiated against the respondent Civil Case No. 65725, an action for damages, alleging
that they had experienced emotional shock, mental anguish, public ridicule, humiliation, insults and
embarrassment during their trip to Thailand because of the respondent's release to them of five US$100
bills that later on turned out to be counterfeit. They claimed that they had travelled to Bangkok,
Thailand after withdrawing US$1,000.00 in US$100 notes from their dollar account at the respondent's
Pateros branch; that while in Bangkok, they had exchanged five US$100 bills into Baht, but only four of
the US$100 bills had been accepted by the foreign exchange dealer because the fifth one was "no
good;" that unconvinced by the reason for the rejection, they had asked a companion to exchange the
same bill at Norkthon Bank in Bangkok; that the bank teller thereat had then informed them and their
companion that the dollar bill was fake; that the teller had then confiscated the US$100 bill and had
threatened to report them to the police if they insisted in getting the fake dollar bill back; and that they
had to settle for a Foreign Exchange Note receipt.3
 The petitioners claimed that later on, they had bought jewelry from a shop owner by using four of the
remaining US$100 bills as payment; that on the next day, however, they had been confronted by the
shop owner at the hotel lobby because their four US$100 bills had turned out to be counterfeit; that the
shop owner had shouted at them: "You Filipinos, you are all cheaters!;" and that the incident had
occurred within the hearing distance of tel low travelers and several foreigners.

The petitioners continued that upon their return to the Philippines, they had confronted the manager of
the respondent's Pateros branch on the fake dollar bills, but the latter had insisted that the dollar bills
she had released to them were genuine inasmuch as the bills had come from the head office; that in
order to put the issue to rest, the counsel of the petitioners had submitted the subject US$100 bills to
the Bangko Sentral ng Pilipinas (BSP) for examination; that the BSP had certified that the four US$100
bills were near perfect genuine notes;4 and that their counsel had explained by letter their unfortunate
experience caused by the respondent's release of the fake US dollar bills to them, and had demanded
moral damages of P10 Million and exemplary damages.5

The petitioners then sent a written notice to the respondent, attaching the BSP certification and
informing the latter that they were giving it five days within which to comply with their demand, or face
court action.6 In response, the respondent's counsel wrote to the petitioners on March 1996 expressing
sympathy with them on their experience but stressing that the respondent could not absolutely
guarantee the genuineness of each and every foreign currency note that passed through its system; that
it had also been a victim like them; and that it had exercised the diligence required in dealing with
foreign currency notes and in the selection and supervision of its employees.7

Prior to the filing of the suit in the RTC, the petitioners had two meetings with the respondent's
representatives. In the course of the two meetings, the latter's representatives reiterated their
sympathy and regret over the troublesome experience that the petitioners had encountered, and
offered to reinstate US$500 in their dollar account, and, in addition, to underwrite a round-trip all-
expense-paid trip to Hong Kong, but they were adamant and staged a walk-out.8

In its judgment rendered on May 22, 1998,9 the RTC ruled in favor of the respondent, disposing as
follows:
WHEREFORE, in the light of all the foregoing, judgment is hereby rendered:

1. Dismissing plaintiffs complaint for lack of merit;

2. On the counterclaim, awarding Metrobank the amount of P20,000.00 as attorney's fees.

SO ORDERED.10

The petitioners appealed, but the CA ultimately promulgated its assailed decision on December 7, 2006
affirming the judgment of the RTC with the modification of deleting the award of attorney's fees,11 to
wit:
As to the award of attorneys fees, we agree with appellants that there is simply no factual and legal
basis thereto. Unquestionably, appellants filed the present case for the humiliation and embarrassment
they suffered in Bangkok. They instituted the complaint in their honest belief that they were entitled to
damages as a result of appellee's issuance of counterfeit dollar notes. Such being the case, they should
not be made answerable to attorney's fees. It is not good public policy to put a premium on the right to
litigate where such right is exercised in good faith, albeit erroneously.

WHEREFORE, the appealed decision is AFFIRMED with modification that the award of attorney's tees is
deleted.
SO ORDERED.
Issues

Hence, this appeal, with the petitioners contending that the CA gravely erred in affirming the judgment
of the RTC. They insist that inasmuch as the business of banking was imbued with public interest, the
respondent's failure to exercise the degree of diligence required in handling the affairs of its clients
showed that it was liable not just for simple negligence but for misrepresentation and bad faith
amounting to fraud; that the CA erred in giving weight and relying on the news clippings allegedly
showing that the "supernotes" had deceived even the U.S. Secret Service and Central Intelligence
Agency, for such news were not based on facts.12
Ruling of the Court

The appeal is partly meritorious.

The General Banking Act of 2000 demands of banks the highest standards of integrity and performance.
As such, the banks are under obligation to treat the accounts of their depositors with meticulous
care.13 However, the banks' compliance with this degree of diligence is to be determined in accordance
with the particular circumstances of each case.

The petitioners argue that the respondent was liable for failing to observe the diligence required from it
by not doing an act from which the material damage had resulted by reason of inexcusable lack of
precaution in the performance of its duties.14 Hence, the respondent was guilty of gross negligence,
misrepresentation and bad faith amounting to fraud.

The petitioners' argument is unfounded.

Gross negligence connotes want of care in the performance of one's duties; it is a negligence
characterized by the want of even slight care, acting or omitting to act in a situation where there is duty
to act, not inadvertently but wilfully and intentionally, with a conscious indifference to consequences
insofar as other persons may be affected. It evinces a thoughtless disregard of consequences without
exerting any effort to avoid them.15

In order for gross negligence to exist as to warrant holding the respondent liable therefor, the
petitioners must establish that the latter did not exert any effort at all to avoid unpleasant
consequences, or that it wilfully and intentionally disregarded the proper protocols or procedure in the
handling of US dollar notes and in selecting and supervising its employees.

The CA and the RTC both found that the respondent had exercised the diligence required by law in
observing the standard operating procedure, in taking the necessary precautions for handling the US
dollar bills in question, and in selecting and supervising its employees.16 Such factual findings by the trial
court are entitled to great weight and respect especially after being affirmed by the appellate court, and
could be overturned only upon a showing of a very good reason to warrant deviating from them.

In this connection, it is significant that the BSP certified that the falsity of the US dollar notes in question,
which were "near perfect genuine notes," could be detected only with extreme difficulty even with the
exercise of due diligence. Ms. Nanette Malabrigo, BSP's Senior Currency Analyst, testified that the
subject dollar notes were "highly deceptive" inasmuch as the paper used for them were similar to that
used in the printing of the genuine notes. She observed that the security fibers and the printing were
perfect except for some microscopic defects, and that all lines were clear, sharp and well defined.17

Nonetheless, the petitioners contend that the respondent should be liable for moral and exemplary
damages18 on account of their suffering the unfortunate experience abroad brought about by their use
of the take US dollar bills withdrawn from the latter.

The contention cannot be upheld.

The relationship existing between the petitioners and the respondent that resulted from a contract of
loan was that of a creditor-debtor.19 Even if the law imposed a high standard on the latter as a bank by
virtue of the fiduciary nature of its banking business, bad faith or gross negligence amounting to bad
faith was absent. Hence, there simply was no legal basis for holding the respondent liable for moral and
exemplary damages. In breach of contract, moral damages may be awarded only where the defendant
acted fraudulently or in bad faith. That was not true herein because the respondent was not shown to
have acted fraudulently or in bad faith. This is pursuant to Article 2220 of the Civil Code, to wit:

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 defendant acted fraudulently or in bad faith.

With the respondent having established that the characteristics of the subject dollar notes had made it
difficult even for the BSP itself as the country's own currency note expert to identify the counterfeiting
with ease despite adhering to all the properly laid out standard operating procedure and precautions in
the handling of US dollar bills, holding it liable for damages in favor of the petitioners would be highly
unwarranted in the absence of proof of bad faith, malice or fraud on its part. That it formally apologized
to them and even offered to reinstate the USD$500.00 in their account as well as to give them the all-
expense-paid round trip ticket to Hong Kong as means to assuage their inconvenience did not
necessarily mean it was liable. In civil cases, an offer of compromise is not an admission of liability, and
is inadmissible as evidence against the offeror.20

Even without taking into consideration the news clippings to the effect that the US Secret Service and
Central Intelligence Agency had themselves been deceived by the 1990 series of the US dollar notes
infamously known as the "supernotes," the record had enough to show in that regard, not the least of
which was the testimony of Ms. Malabrigo as BSP's Senior Currency Analyst about the highly deceptive
nature of the subject US dollar notes and the possibility for them to pass undetected.

Also, the petitioners' allegation of misrepresentation on the part of the respondent was factually
unsupported. They had been satisfied with the services of the respondent for about three years prior to
the incident in question.21 The incident was but an isolated one. Under the law, moral damages for culpa
contractual or breach of contract are recoverable only if the defendant acted fraudulently or in bad
faith, or is found guilty of gross negligence amounting to bad faith, or in wanton disregard of his
contractual obligations.22 The breach must be wanton, reckless, malicious or in bad faith, oppressive or
abusive.23 In order to maintain their action for damages, the petitioners must establish that their injury
resulted from a breach of duty that the respondent had owed to them, that is, there must be the
concurrence of injury caused to them as the plaintiffs and legal responsibility on the part of the
respondent. Underlying the award of damages is the premise that an individual was injured in
contemplation of law. In this regard, there must first be a breach of some duty and the imposition of
liability for that breach before damages may be awarded; and the breach of such duty should be the
proximate cause of the injury.24 That was not so in this case.

It is true that the petitioners suffered embarrassment and humiliation in Bangkok. Yet, we should
distinguish between damage and injury. In The Orchard Golf & Country Club, Inc. v. Yu25 the Court has
fittingly pointed out the distinction, viz.:
x x x Injury is the illegal invasion of a legal right, damage is the loss, hurt, or harm which results from the
injury; and damages are the recompense or compensation awarded for the damage suffered. Thus,
there can be damage without injury in those instances in which the loss or harm was not the result of a
violation of a legal duty. These situations are often called damnum absque injuria. 26

ABROGAR vs. COSMOS BOTTLING COMPANY and INTERGAMES INC. G.R. No. 064749 March 15, 2017

Facts:

This case involves a claim for damages arising from the negligence causing the death of a participant in
an organized marathon bumped by a passenger jeepney on the route of the race. The issues revolve on
whether the organizer and the sponsor of the marathon were guilty of negligence, and, if so, was their
negligence the proximate cause of the death of the participant; on whether the negligence of the driver
of the passenger jeepney was an efficient intervening cause; on whether the doctrine of assumption of
risk was applicable to the fatality; and on whether the heirs of the fatality can recover damages for loss
of earning capacity of the latter who, being then a minor, had no gainful employment.

In the RTC decision dated May 10, 1991, judgment was rendered in favor of plaintiffs-spouses Romulo
Abrogar and Erlinda Abrogar and against defendants Cosmos Bottling Company, Inc. and Intergames,
Inc., ordering both defendants, jointly and severally, to pay and deliver to the plaintiffs the amounts of
Twenty Eight Thousand Sixty One Pesos and Sixty Three Centavos (P28,061.63) as actual damages; One
Hundred Thousand Pesos (P100,000.00) as moral damages; Fifty Thousand Pesos (P50,000.00) as
exemplary damages and Ten Percent (10%) of the total amount of One Hundred Seventy Eight Thousand
Sixty One Pesos and Sixty Three Centavos (P178,061,63) or Seventeen Thousand Eight Hundred Six Pesos
and Sixteen Centavos (P17,806.16) as attorney's fees. On the cross-claim of defendant Cosmos Bottling
Company, Inc., defendant Intergames, Inc, is hereby ordered to reimburse to the former any and all
amounts which may be recovered by the plaintiffs from it by virtue of this Decision.

The RTC observed that the safeguards allegedly instituted by Intergames in conducting the marathon
had fallen short of the yardstick to satisfy the requirements of due diligence as called for by and
appropriate under the circumstances; that the accident had happened because of inadequate
preparation and Intergames' failure to exercise due diligence; that the respondents could not be
excused from liability by hiding behind the waiver executed by Rommel and the permission given to him
by his parents because the waiver could only be effective for risks inherent in the marathon, such as
stumbling, heat stroke, heart attack during the race, severe exhaustion and similar occurrences; that the
liability of the respondents towards the participants and third persons was solidary, because Cosmos,
the sponsor of the event, had been the principal mover of the event, and, as such, had derived benefits
from the marathon that in turn had carried responsibilities towards the participants and the public; that
the respondents' agreement to free Cosmos from any liability had been an agreement binding only
between them, and did not bind third persons; and that Cosmos had a cause of action against
Intergames for whatever could be recovered by the petitioners from Cosmos.

All parties appealed to the CA. The petitioners contended that the RTC erred in not awarding damages
for loss of earning capacity on the part of Rommel for the reason that such damages were not
recoverable due to Rommel not yet having finished his schooling; and that it would be premature to
award such damages upon the assumption that he would finish college and be gainfully employed. The
CA reduced the issues to four, namely:
1. Whether or not appellant Intergames were negligent in its conduct of the 1st Pop Cola Junior
Marathon" held on June 15, 1980 and if so, whether its negligence was the proximate cause of the death
of Rommel Abrogar.

2. Whether or not appellant Cosmos can be held jointly and solidarity liable with appellant Intergames
for the death of Rommel Abrogar, assuming that appellant Intergames is found to have been negligent
in the conduct of the Pop Cola marathon and such negligence was the proximate cause of the death of
Rommel Abrogar.

3. Whether or not the appellants Abrogar are entitled to be compensated for the "loss of earning
capacity" of their son Rommel.

4. Whether or not the appellants Abrogar are entitled to the actual, moral, and exemplary damages
granted to them by the Trial Court. In its assailed judgment on March 10, 2004 and in view of the fact
that both defendants are not liable for the death of Rommel Abrogar, appellants-spouses are not
entitled to actual, moral, exemplary damages as well as for the "loss of earning capacity" of their son.
The third and fourth issues are thus moot and academic. UPON THE VIEW OF THIS CASE, THUS, the
judgment appealed from must be, as it hereby is, REVERSED and SET ASIDE and another entered
DISMISSING the complaint a quo. The appellants shall bear their respective costs.

Issues:

1. Whether or not the CA gravely erred in reversing the RTC Decision, (and) in holding that respondent
Intergames was not negligent considering that:

A. Respondent Intergames failed to exercise the diligence of a good father of the family in the conduct
of the marathon in that it did not block off from traffic the marathon route; and

B. Respondent Intergames' preparations for the race, including the number of marshal during the
marathon, were glaringly inadequate to prevent the happening of the injury to its participants.

2. Whether or not the CA gravely erred in reversing the RTC Decision, (and) in holding that the doctrine
of assumption of risk finds application to the case at bar even though getting hit or run over by a vehicle
is not an inherent risk in a marathon race. Even assuming arguendo that deceased Abrogar made such
waiver as claimed, still there can be no valid waiver of one's right to life and limb for being against public
policy.

3. Whether or not the CA gravely erred in reversing the RTC Decision (and) in absolving respondent
Cosmos from liability to petitioners on the sole ground that respondent Cosmos' contract with
respondent Intergames contained a stipulation exempting the former from liability.

4. Whether or not the CA gravely erred in reversing the RTC Decision and consequently holding
respondents free from liability, (and) in not awarding petitioners with actual, moral and exemplary
damages for the death of their child, Rommel Abrogar.

Held:

1. Yes. Negligence is the failure to observe for the protection of the interests of another person that
degree of care, precaution, and vigilance which the circumstances justly demand, whereby such other
person suffers injury. Under Article 1173 of the Civil Code, it consists of the "omission of that diligence
which is required by the nature of the obligation and corresponds with the circumstances of the person,
of the time and of the place. The Civil Code makes liability for negligence clear under Article 2176, and
Article 20.
2. Yes. The doctrine of assumption of risk means that one who voluntarily exposes himself to an obvious,
known and appreciated danger assumes the risk of injury that may result therefrom. It rests on the fact
that the person injured has consented to relieve the defendant of an obligation of conduct toward him
and to take his chance of injury from a known risk, and whether the former has exercised proper caution
or not is immaterial. In other words, it is based on voluntary consent, express or implied, to accept
danger of a known and appreciated risk; it may sometimes include acceptance of risk arising from the
defendant's negligence, but one does not ordinarily assume risk of any negligence which he does not
know and appreciate. As a defense in negligence cases, therefore, the doctrine requires the concurrence
of three elements, namely; the plaintiff must know that the risk is present;he must further understand
its nature; and his choice to incur it must be free and voluntary. Neither was the waiver by Rommel,
then a minor, an effective form of express or implied consent in the context of the doctrine of
assumption of risk. There is ample authority, cited in Prosser, to the effect that a person does not
comprehend the risk involved in a known situation because of his youth, or lack of information or
experience, and thus will not be taken to consent to assume the risk. Clearly, the doctrine of assumption
of risk does not apply to bar recovery by the petitioners.

3. No. The sponsorship of the marathon by Cosmos was limited to financing the race. Cosmos did
nothing beyond that, and did not involve itself at all in the preparations for the actual conduct of the
race. This verity was expressly confirmed by Intergames, through Castro, Jr.

3. Yes. Art. 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.

JUDITH D. DARINES AND JOYCE D. DARINES, Petitioners, v. EDUARDO QUIÑONES AND ROLANDO
QUITAN, Respondents.

DECISION

This Petition for Review on Certiorari assails the October 29, 2012 Decision1 of the Court of Appeals (CA)
in CA-G.R. CV No. 95638, which reversed and set aside the July 14, 2010 Decision2 of the Regional Trial
Court (RTC) of Baguio City, Branch 3 in Civil Case No. 6363-R for "Breach of Contract of Carriage &
Damages." Also challenged is the March 6, 2013 CA Resolution3 denying the motion for reconsideration
on the assailed Decision.

Factual Antecedents

Judith D. Darines (Judith) and her daughter, Joyce D. Darines (Joyce) (petitioners) alleged in their
Complaint4 that on December 31, 2005, they boarded the Amianan Bus Line with Plate No. ACM 497 and
Body No. 808 as paying passengers enroute from Carmen, Rosales, Pangasinan to Baguio City.
Respondent Rolando M. Quitan (Quitan) was driving the bus at that time. While travelling on Camp 3,
Tuba, Benguet along Kennon Road, the bus crashed into a truck (with Plate No. XSE 578) which was
parked on the shoulder of Kennon Road. As a result, both vehicles were damaged; two passengers of the
bus died; and the other passengers, including petitioners, were injured. In particular, Joyce suffered
cerebral concussion while Judith had an eye wound which required an operation.

Petitioners argued that Quitan and respondent Eduardo Quinones (Quinones), the operator of Amianan
Bus Line, breached their contract of carriage as they failed to bring them safely to their destination. They
also contended that Quitan's reckless and negligent driving caused the collision. Consequently, they
prayed for actual, moral, exemplary and temperate damages, and costs of suit.

For their part, Quinones and Quitan (respondents) countered in their Answer5 that, during the
December 31, 2005 incident, Quitan was driving in a careful, prudent, and dutiful manner at the normal
speed of 40 kilometers per hour. According to them, the proximate cause of the incident was the
negligence of the truck driver, Ronald C. Fernandez, who parked the truck at the roadside right after the
curve without having installed any early warning device. They also claimed that Quinones observed due
diligence in the selection and supervision of his employees as he conducted seminars on road safety
measures; and Quitan attended such seminars including those required by the government on traffic
safety. They likewise averred that Quitan was a licensed professional driver who, in his 12 years as a
public utility driver, had not figured in any incident like the one at hand.

During the trial, Judith testified that Quitan was driving at a very fast pace resulting in a collision with
the truck parked at the shoulder of the road.6 Consequently, the bone holding her right eye was
fractured and had to be operated.7 She claimed that, as a result of incident, she failed to report for work
for two months.8

To prove the actual damages that she suffered, Judith presented receipts for medicine, and a summary
of expenses, which included those incurred for the ritual dao-is. She explained that she and Joyce are
Igorots, being members of Ibaloi, Kankanay-ey, an indigenous tribe;9 and as their customary practice,
when a member who meets an accident is released from the hospital, they butcher pigs to remove or
prevent bad luck from returning to the family.10

Moreover, to support her claim for moral damages, Judith testified that she suffered sleepless nights
since she worried about the result and possible effect of her operation.11

On the other hand, respondents presented Ernesto Benitez (Benitez), who, on behalf of respondents,
testified that he bought the medicines and paid petitioners' hospitalization expenses, as evidenced by
receipts he submitted in court.12

Ruling of the Regional Trial Court

On July 14, 2010, the RTC rendered its Decision ordering respondents to pay petitioners the following:

1. Moral Damages of One Hundred Thousand Pesos (P100,000.00);

2. Exemplary Damages of Thirty Thousand Pesos (P30,000.00);

3. Attorney's Fees of Fifteen Percent (15%) of the Damages, plus Total Appearance Fees of
Sixteen Thousand Five Hundred Pesos (P16,500.00); and

4. Costs of Suit.13

The RTC held that since the respondents already paid the actual damages relating to petitioners' medical
and hospitalization expenses, then the only remaining matters for resolution were: whether
respondents were liable to pay petitioners a) actual damages representing the expenses incurred during
the dao-is ritual; and, Judith's alleged lost income; b) moral and exemplary damages; and, c) attorney's
fees.

The RTC noted that petitioners did not present any receipt as regards the expenses they incurred during
the dao-is ritual. As regards their claim for Judith's lost income, the RTC held that petitioners similarly
failed to substantiate the same as there was no showing that Judith's failure to report for work for two
months was because of the incident. Thus, the RTC did not award actual damages for lack of evidence.

However, the RTC awarded moral damages grounded on Judith's testimony regarding her pain and
suffering. It likewise awarded exemplary damages by way of correction, and to serve as example to
common carriers to be extraordinarily diligent in transporting passengers. It also granted petitioners
attorney's fees plus costs of suit on the ground that petitioners were compelled to litigate the case.

Aggrieved, respondents appealed to the CA.

Ruling of the Court of Appeals

In its October 29, 2012 Decision, the CA reversed and set aside the RTC Decision.

The CA stressed that respondents did not dispute that they were liable for breach of contract of
carriage; in fact, they paid for the medical and hospital expenses of petitioners. Nonetheless, the CA
deleted the award of moral damages because petitioners failed to prove that respondents acted
fraudulently or in bad faith, as shown by the fact that respondents paid petitioners' medical and
hospitalization expenses. The CA held that, since no moral damages was awarded, then there was no
basis to grant exemplary damages. Finally, it ruled that because moral and exemplary damages were not
granted, then the award of attorney's fees must also be deleted.

On March 6, 2013, the CA denied petitioners' Motion for Reconsideration.

Issues

Hence, petitioners filed this Petition raising the issues as follows:chanRoblesvirtualLawlibrary

1. WHETHER OR NOT THE CASE OF PETITIONERS FALL[S] UNDER ARTICLES 20,1157,1759,

2176,2180 AND 2219 OF THE CIVIL CODE THEREBY ENTITL[ING THEM] TO MORAL AND
EXEMPLARY DAMAGES AND ATTORNEY'S FEES;

2. WHETHER OR NOT THE XXX AWARD OF DAMAGES AND ATTORNEY'S FEES BY THE TRIAL
COURT BECAME FINAL AND EXECUTORY SINCE HEREIN RESPONDENTS DID NOT
QUESTION THE SAME IN THEIR APPEAL BUT MERELY QUESTIONED THE AMOUNTS OF
AWARD [FOR BEING] EXORBITANT.14

Petitioners' Arguments

Petitioners maintain that respondents are liable to pay them moral and exemplary damages because the
proximate cause of their injuries was the reckless driving of Quitan. As regards Quinones, his fault is
presumed considering that he did not offer proof that he exercised extraordinary diligence in the
selection and supervision of his employees. They added that the negligence of respondents resulted in
the latter's failure to transport them to their destination thereby constituting a breach of their contract
of carriage. They also argued that the RTC's grant of damages and attorney's fees in their favor already
attained finality because when respondents appealed to the CA, they only questioned the amounts
given by the RTC for being exorbitant, but not the award itself.

Respondents' Arguments

Respondents, on their end, posit that they are not liable to pay moral damages because their acts were
not attended by fraud or bad faith. They add that since petitioners are not entitled to moral damages,
then it follows that they are also not entitled to exemplary damages; and same is true with regard to the
grant of attorney's fees as the same necessitates the grant of moral and exemplary damages.

Our Ruling

The Court denies the Petition.

First of all, petitioners contend that the awards of moral and exemplary damages and attorney's fees by
the RTC already attained finality because respondents did not dispute such grants when they appealed
to the CA but only the fact that the amounts were exorbitant.

Such contention is without merit.

A plain reading of the assigned errors15 and issues16 in the Appellants' Brief of respondents with the CA
reveals that they questioned the awards of moral and exemplary damages as well as attorney's fees
made by the RTC to petitioners. Since respondents timely challenged the awards when they interposed
an appeal to the CA, the same had not yet attained finality.

Going now to the main issue, the Court fully agrees with the CA ruling that in an action for breach of
contract, moral damages may be recovered only when a) death of a passenger results; or b) the carrier
was guilty of fraud and bad faith even if death does not result; and that neither of these circumstances
were present in the case at bar. The CA correctly held that, since no moral damages was awarded then,
there is no basis to grant exemplary damages and attorney's fees to petitioners.

To stress, this case is one for breach of contract of carriage (culpa contractual) where it is necessary to
show the existence of the contract between the parties, and the failure of the common carrier to
transport its passenger safely to his or her destination. An action for breach of contract differs
from quasi-delicts (also referred as culpa aquiliana or culpa extra contractual) as the latter emanate
from the negligence of the tort feasor17 including such instance where a person is injured in a vehicular
accident by a party other than the carrier where he is a passenger.

The principle that, in an action for breach of contract of carriage, moral damages may be awarded only
in case (1) an accident results in the death of a passenger; or (2) the carrier is guilty of fraud or bad faith,
is pursuant to Article 1764, in relation to Article 2206(3) of the Civil Code, and Article 2220 thereof,18 as
follows:chanRoblesvirtualLawlibrary
Article 1764. Damages in cases comprised in this Section shall be awarded in accordance with Title XVIII
of this Book, concerning Damages. Article 2206 shall also apply to the death of a passenger caused by
the breach of contract by a common carrier. (Emphasis supplied)

Article 2206. The amount of damages for death caused by a crime or quasi-delict shall be at least three
thousand pesos, even though there may have been mitigating circumstances. In addition:

xxxx

(3) The spouse, legitimate and illegitimate descendants and ascendants of the deceased may demand
moral damages for mental anguish by reason of the death of the deceased.

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. (Emphasis supplied)
The aforesaid concepts of fraud or bad faith and negligence are basic as they are distinctly differentiated
by law. Specifically, fraud or bad faith connotes "deliberate or wanton wrong doing"19 or such deliberate
disregard of contractual obligations20 while negligence amounts to sheer carelessness.21

More particularly, fraud includes "inducement through insidious machination."22 In turn, insidious
machination refers to such deceitful strategy or such plan with an evil purpose. On the other hand, bad
faith does not merely pertain to bad judgment or negligence but relates to a dishonest purpose, and a
deliberate doing of a wrongful act. Bad faith involves "breach of a known duty through some motive or
interest or ill will that partakes of the nature of fraud."23

In Viluan v. Court of Appeals,24 and Bulante v. Chu Liante,25 the Court disallowed the recovery of moral
damages in actions for breach of contract for lack of showing that the common carrier committed fraud
or bad faith in performing its obligation. Similarly, in Verzosa v. Baytan,26 the Court did not also grant
moral damages in an action for breach of contract as there was neither allegation nor proof that the
common carrier committed fraud or bad faith.27 The Court declared that "[t]o award moral damages for
breach of contract, therefore, without proof of bad faith or malice on the part of the defendant, as
required by [Article 2220 of the Civil Code], would be to violate the clear provisions of the law, and
constitute unwarranted judicial legislation.28

Meanwhile, in Gatchalian v. Delim,29 and Mr. & Mrs. Fabre, Jr. v. Court of Appeals,30 the Court found the
common carriers liable for breach of contract of carriage and awarded moral damages to the injured
passengers on the ground that the common carrier committed gross negligence, which amounted to
bad faith. Particularly, in Mr. & Mrs. Fabre, Jr., the gross negligence of the common carrier was
determined from the fact that its driver was not engaged to drive long distance travels; he was also
unfamiliar with the area where he detoured the bus as it was his first time to ply such route; the road
was slippery because it was raining, yet the bus was running at 50 kilometers per hour resulting in its
skidding to the left shoulder of the road; and the bus hit the steel brace on the road at past 11:30 p.m.
The Court also noted that other than the imputation of gross negligence, the injured passengers therein
pursued their claim not on the theory of breach of contract of carriage alone but also on quasi-delicts.

Clearly, unless it is fully established (and not just lightly inferred) that negligence in an action for breach
of contract is so gross as to amount to malice, then the claim of moral damages is without merit.31

Here, petitioners impute negligence on the part of respondents when, as paying passengers, they
sustained injuries when the bus owned and operated by respondent Quinones, and driven by
respondent Quitan, collided with another vehicle. Petitioners propounded on the negligence of
respondents, but did not discuss or impute fraud or bad faith, or such gross negligence which would
amount to bad faith, against respondents. There being neither allegation nor proof that respondents
acted in fraud or in bad faith in performing their duties arising from their contract of carriage, they are
then not liable for moral damages.

The Court also sustains the CA's finding that petitioners are not entitled to exemplary damages.
Pursuant to Articles 2229 and 223432 of the Civil Code, exemplary damages may be awarded only in
addition to moral, temperate, liquidated, or compensatory damages. Since petitioners are not entitled
to either moral, temperate, liquidated, or compensatory damages, then their claim for exemplary
damages is bereft of merit.

Finally, considering the absence of any of the circumstances under Article 220833 of the Civil Code where
attorney's fees may be awarded, the same cannot be granted to petitioners.

All told, the CA correctly ruled that petitioners are not entitled to moral and exemplary damages as well
as attorney's fees.
WHEREFORE, the Petition is DENIED. The October 29, 2012 Decision and March 6, 2013 Resolution of
the Court of Appeals in CA-G.R. CV No. 95638 are AFFIRMED. SO ORDERED.

JOSE CHING SUI YONG, Petitioner, v. INTERMEDIATE APPELLATE COURT (THIRD CIVIL CASES DIVISION)
AND INTERCONTINENTAL DISTRIBUTORS (P.I.) CORPORATION, ROBERTO SUAREZ, and
INTERCONTINENTAL FILM DISTRIBUTORS, (H.K.) LTD., Respondents.

P .M . Mortera & Associates Law Offices for Petitioner.

Lauro G. Sandoval for Private Respondents.

SYLLABUS

1. REMEDIAL LAW; SPECIAL CIVIL ACTIONS; CERTIORARI; ONLY LEGAL QUESTIONS SHOULD BE RAISED;
REASONS THEREFOR. — At the outset, it would appear that the issues involve a review mainly of factual
findings of respondent appellate court. We have repeatedly held that in a petition for review
on certiorari only legal questions should be raised before this Court and that findings of fact of the Court
of Appeals are conclusive on the parties and on this Court, absent any showing of grave error or abuse
of discretion.

2. ID; EVIDENCE; PRESUMPTION WHEN THE BEST EVIDENCE IS WITHHELD. — The failure of petitioner to
produce the person to whom he allegedly paid P75,000.00 for the seven (7) films, rendered his claim
untenable. For, when a party has it in his possession or power to produce the best evidence of which the
case in its nature is susceptible and withholds it, the fair presumption is that the evidence is withheld for
some sinister motive and that its production would thwart his evil or fraudulent purpose. (Pamantasan
ng Lunsod ng Maynila v. Court of Appeals, 140 SCRA 22; People v. Pacnis, 165 SCRA 609)

3. CIVIL LAW; DAMAGES; WHEN AWARD THEREOF IS PROPER. — No document or proof was presented
to prove that private respondents really lost such amount daily for none/exhibition of the films to the
public by reason of the action instituted by petitioner. The amount of P10,000.00 a day as alleged
unrealized profit was arrived at by mere speculation and conjecture by respondent court. Hence, the
award of damages for the anticipated loss of profits is umwarranted. It is a settled rule that in order for
damages to be recovered, the best evidence obtainable by the injured party must be presented.
(Seaman Carrier, Inc. v. GTI Sportswear Corp., G.R. No. 62130, September 28, 1984, 132 SCRA 308)
Actual or compensatory damages cannot be presumed, but must be duly proved, and proved with a
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 been suffered and
on evidence of the actual amount thereof. If the proof is flimsy and unsubstantial, no damages will be
awarded. (Dee Hua Liong Electrical Equipment Corp. v. Reyes, G.R. No. 72182, November 25, 1986, 145
SCRA 713)
 DECISION
This is a petition for review on certiorari of the decision of the respondent Intermediate Appellate Court
(now Court of Appeals) in AC-G.R. CV No. 58527, dated 14 June 1983 1 affirming in toto the decision of
the lower court rendered in favor of private respondents.

The antecedent facts that gave rise to this case are as follows:chanrob1es virtual 1aw library

Petitioner bought from a certain Norberto Concepcion for the total sum of P75,000.00 seven (7) foreign
cinematographic films, as evidenced by four (4) receipts of payment duly signed by said Norberto
Concepcion who was allegedly the authorized agent and representative of private respondent
Intercontinental Film Distributors (P.I.) Corporation and its managing director, respondent Roberto
[Link] virtualawlibrary [Link]:[Link]

It was stated in the said receipts that private respondents Intercontinental Film Distributors (P.I.)
Corporation (Intercontinental (P.I.), for brevity) and Roberto Suarez agreed that all the seven (7) films
would be sent and delivered directly to petitioner upon their arrival in the Philippines. However, the
films were not delivered to petitioner despite repeated demands, as a result of which, the latter filed an
action for replevin with damages before the Court of First Instance of Rizal, Branch XXII, docketed as
Civil Case No. 12578. 2

Upon petitioner’s filing of the necessary bond in the amount of P150.000.00, the court a quo issued a
writ of seizure ordering the Sheriff of Manila to take immediate possession of the seven (7) films. Six (6)
films were seized by the Sheriff of Manila from the Board of Censors, while the seventh film was seized
by Special Sheriff Gregorio Guido. All the seven (7) cinematographic films had been delivered by
Intercontinental (P.I.) to the Board of Censors prior to their seizure.

Informed of the seizure of the seven (7) films by the Sheriffs, Intercontinental Film Distributors (H.K) Ltd.
(Intercontinental (H.K), for brevity) filed a third-party claim, alleging ownership and asserting the right to
possess the said seven (7) cinematographic films, and stating in its claim that the value of the said films
was P250,000.00. Notified by the Sheriff of the third-party claim, petitioner filed an ex-parte motion to
quash the third-party claim and for the delivery of the said films to him (petitioner), instead of filing an
indemnity bond as required by the Sheriff. The ex-parte motion was granted and the films were
delivered to the petitioner. Subsequently, Intercontinental (H.K) filed a motion praying to the Court that
it be allowed to intervene in the case as party defendant, which motion was granted. It did intervene as
defendant-intervenor and filed its answer to the complaint.

After trial on the merits, the court a quo dismissed the complaint and set aside the writ of seizure it had
issued earlier. The dispositive part of the lower court’s decision, 3 which respondent appellate court
later affirmed in toto reads as follows:jgc:[Link]

"WHEREFORE, judgment is rendered:chanrob1es virtual 1aw library

1. Dismissing plaintiffs complaint, and the writ of seizure issued by this Court in favor of the plaintiff is
hereby set aside;

2. Ordering plaintiff to return to defendants and intervenor the seven (7) cinematographic films, namely,
Venus in Furs; Girl with Hungry Eyes; Free Love Confidential, Cool It Baby; Mondo Mod; Secret Sex Lives
of Romeo and Juliet; Mantis in Lace, in the same condition as they were taken by and delivered to
plaintiff on December 22, 1969 and in the event that delivery cannot be made, plaintiff shall pay
defendants and intervenor the sum of P250,000.00 representing the value of said seven (7)
cinematographic films; and
3. Sentencing plaintiff to pay defendants and defendant-intervenor the sum of P10,000.00 a day as
damages commencing from December 23, 1969 until the aforesaid seven (7) cinematographic films are
delivered or returned to defendants and defendant-intervenor or the sum of P250,000.00 is fully paid to
defendants and defendant/intervenor, and to pay further the amount of P10,000.00 by way of
attorney’s fees.

With costs of suit against the plaintiff.

SO ORDERED."cralaw virtua1aw library

As already stated, the Court of Appeals affirmed the above judgment in its entirety. Not satisfied,
petitioner interposed the present petition for review, raising the following issues:chanrobles virtual
lawlibrary
"(a) Whether or not the plaintiff has a valid cause of action against the defendants and the defendant-
intervenor;

(b) whether or not Norberto Concepcion is the authorized agent and representative of the defendant
Intercontinental Film Distributors (P.I.) Corporation and its Managing Director, defendant Roberto
Suarez;

c) whether or not the award of damages of P10,000.00 a day commencing from December 23, 1969 until
the aforesaid seven (7) cinematographic films are delivered or returned to defendants and defendant-
intervenor or the sum of P250,000.00 is fully paid to defendants and defendant-intervenor; and to pay
further the amount of P10,000.00 by way of attorney’s fees, are supported by evidence and the law on
the matter. "4

At the outset, it would appear that the above-stated issues involve a review mainly of factual findings of
respondent appellate court. We have repeatedly held that in a petition for review on certiorari only legal
questions should be raised before this Court and that findings of fact of the Court of Appeals are
conclusive on the parties and on this Court, absent any showing of grave error or abuse of discretion. 5

We note further that the issues raised and the arguments adduced by petitioner in the present petition
for review are reiterations of those submitted by him to the Court of Appeals. The first two (2) issues
were resolved by the appellate court — to which we agree — in this wise:jgc:[Link]

"A study of the evidence viz a viz (sic) the arguments supporting the errors imputed to the trial court in
its decision appealed from convinces Us that the trial court did not err in holding ‘the plaintiff/appellant
as plainly has no cause of action against defendants and defendant-intervenor’ as it found that Norberto
Concepcion was not the duly authorized agent or representative of the Intercontinental Film
Distributors (PI) Corporation and Roberto Suarez, the Managing Director, (who) denied having
authorized Norberto Concepcion to enter into contract with the plaintiff-appellant.

Let it be admitted that the cause of action of the plaintiff-appellant in his complaint for replevin (to take
possession of the seven cinematographic films) is based on the alleged sales of the films in question to
plaintiff-appellant by defendants thru Norberto Concepcion for the total sum of P75,000 as evidenced
by Exhibits ‘A’, ‘B’, ‘C’ and ‘D’ and the alleged agency instituted by Roberto Suarez in favor of Norberto
Concepcion as shown by said Exhibits.

The trial court, however, found and We agree that plaintiff-appellant failed to prove that Norberto
Concepcion was the duly authorized agent or representative of the Intercontinental Films Distributors
(PI) Corporation and Roberto Suarez. In fact, the lower court went further stabng that Exbibits ‘A’, ‘B’, ‘C’
and ‘D’ are fictitious contracts, a forgery undertaken merely to promote the scheme of the plaintiff-
appellant to take possession of the cinematographic films in question. On the other hand, the
Intercontinental Films Distributors (H.K.) Ltd., intervenors, had established that it owns the said films.
We agree with the foregoing findings and conclusions. As private respondents correctly observed,
despite petitioner’s claim that he paid Norberto Concepcion, the alleged agent of Roberto Suarez, the
sum of P75,000.00 as evidenced by the four (4) receipts of payment, and despite the trial court’s
suggestion that Norberto Concepcion be included as a defendant, petitioner failed to implead said
Norberto Concepcion. Neither was Concepcion presented as a witness. Thus, the court a quo correctly
resolved that:[Link] : virtual law library

". . . . The failure of Concepcion to testify and clear the doubt that surrounded the alleged execution by
Suarez of the receipt Exhibit E, considerably weakened the claim of plaintiff that defendants and
defendant-intervenor sold to him the films in question for which Concepcion was duly authorized by
defendant and intervenor, and the proceeds of the sale was later turned allegedly over by Concepcion
to Suarez. . . . ." 7

In short, the failure of petitioner to produce the person to whom he allegedly paid P75,000.00 for the
seven (7) films, rendered his claim untenable. For, when a party has it in his possession or power to
produce the best evidence of which the case in its nature is susceptible and withholds it, the fair
presumption is that the evidence is withheld for some sinister motive and that its production would
thwart his evil or fraudulent purpose. 8

However, we resolve the third issue raised by petitioner, in his favor.

The sole basis for the award of damages against the petitioner is the alleged unrealized profits of private
respondents for the non-screening of the seven (7) films. We believe that respondent court committed
grave abuse of discretion in arriving at the amount of P10,000.00 a day as unrealized profits suffered by
private respondents due to the filing of the present action by the petitioner. As correctly averred by
petitioner, the films had yet to be passed by the Board of Censors and being "bold" or so-called "bomba"
films, there was the probability that some scenes therein would have been cut or censored or the films
totally banned, as in the case of one of the films.

Besides, no document or proof was presented to prove that private respondents really lost such amount
daily for none/exhibition of the films to the public by reason of the action instituted by petitioner. The
amount of P10,000.00 a day as alleged unrealized profit was arrived at by mere speculation and
conjecture by respondent court. Hence, the award of damages for the anticipated loss of profits is
umwarranted.

It is a settled rule that in order for damages to be recovered, the best evidence obtainable by the injured
party must be presented. 9 Actual or compensatory damages cannot be presumed, but must be duly
proved, and proved with a 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 been suffered and on evidence of the actual amount thereof. If the proof is flimsy
and unsubstantial, no damages will be awarded. 10

WHEREFORE, the appealed decision is hereby AFFIRMED with the modification that the award of
damages in the amount of P10,000.00 a day for alleged unrealized profits is eliminated. Costs against
[Link] virtual lawlibrary

SO ORDERED.
REPUBLIC vs TUVERA (February 16, 2007)

FACTS: Twin peaks is a corporation engaged in real estate business. President Marcos granted Twin
peaks a Timber License Agreement (TLA) in favor of the latter to operate on 26,000 hectares of land with
an annual allowable cut of 60,000 cubic meters of mahogany and narra species. As a result Twin peaks
was able to engage in logging operations.

With President Marcos was ousted, Corazon C. Aquino assumed presidency and established the
Philippine Commission on Good Government (PCGG) to track down the ill-gotten wealth procured by
Marcos. PCGG was granted the power to issue writs of sequestration. PCGG issued a Writ of
Sequestration on all assets, properties, records, documents, and shares of stock of Twin Peaks on the
ground that all the assets of the corporation are ill-gotten wealth for having been acquired directly or
indirectly through fraudulent and illegal means.

During trial after the prosection has rested its case and wiith leave of court, respondents filed a
Demurrer to Evidence on the basis of res judicata citing the factual antecedents culminating with the
Court’s decision in Felipe Ysmael, Jr. & Corp., Inc. v. Sec. of Environment and Natural Resources.

Sandiganbayan sustained the demurrer to evidence. The Republic questioned the correctness of the
Sandiganbayan’s decision to grant the demurrer to evidence because it was not based solely on the
insufficiency of its evidence but also on the evidence of respondent mentioned during the pre-trial
conference. The Republic also challenges the applicability of res judicata.

ISSUE: Whether or not a demurrer to evidence may be granted on the ground of res judicata

RULING: An examination of the Sandiganbayan’s Resolution shows that dismissal of the case on
demurrer to evidence was principally anchored on the Republic’s failure to show its right to relief
because of the existence of a prior judgment which consequently barred the relitigation of the same
issue. In other words, the Sandiganbayan did

not dismiss the case on the insufficiency of the Republic’s evidence nor on the strength of respondents’
evidence. Rather, it based its dismissal on the existence of the Ysmael case which, according to it, would
render the case barred by res judicata.

For res judicata to serve as an absolute bar to a subsequent action, the following requisites must concur:
(1) the former judgment or order must be final; (2) the judgment or order must be on the merits; (3) it
must have been rendered by a court having jurisdiction over the subject matter and parties; and (4)
there must be between the first and second actions, identity of parties, of subject matter, and of causes
of action. When there is only identity of issues with no identity of causes of action, there exists res
judicata in the concept of conclusiveness of judgment.

In Ysmael, the case was between Felipe Ysmael Jr. & Co., Inc. and the Deputy Executive Secretary, the
Secretary of Environment and Natural Resources, the Director of the Bureau of Forest Development and
Twin Peaks Development and Realty Corporation. The present case, on the other hand, was initiated by
the Republic of

the Philippines represented by the Office of the Solicitor General. No amount of imagination could let us
believe that there was an identity of parties between this case and the one formerly filed by Felipe
Ysmael Jr. & Co., Inc.

The Sandiganbayan held that despite the difference of parties, res judicata nevertheless applies on the
basis of the supposed sufficiency of the "substantial identity" between the Republic of the Philippines
and Felipe Ysmael, Jr. Co., Inc. We disagree. The Court in a number of cases considered the substantial
identity of parties in the application of res judicata in instances where there is privity between the two
parties, as between their successors in interest by title or where an additional party was simply included
in the subsequent case or where one of the parties to a previous case was not impleaded in the
succeeding case.

The Court finds no basis to declare the Republic as having substantial interest as that of Felipe Ysmael,
Jr. & Co., Inc. In the first place, the Republic’s cause of action lies in the alleged abuse of

power on respondents’ part in violation of R.A. No. 3019 and breach of public trust, which in turn
warrants its claim for restitution and damages. Ysmael, on the other hand, sought the revocation of TLA
No. 356 and the reinstatement of its own timber license agreement. Indeed, there is no identity of
parties and no identity of causes of action between the two cases.

Citytrust banking Corp., vs. Intermediate Appellate Court GR No. 84281 May 27, 1994 Vitug, J:

Facts:
Emme Herrero, businesswoman, made regular deposits with Citytrust Banking Corp. at its Burgoa
branch in Calamba, Laguna. She deposited the amount of P31, 500 in order to amply cover 6 postdated
checks she issued. All checks were dishonored due to insufficiency of funds upon the presentment for
encashment. Citytrust banking Corp. asserted that it was due to Herrero’s fault that her checks were
dishonored, for he inaccurately wrote his account number in the deposit slip. RTC dismissed the
complaint for lack of merit. CA reversed the decision of RTC.

Issue:
Whether or not Citytrust banking Corp. has the duty to honor checks issued by Emme Herrero
despite the failure to accurately stating the account number resulting to insufficiency of funds for the
check.

Held:
Yes, even it is true that there was error on the account number stated in the deposit slip, its is,
however, indicated the name of “Emme Herrero.” This is controlling in determining in whose account
the deposit is made or should be posted. This is so because it is not likely to commit an error in one’s
name than merely relying on numbers which are difficult to remember. Numbers are for the
convenience of the bank but was never intended to disregard the real name of its depositors. The bank
is engaged in business impressed with public trust, and it is its duty to protect in return its clients and
depositors who transact business with it. It should not be a matter of the bank alone receiving deposits,
lending out money and collecting interests. It is also its obligation to see to it that all funds invested with
it are properly accounted for and duly posted in its ledgers.

Barzaga v CA

Facts:

The Ignacio Barzaga’s wife was suffering from a debilitating ailment and with forewarning of her
impending death, she expressed her wish to be laid to rest before Christmas day to spare her family of
the long vigils as it was almost Christmas. On 21 December 1990 After his wife passed away, petitioner
bought materials from herein private respondent (Angelito Alvair) for the construction of her niche in
Dasmarias, Cavite,. Private respondents however failed to deliver on agreed time and date despite
repeated follow-ups. The niche was completed in the afternoon of the 27th of December, and Barzaga's
wife was finally laid to rest. However, it was two-and-a-half (2-1/2) days behind schedule.

On 21 January 1991, tormented perhaps by his inability to fulfill his wife's dying wish, Barzaga
wrote private respondent Alviar demanding recompense for the damage he suffered. Alviar did not
respond. Consequently, petitioner sued him before the Regional Trial Court.

Resisting petitioner's claim, private respondent contended that legal delay could not be validly
ascribed to him because no specific time of delivery was agreed upon between them. He pointed out
that the invoices evidencing the sale did not contain any stipulation as to the exact time of delivery and
that assuming that the materials were not delivered within the period desired by petitioner.

Issue:

Whether or not there was delay in the performance of the private respondent's obligation

Ruling:

Yes. Article 1170 says that those who in the performance of their obligations are guilty of fraud,
negligence, or delay and those who in any manner contravene the tenor thereof, are liable for damages.
Since the respondent was negligent and incurred delay in the performance of his contractual
obligations, the petitioner is entitled to be indemnified for the damage he suffered as a consequence of
the delay or contractual breach. Contrary to the appellate court's factual determination, there was a
specific time agreed upon for the delivery of the materials to the cemetery. Petitioner went to private
respondent's store on 21 December precisely to inquire if the materials he intended to purchase could
be delivered immediately. But he was told by the storekeeper that if there were still deliveries to be
made that afternoon his order would be delivered the following day. With this in mind Barzaga decided
to buy the construction materials the following morning after he was assured of immediate delivery
according to his time frame. This is clearly a case of non-performance of a reciprocal obligation, as in the
contract of purchase and sale, the petitioner had already done his part, which is the payment of the
price. It was incumbent upon respondent to immediately fulfill his obligation to deliver the goods
otherwise delay would attach. An award of moral damages is incumbent in this case as the petitioner
has suffered so much.

MENCHAVEZ v. TEVES, 26 January 2005

FACTS: Menchavez and Teves entered into a Contract of Lease for an area covered for a fishpond
application for a period of five years. During this period, Cebu RTC sheriffs demolished the fishpond dikes
constructed by Teves. As a consequence, Teves filed for damages with application for preliminary
attachment against Menchavez. In his Complaint, he alleged that the lessors had violated their Contract
of Lease, specifically the provision on peaceful and adequate enjoyment of the property for the entire
duration of the Contract. Respondent further asserted that the lessors had withheld from him the findings
of the trial court in Civil Case No. 510-T, entitled "Eufracia Colongan and Paulino Pamplona v. Juan
Menchavez Sr. and Sevillana S. Menchavez." In that case involving the same property, subject of the lease,
the Menchavez spouses were ordered to remove the dikes illegally constructed and to pay damages and
attorney's fees.

ISSUE: Whether or not Menchavez is liable for Teves for the sheriff’s act of demolishing the constructed
dikes.
HELD: No. A void contract is deemed legally non-existent. It produces no legal effect. As a general rule,
courts leave parties to such a contract as they are, because they are in pari delicto or equally at fault.
Neither party is entitled to legal protection.

RATIO: The defendants ought to have known that they cannot lease what does not belong to them for as
a matter of fact, they themselves are still applying for a lease of the same property under litigation from
the government. On the other hand, Florentino Teves, being fully aware that petitioners were not yet the
owners, had assumed the risks and under the principle of VOLENTI NON FIT INJURIA NEQUES DOLUS —
He who voluntarily assumes a risk, does not suffer damages thereby. As a consequence, when Teves
leased the fishpond area from petitioners — who were mere holders or possessors thereof, he took the
risk that it may turn out later that his application for lease may not be approved. Unfortunately however,
even granting that the lease of petitioners and their application in 1972 were to be approved, still they
could not sublease the same. In view therefore of these, the parties must be left in the same situation in
which the court finds them, under the principle IN PARI DELICTO NON ORITOR ACTIO, meaning: Where
both are at fault, no one can found a claim.

DARIO N. LOZANO, in his capacity as administrator of the estate of the deceased AGUSTO N. LOZANO,
PATROCINIO DEL PRADO and ANTONIO LOZANO, Plaintiffs-Appellants, v. IGNACIO
BALLESTEROS, Defendant-Appellee.

Tomas V . Tadeo, Jr., for Plaintiffs-Appellants.

Generoso T . Tarlit, for Defendant-Appellee.

SYLLABUS
1. CIVIL LAW; LAND REGISTRATION ACT; FORMAL REQUISITES OF AN ADVERSE CLAIM. — 1. the adverse
claimant must state the following in writing: a. his alleged right or interest; b. how and under whom
such alleged right or interest is acquired; c. the description of the land in which the right or interest is
claimed, and d. the certificate of title number 2. the statement must be signed and sworn to before a
notary public or other officer authorized to administer oath; and 3. the claimant should state his
residence or the place to which all notices may be served upon him.

2. ID.; ID.; ID.; NOT COMPLIED WITH IN CASE AT BAR. — The lower court quoted in part the adverse
claim filed by the plaintiffs, to wit: "That this adverse claim is being filed prior to the filing of a court
action because all the properties above-described formerly belong to my husband, the late Augusto
Lozano." (Record on Appeal, p. 32) However, the lower court noted that "the adverse claim filed and
annotated on the back of the title of Marciana de Dios and later to the title of the herein defendant, did
not meet the requirements provided for in Section 110 of Act 496, that is setting forth fully how or
under whom the heirs of Lozano acquired the property." We adhere to the lower court’s findings and
find appellee’s position meritorious. A cursory reading of the aforequoted adverse claim filed by the
plaintiffs shows that the same has failed to comply with the formal requisites of Section 110 of Act 496,
more specifically the appellants’ failure to state how and under whom their alleged right or interest is
acquired. Thus, the effect of such non-compliance renders the adverse claim non-registrable and
ineffective.

3. ID.; ID.; PURCHASER IN BAD FAITH INCONSEQUENTIAL WHERE ADVERSE CLAIM IS A NULLITY. —
Despite the appellee’s alleged knowledge of the appellants’ claims against De Dios, We still find the
allegation of bad faith on the part of the appellee devoid of merit. It should be stressed that bad faith is
inconsequential because of the ineffectiveness of the adverse claim.

4. ID.; DAMAGES; AWARD OF MORAL DAMAGES; NOT WARRANTED. — We already emphasized that
most of the items for which moral damages can be awarded under Article 2219 of the new Civil Code are
such as affect the moral feelings and personal pride of the person seeking recovery, and they should be
weighed in determining the indemnity to be awarded. (Layda v. Court of Appeals, Et Al., 90 Phil 724)
Thus, 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.

5. ID.; ID.; AWARD OF EXEMPLARY DAMAGES DEPENDENT ON COMPENSATORY DAMAGES. — It has

been held that under Articles 2229, 2233 and 2234 of the New Civil Code, "exemplary damages may be
imposed by way of example or correction only in addition, among others, to compensatory damages,
but they cannot be recovered as a matter of right, their determination depending upon the discretion of
the court. It further appears that the amount of exemplary damages need not be proved, because its
determination depends upon the amount of compensatory damages that may be awarded to the
claimant. If the amount of exemplary damages need not be proved, it need not also be alleged and the
reason is obvious because it is merely incidental or dependent upon what the court may award as
compensatory damages. Unless and until this premise is determined and established, what may be
claimed as exemplary damages would amount to a mere surmise or speculation." (Singson, Et. Al. v.
Aragon and Lorza, 92 Phil 515, 518.) Hence, in the absence of any claim and proof of compensatory
damages, the award of exemplary damages has no leg to stand on.

6. REMEDIAL; LAW; CIVIL PROCEDURE; INDISPENSABLE PARTY; NOT INCLUDED AS PARTY LITIGANT
DECISION HAD NULL AND VOID. — Anent the appellant’s contention that appellee is bound by the
decision in the former reconveyance case against De Dios, the lower court stressed that it is convinced
that the decision rendered in Civil Case No. D-1953 is a nullity, because an indispensable party like the
defendant herein was not brought as party therein. The failure of the plaintiffs to implead the present
defendant in that case, constituted a legal obstacle to the exercise of judicial power in said case, and
rendered any judgment therein an absolute nullity.

7. ID.; ID.; ID.; DEFINED. — "An indispensable party is one without whom the action cannot be finally
determined, whose interests in the subject matter of the suit and in the relief sought are so bound up
with that of the other parties that his legal presence as a party to the proceeding is an absolute
necessity. (Co v. Intermediate Appellate Court, G.R. No. 65928, 21 June 1988,162 SCRA 390, 399)

8. ID.; ACTION FOR RECONVEYANCE; OWNERS OF PROPERTY CONSIDERED INDISPENSABLE PARTY. — We

rule that "owners of property over which reconveyance is asserted are indispensable parties, without
whom no relief is available and without whom the court can render no valid judgment." (see Acting
Registrars of Land Titles and Deeds of Pasay City, Pasig and Makati v. Regional Trial Court of Makati,
Branch 57, G.R. No. 81564, 24 April 1990,184 SCRA 622, 633)

9. ID.; AWARD OF ATTORNEY’S FEES; JUSTIFICATION NECESSARY. — The rule on the award of attorney’s
fees is that there must be a justification for the same. In the absence of a statement why attorney’s fees
were awarded, the same should be disallowed.

DECISION

This is an appeal elevated to Us by the Court of Appeals on pure questions of law seeking the reversal of
the decision of the respondent Court of First Instance of Pangasinan, Third Judicial District, Dagupan City
in Civil Case No. D-2107 dismissing the complaint for lack of merit, declaring defendant Ignacio
Ballesteros the absolute owner of the land in question, ordering the cancellation of the plaintiffs’
adverse claim and the payment to defendant of damages, attorney’s fees and cost of suit.
The antecedent facts of this case as recounted by the trial court and adopted partially from the parties’
stipulation of facts are as follows:chanrob1es virtual 1aw library

Maria Nieves Nuñez Tuazon, deceased mother of the plaintiffs, was the original registered exclusive
owner of the land in question comprising Lots Q, B and O as evidenced by Original Certificate of Title No.
46076. However only Lot Q is the subject of this present action. On March 6, 1958, by virtue of a deed of
absolute sale, Tuazon sold the land in question to Marciana de Dios.

On June 2, 1958, Augusto, Dario, Jaime, Cresencia, Lourdes and Alicia, all surnamed Lozano, together
with Marciana de Dios filed a verified petition before the Court of First Instance of Pangasinan seeking
the approval of the consolidation-subdivision plan and for the annotation of several documents at the
back of the Original Certificate of Title No. 46076. Acting on the verified petition, the court approved the
consolidation-subdivision plan and directed the inscription, among others, of said deed of sale at the
back of the title.

Transfer Certificate of Title No. 26537 was issued in the name of Marciana de Dios who later mortgaged
the land to Kaluyagan Rural Bank in San Carlos City, Pangasinan.

On January 22, 1963, plaintiffs caused the annotation of their adverse claim at the back of the title of
the said lot.

Thereafter, a petition for the settlement of the estate of Augusto Lozano was filed by the plaintiffs in the
Court of First Instance of Pangasinan. On November 18, 1965, plaintiffs through the administrator filed
an inventory which included said lot Q.

On August 25, 1966, De Dios sold lot Q to defendant Ignacio Ballesteros and Transfer Certificate of Title
No. 63171 was later transferred in his name.

On September 21, 1966, plaintiffs filed an action for reconveyance against De Dios in Civil Case No. D-
1953, alleging that the estate of Augusto Lozano is the absolute owner of Lots Q, O and B. On June 8,
1967, the court rendered a default decision in favor of the plaintiffs. However, the judgment was not
satisfied on the ground that De Dios was insolvent and did not have any registered property.

Having failed to effect the recovery and/or reconveyance of the lots, plaintiffs filed several complaints in
Civil Cases Nos. D-2107, D-2109 and D-2115 before the Court of First Instance of Pangasinan for
reconveyance and recovery of possession. The trial court in Civil Case No. D-2107 rendered a decision on
October 21, 1969, the dispositive portion is hereunder quoted as follows:cralawnad

"IN VIEW OF THE FOREGOING CONSIDERATIONS, the court hereby renders judgment (1) dismissing the
complaint for lack of merit; (2) declaring defendant Ignacio Ballesteros the absolute owner of the land in
question; (3) ordering the cancellation of plaintiffs’ adverse claim at the back of Transfer Certificate of
Title No. 63171 at the expense of the plaintiffs; and (4) ordering plaintiffs to pay, jointly and severally,
the herein defendant in the amount of P1,000.00 damages, and P500.00 for attorney’s fees and the cost
of suit.

SO ORDERED." (Record on Appeal, p. 35).

Hence, plaintiffs interposed an appeal to the Court of Appeals docketed as CA-G.R. No. 46169-R.
However, the Court of Appeals in its resolution dated November 16, 1978 ruled that "the matter
submitted for determination is purely a question of law that is beyond the jurisdiction of this court."
(Rollo, p. 50). Thus, the records of the case were elevated to this Court, to wit:jgc:[Link]
"WHEREFORE, let the records of this case be elevated to the Honorable Supreme Court as a matter
pertaining to its exclusive appellate jurisdiction.

"SO ORDERED." (Rollo, p. 50).

It should be noted that during the pendency of the appeal before the Court of Appeals, the appellants
manifested in the motion for extension to file brief their intention of filing a joint brief for all cases
pending before the same court because of the relationship and similarity of issues of the afore-
mentioned cases.

Thereupon, said appellants as well as appellees filed their respective joint briefs.

The appellants raised the following seven (7) assignments of errors:chanrob1es virtual 1aw library

"I

"THE LOWER COURT ERRED IN NOT FINDING THAT THE ADVERSE CLAIM OF HEREIN PLAINTIFFS-
APPELLANTS FILED AND ANNOTATED AT THE BACK OF THE PRIOR TITLES OF MARCIANA DE DIOS AS
ENTRY NO. 194992 AND ENTRY NO. 197335 ARE BINDING AND VALID AS AGAINST DEFENDANTS-
APPELLEES WHO ARE SUBSEQUENT PURCHASERS FROM MARCIANA DE DIOS.
"II

"THE LOWER COURT ERRED IN NOT FINDING THAT BY VIRTUE OF SAID ADVERSE CLAIM THE
DEFENDANTS-APPELLEES PURCHASERS ARE BOUND BY THE DECISION AGAINST MARCIANA DE DIOS IN
CIVIL CASE NO. D-1953 (EXHIBIT "I").

"III

"THE LOWER COURT ERRED IN DECLARING NULL AND VOID AS AGAINST THE DEFENDANTS-APPELLEES
THE DECISION IN CIVIL CASE NO. D-1953.
"IV

"THE LOWER COURT ERRED IN NOT FINDING THAT AS LONG AS THE ADVERSE CLAIM REMAINS AS AN
ENCUMBRANCE ON THE TITLES THE SAME IS DESIGNED TO PROTECT THE INTEREST OF THE ADVERSE
CLAIMANTS AGAINST CLAIMS OF SUBSEQUENT PURCHASERS.

"V

"THE LOWER COURT ERRED IN NOT DECLARING THE DEFENDANTS-APPELLEES AS PURCHASERS IN BAD
FAITH AS THEY HAVE KNOWLEDGE OF HEREIN PLAINTIFFS-APPELLANTS’ CLAIMS AGAINST MARCIANA DE
DIOS.

"VI

"THE LOWER COURT ERRED IN AWARDING DAMAGES AND ATTORNEY’S FEES TO THE DEFENDANTS-
APPELLEES DESPITE THE LACK OF EVIDENCE OF DAMAGES AND DESPITE THE FACT THAT THERE IS NO
EVIDENCE THAT HEREIN PLAINTIFFS’ COMPLAINT WERE FILED IN GROSS BAD FAITH OR WITH MALICE.

"VII

"THE LOWER COURT ERRED IN DECIDING THE CASES IN FAVOR OF APPELLEES. (Rollo, pp. 49-50).

Appellants maintain that the first five assignments of errors should be discussed jointly because these
errors boil down to the issue of the validity and effectivity of the adverse claim. The appellants insist
that "the said adverse claim has been carried along in the subsequent titles of the defendants." (Joint
Brief for Plaintiffs-Appellants, p. 7) Thus, they conclude that the consequence of this cautionary notice is
that whatever would be the result of their claim against Marciana de Dios is binding on subsequent
purchasers or successors-in-interest. They contend that the "defendants-appellees should have waited
for the decision of the court on the question of the validity of the adverse claim or should have first
moved for the removal or cancellation of the adverse claim." (Ibid, p. 8) Hence, appellants conclude that
defendants-appellees are purchasers in bad faith as they have knowledge of the claims against De
[Link] virtual lawlibrary

However, the appellee stresses that "a cursory examination of the adverse claim filed by the plaintiffs-
appellants . . . readily reveals that the same has failed to comply with the formal requirements of
Section 110 of Act 496 with respect to adverse claims. And for which, and for all legal purposes, the
adverse claim under comment is not valid and effective." (Joint Brief for Defendants-Appellees, pp. 15-
16) Appellee argues that "there was a fatal non-joinder of necessary or indispensable parties." (Ibid, p.
21) Thus, the position of the appellants is untenable because "the non-joinder of necessary and
indispensable parties renders null and void as against them any decision in a case in which they were not
made parties-litigants." (Ibid, p. 23) Furthermore, appellee "submits that the protection given by the law
to adverse claimants in regard to the property subject to an adverse claim is available only to the party
whose registered adverse claim meets all the formal requisites of law, and not when the same is a
nullity." (Ibid, p. 26) Hence, appellee concludes that "an invalid and ineffective adverse claim cannot
validly serve as a notice or warning to third parties who may deal with the properties subject thereto
because such adverse claim by reason of its nullity is deemed not existent and unregistered." (Ibid, p.
27)

The appellants claim that "there are several reasons why the decision of the lower court in the matter of
damages and attorney’s fees should be reversed, to wit:jgc:[Link]
"First, defendants did not present evidence on damages and attorney’s fees.

"Second, there is no proof of mental suffering, mental anguish, fright, and the like to entitle defendants
to moral damages.

"Third, there is no showing by the defendants that herein plaintiffs’ complaints were filed in gross bad
faith or malice.

"Fourth, the decision itself did not make finding of facts which would show that defendants are entitled
to damages and attorney’s fees. The reason for this is that these cases were submitted mainly on
stipulation of facts and exhibits. In the stipulation of facts, there is no stipulation as to damages and
attorney’s fees.

"Fifth, the herein plaintiffs-appellants in coming to court are just pursuing a proprietary claim which has
legal and factual basis." (Joint Brief for Plaintiffs-Appellants, p. 11)

However, the appellee argues that when he was unfoundedly sued by the appellants, the former was
under pain of default. Whether he liked it or not, he had to come to court and defend himself. Thus, he
was compelled to unnecessarily incur expenses for the services of their counsel. (Joint Brief for
Defendants-Appellees, p. 33)

In sum, the appellants insist that "the lower court erred in deciding the cases in favor of appellees."
(Joint Brief for Plaintiffs-Appellants, p. 1)

We find appellants’ contentions devoid of merit except that pertaining to the award of damages and
attorney’s fees and therefore uphold the ruling of the lower court with modification.

The applicable law in the case at bar is still Section 110 of Act No. 496, otherwise known as the Land
Registration Act despite the modification introduced by Section 70 of Presidential Decree No. 1529. The
said section particularly deals with adverse claim, to wit:jgc:[Link]

"Whoever claims any part or interest in registered land adverse to the registered owner, arising
subsequent to date of the original registration, may, if no other provision is made in this Act for
registering the same, make a statement in writing setting forth fully his alleged right or interest, and
how or under whom acquired, and a reference to the volume and page of the certificate of title of the
registered owner, and a description of the land in which the right or interest is claimed.

"The statement shall be signed and sworn to, and shall state the adverse claimant’s residence, and
designate a place at which all notices may be served upon him. This statement shall be entitled to
registration as an adverse claim, and the court, upon a petition of any party in interest, shall grant a
speedy hearing upon the question of the validity of such adverse claim and shall enter such decree
therein as justice and equity may require. If the claim is adjudged to be invalid, the registration shall be
cancelled. If in any case the court after notice and hearing shall find that a claim thus registered was
frivolous or vexatious, it may tax the adverse claimant double or treble costs in its discretion."cralaw
virtua1aw library

Hence, for the purpose of registration and as required by the abovequoted provision, as amended, the
following are the formal requisites of an adverse claim:.

1. the adverse claimant must state the following in writing:chanrob1es virtual 1aw library

a. his alleged right or interest;

b. how and under whom such alleged right or interest is acquired;

c. the description of the land in which the right or interest is claimed, and

d. the certificate of title number

2. the statement must be signed and sworn to before a notary public or other officer authorized to
administer oath; and

3. the claimant should state his residence or the place to which all notices may be served upon him.

The lower court quoted in part the adverse claim filed by the plaintiffs, to wit:jgc:[Link]

"That this adverse claim is being filed prior to the filing of a court action because all the properties
above-described formerly belong to my husband, the late Augusto Lozano." (Record on Appeal, p. 32)

However, the lower court noted that "the adverse claim filed and annotated on the back of the title of
Marciana de Dios and later to the title of the herein defendant, did not meet the requirements provided
for in Section 110 of Act 496, that is setting forth fully how or under whom the heirs of Lozano acquired
the property." (Record on Appeal, p. 33)

We adhere to the lower court’s findings and find appellee’s position meritorious. A cursory reading of
the aforequoted adverse claim filed by the plaintiffs shows that the same has failed to comply with the
formal requisites of Section 110 of Act 496, more specifically the appellants’ failure to state how and
under whom their alleged right or interest is acquired. Thus, the effect of such non-compliance renders
the adverse claim non-registrable and ineffective.

In a case where the adverse claim filed for registration did not fully comply with the formal requisites of
Section 110 of Act No. 496, or more specifically, there being no description of the land in which right or
interest is claimed nor the place to which all notices may be served upon the adverse claimant given,
such adverse claim could not be registered. (LRC Consulta No. 144, Register of Deeds of Quezon City,
pet., February 18, 1957)

Despite the appellee’s alleged knowledge of the appellants’ claims against De Dios, We still find the
allegation of bad faith on the part of the appellee devoid of merit. It should be stressed that bad faith is
inconsequential because of the ineffectiveness of the adverse claim.

Anent the appellant’s contention that appellee is bound by the decision in the former reconveyance
case against De Dios, the lower court stressed that it is convinced that the decision rendered in Civil
Case No. D-1953 is a nullity, because an indispensable party like the defendant herein was not brought
as party therein. The failure of the plaintiffs to implead the present defendant in that case, constituted a
legal obstacle to the exercise of judicial power in said case, and rendered any judgment therein an
absolute nullity. (Record on Appeal, p. 30)chanrobles virtual lawlibrary

Rule 3, Section 7 of the Revised Rules of Court provides that:jgc:[Link]

"Parties in interest without whom no final determination can be had of an action shall be joined either
as plaintiffs or defendants."cralaw virtua1aw library

We rule that "owners of property over which reconveyance is asserted are indispensable parties,
without whom no relief is available and without whom the court can render no valid judgment." (see
Acting Registrars of Land Titles and Deeds of Pasay City, Pasig and Makati v. Regional Trial Court of
Makati, Branch 57, G.R. No. 81564, 24 April 1990,184 SCRA 622, 633.)

As defined, "an indispensable party is one without whom the action cannot be finally determined,
whose interests in the subject matter of the suit and in the relief sought are so bound up with that of
the other parties that his legal presence as a party to the proceeding is an absolute necessity. (Co v.
Intermediate Appellate Court, G.R. No. 65928, 21 June 1988,162 SCRA 390, 399)
On the basis of the above-mentioned definition, We believe that the point of the appellee was well
taken by the court and We therefore conclude that the defendant-appellee was correctly considered as
an indispensable party, ergo, the court cannot rule that said party is bound by the previous decision in
favor of the appellants.

Finally, the appellants’ claim against the lower court’s award of damages and attorney’s fees is
meritorious.

The lower court is admonished in ordering the payment of damages without mentioning the specific
type of damages being awarded. In view of the lower court’s inaccuracy as well as its failure to state any
basis for the award of the indemnity, the same must be deleted.

More specifically, We already emphasized that most of the items for which moral damages can be
awarded under Article 2219 of the new Civil Code are such as affect the moral feelings and personal
pride of the person seeking recovery, and they should be weighed in determining the indemnity to be
awarded. (Layda v. Court of Appeals, Et Al., 90 Phil 724) Thus, 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.
In relation to appellee’s prayer for exemplary damages, it has been held that under Articles 2229, 2233
and 2234 of the New Civil Code, "exemplary damages may be imposed by way of example or correction
only in addition, among others, to compensatory damages, but they cannot be recovered as a matter of
right, their determination depending upon the discretion of the court. It further appears that the
amount of exemplary damages need not be proved, because its determination depends upon the
amount of compensatory damages that may be awarded to the claimant. If the amount of exemplary
damages need not be proved, it need not also be alleged and the reason is obvious because it is merely
incidental or dependent upon what the court may award as compensatory damages. Unless and until
this premise is determined and established, what may be claimed as exemplary damages would amount
to a mere surmise or speculation." (Singson, Et. Al. v. Aragon and Lorza, 92 Phil 515, 518.)

Hence, in the absence of any claim and proof of compensatory damages, the award of exemplary
damages has no leg to stand on.

Finally, the rule on the award of attorney’s fees is that there must be a justification for the same. In the
absence of a statement why attorney’s fees were awarded, the same should be disallowed.

All premises considered, the Court is convinced that the lower court committed no error in adjudicating
in favor of the defendant-appellee except as to the award of damages and attorney’s fees which We find
erroneous.

ACCORDINGLY, the appealed judgment of the lower court is hereby AFFIRMED with modification insofar
as it awarded damages amounting to P1,000.00, and attorney’s fees amounting to P500.00 which are
hereby deleted.

SO ORDERED.

SMITH BELL DODWELL SHIPPING AGENCY CORPORATION,, Petitioner, vs. CATALINO BORJA and
INTERNATIONAL TO WAGE AND TRANSPORT CORPORATION, Respondents.

DECISION

The owner or the person in possession and control of a vessel is liable for all natural and proximate
damages caused to persons and property by reason of negligence in its management or navigation. The
liability for the loss of the earning capacity of the deceased is fixed by taking into account the net
income of the victim at the time of death -- of the incident in this case -- and that persons probable life
expectancy.

The Case

Before us is a Petition for Review on Certiorari under Rule 45 of the Rules of Court, challenging the
March 6, 2000 Decision1 and the April 25, 2000 Resolution2 of the Court of Appeals3 (CA) in CA-GR CV
No. 57470. The assailed Decision disposed as follows:

WHEREFORE, premises considered, the instant appeal is hereby DENIED. The questioned decision of the
lower court is hereby AFFIRMED in toto. No pronouncement as to costs.4cräläwvirtualibräry

Reconsideration was denied in the assailed Resolution.

 The Facts

The facts of the case are set forth by the CA as follows:

It appears that on September 23, 1987, Smith Bell [herein petitioner] filed a written request with the
Bureau of Customs for the attendance of the latters inspection team on vessel M/T King Family which
was due to arrive at the port of Manila on September 24, 1987.

Said vessel contained 750 metric tons of alkyl benzene and methyl methacrylate monomer.

On the same day, Supervising Customs Inspector Manuel Ma. D. Nalgan instructed [Respondent Catalino
Borja] to board said vessel and perform his duties as inspector upon the vessels arrival until its
departure. At that time, [Borja] was a customs inspector of the Bureau of Customs receiving a salary of
P31,188.25 per annum.

"At about 11 oclock in the morning on September 24, 1987, while M/T King Family was unloading
chemicals unto two (2) barges [--] ITTC 101 and CLC-1002 [--] owned by [Respondent] ITTC, a sudden
explosion occurred setting the vessels afire. Upon hearing the explosion, [Borja], who was at that time
inside the cabin preparing reports, ran outside to check what happened. Again, another explosion was
heard.

Seeing the fire and fearing for his life, [Borja] hurriedly jumped over board to save himself. However, the
[water] [was] likewise on fire due mainly to the spilled chemicals. Despite the tremendous heat, [Borja]
swam his way for one (1) hour until he was rescued by the people living in the squatters area and sent to
San Juan De Dios Hospital.

After weeks of intensive care at the hospital, his attending physician diagnosed [Borja] to be
permanently disabled due to the incident. [Borja] made demands against Smith Bell and ITTC for the
damages caused by the explosion. However, both denied liabilities and attributed to each other
negligence.5cräläwvirtualibräry

The trial court6 (RTC) ruled in favor of Respondent Borja and held petitioner liable for damages and loss
of income. The RTC disposed as follows:

WHEREFORE, premises considered, judgment is hereby rendered ordering [Petitioner] Smith Bell
Dodwell [S]hipping Agency Corporation to pay [Borja]:

1. The amount of P495,360.00 as actual damages for loss of earning capacity:

2. The amount of P100,000.00 for moral damages; and

3. The amount of P50,000.00 for and as reasonable attorneys fees.

The cross-claim of [Petitioner] Smith Bell Dodwell Shipping Agency Corporation against co-defendant
International Towage and Transport Corporation and the latters counterclaim against [Borja] and cross-
claim with compulsory counterclaim against Smith Bell are hereby ordered dismissed.7

Ruling of the Court of Appeals

Affirming the trial court, the CA rejected the plea of petitioner that it be exonerated from liability for
Respondent Borjas injuries. Contrary to the claim of petitioner that no physical evidence was shown to
prove that the explosion had originated from its vessel, the CA held that the fire had originated
from M/T King Family. This conclusion was amply supported by the testimonies of Borja and Eulogio
Laurente (the eyewitness of International Towage and Transport Corporation or ITTC) as well as by the
investigation conducted by the Special Board of Marine Inquiry and affirmed by the secretary of the
Department of National Defense. On the other hand, the RTC, which the CA sustained, had not given
probative value to the evidence of petitioner, whose sole eyewitness had not shown up for cross-
examination.

Hence, this Petition.8

The Issues

In its Memorandum,9 petitioner raises the following issues:

1. Whether petitioner should be held liable for the injuries of Respondent Catalino Borja.

2. Whether Respondent ITTC should be held liable for the injuries of Respondent Catalino Borja.

3. Assuming without admitting that Respondent Catalino Borja is entitled to damages, whether
Respondent Borja is entitled to the amount of damages awarded to him by the trial
court.10cräläwvirtualibräry

Simply put, these issues can be summed up in these two questions: (1) Who, if any, is liable for Borjas
injuries? (2) What is the proper amount of liability?

This Courts Ruling

The Petition is partly meritorious.

First Issue:

Responsibility for Injuries

Petitioner avers that both lower courts labored under a misapprehension of the facts. It claims that the
documents adduced in the RTC conclusively revealed that the explosion that caused the fire on M/T King
Family had originated from the barge ITTC-101, a conclusion based on three grounds. First, the Survey
Report (Exh. 10) dated October 21, 1987 submitted by the Admiral Surveyors and Adjusters, Inc.,
showed that no part of M/T King Family sustained any sharp or violent damage that would otherwise be
observed if indeed an explosion had occurred on it. On the other hand, the fact that the vessel sustained
cracks on its shell plating was noted in two Survey Reports from Greutzman Divers Underwater
Specialist, dated October 6, 1987 (Exh. 11), and during the underwater inspection on the sunken
barge ITTC-101.

Second, external fire damage on the hull of M/T King Family indicated that the fire had started from
outside the vessel and from ITTC-101. The port side of the vessel to which the ITTC barge was tied was
completely gutted by fire, while the starboard side to which the barge CLC-1002 was tied sustained only
slight fire damage.

Third, testimonial evidence proved that the explosion came from the barge of the ITTC and not from its
vessel. Security Guard Vivencio Estrella testified that he had seen the sudden explosion of monomer on
the barge with fire that went up to about 60 meters. Third Mate Choi Seong Hwan and Second Mate
Nam Bang Choun of M/T King Family narrated that while they were discharging the chemicals, they saw
and heard an explosion from the barge ITTC-101. Chief Security Guard Reynaldo Patron, in turn, testified
that he was 7 to 10 meters away from the barge when he heard the explosion from the port side of M/T
King Family and saw the barge already on fire.

We are not persuaded. Both the RTC and the CA ruled that the fire and the explosion had originated
from petitioners vessel. Said the trial court:

The attempts of [Petitioner] Smith Bell to shift the blame on x x x ITTC were all for naught. First, the
testimony of its alleged eyewitness was stricken off the record for his failure to appear for cross-
examination (p. 361, Record). Second, the documents offered to prove that the fire originated from
barge ITTC-101 were all denied admission by the [c]ourt for being, in effect, hearsay (pp. 335 and 362). x
x x Thus, there is nothing in the record to support [petitioners] contention that the fire and explosion
originated from barge ITTC-101.11cräläwvirtualibräry

We find no cogent reason to overturn these factual findings. Nothing is more settled in jurisprudence
than that this Court is bound by the factual findings of the Court of Appeals when these are supported
by substantial evidence and are not under any of the exceptions in Fuentes v. Court of Appeals;12 more
so, when such findings affirm those of the trial court.13 Verily, this Court reviews only issues of law.

Negligence is conduct that creates undue risk of harm to another. It is the failure to observe that degree
of care, precaution and vigilance that the circumstances justly demand, whereby that other person
suffers injury.14 Petitioners vessel was carrying chemical cargo -- alkyl benzene and methyl methacrylate
monomer.15 While knowing that their vessel was carrying dangerous inflammable chemicals, its officers
and crew failed to take all the necessary precautions to prevent an accident. Petitioner was, therefore,
negligent.

The three elements of quasi delict are: (a) damages suffered by the plaintiff, (b) fault or negligence of
the defendant, and (c) the connection of cause and effect between the fault or negligence of the
defendant and the damages inflicted on the plaintiff.16 All these elements were established in this case.
Knowing fully well that it was carrying dangerous chemicals, petitioner was negligent in not taking all the
necessary precautions in transporting the cargo.

As a result of the fire and the explosion during the unloading of the chemicals from petitioners vessel,
Respondent Borja suffered the following damage: and injuries: (1) chemical burns of the face and arms;
(2) inhalation of fumes from burning chemicals; (3) exposure to the elements [while] floating in sea
water for about three (3) hours; (4) homonymous hemianopsia or blurring of the right eye [which was
of] possible toxic origin; and (5) [c]erebral infract with neo-vascularization, left occipital region with right
sided headache and the blurring of vision of right eye.17cräläwvirtualibräry

Hence, the owner or the person in possession and control of a vessel and the vessel are liable for all
natural and proximate damage caused to persons and property by reason of negligent management or
navigation.

Second Issue:

Amount of Liability

Petitioner insists that Borja is not entitled to the full amount of damages awarded by the lower courts. It
disputes the use of his gross earning as basis for the computation of the award for loss of earning
capacity. Both courts, in computing the value of such loss, used the remaining years of the victim as a
government employee and the amount he had been receiving per annum at the time of the incident.
Counsel for Respondent Borja, on the other hand, claims that petitioner had no cause to complain,
because the miscomputation had ironically been in its favor. The multiplier used in the computation was
erroneously based on the remaining years in government service, instead of the life expectancy, of the
victim. Borjas counsel also points out that the award was based on the formers meager salary in 1987,
or about 23 years ago when the foreign exchange was still P14 to $1. Hence, the questioned award is
consistent with the primary purpose of giving what is just, moral and legally due the victim as the
aggrieved party.

Both parties have a point. In determining the reasonableness of the damages awarded under Article
1764 in conjunction with Article 2206 of the Civil Code, the factors to be considered are: (1) life
expectancy (considering the health of the victim and the mortality table which is deemed conclusive)
and loss of earning capacity; (b) pecuniary loss, loss of support and service; and (c) moral and mental
sufferings.19 The loss of earning capacity is based mainly on the number of years remaining in the
persons expected life span. In turn, this number is the basis of the damages that shall be computed and
the rate at which the loss sustained by the heirs shall be fixed.20cräläwvirtualibräry

The formula for the computation of loss of earning capacity is as follows:21

Net earning capacity = Life expectancy x [Gross Annual Income - Living Expenses (50% of gross
annual income)], where life expectancy = 2/3 (80 - the age of the
deceased).22cräläwvirtualibräry

Petitioner is correct in arguing that it is net income (or gross income less living expenses) which is to be
used in the computation of the award for loss of income. Villa Rey Transit v. Court of Appeals23 explained
that the amount recoverable is not the loss of the entire earning, but rather the loss of that portion of
the earnings which the beneficiary would have received. Hence, in fixing the amount of the said
damages, the necessary expenses of the deceased should be deducted from his earnings.

In other words, only net earnings, not gross earnings, are to be considered; that is, the total of the
earnings less expenses necessary in the creation of such earnings or income, less living and other
incidental expenses. When there is no showing that the living expenses constituted a smaller percentage
of the gross income, we fix the living expenses at half of the gross income. To hold that one would have
used only a small part of the income, with the larger part going to the support of ones children, would
be conjectural and unreasonable.24cräläwvirtualibräry

Counsel for Respondent Borja is also correct in saying that life expectancy should not be based on the
retirement age of government employees, which is pegged at 65. In Negros Navigation Co, Inc. v.
CA,25 the Court resolved that in calculating the life expectancy of an individual for the purpose of
determining loss of earning capacity under Article 2206(1) of the Civil Code, it is assumed that the
deceased would have earned income even after retirement from a particular job.

Respondent Borja should not be situated differently just because he was a government employee.
Private employees, given the retirement packages provided by their companies, usually retire earlier
than government employees; yet, the life expectancy of the former is not pegged at 65 years.

Petitioner avers that Respondent Borja died nine years after the incident and, hence, his life expectancy
of 80 years should yield to the reality that he was only 59 when he actually died.

We disagree. The Court uses the American Experience/Expectancy Table of Mortality or the Actuarial or
Combined Experience Table of Mortality, which consistently pegs the life span of the average Filipino at
80 years, from which it extrapolates the estimated income to be earned by the deceased had he or she
not been killed.26cräläwvirtualibräry
Respondent Borjas demise earlier than the estimated life span is of no moment. For purposes of
determining loss of earning capacity, life expectancy remains at 80. Otherwise, the computation of loss
of earning capacity will never become final, being always subject to the eventuality of the victims death.
The computation should not change even if Borja lived beyond 80 years. Fair is fair.

Based on the foregoing discussion, the award for loss of earning capacity should be computed as
follows:

Loss of earning = [2 (80-50)] x [(P2,752x12)-16,512]

capacity 3

= P330,240

Having been duly proven, the moral damages and attorneys fees awarded are justified under the Civil
Codes Article 2219, paragraph 2; and Article 2208, paragraph 11, respectively.

WHEREFORE, the Petition is PARTLY GRANTED. The assailed Decision is AFFIRMED with the
following MODIFICATIONS: petitioner is ordered to pay the heirs of the victim damages in the amount
of P320,240 as loss of earning capacity, moral damages in the amount of P100,000, plus
another P50,000 as attorneys fees. Costs against petitioner.

SO ORDERED.