G.R. No.

116100 February 9, 1996

SPOUSES CRISTINO and BRIGIDA CUSTODIO and SPOUSES LITO and MARIA CRISTINA SANTOS,petitioners,
vs.
COURT OF APPEALS, HEIRS OF PACIFICO C. MABASA and REGIONAL TRIAL COURT OF PASIG, METRO
MANILA, BRANCH 181, respondents.

DECISION

REGALADO, J.:

This petition for review on certiorari assails the decision of respondent Court of Appeals in CA-G.R. CV No. 29115,
promulgated on November 10, 1993, which affirmed with modification the decision of the trial court, as well as its
1
resolution dated July 8, 1994 denying petitioner's motion for reconsideration.

On August 26, 1982, Civil Case No. 47466 for the grant of an easement of right of way was filed by Pacifico Mabasa
against Cristino Custodio, Brigida R. Custodio, Rosalina R. Morato, Lito Santos and Maria Cristina C. Santos before the
2
Regional Trial Court of Pasig and assigned to Branch 22 thereof.

The generative facts of the case, as synthesized by the trial court and adopted by the Court of Appeals, are as follows:

Perusing the record, this Court finds that the original plaintiff Pacifico Mabasa died during the pendency of this
case and was substituted by Ofelia Mabasa, his surviving spouse [and children].

The plaintiff owns a parcel of land with a two-door apartment erected thereon situated at Interior P. Burgos St.,
Palingon, Tipas, Tagig, Metro Manila. The plaintiff was able to acquire said property through a contract of sale
with spouses Mamerto Rayos and Teodora Quintero as vendors last September 1981. Said property may be
described to be surrounded by other immovables pertaining to defendants herein. Taking P. Burgos Street as the
point of reference, on the left side, going to plaintiff's property, the row of houses will be as follows: That of
defendants Cristino and Brigido Custodio, then that of Lito and Maria Cristina Santos and then that of Ofelia
Mabasa. On the right side (is) that of defendant Rosalina Morato and then a Septic Tank (Exhibit "D"). As an
access to P. Burgos Street from plaintiff's property, there are two possible passageways. The first passageway is
approximately one meter wide and is about 20 meters distan(t) from Mabasa's residence to P. Burgos Street.
Such path is passing in between the previously mentioned row of houses. The second passageway is about 3
meters in width and length from plaintiff Mabasa's residence to P. Burgos Street; it is about 26 meters. In passing
thru said passageway, a less than a meter wide path through the septic tank and with 5-6 meters in length, has to
be traversed.

When said property was purchased by Mabasa, there were tenants occupying the remises and who were
acknowledged by plaintiff Mabasa as tenants. However, sometime in February, 1982, one of said tenants vacated
the apartment and when plaintiff Mabasa went to see the premises, he saw that there had been built an adobe
fence in the first passageway making it narrower in width. Said adobe fence was first constructed by defendants
Santoses along their property which is also along the first passageway. Defendant Morato constructed her adobe
fence and even extended said fence in such a way that the entire passageway was enclosed. (Exhibit "1-
Santoses and Custodios, Exh. "D" for plaintiff, Exhs. "1-C", "1-D" and "1-E") And it was then that the remaining
tenants of said apartment vacated the area. Defendant Ma. Cristina Santos testified that she constructed said
fence because there was an incident when her daughter was dragged by a bicycle pedalled by a son of one of the
tenants in said apartment along the first passageway. She also mentioned some other inconveniences of having
(at) the front of her house a pathway such as when some of the tenants were drunk and would bang their doors
3
and windows. Some of their footwear were even lost. . . . (Emphasis in original text; corrections in parentheses
supplied)

On February 27, 1990, a decision was rendered by the trial court, with this dispositive part:

Accordingly, judgment is hereby rendered as follows:

1) Ordering defendants Custodios and Santoses to give plaintiff permanent access ingress and egress, to the
public street;

2) Ordering the plaintiff to pay defendants Custodios and Santoses the sum of Eight Thousand Pesos (P8,000) as
indemnity for the permanent use of the passageway.

4
The parties to shoulder their respective litigation expenses.

Not satisfied therewith, therein plaintiff represented by his heirs, herein private respondents, went to the Court of Appeals
raising the sole issue of whether or not the lower court erred in not awarding damages in their favor. On November 10,
1993, as earlier stated, the Court of Appeals rendered its decision affirming the judgment of the trial court with
modification, the decretal portion of which disposes as follows:

WHEREFORE, the appealed decision of the lower court is hereby AFFIRMED WITH MODIFICATION only insofar
as the herein grant of damages to plaintiffs-appellants. The Court hereby orders defendants-appellees to pay
 plaintiffs-appellants the sum of Sixty Five Thousand (P65,000) Pesos as Actual Damages, Thirty Thousand
(P30,000) Pesos as Moral Damages, and Ten Thousand (P10,000) Pesos as Exemplary Damages. The rest of
5
the appealed decision is affirmed to all respects.

6
On July 8, 1994, the Court of Appeals denied petitioner's motion for reconsideration. Petitioners then took the present
recourse to us, raising two issues, namely, whether or not the grant of right of way to herein private respondents is proper,
and whether or not the award of damages is in order.

With respect to the first issue, herein petitioners are already barred from raising the same. Petitioners did not appeal from
the decision of the court a quo granting private respondents the right of way, hence they are presumed to be satisfied with
the adjudication therein. With the finality of the judgment of the trial court as to petitioners, the issue of propriety of the
grant of right of way has already been laid to rest.

For failure to appeal the decision of the trial court to the Court of Appeals, petitioners cannot obtain any affirmative relief
other than those granted in the decision of the trial court. That decision of the court below has become final as against
them and can no longer be reviewed, much less reversed, by this Court. The rule in this jurisdiction is that whenever an
appeal is taken in a civil case, an appellee who has not himself appealed may not obtain from the appellate court any
affirmative relief other than what was granted in the decision of the lower court. The appellee can only advance any
argument that he may deem necessary to defeat the appellant's claim or to uphold the decision that is being disputed, and
he can assign errors in his brief if such is required to strengthen the views expressed by the court a quo. These assigned
errors, in turn, may be considered by the appellate court solely to maintain the appealed decision on other grounds, but
7
not for the purpose of reversing or modifying the judgment in the appellee's favor and giving him other affirmative reliefs.

However, with respect to the second issue, we agree with petitioners that the Court of Appeals erred in awarding
damages in favor of private respondents. The award of damages has no substantial legal basis. A reading of the decision
of the Court of Appeals will show that the award of damages was based solely on the fact that the original plaintiff,
Pacifico Mabasa, incurred losses in the form of unrealized rentals when the tenants vacated the leased premises by
reason of the closure of the passageway.

However, the mere fact that the plaintiff suffered losses does not give rise to a right to recover damages. To warrant the
recovery of damages, there must be both a right of action for a legal wrong inflicted by the defendant, and damage
resulting to the plaintiff therefrom. Wrong without damage, or damage without wrong, does not constitute a cause of
8
action, since damages are merely part of the remedy allowed for the injury caused by a breach or wrong.

There is a material distinction between damages and injury. 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
9
result of a violation of a legal duty. These situations are often called damnum absque injuria.

In order that a plaintiff may maintain an action for the injuries of which he complains, he must establish that such injuries
resulted from a breach of duty which the defendant owed to the plaintiff a concurrence of injury to the plaintiff and legal
10
responsibility by the person causing it. The underlying basis for the award of tort damages is the premise that an
individual was injured in contemplation of law. Thus, there must first be the breach of some duty and the imposition of
liability for that breach before damages may be awarded; it is not sufficient to state that there should be tort liability merely
11
because the plaintiff suffered some pain and suffering.

Many accidents occur and many injuries are inflicted by acts or omissions which cause damage or loss to another but
which violate no legal duty to such other person, and consequently create no cause of action in his favor. In such cases,
the consequences must be borne by the injured person alone. The law affords no remedy for damages resulting from an
12
act which does not amount to a legal injury or wrong.

In other words, in order that the law will give redress for an act causing damage, that act must be not only hurtful, but
13
wrongful. There must be damnum et injuria. If, as may happen in many cases, a person sustains actual damage, that is,
harm or loss to his person or property, without sustaining any legal injury, that is, an act or omission which the law does
14
not deem an injury, the damage is regarded as damnum absque injuria.

In the case at bar, although there was damage, there was no legal injury. Contrary to the claim of private respondents,
petitioners could not be said to have violated the principle of abuse of right. In order that the principle of abuse of right
provided in Article 21 of the Civil Code can be applied, it is essential that the following requisites concur: (1) The
defendant should have acted in a manner that is contrary to morals, good customs or public policy; (2) The acts should be
15
willful; and (3) There was damage or injury to the plaintiff.

The act of petitioners in constructing a fence within their lot is a valid exercise of their right as owners, hence not contrary
to morals, good customs or public policy. The law recognizes in the owner the right to enjoy and dispose of a thing,
16
without other limitations than those established by law. It is within the right of petitioners, as owners, to enclose and
fence their property. Article 430 of the Civil Code provides that "(e)very owner may enclose or fence his land or tenements
by means of walls, ditches, live or dead hedges, or by any other means without detriment to servitudes constituted
thereon."

At the time of the construction of the fence, the lot was not subject to any servitudes. There was no easement of way
existing in favor of private respondents, either by law or by contract. The fact that private respondents had no existing
right over the said passageway is confirmed by the very decision of the trial court granting a compulsory right of way in
their favor after payment of just compensation. It was only that decision which gave private respondents the right to use
the said passageway after payment of the compensation and imposed a corresponding duty on petitioners not to interfere
in the exercise of said right.

Hence, prior to said decision, petitioners had an absolute right over their property and their act of fencing and enclosing
the same was an act which they may lawfully perform in the employment and exercise of said right. To repeat, whatever
injury or damage may have been sustained by private respondents by reason of the rightful use of the said land by
17
petitioners is damnum absque injuria.

A person has a right to the natural use and enjoyment of his own property, according to his pleasure, for all the purposes
to which such property is usually applied. As a general rule, therefore, there is no cause of action for acts done by one
person upon his own property in a lawful and proper manner, although such acts incidentally cause damage or an
18
unavoidable loss to another, as such damage or loss is damnum absque injuria. When the owner of property makes use
thereof in the general and ordinary manner in which the property is used, such as fencing or enclosing the same as in this
case, nobody can complain of having been injured, because the incovenience arising from said use can be considered as
19
a mere consequence of community life.

20
The proper exercise of a lawful right cannot constitute a legal wrong for which an action will lie, although the act may
21
result in damage to another, for no legal right has been invaded. One may use any lawful means to accomplish a lawful
purpose and though the means adopted may cause damage to another, no cause of action arises in the latter's favor. An
injury or damage occasioned thereby is damnum absque injuria. The courts can give no redress for hardship to an
22
individual resulting from action reasonably calculated to achieve a lawful means.

WHEREFORE, under the compulsion of the foregoing premises, the appealed decision of respondent Court of Appeals is
hereby REVERSED and SET ASIDE and the judgment of the trial court is correspondingly REINSTATED.

G.R. No. 172707 October 1, 2013

PEOPLE OF THE PHILIPPINES, PLAINTIFF-APPELLEE,

vs.
HALIL GAMBAO Y ESMAIL, EDDIE KARIM Y USO, EDWIN DUKILMAN Y SUBOH, TONY ABAO Y SULA, RAUL
UDAL Y KAGUI, THENG DILANGALEN Y NANDING, JAMAN MACALINBOL Y KATOL, MONETTE RONAS Y AMPIL,
NORA EVAD Y MULOK, THIAN PERPENIAN Y RAFON A.K.A LARINA PERPENIAN AND JOHN DOES,ACCUSED-
APPELLANTS.

DECISION

PEREZ, J.:

1
Before this Court for Automatic Review is the Decision dated 28 June 2005 of the Court of Appeals (CA) in CA-G.R. CR-
2
H.C. No. 00863, which affirmed with modification the Decision of the Regional Trial Court (RTC) of Pasay City, Branch
109 dated 16 October 1998, finding accused-appellants Halil Gambao y Esmail, Eddie Karim y Uso, Edwin Dukilman y
Suboh, Tony Abao y Sula, Raul Udal y Kagui, Teng Mandao y Haron, Theng Dilangalen y Nanding, Jaman Macalinbol y
Katol, Monette Ronas y Ampil, Nora Evad y Mulok and Thian Perpenian y Rafon guilty beyond reasonable doubt of
kidnapping for ransom as defined and penalized under Article 267 of the Revised Penal Code, as amended by Republic
Act (R.A.) No. 7659.

3
The accused-appellants, along with an unidentified person, were charged under the criminal information which reads:

Criminal Case No. 98-0928

For Kidnapping for Ransom as amended by RA 7659

That on August 12, 1998 at around 7:30 o’clock in the evening at No. 118 FB Harrison Pasay City and within the
jurisdiction of this Honorable Court, the above named-accused conspiring, confederating and mutually helping one
another and grouping themselves together, did then and there by force and intimidation, and the use of high powered
firearms, willfully, unlawfully and feloniously take, carry away and deprive Lucia Chan y Lee of her liberty against her will
for the purpose of extorting ransom as in fact a demand for ransom was made as a condition for her release amounting to
FOUR HUNDRED THOUSAND PESOS (₱400,000.00) to the damage and prejudice of Lucia L. Chan in the said amount
and such other amounts as may be awarded to her under the provisions of the Civil Code.

4
The antecedent facts were culled from the records of the case:

Lucia Chan (Chan) was a fish dealer based in Manila. She usually expected fish deliveries, which were shipped by her
suppliers from the provinces. Sometime in the afternoon of 11 August 1998, two persons, one of whom was identified as
Theng Dilangalen (Dilangalen), went to Chan’s residence at FB Harrison St., Pasay City to inquire about a certain
passport alleged to have been mistakenly placed inside a box of fish to be delivered to her. Unable to locate said
passport, the two left. The next morning, Dilangalen, together with another companion identified as Tony Abao (Abao),
returned looking for Chan but were told that she was out. When the two returned in the afternoon, Chan informed them
that the fish delivery had yet to arrive. Chan offered instead to accompany them to the airport to retrieve the box of fish
allegedly containing the passport. Dilangalen and Abao declined and told Chan that they would be back later that
5
evening.

Dilangalen, accompanied by an unidentified person who remains at large, returned to Chan’s residence that evening.
6
Chan’s houseboy ushered them in and Chan met them by the stairs. Thereat, the unidentified companion of Dilangalen
7
pointed his gun at Chan’s son, Levy Chan (Levy), and the house companions. As the unidentified man forcibly dragged
Chan, her son Levy tried to stop the man by grabbing his mother’s feet. Seeing this, Dilangalen pointed his gun at Levy’s
8
head forcing the latter to release his grip on Chan’s feet. Levy thereafter proceeded to the Pasay Police Headquarters to
9
report the incident.

10
Chan was forced to board a "Tamaraw FX" van. After travelling for about two hours, the group stopped at a certain
house. Accused-appellant Edwin Dukilman (Dukilman) warned Chan not to shout as he had his gun pointed at her mouth.
11
Chan was ordered to go with two women, later identified in court by Chan as appellants Monette Ronas (Ronas) and
12
Nora Evad (Evad). Chan was brought inside a house and was made to lie down on a bed, guarded by Ronas, Evad,
13
Dukilman and Jaman Macalinbol (Macalinbol). Ronas and Evad threatened Chan that she would be killed unless she
14
paid 20 Million Pesos.

On 13 August 1998, Chan was awakened by Evad and was asked to board the "Tamaraw FX" van. After travelling for
about ten minutes, the van stopped and the group alighted. Chan was brought to a room on the second floor of the house.
Inside the room were three persons whom Chan identified in court as Macalinbol, Raul Udal (Udal) and Halil Gambao
15 16
(Gambao). Another woman, later identified as Thian Perpenian (Perpenian), arrived. At about 9:00 o’clock in the
evening, a man who was later identified as Teng Mandao (Mandao), entered the room with a handgun and asked Chan
17
"Bakit kayo nagsumbong sa pulis?" Another man, whom Chan identified in court as Eddie Karim (Karim), ordered
Mandao out of the room. Karim informed Chan that he was sent by their boss to ask her how much money she
18
has. Chan was instructed to talk to her son through a cell phone and she gave instructions to her son to get the ₱75,
19
000.00 she kept in her cabinet. The group then talked to Chan’s son and negotiated the ransom amount in exchange for
his mother’s release. It was agreed upon that Levy was to deliver ₱400,000.00 at the "Chowking" Restaurant at Buendia
20
Avenue.

Inspectors Narciso Ouano, Jr. (Inspector Ouano) and Cesar Mancao (Inspector Mancao), who were assigned at the
Pasay City area to conduct the investigation regarding the kidnapping, were informed that the abductors called and
21
demanded for ransom in exchange for Chan’s release. During their surveillance the following day, Inspectors Ouano and
Mancao observed a Red Transport taxicab entering the route which led to the victim’s residence. The inspectors observed
that the occupants of the taxicab kept on looking at the second floor of the house. The inspectors and their team tailed the
taxicab until Pansol, Calamba, Laguna, where it entered the Elizabeth Resort and stopped in front of Cottage 1.
Convinced that the woman the team saw in the cottage was the victim, they sought clearance from Philippine Anti
22
Organized Crime Task Force (PAOCTF) to conduct a rescue operation.

On 14 August 1998, P/Insp. Vicente Arnado (Inspector Arnado) received information that the abductors acceded to a
₱400,000.00 ransom money to be delivered at "Chowking" Restaurant at Buendia Avenue at around 2:00 am. Upon
learning of the information, the team immediately and strategically positioned themselves around the vicinity of the
restaurant. At about 2:00 am, a light blue "Tamaraw FX" van with 4 people on board arrived. The four took the ransom
money and headed towards the South Luzon Expressway. The surveillance team successfully intercepted the van and
arrested the 4 men, later identified in court as Karim, Abao, Gambao and Dukilman. The team was also able to recover
23
the ₱400,000.00 ransom.

At about 5:00 o’clock in the morning of the same day, the police team assaulted Cottage No. 1, resulting in the safe
rescue of Chan and the apprehension of seven of her abductors, later identified in court as Dilangalen, Udal, Macalinbol,
24
Mandao, Perpenian, Evad and Ronas.

During the 7 October 1998 hearing, after the victim and her son testified, Karim manifested his desire to change his earlier
plea of "not guilty" to "guilty." The presiding judge then explained the consequences of a change of plea, stating: "It would
mean the moment you withdraw your previous pleas of not guilty and enter a plea of guilty, the court of course, after
receiving evidence, as in fact it has received the testimonies of [the] two witnesses, will [outrightly] sentence you to the
penalty provided by law after the prosecution shall have finished the presentation of its evidence. Now that I have
explained to you the consequences of your entering a plea of guilty, are you still desirous of entering a plea of ‘guilty’?"
25
Eddie Karim answered, "Yes." On hearing this clarification, the other appellants likewise manifested, through their
counsel who had earlier conferred with them and explained to each of them the consequences of a change of plea, their
desire to change the pleas they entered. The trial court separately asked each of the appellants namely: Gambao, Abao,
Udal, Mandao, Dilangalen, Macalinbol, Ronas and Evad if they understood the consequence of changing their pleas. All
26
of them answered in the affirmative. Similarly, Dukilman manifested his desire to change his plea and assured the trial
27
court that he understood the consequences of such change of plea. Thereupon, the trial court ordered their re-
28
arraignment. After they pleaded guilty, the trial court directed the prosecution to present evidence, which it did.

On 16 October 1998, the RTC rendered a decision convicting Gambao, Karim, Dukilman, Abao, Udal, Mandao,
Dilangalen, Macalinbol, Ronas, Evad and Perpenian of Kidnapping for Ransom. Hence, they appealed to the CA.

In a Decision dated 28 June 2005, the appellate court affirmed with modifications the decision of the trial court. The
dispositive portion of the CA decision reads:

WHEREFORE, the decision of the court a quo finding accused-appellants HALIL GAMBAO y ESMAIL, EDDIE KARIM y
USO, EDWIN DUKILMAN y SUBOH, TONY ABAO y SULA, RAUL UDAL y KAGUI, TENG MANDAO y HARON, THENG
DILANGALEN y NANDING, JAMAN MACALINBOL y KATOL, MONETTE RONAS y AMPIL and NORA EVAD y MULOK
guilty beyond reasonable doubt of kidnapping for ransom defined and penalized under Article 267 of the Revised Penal
Code, as amended by RA 7659 and imposing upon each of them the supreme penalty of death is AFFIRMED WITH
MODIFICATION that each of them is ordered to pay jointly and severally the victim in the amount of ₱50,000.00 by way of
moral damages.

It appearing that accused-appellant THIAN PERPENIAN y RAFON was only 17 years old at the time of the commission of
29
the crime, she is hereby sentenced to suffer the penalty of reclusion perpetua.

Pursuant to Section 13, Rule 124 as amended by Administrative Matter No. 00-5-03-SC, the appellate court certified the
case to this Court and accordingly ordered the elevation of the records.

30
In a Resolution dated 20 June 2006, we required the parties to file their respective supplemental briefs. The issues
raised by the accused-appellants in their respective briefs, supplemental briefs and manifestations will be discussed
collectively.

Insufficiency of Evidence

Accused-appellants Dukilman, Ronas, Evad would have this Court believe that the witness, Chan, was not able to
positively identify them because of her failing eyesight due to old age.

This argument is bereft of merit. We note that both the trial court and the CA found Chan’s testimony credible and
straightforward. During her testimony, she positively identified the accused-appellants. If she had not met them before,
she could not have positively identified them in open court. In fact, the participation of these accused-appellants was
further established through the testimonies of the other prosecution witnesses.

Time and again, this Court has maintained that the question of credibility of witnesses is primarily for the trial court to
determine. For this reason, its observations and conclusions are accorded great respect on appeal. They are conclusive
and binding unless shown to be tainted with arbitrariness or unless, through oversight, some fact or circumstance of
31 32
weight and influence has not been considered. In People v. Tañedo, this Court had occasion to reiterate the ruling that
findings of fact of the trial court pertaining to the credibility of witnesses command great respect since it had the
33
opportunity to observe their demeanor while they testified in court. It can be observed that the briefs submitted by the
accused-appellants are replete with generalities and wanting in relevant particulars. It is for this reason that we are giving
full credence to the findings of the trial court regarding the credibility of witness Chan.

Perpenian likewise argued that the evidence for her conviction is insufficient. We also find her argument bereft of merit.

The testimony of Inspector Ouano, establishing Perpenian as one of the seven people apprehended when they conducted
34
the rescue operation at around 5:00 o’clock in the morning of 14 August 1998, and the positive identification of
Perpenian by Chan constituted adequate evidence working against her defense of denial.

Further, it should be noted that the only defense the accused-appellants proffered was denial. It is established
jurisprudence that denial cannot prevail over the witnesses’ positive identification of the accused-appellants, more so
where the defense did not present convincing evidence that it was physically impossible for them to have been present at
35
the crime scene at the time of the commission of the crime.

The foregoing considered, the positive identification by Chan, the relevant testimonies of witnesses and the absence of
evidence other than mere denial proffered by the defense lead this Court to give due weight to the findings of the lower
courts.

Improvident Plea

As provided for by Article 267 of the Revised Penal Code, as amended by RA 7659, the penalty for kidnapping for ransom
36
is death. A review of the records shows that on 7 October 1998, the accused-appellants withdrew their plea of "not
guilty" and were re-arraigned. They subsequently entered pleas of "guilty" to the crime of kidnapping for ransom, a capital
37
offense. This Court, in People v. Oden, laid down the duties of the trial court when the accused pleads guilty to a capital
offense. The trial court is mandated:

(1)

to conduct a searching inquiry into the voluntariness and full comprehension of the consequences of the plea of guilt,

(2)

to require the prosecution to still prove the guilt of the accused and the precise degree of his culpability, and

(3)

38
to inquire whether or not the accused wishes to present evidence in his behalf and allow him to do so if he desires.
The rationale behind the rule is that the courts must proceed with more care where the possible punishment is in its
severest form, namely death, for the reason that the execution of such a sentence is irreversible. The primordial purpose
is to avoid improvident pleas of guilt on the part of an accused where grave crimes are involved since he might be
admitting his guilt before the court and thus forfeiting his life and liberty without having fully understood the meaning,
39
significance and consequence of his plea. Moreover, the requirement of taking further evidence would aid this Court on
40
appellate review in determining the propriety or impropriety of the plea.

Anent the first requisite, the searching inquiry determines whether the plea of guilt was based on a free and informed
judgement. The inquiry must focus on the voluntariness of the plea and the full comprehension of the consequences of
41
the plea. This Court finds no cogent reason for deviating from the guidelines provided by jurisprudence and thus, adopts
the same:

Although there is no definite and concrete rule as to how a trial judge must conduct a "searching inquiry," we have held
that the following guidelines should be observed:

Ascertain from the accused himself

(a) how he was brought into the custody of the law;

(b) whether he had the assistance of a competent counsel during the custodial and preliminary investigations; and

(c) under what conditions he was detained and interrogated during the investigations. This is intended to rule out
the possibility that the accused has been coerced or placed under a state of duress either by actual threats of
physical harm coming from malevolent quarters or simply because of the judge’s intimidating robes.

Ask the defense counsel a series of questions as to whether he had conferred with, and completely explained to, the
accused the meaning and consequences of a plea of guilty.

Elicit information about the personality profile of the accused, such as his age, socio-economic status, and educational
background, which may serve as a trustworthy index of his capacity to give a free and informed plea of guilty.

Inform the accused the exact length of imprisonment or nature of the penalty under the law and the certainty that he will
serve such sentence. For not infrequently, an accused pleads guilty in the hope of a lenient treatment or upon bad advice
or because of promises of the authorities or parties of a lighter penalty should he admit guilt or express remorse. It is the
duty of the judge to ensure that the accused does not labor under these mistaken impressions because a plea of guilty
carries with it not only the admission of authorship of the crime proper but also of the aggravating circumstances attending
it, that increase punishment.

Inquire if the accused knows the crime with which he is charged and fully explain to him the elements of the crime which is
the basis of his indictment. Failure of the court to do so would constitute a violation of his fundamental right to be informed
of the precise nature of the accusation against him and a denial of his right to due process.

All questions posed to the accused should be in a language known and understood by the latter.

The trial judge must satisfy himself that the accused, in pleading guilty, is truly guilty. The accused must be required to
narrate the tragedy or reenact the crime or furnish its missing details.

42
It is evident from the records that the aforesaid rules have not been fully complied with. The questions propounded by
the trial court judge failed to ensure that accused-appellants fully understood the consequences of their plea. In fact, it is
43
readily apparent from the records that Karim had the mistaken assumption that his plea of guilt would mitigate the
imposable penalty and that both the judge and his counsel failed to explain to him that such plea of guilt will not mitigate
the penalty pursuant to Article 63 of the Revised Penal Code. Karim was not warned by the trial court judge that in cases
where the penalty is single and indivisible, like death, the penalty is not affected by either aggravating or mitigating
circumstances. The trial court judge’s seemingly annoyed statement that a conditional plea is not allowed, as provided
below, is inadequate:

Atty. Ferrer:

Your Honor please, may we be allowed to say something before the trial. For accused Eddie Karim we manifest and
petition this court that he be allowed to be re-arraigned Your Honor please, considering that he will plead guilty as
charged but the imposable penalty is lowered, Your Honor.

Court:

You cannot make a conditional plea of guilty, that is what the law says. You plead guilty, no condition attached.
Conditional plea is not allowed.

Atty. Ferrer:

Considering, Your Honor, accused Eddie Karim is already repenting

Court:

Nevertheless. Read the law. If you entered a plea of guilty there should be no condition attached. We cannot make that
44
condition and dictate to the court the penalty.

Although the pleas rendered, save for Perpenian’s, were improvidently made, this Court will still not set aside the
condemnatory judgment. Despite the trial court judge’s shortcomings, we still agree with his ruling on accused-appellants’
culpability.

As a general rule, convictions based on an improvident plea of guilt are set aside and the cases are remanded for further
proceedings if such plea is the sole basis of judgement. If the trial court, however, relied on sufficient and credible
evidence to convict the accused, as it did in this case, the conviction must be sustained, because then it is predicated not
45
merely on the guilty plea but on evidence proving the commission of the offense charged. The manner by which the plea
of guilty is made, whether improvidently or not, loses legal significance where the conviction can be based on independent
46
evidence proving the commission of the crime by the accused.

Contrary to accused-appellants’ assertions, they were convicted by the trial court, not on the basis of their plea of guilty,
47
but on the strength of the evidence adduced by the prosecution, which was properly appreciated by the trial court. The
prosecution was able to prove the guilt of the accused-appellants and their degrees of culpability beyond reasonable
doubt.

Degree of Culpability

Accused-appellants Dukilman, Ronas and Evad argue in their respective briefs that conspiracy, insofar as they were
concerned, was not convincingly established. Dukilman hinges his argument on the fact that he was not one of those
48
arrested during the rescue operation based on the testimony of Inspector Ouano. On the other hand, Ronas and Evad
base their argument on the fact that they had no participation whatsoever in the negotiation for the ransom money.

We hold otherwise. Although Dukilman was not one of those apprehended at the cottage during the rescue operation, the
testimony of Police Inspector Arnado sufficiently established that he was one of the four people apprehended when the
49
police intercepted the "Tamaraw FX" at the Nichols Tollgate. Likewise, the testimony of Police Inspector Ouano
50
sufficiently established that Ronas and Evad were two of those who were arrested during the rescue operation. This
Court has held before that to be a conspirator, one need not participate in every detail of the execution; he need not even
take part in every act or need not even know the exact part to be performed by the others in the execution of the
51
conspiracy. Once conspiracy is shown, the act of one is the act of all the conspirators. The precise extent or modality of
52
participation of each of them becomes secondary, since all the conspirators are principals. Moreover, Chan positively
identified the accused-appellants and placed all of them at the crime scenes.

Under Article 8 of the Revised Penal Code, there is conspiracy when two or more persons come to an agreement
concerning a felony and decide to commit it. It has been a long standing opinion of this Court that proof of the conspiracy
need not rest on direct evidence, as the same may be inferred from the collective conduct of the parties before, during or
after the commission of the crime indicating a common understanding among them with respect to the commission of the
53
offense. The testimonies, when taken together, reveal the common purpose of the accused-appellants and how they
were all united in its execution from beginning to end. There were testimonies proving that (1) before the incident, two of
the accused-appellants kept coming back to the victim’s house; (2) during the kidnapping, accused-appellants changed
shifts in guarding the victim; and (3) the accused appellants were those present when the ransom money was recovered
and when the rescue operation was conducted.

Seeing that conspiracy among Gambao, Karim, Dukilman, Abao, Udal, Mandao, Dilangalen, Macalinbol, Ronas and Evad
was established beyond reasonable doubt based on the proffered evidence of the prosecution, the act of one is the act of
all the conspirators.

54
In Perpenian’s Supplemental Brief, she directs this Court’s attention to the manifestation made by the prosecution
55
regarding their disinterest in prosecuting, insofar as she was concerned. However, pursuant to the ruling of this Court in
56
Crespo v. Judge Mogul, once the information is filed, any disposition of the case or dismissal or acquittal or conviction of
the accused rests within the exclusive jurisdiction, competence and discretion of the courts; more so in this case, where
no Motion to Dismiss was filed by the prosecution.

The trial court took note of the fact that Perpenian gave inconsistent answers and lied several times under oath during the
57
trial. Perpenian lied about substantial details such as her real name, age, address and the fact that she saw Chan at the
Elizabeth Resort. When asked why she lied several times, Perpenian claimed she was scared to be included or identified
with the other accused-appellants. The lying and the fear of being identified with people whom she knew had done wrong
are indicative of discernment. She knew, therefore, that there was an ongoing crime being committed at the resort while
she was there. It is apparent that she was fully aware of the consequences of the unlawful act.

58
As reflected in the records, the prosecution was not able to proffer sufficient evidence to hold her responsible as a
59
principal. Seeing that the only evidence the prosecution had was the testimony of Chan to the effect that on 13 August
1998 Perpenian entered the room where the victim was detained and conversed with Evad and Ronas regarding stories
unrelated to the kidnapping, this Court opines that Perpenian should not be held liable as a co-principal, but rather only as
an accomplice to the crime.
 60
Jurisprudence is instructive of the elements required, in accordance with Article 18 of the Revised Penal Code, in order
that a person may be considered an accomplice, namely, (1) that there be community of design; that is knowing the
criminal design of the principal by direct participation, he concurs with the latter in his purpose; (2) that he cooperates in
the execution by previous or simultaneous act, with the intention of supplying material or moral aid in the execution of the
crime in an efficacious way; and (3) that there be a relation between the acts done by the principal and those attributed to
the person charged as accomplice.

The defenses raised by Perpenian are not sufficient to exonerate her criminal liability.1âwphi1 Assuming arguendo that
she just came to the resort thinking it was a swimming party, it was inevitable that she acquired knowledge of the criminal
design of the principals when she saw Chan being guarded in the room. A rational person would have suspected
something was wrong and would have reported such incident to the police. Perpenian, however, chose to keep quiet; and
to add to that, she even spent the night at the cottage. It has been held before that being present and giving moral support
61
when a crime is being committed will make a person responsible as an accomplice in the crime committed. It should be
noted that the accused-appellant’s presence and company were not indispensable and essential to the perpetration of the
62
kidnapping for ransom; hence, she is only liable as an accomplice. Moreover, this Court is guided by the ruling in People
63
v. Clemente, et al., where it was stressed that in case of doubt, the participation of the offender will be considered as
that of an accomplice rather than that of a principal.

Having admitted their involvement in the crime of kidnapping for ransom and considering the evidence presented by the
prosecution, linking accused-appellants’ participation in the crime, no doubt can be entertained as to their guilt. The CA
convicted the accused-appellants of kidnapping for ransom and imposed upon them the supreme penalty of death,
applying the provisions of Article 267 of the Revised Penal Code. Likewise, this Court finds accused-appellants guilty
64
beyond reasonable doubt as principals to the crime of kidnapping for ransom. However, pursuant to R.A. No. 9346, we
modify the penalty imposed by the trial court and reduce the penalty to Reclusion Perpetua, without eligibility for parole.

65
Modification should also be made as to the criminal liability of Perpenian. Pursuant to the passing of R.A. No. 9344, a
determination of whether she acted with or without discernment is necessary. Considering that Perpenian acted with
discernment when she was 17 years old at the time of the commission of the offense, her minority should be appreciated
not as an exempting circumstance, but as a privileged mitigating circumstance pursuant to Article 68 of the Revised Penal
Code.

66
Under Section 38 of R.A. No. 9344, the suspension of sentence of a child in conflict with the law shall still be applied
even if he/she is already eighteen (18) years of age or more at the time of the pronouncement of his/her guilt.

Unfortunately, at the present age of 31, Perpenian can no longer benefit from the aforesaid provision, because under
67
Article 40 of R.A. No. 9344, the suspension of sentence can be availed of only until the child in conflict with the law
reaches the maximum age of twenty-one (21) years. This leaves the Court with no choice but to pronounce judgement.
Perpenian is found guilty beyond reasonable doubt as an accomplice in the crime of kidnapping for ransom. Since this
Court has ruled that death as utilized in Article 71 of the Revised Penal Code shall no longer form part of the equation in
68
the graduation of penalties pursuant to R.A. No. 9346, the penalty imposed by law on accomplices in the commission of
consummated kidnapping for ransom is Reclusion Temporal, the penalty one degree lower than what the principals would
69
bear (Reclusion Perpetua). Applying Article 68 of the Revised Penal Code, the imposable penalty should then be
adjusted to the penalty next lower than that prescribed by law for accomplices. This Court, therefore, holds that as to
Perpenian, the penalty of Prision Mayor, the penalty lower than that prescribed by law (Reclusion Temporal), should be
imposed. Applying the Indeterminate Sentence Law, the minimum penalty, which is one degree lower than the maximum
imposable penalty, shall be within the range of Prision Correccional; and the maximum penalty shall be within the
minimum period of Prision Mayor, absent any aggravating circumstance and there being one mitigating circumstance.
Hence, the Court imposes the indeterminate sentence of six (6) months and one (1) day of Prision Correccional, as
minimum, to six (6) years and one (1) day of Prision Mayor, as maximum.

As regards Perpenian’s possible confinement in an agricultural camp or other training facility in accordance with Section
70
51 of R.A. 9344, this Court held in People v. Jacinto that the age of the child in conflict with the law at the time of the
promulgation of the judgment is not material. What matters is that the offender committed the offense when he/she was
still of tender age. This Court, however, finds such arrangement no longer necessary in view of the fact that Perpenian’s
actual served term has already exceeded the imposable penalty for her offense. For such reason, she may be
immediately released from detention.

71
We note that in the Order dated 9 October 1998, the trial court admitted the documentary evidence offered by the
counsel for the defense proving that the real name of Thian Perpenian is Larina Perpenian.

In view of the death of Mandao during the pendency of this case, he is relieved of all personal and pecuniary penalties
72 73
attendant to the crime, his death having occurred before rendition of final judgement.

74
There is prevailing jurisprudence, on civil liabilities arising from the commission of kidnapping for the purpose of
extorting ransom from the victim or any other person under Article 267 of the Revised Penal Code. The persons convicted
were held liable for ₱75,000.00 as civil indemnity; ₱75,000.00 as moral damages; and ₱30,000.00 as exemplary
damages.

We take this opportunity to increase the amounts of indemnity and damages, where, as in this case, the penalty for the
75
crime committed is death which, however, cannot be imposed because of the provisions of R.A. No. 9346:

1. ₱100,000.00 as civil indemnity;

 2. ₱100,000.00 as moral damages which the victim is assumed to have suffered and thus needs no proof; and

3. ₱100,000.00 as exemplary damages to set an example for the public good.

These amounts shall be the minimum indemnity and damages where death is the penalty warranted by the facts but is not
imposable under present law.

76
The ruling of this Court in People v. Montesclaros is instructive on the apportionment of civil liabilities among all the
accused-appellants. The entire amount of the civil liabilities should be apportioned among all those who cooperated in the
commission of the crime according to the degrees of their liability, respective responsibilities and actual participation.
Hence, each principal accused-appellant should shoulder a greater share in the total amount of indemnity and damages
than Perpenian who was adjudged as only an accomplice.

Taking into account the difference in the degrees of their participation, all of them shall be liable for the total amount of
₱300,000.00 divided among the principals who shall be liable for ₱288,000.00 (or ₱32,000.00 each) and Perpenian who
shall be liable for ₱12,000.00. This is broken down into ₱10,666.67 civil indemnity, ₱10,666.67 moral damages and
₱10,666.67 exemplary damages for each principal; and ₱4,000.00 civil indemnity, ₱4,000.00 moral damages and
₱4,000.00 exemplary damages for the lone accomplice.

WHEREFORE, the 28 June 2005 Decision of the Court of Appeals in CA-G.R. CR–H.C. No. 00863 is hereby AFFIRMED
WITH MODIFICATIONS. Accused-appellants HALIL GAMBAO y ESMAIL, EDDIE KARIM y USO, EDWIN DUKILMAN y
SUBOH, TONY ABAO y SULA, RAUL UDAL y KAGUI, THENG DILANGALEN y NANDING, JAMAN MACALINBOL y
KATOL, MONETTE RONAS y AMPIL and NORA EVAD y MULOK are found guilty beyond reasonable doubt as principals
in the crime of kidnapping for ransom and sentenced to suffer the penalty of Reclusion Perpetua, without eligibility of
parole. Accused-appellant THIAN PERPENIAN y RAFON A.K.A. LARINA PERPENIAN is found guilty beyond reasonable
doubt as accomplice in the crime of kidnapping for ransom and sentenced to suffer the indeterminate penalty of six (6)
months and one (1) day of Prision Correccional, as minimum, to six (6) years and one (1) day of Prision Mayor, as
maximum. Accused-appellants are ordered to indemnify the victim in the amounts of ₱100,000.00 as civil indemnity,
₱100,000.00 as moral damages and ₱100,000.00 as exemplary damages apportioned in the following manner: the
principals to the crime shall jointly and severally pay the victim the total amount of ₱288,000.00 while the accomplice shall
pay the victim ₱12,000.00, subject to Article 110 of the Revised Penal Code on several and subsidiary liability.

The Court orders the Correctional Institute for Women to immediately release THIAN PERPENIAN A.K.A. LARINA
PERPENIAN due to her having fully served the penalty imposed on her, unless her further detention is warranted for any
other lawful causes.

Let a copy of this decision be furnished for immediate implementation to the Director of the Correctional Institute for
Women by personal service. The Director of the Correctional Institute for Women shall submit to this Court, within five (5)
days from receipt of a copy of the decision, the action he has taken thereon.

SO ORDERED.

G.R. No. L-56487 October 21, 1991

REYNALDA GATCHALIAN, petitioner,

vs.
ARSENIO DELIM and the HON. COURT OF APPEALS, respondents.

Pedro G. Peralta for petitioner.

Florentino G. Libatique for private respondent.

FELICIANO, J.:

At noon time on 11 July 1973, petitioner Reynalda Gatchalian boarded, as a paying passenger, respondent's "Thames"
mini bus at a point in San Eugenio, Aringay, La Union, bound for Bauang, of the same province. On the way, while the
bus was running along the highway in Barrio Payocpoc, Bauang, Union, "a snapping sound" was suddenly heard at one
part of the bus and, shortly thereafter, the vehicle bumped a cement flower pot on the side of the road, went off the road,
turned turtle and fell into a ditch. Several passengers, including petitioner Gatchalian, were injured. They were promptly
taken to Bethany Hospital at San Fernando, La Union, for medical treatment. Upon medical examination, petitioner was
found to have sustained physical injuries on the leg, arm and forehead, specifically described as follows: lacerated wound,
1
forehead; abrasion, elbow, left; abrasion, knee, left; abrasion, lateral surface, leg, left.

On 14 July 1973, while injured. passengers were confined in the hospital, Mrs. Adela Delim, wife of respondent, visited them and later paid for their hospitalization and medical expenses.
She also gave petitioner P12.00 with which to pay her transportation expense in going home from the hospital. However, before Mrs. Delim left, she had the injured passengers, including
petitioner, sign an already prepared Joint Affidavit which stated, among other things:
 That we were passengers of Thames with Plate No. 52-222 PUJ Phil. 73 and victims after the said Thames met an accident at Barrio Payocpoc Norte, Bauang, La Union while
passing through the National Highway No. 3;

That after a thorough investigation the said Thames met the accident due to mechanical defect and went off the road and turned turtle to the east canal of the road into a creek
causing physical injuries to us;

xxx xxx xxx

That we are no longer interested to file a complaint, criminal or civil against the said driver and owner of the said Thames, because it was an accident and the said driver and
owner of the said Thames have gone to the extent of helping us to be treated upon our injuries.

xxx xxx xxx 2

(Emphasis supplied)

Notwithstanding this document, petitioner Gathalian filed with the then Court of First Instance of La Union an action extra contractu to recover compensatory and moral damages. She
alleged in the complaint that her injuries sustained from the vehicular mishap had left her with a conspicuous white scar measuring 1 by 1/2 inches on the forehead, generating mental
suffering and an inferiority complex on her part; and that as a result, she had to retire in seclusion and stay away from her friends. She also alleged that the scar diminished her facial
beauty and deprived her of opportunities for employment. She prayed for an award of: P10,000.00 for loss of employment and other opportunities; P10,000.00 for the cost of plastic surgery
for removal of the scar on her forehead; P30,000.00 for moral damages; and P1,000.00 as attorney's fees.

In defense, respondent averred that the vehicular mishap was due to force majeure, and that petitioner had already been paid and moreover had waived any right to institute any action
against him (private respondent) and his driver, when petitioner Gatchalian signed the Joint Affidavit on 14 July 1973.

After trial, the trial court dismissed the complaint upon the ground that when petitioner Gatchalian signed the Joint Affidavit, she relinquished any right of action (whether criminal or civil)
that she may have had against respondent and the driver of the mini-bus.

On appeal by petitioner, the Court of Appeals reversed the trial court's conclusion that there had been a valid waiver, but affirmed the dismissal of the case by denying petitioner's claim for
damages:

We are not in accord, therefore, of (sic) the ground of the trial court's dismissal of the complaint, although we conform to the trial court's disposition of the case — its dismissal.

IN VIEW OF THE FOREGOING considerations, there being no error committed by the lower court in dismissing the plaintiff-appellant's complaint, the judgment of dismissal is
hereby affirmed.

Without special pronouncement as to costs.

SO ORDERED. 3

In the present Petition for Review filed in forma pauperis, petitioner assails the decision of the Court of Appeals and ask this Court to award her actual or compensatory damages as well as
moral damages.

We agree with the majority of the Court of Appeals who held that no valid waiver of her cause of action had been made by petitioner. The relevant language of the Joint Affidavit may be
quoted again:

That we are no longer interested to file a complaint, criminal or civil against the said driver and owner of the said Thames, because it was an accident and the said driver and
owner of the said Thames have gone to the extent of helping us to be treated upon our injuries. (Emphasis supplied)
A waiver, to be valid and effective, must in the first place be couched in clear and unequivocal terms which leave no doubt as to the intention of a person to give up a right or benefit which
legally pertains to him. 4
A waiver may not casually be attributed to a person when the terms thereof do not explicitly and clearly
evidence an intent to abandon a right vested in such person.

The degree of explicitness which this Court has required in purported waivers is illustrated in Yepes and Susaya v. Samar
Express Transit (supra), where the Court in reading and rejecting a purported waiver said:

. . . It appears that before their transfer to the Leyte Provincial Hospital, appellees were asked to sign as, in fact,
they signed the document Exhibit I wherein they stated that "in consideration of the expenses which said operator
has incurred in properly giving us the proper medical treatment, we hereby manifest our desire to waive any and
all claims against the operator of the Samar Express Transit."

xxx xxx xxx

Even a cursory examination of the document mentioned above will readily show that appellees did not actually
waive their right to claim damages from appellant for the latter's failure to comply with their contract of carriage. All
that said document proves is that they expressed a "desire" to make the waiver — which obviously is not the
same as making an actual waiver of their right. A waiver of the kind invoked by appellant must be clear and
unequivocal (Decision of the Supreme Court of Spain of July 8, 1887) — which is not the case of the one relied
upon in this appeal. (Emphasis supplied)

If we apply the standard used in Yepes and Susaya, we would have to conclude that the terms of the Joint Affidavit in the
instant case cannot be regarded as a waiver cast in "clear and unequivocal" terms. Moreover, the circumstances under
which the Joint Affidavit was signed by petitioner Gatchalian need to be considered. Petitioner testified that she was still
reeling from the effects of the vehicular accident, having been in the hospital for only three days, when the purported
waiver in the form of the Joint Affidavit was presented to her for signing; that while reading the same, she experienced
dizziness but that, seeing the other passengers who had also suffered injuries sign the document, she too signed without
bothering to read the Joint Affidavit in its entirety. Considering these circumstances there appears substantial doubt
whether petitioner understood fully the import of the Joint Affidavit (prepared by or at the instance of private respondent)
she signed and whether she actually intended thereby to waive any right of action against private respondent.

Finally, because what is involved here is the liability of a common carrier for injuries sustained by passengers in respect of
whose safety a common carrier must exercise extraordinary diligence, we must construe any such purported waiver most
strictly against the common carrier. For a waiver to be valid and effective, it must not be contrary to law, morals, public
policy or good
5
customs. To uphold a supposed waiver of any right to claim damages by an injured passenger, under circumstances like
those exhibited in this case, would be to dilute and weaken the standard of extraordinary diligence exacted by the law
6
from common carriers and hence to render that standard unenforceable. We believe such a purported waiver is
offensive to public policy.

Petitioner Gatchalian also argues that the Court of Appeals, having by majority vote held that there was no enforceable
waiver of her right of action, should have awarded her actual or compensatory and moral damages as a matter of course.

We have already noted that a duty to exercise extraordinary diligence in protecting the safety of its passengers is imposed
7
upon a common carrier. In case of death or injuries to passengers, a statutory presumption arises that the common
carrier was at fault or had acted negligently "unless it proves that it [had] observed extraordinary diligence as prescribed in
8
Articles 1733 and 1755." In fact, because of this statutory presumption, it has been held that a court need not even make
9
an express finding of fault or negligence on the part of the common carrier in order to hold it liable. To overcome this
presumption, the common carrier must slow to the court that it had exercised extraordinary diligence to prevent the
10
injuries. The standard of extraordinary diligence imposed upon common carriers is considerably more demanding than
the standard of ordinary diligence, i.e., the diligence of a good paterfamilias established in respect of the ordinary relations
between members of society. A common carrier is bound to carry its passengers safely" as far as human care and
11
foresight can provide, using the utmost diligence of a very cautious person, with due regard to all the circumstances".

Thus, the question which must be addressed is whether or not private respondent has successfully proved that he had exercised extraordinary diligence to prevent the mishap involving his
mini-bus. The records before the Court are bereft of any evidence showing that respondent had exercised the extraordinary diligence required by law. Curiously, respondent did not even
attempt, during the trial before the court a quo, to prove that he had indeed exercised the requisite extraordinary diligence. Respondent did try to exculpate himself from liability by alleging
that the mishap was the result of force majeure. But allegation is not proof and here again, respondent utterly failed to substantiate his defense of force majeure. To exempt a common
carrier from liability for death or physical injuries to passengers upon the ground of force majeure, the carrier must clearly show not only that the efficient cause of the casualty was entirely
independent of the human will, but also that it was impossible to avoid. Any participation by the common carrier in the occurrence of the injury will defeat the defense of force
majeure. In Servando v. Philippine Steam Navigation Company, 12
the Court summed up the essential characteristics of force majeure by
quoting with approval from the Enciclopedia Juridica Española:

Thus, where fortuitous event or force majeure is the immediate and proximate cause of the loss, the obligor is
exempt from liability non-performance. The Partidas, the antecedent of Article 1174 of the Civil Code, defines
"caso fortuito" as 'an event that takes place by accident and could not have been foreseen. Examples of this are
destruction of houses, unexpected fire, shipwreck, violence of robber.

In its dissertation on the phrase "caso fortuito" the Enciclopedia Juridica Española says: 'In legal sense and,
consequently, also in relation to contracts, a "caso fortuito" presents the following essential characteristics: (1) the
cause of the unforeseen and unexpected occurence, or of the failure of the debtor to comply with his obligation,
must be independent of the human will; (2) it must be impossible to foresee the event which constitutes the "caso
 fortuito", or if it can be foreseen, it must be impossible to avoid; (3) the occurrence must be such as to render it
impossible for the debtor to fulfill his obligation in a normal manner; and (4) the obligor must be free from any
participation in the aggravation of the injury resulting to the creditor.

Upon the other hand, the record yields affirmative evidence of fault or negligence on the part of respondent common
carrier. In her direct examination, petitioner Gatchalian narrated that shortly before the vehicle went off the road and into a
ditch, a "snapping sound" was suddenly heard at one part of the bus. One of the passengers, an old woman, cried out,
"What happened?" ("Apay addan samet nadadaelen?"). The driver replied, nonchalantly, "That is only normal" ("Ugali ti
makina dayta"). The driver did not stop to check if anything had gone wrong with the bus. Moreover, the driver's reply
necessarily indicated that the same "snapping sound" had been heard in the bus on previous occasions. This could only
mean that the bus had not been checked physically or mechanically to determine what was causing the "snapping sound"
which had occurred so frequently that the driver had gotten accustomed to it. Such a sound is obviously alien to a motor
vehicle in good operating condition, and even a modicum of concern for life and limb of passengers dictated that the bus
be checked and repaired. The obvious continued failure of respondent to look after the roadworthiness and safety of the
bus, coupled with the driver's refusal or neglect to stop the mini-bus after he had heard once again the "snapping sound"
and the cry of alarm from one of the passengers, constituted wanton disregard of the physical safety of the passengers,
and hence gross negligence on the part of respondent and his driver.

We turn to petitioner's claim for damages. The first item in that claim relates to revenue which petitioner said she failed to
realize because of the effects of the vehicular mishap. Petitioner maintains that on the day that the mini-bus went off the
road, she was supposed to confer with the district supervisor of public schools for a substitute teacher's job, a job which
she had held off and on as a "casual employee." The Court of Appeals, however, found that at the time of the accident,
she was no longer employed in a public school since, being a casual employee and not a Civil Service eligible, she had
been laid off. Her employment as a substitute teacher was occasional and episodic, contingent upon the availability of
vacancies for substitute teachers. In view of her employment status as such, the Court of Appeals held that she could not
13
be said to have in fact lost any employment after and by reason of the accident. Such was the factual finding of the
Court of Appeals, a finding entitled to due respect from this Court. Petitioner Gatchalian has not submitted any basis for
14
overturning this finding of fact, and she may not be awarded damages on the basis of speculation or conjecture.

Petitioner's claim for the cost of plastic surgery for removal of the scar on her forehead, is another matter. A person is entitled to the physical integrity of his or her body; if that integrity is
violated or diminished, actual injury is suffered for which actual or compensatory damages are due and assessable. Petitioner Gatchalian is entitled to be placed as nearly as possible in
the condition that she was before the mishap. A scar, especially one on the face of the woman, resulting from the infliction of injury upon her, is a violation of bodily integrity, giving raise to
a legitimate claim for restoration to her conditio ante. If the scar is relatively small and does not grievously disfigure the victim, the cost of surgery may be expected to be correspondingly
modest. In Araneta, et al. vs. Areglado, et al., 15 this Court awarded actual or compensatory damages for, among other things, the surgical removal of the scar on the face of a young boy
who had been injured in a vehicular collision. The Court there held:

We agree with the appellants that the damages awarded by the lower court for the injuries suffered by Benjamin Araneta are inadequate. In allowing not more than P1,000.00
as compensation for the "permanent deformity and — something like an inferiority complex" as well as for the "pathological condition on the left side of the jaw" caused to said
plaintiff, the court below overlooked the clear evidence on record that to arrest the degenerative process taking place in the mandible and restore the injured boy to a nearly
normal condition, surgical intervention was needed, for which the doctor's charges would amount to P3,000.00, exclusive of hospitalization fees, expenses and
medicines. Furthermore, the operation, according to Dr. Diño, would probably have to be repeated in order to effectuate a complete cure, while removal of the scar on the face
obviously demanded plastic surgery.

xxx xxx xxx

The father's failure to submit his son to a plastic operation as soon as possible does not prove that such treatment is not called for. The damage to the jaw and the existence of
the scar in Benjamin Araneta's faceare physical facts that can not be reasoned out of existence. That the injury should be treated in order to restore him as far as possible to
his original condition is undeniable. The father's delay, or even his negligence, should not be allowed to prejudice the son who has no control over the parent's action nor
impair his right to a full indemnity.

. . . Still, taking into account the necessity and cost of corrective measures to fully repair the damage; the pain suffered by the injured party; his feelings of inferiority due to
consciousness of his present deformity, as well as the voluntary character of the injury inflicted; and further considering that a repair, however, skillfully conducted, is never
equivalent to the original state, we are of the opinion that the indemnity granted by the trial court should be increased to a total of P18,000.00. (Emphasis supplied)

Petitioner estimated that the cost of having her scar surgically removed was somewhere between P10,000.00 to P15,000.00. 16
Upon the other hand, Dr. Fe Tayao
Lasam, a witness presented as an expert by petitioner, testified that the cost would probably be between P5,000.00 to
17
P10,000.00. In view of this testimony, and the fact that a considerable amount of time has lapsed since the mishap in
1973 which may be expected to increase not only the cost but also very probably the difficulty of removing the scar, we
consider that the amount of P15,000.00 to cover the cost of such plastic surgery is not unreasonable.

Turning to petitioner's claim for moral damages, the long-established rule is that moral damages may be awarded where
18
gross negligence on the part of the common carrier is shown. Since we have earlier concluded that respondent
common carrier and his driver had been grossly negligent in connection with the bus mishap which had injured petitioner
and other passengers, and recalling the aggressive manuevers of respondent, through his wife, to get the victims to waive
their right to recover damages even as they were still hospitalized for their injuries, petitioner must be held entitled to such
moral damages. Considering the extent of pain and anxiety which petitioner must have suffered as a result of her physical
injuries including the permanent scar on her forehead, we believe that the amount of P30,000.00 would be a reasonable
19
award. Petitioner's claim for P1,000.00 as atttorney's fees is in fact even more modest.
WHEREFORE, the Decision of the Court of Appeals dated 24 October 1980, as well as the decision of the then Court of First Instance of La Union dated 4 December 1975 are hereby
REVERSED and SET ASIDE.Respondent is hereby ORDERED to pay petitioner Reynalda Gatchalian the following sums: 1) P15,000.00 as actual or compensatory damages to cover the
cost of plastic surgery for the removal of the scar on petitioner's forehead; 2) P30,000.00 as moral damages; and 3) P1,000.00 as attorney's fees, the aggregate amount to bear interest at
the legal rate of 6% per annum counting from the promulgation of this decision until full payment thereof. Costs against private respondent.

SO ORDERED.

G.R. No. 184215 February 9, 2011

OCEANEERING CONTRACTORS (PHILS), INC., Petitioner,

vs.
NESTOR N. BARRETTO, doing business as N.N.B. LIGHTERAGE, Respondents.

DECISION

PEREZ, J.:

The requirements for an award of actual damages are central to this petition for review filed under Rule 45 of the 1997
Rules of Civil Procedure, primarily assailing the Decision dated 12 December 2007 rendered by the then Special Third
1
Division of the Court of Appeals (CA) in CA-G.R. CV No. 87168, the dispositive portion of which states:

WHEREFORE, premises considered, the instant appeal is PARTIALLY GRANTED. The decision dated 27 December
2005 and order dated 28 April 2006 of the Regional Trial Court of Las Piñas, City, Branch 255, to the extent that it
dismissed the counterclaims of defendant-appellant, are hereby reversed and set aside. Plaintiff-appellee is ordered to
pay defendant-appellant the amount of ₱306,000.00 as actual damages and ₱30,000.00 as attorney’s fees.

2
SO ORDERED.

The Facts

Doing business under the name and style of N.N. B. Lighterage, respondent Nestor N. Barretto (Barretto) is the owner of
3
the Barge "Antonieta" which was last licensed and permitted to engage in coastwise trading for a period of one year
4
expiring on 21 August 1998. On 27 November 1997, Barretto and petitioner Oceaneering Contractors (Phils.), Inc.
5
(Oceaneering) entered into a Time Charter Agreement whereby, for the contract price of ₱306,000.00, the latter hired the
aforesaid barge for a renewable period of thirty calendar days, for the purpose of transporting construction materials from
6 7
Manila to Ayungon, Negros Oriental. Brokered by freelance ship broker Manuel Velasco, the agreement included
Oceaneering’s acknowledgment of the seaworthiness of the barge as well as the following stipulations, to wit:

"a) [Barreto] shall be responsible for the salaries, subsistence, SSS premium, medical, workmen’s compensation
contribution and other legal expenses of the crew;

b) [Oceaneering] shall be responsible for all port charges, insurance of all equipments, cargo loaded to the above
mentioned deck barge against all risks (Total or Partial), or theft, security and stevedoring during loading and
unloading operations and all other expenses pertinent to the assessment, fines and forfeiture for any violation that
may be imposed in relation to the operation of the barge;

xxxx

(f) Delivery and re-delivery be made in Pasig River, Metro Manila;

(g) Damage to deck barge caused by carelessness or negligence of stevedores hired by [Oceaneering] will be
[Oceaneering’s] liability. Upon clear findings by owners or barge patron of any damages to the barge that will
endanger its seaworth(i)ness and stability, such damage/s shall be repaired first before loading and leaving port.
Under such conditions, the Barge Patron has the right to refuse loading and/or leaving port;

xxxx

(i) [Barreto] reserves the right to stop, abort and deviate any voyage in case of imminent danger to the crew
8
and/or vessel that may be occasioned by any storm, typhoon, tidal wave or any similar events."

In accordance with the agreement, Oceaneering’s hired stevedores who loaded the barge with pipe piles, steel bollards,
concrete mixers, gravel, sand, cement and other construction materials in the presence of and under the direct
9
supervision of the broker Manuel Velasco and Barretto’s Bargemen. In addition to the polythene ropes with which they
were lashed, the cargoes were secured by steel stanchions which Oceaneering caused to be welded on the port and
10
starboard sides of the barge. On 3 December 1997, the barge eventually left Manila for Negros Oriental, towed by the
11
tug-boat "Ayalit" which, for said purpose, was likewise chartered by Oceaneering from Lea Mer Industries, Inc. On 5
 12
December 1997, however, Barretto’s Bargeman, Eddie La Chica, executed a Marine Protest, reporting the following
circumstances under which the barge reportedly capsized in the vicinity of Cape Santiago, Batangas, viz.:

That on or about 1635 December 3, 1997, Barge ‘Antonieta’ departed Pico de Loro, Pasig River and towed by Tug-Boat
‘Ayalit’ bound for Ayungon, Negros Oriental with cargo onboard steel pipes and various construction materials. While
underway on or about 0245 December 4, 1997 encountered rough sea at the vicinity of Cape Santiago, Batangas and
ma(d)e the barge x x x roll and pitch which caused the steel pipes and various construction materials to shift on the
starboardside causing the breakdown of the steel stanch(i)ons welded on the deck of the barge leaving holes on the deck
that cause(d) water to enter the hold.

That on or about 1529 December 5, 199[7], with the continuous entrance of sea water on the hold, the barge totally
capsized touch(ed) bottom.

On 9 December 1997, Barretto apprised Oceaneering of the supposed fact that the mishap was caused by the
incompetence and negligence of the latter’s personnel in loading the cargo and that it was going to proceed with the
13
salvage, refloating and repair of the barge. In turn contending that the barge tilted because of the water which seeped
through a hole in its hull, Oceaneering caused its counsel to serve Barretto a letter dated 12 March 1998, demanding the
return of the unused portion of the charter payment amounting to ₱224,400.00 as well as the expenses in the sum of
14
₱125,000.00 it purportedly incurred in salvaging its construction materials. In a letter dated 25 March 1998, however,
Barretto’s counsel informed Oceaneering that its unused charter payment was withheld by his client who was likewise
15
seeking reimbursement for the ₱836,425.00 he expended in salvaging, refloating and repairing the barge. In response to
16
Barretto’s 29 June 1998 formal demand for the payment of the same expenses, Oceaneering reiterated its demand for
17
the return of the unused charter payment and the reimbursement of its salvaging expenses as aforesaid.

On 6 October 1998, Barretto commenced the instant suit with the filing of his complaint for damages against Oceaneering,
which was docketed as Civil Case No. LP-98-0244 before Branch 255 of the Regional Trial Court (RTC) of Las Piñas City.
Contending that the accident was attributable to the incompetence and negligence which attended the loading of the
cargo by Oceaneering’s hired employees, Barretto sought indemnities for expenses incurred and lost income in the
18
aggregate sum of ₱2,750,792.50 and attorney’s fees equivalent to 25% of said sum. Specifically denying the material
allegations of the foregoing complaint in its 26 January 1999 answer, Oceaneering, on the other hand, averred that the
accident was caused by the negligence of Barretto’s employees and the dilapidated hull of the barge which rendered it
unseaworthy. As a consequence, Oceaneering prayed for the grant of its counterclaims for the value of its cargo in the
sum of ₱4,055,700.00, salvaging expenses in the sum of ₱125,000.00, exemplary damages, attorney’s fees and litigation
19
expenses.

The issues thus joined and the mandatory pre-trial conference subsequently terminated upon the agreement of the
20
parties, the RTC proceeded to try the case on the merits. In support of his complaint, Barretto took the witness stand to
prove the seaworthiness of the barge as well as the alleged negligent loading of the cargo by Oceaneering’s
21
employees. Barretto also presented the following witnesses: (a) Toribio Barretto II, Vice President for Operations of
22
N.B.B. Lighterage, who primarily testified on the effort exerted to salvage the barge; and, (b) Manuel Velasco, who
testified on his participation in the execution of the Time Charter Agreement as well as the circumstances before and after
23
the sinking of the barge. By way of defense evidence, Oceaneering in turn presented the testimonies of the following
witnesses: (a) Engr. Wenifredo Oracion, its Operation’s Manager, to prove, among other matters, the value of the cargo
24
and the salvage operation it conducted in the premises; and, (b) Maria Flores Escaño, Accounting Staff at Castillo
25
Laman Tan Pantaleon and San Jose Law Offices, to prove its claim for attorney’s fees and litigation expenses. 1avvphi1

To disprove the rough sea supposedly encountered by the barge as well as the negligence imputed against its
employees, Oceaneering further adduced the testimonies of the following witnesses: (a) Rosa Barba, a Senior Weather
26
Specialist at the Philippine Atmospheric, Geophysical and Astronomical Services Administration (PAGASA); (b) Cmdr.
Herbert Catapang, Officer-in-Charge of the Hydrographic Division at the National Mapping Resource Information Authority
27 28
(NAMRIA); and, (c) Engr. Carlos Gigante, a freelance marine surveyor and licensed naval architect. Recalled as a
rebuttal witness, Toribio Barretto II, in turn, asserted that the hull of the barge was not damaged and that the sinking of
29
said vessel was attributable to the improper loading of Oceaneering’s construction materials. Upon the formal offer
respectively made by the parties, the pieces of documentary evidence identified and marked in the course of the
30 31
testimonies of the above named witnesses were, accordingly, admitted by the RTC.

On 27 December 2005, the RTC rendered a decision, dismissing both Barretto’s complaint and Oceaneering’s
counterclaims for lack of merit. While finding that Barretto failed to adduce sufficient and convincing evidence to prove that
the accident was due to the negligence of Oceaneering’s employees, the RTC nevertheless brushed aside the latter’s
claim that the barge was not seaworthy as acknowledged in the Time Charter Agreement. Alongside its claim for
reimbursement of the sums expended for the salvage operation it conducted which was denied for lack of evidence to
prove the same, Oceaneering’s claim for the value of its cargo was likewise denied on the ground, among other matters,
that the same was not included in the demand letters it served Barretto; and, that it has no one but itself to blame for
failing to insure its cargo against all risks, as provided in the parties’ agreement. With its claims for exemplary damages
32
and attorney’s fees further denied for lack of showing of bad faith on the part of Barretto, Oceaneering filed the motion
33
for partial reconsideration of the foregoing decision which was denied for lack of merit in the RTC’s 28 April 2006
34
order.

Dissatisfied, Oceaneering perfected its appeal from the aforesaid 27 December 2005 decision on the ground that the RTC
reversibly erred in not finding that the accident was caused by the unseaworthy condition of the barge and in denying its
counterclaims for actual and exemplary damages as well as attorney’s fees and litigation expenses. Docketed before the
35
CA as CA-G.R. CV No. 87168, the appeal was partially granted in the herein assailed 12 December 2007 decision upon
the finding, among others, that the agreement executed by the parties, by its express terms, was a time charter where the
possession and control of the barge was retained by Barretto; that the latter is, therefore, a common carrier legally
charged with extraordinary diligence in the vigilance over the goods transported by him; and, that the sinking of the vessel
created a presumption of negligence and/or unseaworthiness which Barretto failed to overcome and gave rise to his
liability for Oceaneering’s lost cargo despite the latter’s failure to insure the same. Applying the rule, however, that actual
damages should be proved with a reasonable degree of certainty, the CA denied Oceaneering’s claim for the value of its
lost cargo and merely ordered the refund of the ₱306,000.00 it paid for the time charter, with indemnity for attorney’s fees
36
in the sum of ₱30,000.

Alongside that interposed by Barretto, the motion for reconsideration of the foregoing decision filed by
37 38
Oceaneering’s was denied for lack of merit in the CA’s resolution dated 11 August 2008, hence, this petition.

The Issues

Oceaneering urges the reversal of the assailed 12 December 2007 decision and 11 August 2008 resolution on the ground
that the CA erred in the following wise:

I. IN HOLDING THAT THERE WERE NO VALID DOCUMENTS SHOWING THE REAL VALUE OF THE
MATERIALS LOST AND THOSE ACTUALLY RECOVERED.

II. IN DENYING OCEANEERING’S COUNTERCLAIMS FOR ACTUAL DAMAGES AMOUNTING TO (A)

₱3,704,700.00 REPRESENTING THE VALUE OF THE MATERIALS IT LOST DUE TO THE SINKING OF
[BARRETO’S] BARGE; AND (b) ₱125,000.00 REPRESENTING THE EXPENSES IT INCURRED FOR
SALVAGING ITS CARGO.

III. IN AWARDING OCEANEERING’S COUNTERCLAIM FOR ATTORNEY’S FEES IN THE REDUCED AMOUNT
39
OF ₱30,000.00 ONLY.

The Court’s Ruling

We find the modification of the assailed decision in order.

Oceaneering argues that, having determined Barretto’s liability for presumed negligence as a common carrier, the CA
erred in disallowing its counterclaims for the value of the construction materials which were lost as a consequence of the
sinking of the barge. Alongside the testimony elicited from its Operation’s Manager, Engr. Winifredo Oracion, Oceaneering
calls attention to the same witness’ inventory which pegged the value of said construction materials at ₱4,055,700.00, as
well as the various sales receipts, order slips, cash vouchers and invoices which were formally offered before and
admitted in evidence by the RTC. Considering that it was able to salvage only nine steel pipes amounting to ₱351,000.00,
Oceaneering insists that it should be indemnified the sum of ₱3,703,700.00 for the value of the lost cargo, with legal
interest at 12% per annum, from the date of demand until fully paid. In addition, Oceaneering maintains that Barretto
should be held liable to refund the ₱306,000.00 it paid as consideration for the Time Charter Agreement and to pay the
₱125,000.00 it incurred by way of salvaging expenses as well as its claim for attorney’s fees in the sum of ₱750,000.00.

In finding Oceaneering’s petition impressed with partial merit, uppermost in our mind is the fact that actual or
compensatory damages are those damages which the injured party is entitled to recover for the wrong done and injuries
40
received when none were intended. Pertaining as they do to such injuries or losses that are actually sustained and
41
susceptible of measurement, they are intended to put the injured party in the position in which he was before he was
42
injured. Insofar as actual or compensatory damages are concerned, Article 2199 of the Civil Code of the Philippines
provides as follows:

"Art. 2199. Except as provided by law or by stipulation, one is entitled to an adequate compensation only for such
pecuniary loss suffered by him as he has duly proved. Such compensation is referred to as actual or compensatory
damages."

Conformably with the foregoing provision, the rule is long and well settled that there must be pleading and proof of actual
43
damages suffered for the same to be recovered. In addition to the fact that the amount of loss must be capable of proof,
it must also be actually proven with a reasonable degree of certainty, premised upon competent proof or the best
44
evidence obtainable. The burden of proof of the damage suffered is, consequently, imposed on the party claiming the
45
same who should adduce the best evidence available in support thereof, like sales and delivery receipts, cash and
check vouchers and other pieces of documentary evidence of the same nature. In the absence of corroborative evidence,
it has been held that self-serving statements of account are not sufficient basis for an award of actual
46
damages. Corollary to the principle that a claim for actual damages cannot be predicated on flimsy, remote, speculative,
47 48
and insubstantial proof, courts are, likewise, required to state the factual bases of the award.

Applying the just discussed principles to the case at bench, we find that Oceaneering correctly fault the CA for not
granting its claim for actual damages or, more specifically, the portions thereof which were duly pleaded and adequately
49
proved before the RTC. While concededly not included in the demand letters dated 12 March 1998 and 13 July
50
1998 Oceaneering served Barretto, the former’s counterclaims for the value of its lost cargo in the sum of ₱4,055,700.00
and salvaging expenses in the sum of ₱125,000.00 were distinctly pleaded and prayed for in the 26 January 1999 answer
51 52
it filed a quo. Rather than the entire ₱4,055,700.00 worth of construction materials reflected in the inventory which
Engr. Oracion claims to have prepared on 29 November 1997, based on the delivery and official receipts from
53
Oceaneering’s suppliers, we are, however, inclined to grant only the following items which were duly proved by the
vouchers and receipts on record, viz.: (a) ₱1,720,850.00 worth of spiral welded pipes with coal tar epoxy procured on 22
 54 55
November 1997; (b) ₱629,640.00 worth of spiral welded steel pipes procured on 28 October 1997; (c) ₱155,500.00
56
worth of various stainless steel materials procured on 27 November 1997; (d) ₱66,750.00 worth of gaskets and shackles
57 58
procured on 20 November 1997; and, (e) ₱4,880.00 worth of anchor bolt procured on 27 November 1997.

The foregoing sums all add up to of ₱2,577,620.00 from which should be deducted the sum of ₱351,000.00 representing
the value of the nine steel pipes salvaged by Oceaneering, or a total of ₱2,226,620.00 in actual damages representing the
value of the latter’s lost cargo. Excluded from the computation are the following items which, on account of the dates of
their procurement, could not have possibly been included in the 29 November 1997 inventory prepared by Engr. Oracion,
59
to wit: (a) ₱1,129,640.00 worth of WO#1995 and PO#OCPI-060-97 procured on 9 December 1997; and, (b)
60
₱128,000.00 worth of bollard procured on 16 December 1997. Likewise excluded are the anchor bolt with nut
61
Oceaneering claims to have procured for an unspecified amount on 3 November 1997 and the ₱109,018.50 worth of
62
Petron oil it procured on 28 November 1997 which does not fit into the categories of lost cargo and/or salvaging
expenses for which it interposed counterclaims a quo. Although included in its demand letters as aforesaid and pleaded in
its answer, Oceaneering’s claim for salvaging expenses in the sum of ₱125,000.00 cannot, likewise, be granted for lack of
credible evidence to support the same.

Tested alongside the twin requirements of pleading and proof for the grant of actual damages, on the other hand, we find
that the CA also erred in awarding the full amount of ₱306,000.00 in favor of Oceaneering, as and by way of refund of the
consideration it paid Barretto for the Time Charter Agreement. Aside from not being clearly pleaded in the answer it filed a
quo, said refund was claimed in Oceaneering’s demand letters only to the extent of the unused charter payment in the
63
reduced sum of ₱224,400.00 which, to our mind, should be the correct measure of the award. Having breached an
obligation which did not constitute a loan or forbearance of money, moreover, Barretto can only be held liable for interest
at the rate of 6% per annum on said amount as well as the ₱2,226,620.00 value of the lost cargo instead of the 12%
urged by Oceaneering. Although the lost cargo was not included in the demand letters the latter served the former, said
interest rate of 6% per annum shall be imposed from the time of the filing of the complaint which is equivalent to a judicial
64
demand. Upon the finality of this decision, said sums shall earn a further interest of 12% per annum until full payment in
65
accordance with the following pronouncements handed down in Eastern Shipping Lines, Inc. vs. Court of Appeals, to
wit:

"2. When an obligation, not constituting a loan or forbearance of money, is breached, an interest on the amount of
damages awarded may be imposed at the discretion of the court at the rate of 6% per annum. No interest, however, shall
be adjudged on unliquidated claims or damages except when or until the demand can be established with reasonable
certainty. Accordingly, where the demand is established with reasonable certainty, the interest shall begin to run from the
time the claim is made judicially or extrajudicially (Art. 1169, Civil Code) but when such certainty cannot be so reasonably
established at the time the demand is made, the interest shall begin to run only from the date of the judgment of the court
is made (at which time the quantification of damages may be deemed to have been reasonably ascertained). The actual
base for the computation of legal interest shall, in any case, be on the amount of finally adjudged.

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

For lack of sufficient showing of bad faith on the part of Barretto, we find that the CA, finally, erred in granting
Oceaneering’s claim for attorney’s fees, albeit in the much reduced sum of ₱30,000.00. In the absence of stipulation, after
all, the rule is settled that there can be no recovery of attorney’s fees and expenses of litigation other than judicial costs
66
except in the instances enumerated under Article 2208 of the Civil Code. Being the exception rather than the
67 68
rule, attorney’s fees are not awarded every time a party prevails in a suit, in view of the policy that no premium should
69
be placed on the right to litigate. Even when a claimant is compelled to litigate with third persons or to incur expenses to
protect his rights, still attorney’s fees may not be awarded where, as here, no sufficient showing of bad faith can be
70
reflected in the party’s persistence in a case other than an erroneous conviction of the righteousness of his cause.

WHEREFORE, premises considered, the petition is PARTIALLY GRANTED and the assailed 12 December 2007
Decision is, accordingly, MODIFIED: (a) to GRANT Oceaneering’s claim for the value of its lost cargo in the sum of
₱2,226,620.00 with 6% interest per annum computed from the filing of the complaint and to earn further interest at the
rate of 12% per annum from finality of the decision until full payment; (b) to REDUCE the refund of the consideration for
the Time Charter Agreement from ₱306,000.00 to ₱224,400.00, with 6% interest per annum computed from 12 March
1998, likewise to earn further interest at the rate of 12% per annum from finality of this decision; and, (c) to DELETE the
CA’s award of salvaging expenses and attorney’s fees, for lack of factual and legal basis. The rest is AFFIRMED in toto.

SO ORDERED.

G.R. No. 107518 October 8, 1998

PNOC SHIPPING AND TRANSPORT CORPORATION, petitioner,

vs.
HONORABLE COURT OF APPEALS and MARIA EFIGENIA FISHING CORPORATION, respondents.

ROMERO, J.:
 1
A party is entitled to adequate compensation only for such pecuniary loss actually suffered and duly proved. Indeed, basic
is the rule that to recover actual damages, the amount of loss must not only be capable of proof but must actually be
proven with a reasonable degree of certainty, premised upon competent proof or best evidence obtainable of the actual
2
amount thereof. The claimant is duty-bound to point out specific facts that afford a basis for measuring whatever
3
compensatory damages are borne. A court cannot merely rely on speculations, conjectures, or guesswork as to the fact
4 5 6
and amount of damages as well as hearsay or uncorroborated testimony whose truth is suspect. Such are the
jurisprudential precepts that the Court now applies in resolving the instant petition.

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

After investigation was conducted by the Board of Marine Inquiry, Philippine Coast Guard Commandant Simeon N.
Alejandro rendered a decision finding the Petroparcel at fault. Based on this finding by the Board and after unsuccessful
7
demands on petitioner, private respondent sued the LSC and the Petroparcelcaptain, Edgardo Doruelo, before the then
Court of First Instance of Caloocan City, paying thereto the docket fee of one thousand two hundred fifty-two pesos
8
(P1,252.00) and the legal research fee of two pesos (P2.00). In particular, private respondent prayed for an award of
P692,680.00, allegedly representing the value of the fishing nets, boat equipment and cargoes of M/V Maria Efigenia
XV, with interest at the legal rate plus 25% thereof as attorney's fees. Meanwhile, during the pendency of the case,
petitioner PNOC Shipping and Transport Corporation sought to be substituted in place of LSC as it had already acquired
9
ownership of the Petroparcel.

For its part, private respondent later sought the amendment of its complaint on the ground that the original complaint
10
failed to plead for the recovery of the lost value of the hull of M/V Maria Efigenia XV. Accordingly, in the amended
complaint, private respondent averred that M/V Maria Efigenia XV had an actual value of P800,000.00 and that, after
deducting the insurance payment of P200,000.00, the amount of P600,000.00 should likewise be claimed. The amended
complaint also alleged that inflation resulting from the devaluation of the Philippine peso had affected the replacement
value of the hull of the vessel, its equipment and its lost cargoes, such that there should be a reasonable determination
thereof. Furthermore, on account of the sinking of the vessel, private respondent supposedly incurred unrealized profits
11
and lost business opportunities that would thereafter be proven.

12
Subsequently, the complaint was further amended to include petitioner as a defendant which the lower court granted in
its order of September 16,
13
1985. After petitioner had filed its answer to the second amended complaint, on February 5, 1987, the lower court
14
issued a pre-trial order containing, among other things, a stipulations of facts, to wit:

1. On 21 September 1977, while the fishing boat "M/V MARIA EFIGENIA" owned by plaintiff was
navigating in the vicinity of Fortune Island in Nasugbu, Batangas, on its way to Navotas, Metro Manila,
said fishing boat was hit by the LSCO tanker "Petroparcel" causing the former to sink.

2. The Board of Marine Inquiry conducted an investigation of this marine accident and on 21 November
1978, the Commandant of the Philippine Coast Guard, the Honorable Simeon N. Alejandro, rendered a
decision finding the cause of the accident to be the reckless and imprudent manner in which Edgardo
Doruelo navigated the LSCO "Petroparcel" and declared the latter vessel at fault.

3. On 2 April 1978, defendant Luzon Stevedoring Corporation (LUSTEVECO), executed in favor of PNOC
Shipping and Transport Corporation a Deed of Transfer involving several tankers, tugboats, barges and
pumping stations, among which was the LSCO Petroparcel.

4. On the same date on 2 April 1979 (sic), defendant PNOC STC again entered into an Agreement of
Transfer with co-defendant Lusteveco whereby all the business properties and other assets appertaining
to the tanker and bulk oil departments including the motor tanker LSCO Petroparcel of defendant
Lusteveco were sold to PNOC STC.

5. The aforesaid agreement stipulates, among others, that PNOC-STC assumes, without qualifications,
all obligations arising from and by virtue of all rights it obtained over the LSCO "Petroparcel".

6. On 6 July 1979, another agreement between defendant LUSTEVECO and PNOC-STC was executed
wherein Board of Marine Inquiry Case No. 332 (involving the sea accident of 21 September 1977) was
specifically identified and assumed by the latter.

7. On 23 June 1979, the decision of Board of Marine Inquiry was affirmed by the Ministry of National
Defense, in its decision dismissing the appeal of Capt. Edgardo Doruelo and Chief mate Anthony Estenzo
of LSCO "Petroparcel".

8. LSCO "Petroparcel" is presently owned and operated by PNOC-STC and likewise Capt. Edgardo
Doruelo is still in their employ.

9. As a result of the sinking of M/V Maria Efigenia caused by the reckless and imprudent manner in which
LSCO Petroparcel was navigated by defendant Doruelo, plaintiff suffered actual damages by the loss of
 its fishing nets, boat equipments (sic) and cargoes, which went down with the ship when it sank the
replacement value of which should be left to the sound discretion of this Honorable Court.

15
After trial, the lower court rendered on November 18, 1989 its decision disposing of Civil Case No. C-9457 as follows:

WHEREFORE, and in view of the foregoing, judgment is hereby rendered in favor of the plaintiff and
against the defendant PNOC Shipping & Transport Corporation, to pay the plaintiff:

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

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

c. The costs of suit.

The counterclaim is hereby DISMISSED for lack of merit. Likewise, the case against defendant Edgardo
Doruelo is hereby DISMISSED, for lack of jurisdiction.

SO ORDERED.

In arriving at the above disposition, the lower court cited the evidence presented by private respondent consisting of the
testimony of its general manager and sole witness, Edilberto del Rosario. Private respondent's witness testified that M/V
Maria Efigenia XV was owned by private respondent per Exhibit A, a certificate of ownership issued by the Philippine
Coast Guard showing that M/V Maria Efigenia XV was a wooden motor boat constructed in 1965 with 128.23 gross
tonnage. According to him, at the time the vessel sank, it was then carrying 1,060 tubs (bañeras) of assorted fish the
value of which was never recovered. Also lost with the vessel were two cummins engines (250 horsepower), radar,
pathometer and compass. He further added that with the loss of his flagship vessel in his fishing fleet of fourteen (14)
vessels, he was constrained to hire the services of counsel whom he paid P10,000 to handle the case at the Board of
Marine Inquiry and P50,000.00 for commencing suit for damages in the lower court.

As to the award of P6,438,048.00 in actual damages, the lower court took into account the following pieces of
documentary evidence that private respondent proffered during trial:

(a) Exhibit A — certified xerox copy of the certificate of ownership of M/V Maria Efigenia
XV;

(b) Exhibit B — a document titled "Marine Protest" executed by Delfin Villarosa, Jr. on
September 22, 1977 stating that as a result of the collision, the M/V Maria Efigenia
XV sustained a hole at its left side that caused it to sink with its cargo of
1,050 bañeras valued at P170,000.00;

(c) Exhibit C — a quotation for the construction of a 95-footer trawler issued by Isidoro A.
Magalong of I. A. Magalong Engineering and Construction on January 26, 1987 to Del
Rosario showing that construction of such trawler would cost P2,250,000.00;

(d) Exhibit D — pro forma invoice No. PSPI-05/87-NAV issued by E.D. Daclan of Power
Systems, Incorporated on January 20, 1987 to Del Rosario showing that two (2) units of
CUMMINS Marine Engine model N855-M, 195 bhp. at 1800 rpm. would cost
P1,160,000.00;

(e) Exhibit E — quotation of prices issued by Scan Marine Inc. on January 20, 1987 to
Del Rosario showing that a unit of Furuno Compact Daylight Radar, Model FR-604D,
would cost P100,000.00 while a unit of Furuno Color Video Sounder, Model FCV-501
would cost P45,000.00 so that the two units would cost P145,000.00;

(f) Exhibit F — quotation of prices issued by Seafgear Sales, Inc. on January 21, 1987 to
Del Rosario showing that two (2) rolls of nylon rope (5" cir. X 300fl.) would cost
P140,000.00; two (2) rolls of nylon rope (3" cir. X 240fl.), P42,750.00; one (1) binocular (7
x 50), P1,400.00, one (1) compass (6"), P4,000.00 and 50 pcs. of floats, P9,000.00 or a
total of P197,150.00;

(g) Exhibit G — retainer agreement between Del Rosario and F. Sumulong Associates
Law Offices stipulating an acceptance fee of P5,000.00, per appearance fee of P400.00,
monthly retainer of P500.00, contingent fee of 20% of the total amount recovered and
that attorney's fee to be awarded by the court should be given to Del Rosario; and

(h) Exhibit H — price quotation issued by Seafgear Sales, Inc. dated April 10, 1987 to Del
Rosario showing the cost of poly nettings as: 50 rolls of 400/18 3kts. 100md x 100mtrs.,
P70,000.00; 50 rolls of 400/18 5kts. 100md x 100mtrs., P81,500.00; 50 rolls of 400/18
8kts. 100md x 100mtrs., P116,000.00, and 50 rolls of 400/18 10kts. 100md x 100mtrs.,
P146,500 and bañera (tub) at P65.00 per piece or a total of P414,065.00.
The lower court held that the prevailing replacement value of P6,438,048.00 of the fishing boat and all its equipment
would regularly increase at 30% every year from the date the quotations were given.

On the other hand, the lower court noted that petitioner only presented Lorenzo Lazaro, senior estimator at PNOC
Dockyard & Engineering Corporation, as sole witness and it did not bother at all to offer any documentary evidence to
support its position. Lazaro testified that the price quotations submitted by private respondent were "excessive" and that
as an expert witness, he used the quotations of his suppliers in making his estimates. However, he failed to present such
quotations of prices from his suppliers, saying that he could not produce a breakdown of the costs of his estimates as it
was "a sort of secret scheme." For this reason, the lower court concluded:

Evidently, the quotation of prices submitted by the plaintiff relative to the replacement value of the fishing
boat and its equipments in the tune of P6,438,048.00 which were lost due to the recklessness and
imprudence of the herein defendants were not rebutted by the latter with sufficient evidence. The
defendants through their sole witness Lorenzo Lazaro relied heavily on said witness' bare claim that the
amount afore-said is excessive or bloated, but they did not bother at all to present any documentary
evidence to substantiate such claim. Evidence to be believed must not only proceed from the mouth of
the credible witness, but it must be credible in itself. (Vda. de Bonifacio vs. B. L. T. Bus Co., Inc. L-26810,
August 31, 1970).

Aggrieved, petitioner filed a motion for the reconsideration of the lower court's decision contending that: (1) the lower court
erred in holding it liable for damages; that the lower court did not acquire jurisdiction over the case by paying only
P1,252.00 as docket fee; (2) assuming that plaintiff was entitled to damages, the lower court erred in awarding an amount
greater than that prayed for in the second amended complaint; and (3) the lower court erred when it failed to resolve the
16
issues it had raised in its memorandum. Petitioner likewise filed a supplemental motion for reconsideration expounding
on whether the lower court acquired jurisdiction over the subject matter of the case despite therein plaintiff's failure to pay
17
the prescribed docket fee.

18
On January 25, 1990, the lower court declined reconsideration for lack of merit. Apparently not having received the
order denying its motion for reconsideration, petitioner still filed a motion for leave to file a reply to private respondent's
19
opposition to said motion. Hence, on February 12, 1990, the lower court denied said motion for leave to file a reply on
20
the ground that by the issuance of the order of January 25, 1990, said motion had become moot and academic.

Unsatisfied with the lower court's decision, petitioner elevated the matter to the Court of Appeals which, however, affirmed
21
the same in toto on October 14, 1992. On petitioner's assertion that the award of P6,438,048.00 was not convincingly
proved by competent and admissible evidence, the Court of Appeals ruled that it was not necessary to qualify Del Rosario
as an expert witness because as the owner of the lost vessel, "it was well within his knowledge and competency to identify
and determine the equipment installed and the cargoes loaded" on the vessel. Considering the documentary evidence
presented as in the nature of market reports or quotations, trade journals, trade circulars and price lists, the Court of
Appeals held, thus:

Consequently, until such time as the Supreme Court categorically rules on the admissibility or
inadmissibility of this class of evidence, the reception of these documentary exhibits (price quotations) as
evidence rests on the sound discretion of the trial court. In fact, where the lower court is confronted with
evidence which appears to be of doubtful admissibility, the judge should declare in favor of admissibility
rather than of non-admissibility (The Collector of Palakadhari, 124 [1899], p. 13, cited in Francisco,
Revised Rules of Court, Evidence, Volume VII, Part I, 1990 Edition, p. 18). Trial courts are enjoined to
observe the strict enforcement of the rules of evidence which crystallized through constant use and
practice and are very useful and effective aids in the search for truth and for the effective administration of
justice. But in connection with evidence which may appear to be of doubtful relevancy or incompetency or
admissibility, it is the safest policy to be liberal, not rejecting them on doubtful or technical grounds, but
admitting them unless plainly irrelevant, immaterial or incompetent, for the reason that their rejection
places them beyond the consideration of the court. If they are thereafter found relevant or competent, can
easily be remedied by completely discarding or ignoring them. (Banaria vs. Banaria, et al., C.A. No. 4142,
May 31, 1950; cited in Francisco, Supra). [Emphasis supplied].

Stressing that the alleged inadmissible documentary exhibits were never satisfactorily rebutted by appellant's own sole
witness in the person of Lorenzo Lazaro, the appellate court found that petitioner ironically situated itself in an
"inconsistent posture by the fact that its own witness, admittedly an expert one, heavily relies on the very same pieces of
evidence (price quotations) appellant has so vigorously objected to as inadmissible evidence." Hence, it concluded:

. . . The amount of P6,438,048.00 was duly established at the trial on the basis of appellee's documentary
exhibits (price quotations) which stood uncontroverted, and which already included the amount by way of
adjustment as prayed for in the amended complaint. There was therefore no need for appellee to amend
the second amended complaint in so far as to the claim for damages is concerned to conform with the
evidence presented at the trial. The amount of P6,438,048.00 awarded is clearly within the relief prayed
for in appellee's second amended complaint.

On the issue of lack of jurisdiction, the respondent court held that following the ruling in Sun Insurance Ltd. v.
22
Asuncion, the additional docket fee that may later on be declared as still owing the court may be enforced as a lien on
the judgment.

Hence, the instant recourse.

In assailing the Court of Appeals' decision, petitioner posits the view that the award of P6,438,048 as actual damages
should have been in light of these considerations, namely: (1) the trial court did not base such award on the actual value
of the vessel and its equipment at the time of loss in 1977; (2) there was no evidence on extraordinary inflation that would
warrant an adjustment of the replacement cost of the lost vessel, equipment and cargo; (3) the value of the lost cargo and
the prices quoted in respondent's documentary evidence only amount to P4,336,215.00; (4) private respondent's failure to
adduce evidence to support its claim for unrealized profit and business opportunities; and (5) private respondent's failure
23
to prove the extent and actual value of damages sustained as a result of the 1977 collision of the vessels.

Under Article 2199 of the Civil Code, actual or compensatory damages are those awarded in satisfaction of, or in
recompense for, loss or injury sustained. They proceed from a sense of natural justice and are designed to repair the
24
wrong that has been done, to compensate for the injury inflicted and not to impose a penalty. In actions based on torts
or quasi-delicts, actual damages include all the natural and probable consequences of the act or omission complained
25
of. There are two kinds of actual or compensatory damages: one is the loss of what a person already possesses (daño
emergente), and the other is the failure to receive as a benefit that which would have pertained to him (lucro
26
cesante). Thus:

Where goods are destroyed by the wrongful act of the defendant the plaintiff is entitled to their value at
the time of destruction, that is, normally, the sum of money which he would have to pay in the market for
identical or essentially similar goods, plus in a proper case damages for the loss of use during the period
before replacement. In other words, in the case of profit-earning chattels, what has to be assessed is the
value of the chattel to its owner as a going concern at the time and place of the loss, and this means, at
least in the case of ships, that regard must be had to existing and pending engagements, . . .

. . . . If the market value of the ship reflects the fact that it is in any case virtually certain of profitable
employment, then nothing can be added to that value in respect of charters actually lost, for to do so
would be pro tanto to compensate the plaintiff twice over. On the other hand, if the ship is valued without
reference to its actual future engagements and only in the light of its profit-earning potentiality, then it may
be necessary to add to the value thus assessed the anticipated profit on a charter or other engagement
which it was unable to fulfill. What the court has to ascertain in each case is the "capitalised value of the
vessel as a profit-earning machine not in the abstract but in view of the actual circumstances," without, of
27
course, taking into account considerations which were too remote at the time of the loss. [Emphasis
supplied].

As stated at the outset, to enable an injured party to recover actual or compensatory damages, he is required to prove the
actual amount of loss with reasonable degree of certainty premised upon competent proof and on the best evidence
28
available. The burden of proof is on the party who would be defeated if no evidence would be presented on either side.
He must establish his case by a preponderance of evidence which means that the evidence, as a whole, adduced by one
29
side is superior to that of the other. In other words, damages cannot be presumed and courts, in making an award must
30
point out specific facts that could afford a basis for measuring whatever compensatory or actual damages are borne.

In this case, actual damages were proven through the sole testimony of private respondent's general manager and certain
pieces of documentary evidence. Except for Exhibit B where the value of the 1,050 bañeras of fish were pegged at their
September 1977 value when the collision happened, the pieces of documentary evidence proffered by private respondent
with respect to items and equipment lost show similar items and equipment with corresponding prices in early 1987 or
approximately ten (10) years after the collision. Noticeably, petitioner did not object to the exhibits in terms of the time
index for valuation of the lost goods and equipment. In objecting to the same pieces of evidence, petitioner commented
that these were not duly authenticated and that the witness (Del Rosario) did not have personal knowledge on the
31
contents of the writings and neither was he an expert on the subjects thereof. Clearly ignoring petitioner's objections to
the exhibits, the lower court admitted these pieces of evidence and gave them due weight to arrive at the award of
P6,438,048.00 as actual damages.

The exhibits were presented ostensibly in the course of Del Rosario's testimony. Private respondent did not present any
other witnesses especially those whose signatures appear in the price quotations that became the bases of the award.
We hold, however, that the price quotations are ordinary private writings which under the Revised Rules of Court should
have been proffered along with the testimony of the authors thereof. Del Rosario could not have testified on the veracity of
the contents of the writings even though he was the seasoned owner of a fishing fleet because he was not the one who
issued the price quotations. Section 36, Rule 130 of the Revised Rules of Court provides that a witness can testify only to
those facts that he knows of his personal knowledge.

For this reason, Del Rosario's claim that private respondent incurred losses in the total amount of P6,438,048.00 should
be admitted with extreme caution considering that, because it was a bare assertion, it should be supported by
32
independent evidence. Moreover, because he was the owner of private respondent corporation whatever testimony he
would give with regard to the value of the lost vessel, its equipment and cargoes should be viewed in the light of his self-
interest therein. We agree with the Court of Appeals that his testimony as to the equipment installed and the cargoes
33
loaded on the vessel should be given credence considering his familiarity thereto. However, we do not subscribe to the
34
conclusion that his valuation of such equipment, cargo and the vessel itself should be accepted as gospel truth. We
must, therefore, examine the documentary evidence presented to support Del Rosario's claim as regards the amount of
losses.

The price quotations presented as exhibits partake of the nature of hearsay evidence considering that the persons who
35
issued them were not presented as witnesses. Any evidence, whether oral or documentary, is hearsay if its probative
value is not based on the personal knowledge of the witness but on the knowledge of another person who is not on the
witness stand. Hearsay evidence, whether objected to or not, has no probative value unless the proponent can show that
 36
the evidence falls within the exceptions to the hearsay evidence rule. On this point, we believe that the exhibits do not
37
fall under any of the exceptions provided under Sections 37 to 47 of Rule 130.

It is true that one of the exceptions to the hearsay rule pertains to "commercial lists and the like" under Section 45, Rule
130 of the Revised Rules on Evidence. In this respect, the Court of Appeals considered private respondent's exhibits as
"commercial lists." It added, however, that these exhibits should be admitted in evidence "until such time as the Supreme
Court categorically rules on the admissibility or inadmissibility of this class of evidence" because "the reception of these
38
documentary exhibits (price quotations) as evidence rests on the sound discretion of the trial court." Reference to
Section 45, Rule 130, however, would show that the conclusion of the Court of Appeals on the matter was arbitrarily
arrived at. This rule states:

Commercial lists and the like. — Evidence of statements of matters of interest to persons engaged in an
occupation contained in a list, register, periodical, or other published compilation is admissible as tending
to prove the truth of any relevant matter so stated if that compilation is published for use by persons
engaged in that occupation and is generally used and relied upon by them there.

Under Section 45 of the aforesaid Rule, a document is a commercial list if: (1) it is a statement of matters of interest to
persons engaged in an occupation; (2) such statement is contained in a list, register, periodical or other published
compilation; (3) said compilation is published for the use of persons engaged in that occupation, and (4) it is generally
used and relied upon by persons in the same occupation.

39
Based on the above requisites, it is our considered view that Exhibits B, C, D, E, F and H are not "commercial lists" for
these do not belong to the category of "other published compilations" under Section 45 aforequoted. Under the principle
of ejusdem generis, "(w)here general words follow an enumeration of persons or things, by words of a particular and
specific meaning, such general words are not to be construed in their widest extent, but are to be held as applying only to
40
persons or things of the same kind or class as those specifically mentioned." The exhibits mentioned are mere price
quotations issued personally to Del Rosario who requested for them from dealers of equipment similar to the ones lost at
the collision of the two vessels. These are not published in any list, register, periodical or other compilation on the relevant
subject matter. Neither are these "market reports or quotations" within the purview of "commercial lists" as these are not
"standard handbooks or periodicals, containing data of everyday professional need and relied upon in the work of the
41
occupation." These are simply letters responding to the queries of Del Rosario. Thus, take for example Exhibit D which
reads:

January 20, 1987

PROFORMA INVOICE NO. PSPI-05/87-NAV

MARIA EFIGINIA FISHING CORPORATION

Navotas, Metro Manila

Attention: MR. EDDIE DEL ROSARIO

Gentlemen:

In accordance to your request, we are pleated to quote our Cummins Marine Engine, to wit.

Two (2) units CUMMINS Marine Engine model N855-M, 195 bhp. at
1800 rpm., 6-cylinder in-line, 4-stroke cycle, natural aspirated, 5 1/2 in. x
6 in. bore and stroke, 855 cu. In. displacement, keel-cooled, electric
starting coupled with Twin-Disc Marine gearbox model MG-509, 4.5:1
reduction ratio, includes oil cooler, companion flange, manual and
standard accessories as per attached sheet.

Price FOB Manila P580,000.00/unit

Total FOB Manila P1,160,000.00

TERMS : CASH

DELIVERY : 60-90 days from date of order.

VALIDITY : Subject to our final confirmation.

WARRANTY : One (1) full year against factory defect.

Very truly
yours,
 POWER
SYSTEMS,
INC.

(Sgd.)

E. D. Daclan

To be sure, letters and telegrams are admissible in evidence but these are, however, subject to the general principles of
42
evidence and to various rules relating to documentary evidence. Hence, in one case, it was held that a letter from an
automobile dealer offering an allowance for an automobile upon purchase of a new automobile after repairs had been
completed, was not a "price current" or "commercial list" within the statute which made such items presumptive evidence
of the value of the article specified therein. The letter was not admissible in evidence as a "commercial list" even though
43
the clerk of the dealer testified that he had written the letter in due course of business upon instructions of the dealer.

But even on the theory that the Court of Appeals correctly ruled on the admissibility of those letters or communications
when it held that unless "plainly irrelevant, immaterial or incompetent," evidence should better be admitted rather than
44
rejected on "doubtful or technical grounds," the same pieces of evidence, however, should not have been given
probative weight. This is a distinction we wish to point out. Admissibility of evidence refers to the question of whether or
45
not the circumstance (or evidence) is to considered at all. On the other hand, the probative value of evidence refers to
46
the question of whether or not it proves an issue. Thus, a letter may be offered in evidence and admitted as such but its
evidentiary weight depends upon the observance of the rules on evidence. Accordingly, the author of the letter should be
presented as witness to provide the other party to the litigation the opportunity to question him on the contents of the
letter. Being mere hearsay evidence, failure to present the author of the letter renders its contents suspect. As earlier
stated, hearsay evidence, whether objected to or not, has no probative value. Thus:

The courts differ as to the weight to be given to hearsay evidence admitted without objection. Some hold
that when hearsay has been admitted without objection, the same may be considered as any other
properly admitted testimony. Others maintain that it is entitled to no more consideration than if it had been
excluded.

The rule prevailing in this jurisdiction is the latter one. Our Supreme Court held that although the question
of admissibility of evidence can not be raised for the first time on appeal, yet if the evidence is hearsay it
has no probative value and should be disregarded whether objected to or not. "If no objection is made" —
quoting Jones on Evidence — "it (hearsay) becomes evidence by reason of the want of such objection
even though its admission does not confer upon it any new attribute in point of weight. Its nature and
quality remain the same, so far as its intrinsic weakness and incompetency to satisfy the mind are
concerned, and as opposed to direct primary evidence, the latter always prevails.

The failure of the defense counsel to object to the presentation of incompetent evidence, like hearsay
evidence or evidence that violates the rules of res inter alios acta, or his failure to ask for the striking out
of the same does not give such evidence any probative value. But admissibility of evidence should not be
47
equated with weight of evidence. Hearsay evidence whether objected to or not has no probative value.

48
Accordingly, as stated at the outset, damages may not be awarded on the basis of hearsay evidence.

Nonetheless, the non-admissibility of said exhibits does not mean that it totally deprives private respondent of any redress
for the loss of its vessel. This is because in Lufthansa German Airlines v. Court of Appeals, 49 the Court said:

In the absence of competent proof on the actual damage suffered, private respondent is "entitled to
nominal damages which, as the law says, is adjudicated in order that a right of the plaintiff, which has
been violated or invaded by defendant, may be vindicated and recognized, and not for the purpose of
indemnifying the plaintiff for any loss suffered." [Emphasis supplied].

Nominal damages are awarded in every obligation arising from law, contracts, quasi-contracts, acts or omissions
50
punished by law, and quasi-delicts, or in every case where property right has been invaded. Under Article 2223 of the
Civil Code, "(t)he adjudication of nominal damages shall preclude further contest upon the right involved and all accessory
questions, as between the parties to the suit, or their respective heirs and assigns."

Actually, nominal damages are damages in name only and not in fact. Where these are allowed, they are not treated as
51
an equivalent of a wrong inflicted but simply in recognition of the existence of a technical injury. However, the amount to
be awarded as nominal damages shall be equal or at least commensurate to the injury sustained by private respondent
52
considering the concept and purpose of such damages. The amount of nominal damages to be awarded may also
53
depend on certain special reasons extant in the case.

Applying now such principles to the instant case, we have on record the fact that petitioner's vesselPetroparcel was at
fault as well as private respondent's complaint claiming the amount of P692,680.00 representing the fishing nets, boat
equipment and cargoes that sunk with the M/V Maria Efigenia XV. In its amended complaint, private respondent alleged
that the vessel had an actual value of P800,000.00 but it had been paid insurance in the amount of P200,000.00 and,
therefore, it claimed only the amount of P600,000.00. Ordinarily, the receipt of insurance payments should diminish the
total value of the vessel quoted by private respondent in his complaint considering that such payment is causally related
to the loss for which it claimed compensation. This Court believes that such allegations in the original and amended
complaints can be the basis for determination of a fair amount of nominal damages inasmuch as a complaint alleges the
ultimate facts constituting the plaintiffs cause of
54
action. Private respondent should be bound by its allegations on the amount of its claims.

With respect to petitioner's contention that the lower court did not acquire jurisdiction over the amended complaint
increasing the amount of damages claimed to P600,000.00, we agree with the Court of Appeals that the lower court
acquired jurisdiction over the case when private respondent paid the docket fee corresponding to its claim in its original
complaint. Its failure to pay the docket fee corresponding to its increased claim for damages under the amended
complaint should not be considered as having curtailed the lower court's jurisdiction. Pursuant to the ruling in Sun
55
Insurance Office, Ltd. (SIOL) v. Asuncion, the unpaid docket fee should be considered as a lien on the judgment even
though private respondent specified the amount of P600,000.00 as its claim for damages in its amended complaint.

Moreover, we note that petitioner did not question at all the jurisdiction of the lower court on the ground of insufficient
docket fees in its answers to both the amended complaint and the second amended complaint. It did so only in its motion
for reconsideration of the decision of the lower court after it had received an adverse decision. As this Court held
56
in Pantranco North Express, Inc. v. Court of Appeals, participation in all stages of the case before the trial court, that
included invoking its authority in asking for affirmative relief, effectively barred petitioner by estoppel from challenging the
court's jurisdiction. Notably, from the time it filed its answer to the second amended complaint on April 16,
57 58
1985, petitioner did not question the lower court's jurisdiction. It was only on December 29, 1989 when it filed its
motion for reconsideration of the lower court's decision that petitioner raised the question of the lower court's lack of
jurisdiction. Petitioner thus foreclosed its right to raise the issue of jurisdiction by its own inaction.

WHEREFORE, the challenged decision of the Court of Appeals dated October 14, 1992 in CA-G.R. CV No. 26680
affirming that of the Regional Trial Court of Caloocan City, Branch 121, is hereby MODIFIED insofar as it awarded actual
damages to private respondent Maria Efigenia Fishing Corporation in the amount of P6,438,048.00 for lack of evidentiary
bases therefor. Considering the fact, however, that: (1) technically petitioner sustained injury but which, unfortunately, was
not adequately and properly proved, and (2) this case has dragged on for almost two decades, we believe that an award
59
of Two Million (P2,000,000.00) in favor of private respondent as and for nominal damages is in order.

No pronouncement as to costs.

SO ORDERED.

G.R. No. 163212 March 13, 2007

CANDANO SHIPPING LINES, INC., Petitioner,

vs.
FLORENTINA J. SUGATA-ON, Respondent.

DECISION

CHICO-NAZARIO, J.:

This is a Petition for Review on Certiorari under Rule 45 of the Revised Rules of Court, seeking to reverse and set aside
1
the Court of Appeals Decision dated 23 May 2003 and its Resolution dated 1 April 2004, affirming with modification the
Decision of the Regional Trial Court (RTC) of Manila, Branch 20, finding Candano Shipping Lines, Inc. (Candano
Shipping) liable for the death of Melquiades Sugata-on. The dispositive portion of the assailed decision of the appellate
court reads:

IN VIEW OF ALL THE FOREGOING, the appealed decision is AFFIRMED, with the MODIFICATION that: (1) the
awarded compensation for the death of Melquiades Sugata-on is reduced to ₱608,400.00; and, (2) the award of moral
2
and exemplary damages as well as attorney’s fees is deleted. No pronouncement as to costs.

The factual and procedural antecedents of this instant petition are as follows:

3
Candano Shipping is a domestic corporation engaged in the business of coastwise trading within the Philippines. On 7
March 1994, Melquiades Sugata-on was employed by Candano Shipping as Third Marine Engineer on board its cargo
4
vessel, M/V David, Jr., with the monthly salary of ₱7,800.00.

On 25 March 1996, M/V David, Jr. left the port of Davao City with its cargo and 20 crew members. The voyage was
initially uneventful until around seven o’clock in the evening of 27 March 1996 when the vessel encountered rough seas
and strong winds while traversing the waters of Lianga Bay, Surigao del Sur, causing her to tilt at three degrees on its
starboard side. Due to the violent waves which continuously hammered the tilting vessel, the seawaters slowly swallowed
up the main deck causing the tilting to worsen up to 30 degrees. In an effort to salvage the vessel, the ship captain
changed its course from the north to the south but the tilting continued to grow to a dangerously high level, rendering the
vessel beyond control. It was at this point when the ship captain ordered the crew members to abandon the vessel.
Despite the efforts exerted by the crew members to save the vessel, M/V David, Jr. sank together with her cargo at
around eleven o’clock in the evening at Bakulin Point, Lianga Bay, Surigao del Sur. Among the 20 crew members, twelve
survived, one died and seven were missing. One of those who were missing was Melquiades Sugata-on (Melquiades), the
husband of herein respondent, Florentina Sugata-on, (Florentina) as shown in the List of Surviving Crew of the Ill-Fated
5
David, Jr., prepared by Candano Shipping.
Upon learning of Melquiades’ fate, Florentina immediately went to the office of Candano Shipping in Manila to claim the
6
death benefits of her husband but it refused to pay.

Such refusal prompted Florentina to institute on 31 January 1997, an action seeking indemnity for the death of her
husband against Candano Shipping before the RTC of Manila, Branch 20. She grounded her case on the provision of
7
Article 1711 of the New Civil Code, which imposes upon the employer liability for the death of his employee in the course
of employment, even if the death is caused by a fortuitous event. Accordingly, Florentina prayed that actual, moral and
8
exemplary damages including attorney’s fees, be awarded in her favor.

9
In its Answer, Candano Shipping countered that Florentina had no cause of action against it because the death of
Melquiades was not yet an established fact since he was merely reported missing upon the sinking of M/V David, Jr. The
filing of the case before the RTC therefore was premature for she should have waited until the body of Melquiades could
10
be recovered or until the lapse of time which would render the provision of Article 391 of the New Civil Code on
presumptive death operative.

The RTC resolved the controversy in favor of Florentina and ratiocinated that the provision of Article 391 of the New Civil
Code on presumptive death had become operative since the period of four years had already elapsed since Melquiades
11
was reported missing upon the sinking incident which occurred on 27 March 1996. In a Decision promulgated on 15
February 2001, the RTC ordered Candano Shipping to indemnify Florentina for the death of her husband, in the following
amounts:

WHEREFORE, premises considered, judgment is hereby rendered ordering defendant Candano Shipping Lines, Inc. to
indemnify plaintiff Forentina J. Sugata-on the amount of ₱988,400.00 as actual damages, ₱100,000.00 as moral damages
₱50,000.00 as exemplary damages and 10% of the amount due as and for attorney’s fees plus the cost of suit.

The award for actual damages amounting to ₱988,400.00 was computed by the lower court by adopting the formula in the
12
computation of loss of earning capacity enunciated in the case of Villa Rey Transit, Inc. v. Court of Appeals, wherein the
annual expenses of the deceased are deducted from his gross annual income and multiplied by life expectancy (gross
13
annual income – annual expense x life expectancy).

The Motion for Reconsideration interposed by Candano Shipping was denied by the RTC for lack of cogent reason to
14
disturb or reconsider its decision.

Aggrieved, Candano Shipping elevated the adverse RTC decision to the Court of Appeals, which in turn, affirmed with
modification the judgment of the lower court. The award for actual damages was reduced from ₱998,400.00 to
₱608,400.00, while the awards for moral and exemplary damages including attorney’s fees were deleted for lack of
15
sufficient basis for their allowance.

In arriving at the sum of ₱608,400.00, the appellate court applied the standard prescribed by Article 194 of the Labor
Code of the Philippines, as amended, to wit:

ART. 194. DEATH. – (a) Under such regulations as the Commission may approve, the System shall pay to the primary
beneficiaries upon the death of the covered employee under this Title an amount equivalent to his monthly income benefit,
plus ten percent thereof for each dependent child, but not exceeding five, beginning with the youngest and without
substitution, except as provided for in paragraph (j) of Article 167 hereof; Provided, however, That the monthly income
benefit shall be guaranteed for five years: Provided, further, That if he has no primary beneficiary, the System shall pay to
his secondary beneficiaries the monthly income benefit not to exceed sixty months; Provided, finally, That the minimum
monthly death benefit shall not be less that fifteen thousand pesos.

16
In a Resolution issued on 1 April 2004, the Court of Appeals denied the Motion for Reconsideration filed by Candano
Shipping for failure to offer any justifiable ground to modify, reverse or reconsider the questioned decision.

Hence, this instant Petition for Review on Certiorari filed by Candano Shipping raising the following issues:

WHETHER OR NOT THE FORMULA FOR FIXING THE AMOUNT OF DEATH COMPENSATION IN ARTICLE
194 OF THE LABOR CODE APPLIES IN DETERMINING THE COMPENSATION CLAIMED BY THE HEIR OF
THE DECEASED EMPLOYEE AGAINST THE EMPLOYER UNDER ARTICLE 1711?

WHETHER OR NOT IT IS PERMITTED FOR THE COURT OF APPEALS, ON ORDINARY APPEAL, TO APPLY
ART. 194 OF THE LABOR CODE ON A CLAIM FOR DEATH COMPENSATION OF AN EMPLOYEE AGAINST
THE EMPLOYER FILED AND TRIED BEFORE THE REGULAR COURTS ON THE BASIS OF ARTICLE 1711
OF THE CIVIL CODE AND THE DOCTRINE ENUNCIATED IN THE VILLA REY TRANSIT CASE?

WHETHER OR NOT APPLICATION OF ARTICLE 194 OF THE LABOR CODE ON THE CLAIM FOR DEATH
COMPENSATION OF RESPONDENT OUSTS THE REGULAR COURTS, INCLUDING THE COURT OF
APPEALS OF JURISDICTION OVER THE CASE?

IN THE EVENT THAT THE SUPREME COURT RULES THAT THE COURT OF APPEALS APPLICATION OF
ARTICLE 194 OF THE LABOR CODE IN THIS CASE SHOULD BE SET ASIDE, IS RESPONDENT ENTITLED
TO RECOVER DEATH COMPENSATION FROM PETITIONER IN ACCORDANCE WITH HER THEORY OF
17
THE CASE AS ALLEGED, ARGUED AND TRIED BEFORE THE TRIAL COURT.
Since the factual findings of the RTC and the Court of Appeals that the non-recovery of Melquiades’ body for the period of
four (4) years from 27 March 1996 creates a presumption that he is already dead and that his death was caused by a
fortuitous event, were already settled, and considering that these findings were not controverted by the parties in this
instant petition, we find no compelling reason to disturb the same. Henceforth, we will limit our discussion to the
computation of the amount of indemnification.

In its Petition, Candano Shipping argues that the application of the measure stipulated under Article 194 of the Labor
Code is erroneous since it applies only to death compensation to be paid by the Social Security System to the
beneficiaries of a deceased member, to which proposition Florentina concedes. We agree. The remedy availed by
Sugata-on in filing the claim under the New Civil Code has been validly recognized by the prevailing jurisprudence on the
matter.

18
In the case of Floresca v. Philex Mining Company, we declared that the employees may invoke either the Workmen’s
Compensation Act or the provisions of the Civil Code, subject to the consequence that the choice of one remedy will
exclude the other and that the acceptance of the compensation under the remedy chosen will exclude the other remedy.
The exception is where the claimant who had already been paid under the Workmen’s Compensation Act may still sue for
damages under the Civil Code on the basis of supervening facts or developments occurring after he opted for the first
19
remedy.

Stated differently, save for the recognized exception, an employee cannot pursue both remedies simultaneously but has
the option to proceed by interposing one remedy and waiving his right over the other. As we have explained
in Floresca, this doctrinal rule is rooted on the theory that the basis of the compensation under the Workmen’s
Compensation Act is separate and distinct from the award of damages under the Civil Code, thus:

The rationale in awarding compensation under the Workmen’s Compensation Act differs from that in giving damages
under the Civil Code. The compensation acts are based on a theory of compensation distinct from the existing theories of
damages, payments under the acts being made as compensation and not as damages (99 C.J.S. 53). Compensation is
given to mitigate harshness and insecurity of industrial life for the workman and his family. Hence, an employer is liable
whether negligence exists or not since liability is created by law. Recovery under the Act is not based on any theory of
actionable wrong on the part of the employer (99 D.J.S. 36).

In other words, under compensation acts, the employer is liable to pay compensation benefits for loss of income, as long
as the death, sickness or injury is work-connected or work-aggravated, even if the death or injury is not due to the fault of
the employer (Murillo v. Mendoza, 66 Phil. 689). On the other hand, damages are awarded to one as a vindication of the
wrongful invasion of his rights. It is the indemnity recoverable by a person who has sustained injury either in his person,
property or relative rights, through the act or default of another (25 C.J.S. 452).

The principle underscored in the case of Floresca was further affirmed in the later case of Ysmael Maritime Corporation v.
20
Avelino, wherein we emphasized that once the claimant had already exercised his choice to pursue his right under one
remedy, he is barred from proceeding with an alternative remedy. As eloquently laid down by Chief Justice Marcelo
Fernan:

It is therefore clear that respondents had not only opted to recover under the Act but they had also been duly paid. At the
very least, a sense of fair play would demand that if a person entitled to a choice of remedies made a first election and
accepted the benefits thereof, he should no longer be allowed to exercise the second option. "Having staked his
fortunes on a particular remedy, (he) is precluded from pursuing the alternate course, at least until the prior claim
is rejected by the Compensation Commission."

In the case at bar, Florentina was forced to institute a civil suit for indemnity under the New Civil Code, after Candano
Shipping refused to compensate her husband’s death.

The pertinent provision of the New Civil Code reads:

Article 1711. Owners of enterprises and other employers are obliged to pay compensation for the death of or injuries to
their laborers, workmen, mechanics or other employees, even though the event may have been purely accidental or
entirely due to a fortuitous cause, if the death or personal injury arose out of and in the course of employment. The
employer is also liable for compensation if the employee contracts any illness or diseases caused by such employment or
as the result of the nature of employment. If the mishap was due to the employee’s own notorious negligence, or voluntary
act, or drunkenness, the employer shall not be liable for compensation. When the employee’s lack of due care contributed
to his death or injury, the compensation shall be equitably reduced.

21
In the case of Philippine Air Lines, Inc. v. Court of Appeals, this Court validated the strength of the aforementioned
provision and made the employer liable for the injury suffered by its employee in the course of employment. We thus
ruled:

Having affirmed the gross negligence of PAL in allowing Capt. Delfin Bustamante to fly the plane to Daet on January 8,
1951 whose slow reaction and poor judgment was the cause of the crash-landing of the plane which resulted in private
respondent Samson hitting his head against the windshield and causing him injuries for which reason PAL terminated his
services and employment as pilot after refusing to provide him with the necessary medical treatment of respondent’s
periodic spells, headache and general debility produced from said injuries, We must necessarily affirm likewise the
award of damages or compensation under the provisions of Art. 1711 and Art. 1712 of the New Civil Code. x x x.
 22
As early as the case of Valencia v. Manila Yacht Club, Inc., this Court, speaking through the renowned civilist,
Mr. Justice J.B.L. Reyes, made a pronouncement that Article 1711 of the Civil Code imposes upon the employer
the obligation to compensate the employee for injury or sickness occasioned by his employment, and thus
articulated:

>Appellant’s demand for compensation is predicated on employer’s liability for the sickness of, or injury to, his employee
imposed by Article 1711 of the Civil Code, which reads:

Article 1711. Owners of enterprises and other employers are obliged to pay compensation for the death x x x.

We find the abovequoted provision to be applicable and controlling in this case. The matter of the amount of
compensation and allowable medical expenses should be properly determined by the Municipal Court after the parties are
heard accordingly.

Given that the right of the claimant arose from the contract of employment and the corresponding obligation imposed by
the New Civil Code upon the employer to indemnify the former for death and injury of the employee circumstanced by his
employment, necessarily, the provisions of the same code on damages shall govern the extent of the employer’s liability.

The pertinent provision on damages under the New Civil Code provides:

Art. 2199. Except as provided by law or by stipulation, one is entitled to an adequate compensation only for such
pecuniary loss suffered by him as he has duly proved. Such compensation is referred to as actual or compensatory
damages.

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

In order to give breath to the aforestated provisions on damages of the New Civil Code, they must be transformed into a
more tangible and practical mathematical form, so that the purpose of the law to indemnify the employee or his heirs for
his death or injury occasioned by his employment, as envisioned by the Article 1711 of the same code may be realized.
We deem it best to adopt the formula for loss of earning capacity enunciated in the case of Villa Rey v. Court of
23
Appeals, in computing the amount of actual damages to be awarded to the claimant under Article 1711 of the New Civil
Code.

In Villa Rey, the common carrier was made liable for the death of its passenger on board a passenger bus owned and
operated by Villa Rey Transit, Inc. going to Manila from Lingayen, Pangasinan. While the bus was nearing Sadsaran
Bridge in Barrio Sto. Domingo, Minalin, Pampanga, it frontally hit the rear side of bull cart filled with hay and bamboo
poles. The protruding end of one bamboo pole, about eight feet long, penetrated through the glass windshield of the bus
24
and hit the face of Policarpio Quintos, Jr., who was then sitting at the front row, causing his death.

The obligation of the common carrier to indemnify its passenger or his heirs for injury or death arose from the contract of
25
carriage entered into by the common carrier and the passenger. By the very nature of the obligation which is imbued
26
with public interest, in contract of carriage the carrier assumes the express obligation to transport its passenger to his
destination safely and to observe extraordinary diligence with due regard to all the circumstances, and any injury that
might be suffered by the passenger is right away attributable to the fault or negligence of the carrier and thus gives rise to
27
the right of the passenger or his heirs for indemnity.

In the same breadth, the employer shall be liable for the death or personal injury of its employees in the course of
employment as sanctioned by Article 1711 of the New Civil Code. The liability of the employer for death or personal injury
of his employees arose from the contract of employment entered into between the employer and his employee which is
28
likewise imbued with public interest. Accordingly, when the employee died or was injured in the occasion of employment,
the obligation of the employer for indemnity, automatically attaches. The indemnity may partake of the form of actual,
moral, nominal, temperate, liquidated or exemplary damages, as the case may be depending on the factual milieu of the
29
case and considering the criterion for the award of these damages as outlined by our jurisprudence. In the case at bar,
only the award of actual damages, specifically the award for unearned income is warranted by the circumstances since it
has been duly proven that the cause of death of Melquiades is a fortuitous event for which Candano Shipping cannot be
faulted.

The formula for the computation of unearned income is:

Net Earning Capacity = life expectancy x (gross annual income - reasonable and necessary living expenses).

Life expectancy is determined in accordance with the formula:

2 / 3 x [80 – age of deceased at the time of death]

Jurisprudence provides that the first factor, i.e., life expectancy, shall be computed by applying the formula (2/3 x [80 - age
at death]) adopted in the American Expectancy Table of Mortality or the Actuarial of Combined Experience Table of
30
Mortality.
In the computation of the second factor, it is computed by multiplying the life expectancy by the net earnings of the
deceased, i.e., the total earnings less expenses necessary in the creation of such earnings or income and less living and
31
other incidental expenses. The loss is not equivalent to the entire earnings of the deceased, but only such portion that
he would have used to support his dependents or heirs. Hence, we deduct from his gross earnings the necessary
32
expenses supposed to be used by the deceased for his own needs. The Court explained in Villa Rey:1avvphi1

[(The award of damages for loss of earning capacity is)] concerned with the determination of losses or damages sustained
by the private respondents, as dependents and intestate heirs of the deceased, and that said damages consist, not of the
full amount of his earnings, but of the support they received or would have received from him had he not died in
consequence of negligence of petitioner’s agent. In fixing the amount of that support, we must reckon with the ‘necessary
expenses of his own living’, which should be deducted from his earnings. Thus, it has been consistently held that earning
capacity, as an element of damages to one’s estate for his death by wrongful act is necessarily his net earning capacity or
his capacity to acquire money, ‘less necessary expense for his own living.’ Stated otherwise, the amount recoverable is
not the loss of entire earning, but rather the loss of that portion of the earnings which the beneficiary would have received.
In other words, only net earnings, and not gross earnings are to be considered that is, the total of the earnings less
33
expenses necessary in the creation of such earnings or income and less living and other incidental expenses.

In computing the third factor, the necessary living expense, a survey of more recent jurisprudence shows that this Court
34
consistently pegged the amount at 50% of the gross annual income. We held in Smith Bell Dodwell Shipping Agency
35
Corp. v. Borja, that when there is no showing that the living expenses constituted the smaller percentage of the gross
income, we fix the living expenses at half of the gross income.

Applying the aforestated jurisprudential guidelines in the computation of the amount of award for damages set out in Villa
Rey, we now proceed to determining Melquiades’ life expectancy, thus:

Life expectancy = 2 / 3 x [80 – age of deceased at the time of death]

2 /3 x [80 – 56]

2 / 3 x [24]

Life expectancy = 16

With 16 more years of life expectancy and a monthly income of ₱7,800.00, as evidenced by the pay slips duly presented
before the RTC, Melquiades’ earning capacity is computed as follows:

Net Earning Capacity = life expectancy x (gross annual income - reasonable and necessary living expenses).

= 16 x ( ₱93,600.00 – ₱ 46,800.00)

= 16 x ( ₱ 46,800.00 )

Net Earning Capacity = ₱ 748,800.00

The argument raised by Candano Shipping that the formula for determining the life expectancy under Villa Reycannot be
automatically applied without proof of the basis for the expected length of life of a Filipino does not merit our
consideration. The formula for life expectancy has been repeatedly adopted in our jurisprudence in fixing the amount of
indemnity for the death of a party. This was adopted from the American Expectancy Table of Mortality or the Actuarial of
Combined Experience Table of Mortality which was used by insurers in determining the capital sum to be charged for
36
annuity.

Admittedly, in several cases, this Court reduced the life expectancy multiplier considering the medical history such as
37
when the deceased previously underwent a major surgery or when it was shown that he was treated for chest pains,
38
backache or occasional feeling of tiredness and the fact that the deceased has been consistently engaged in a
39
dangerous and risky activity tending to shorten his life. Failing to prove, however, that any of these circumstances is
attendant in the case at bar, Candano Shipping cannot validly assert that the standard life expectancy factor laid down
in Villa Rey cannot be applied in this case.

Accordingly, Florentina is entitled to recover the amount of ₱748,800.00 as actual damages for the death of her husband.
The awards of moral and exemplary damages are deleted. However, the award of costs of litigation and attorney’s fees
40
are proper.

WHEREFORE, in view of the foregoing, the instant petition is DENIED and the Decision dated 23 May 2003 as well as the
Resolution dated 1 April 2004, rendered by the Court of Appeals in CA-G.R. CV No. 70410, are hereby PARTIALLY
AFFIRMED in so far as it finds petitioner liable to respondent for damages.

Pursuant to the appropriate provisions of the New Civil Code and the prevailing jurisprudence on the matter, petitioner
Candano Shipping Lines, Inc., is ORDERED to pay the amount of ₱748,800.00, as actual damages, plus 10% of the
amount awarded as attorney’s fee plus cost of the suit.

SO ORDERED.
G.R. No. 104235 November 18, 1993

SPOUSES CESAR & SUTHIRA ZALAMEA and LIANA ZALAMEA, petitioners,

vs.
HONORABLE COURT OF APPEALS and TRANSWORLD AIRLINES, INC., respondents.

Sycip, Salazar, Hernandez, Gatmaitan for petitioners.

Quisumbing, Torres & Evangelista for private-respondent.

NOCON, J.:

Disgruntled over TransWorld Airlines, Inc.'s refusal to accommodate them in TWA Flight 007 departing from New York to
Los Angeles on June 6, 1984 despite possession of confirmed tickets, petitioners filed an action for damages before the
Regional Trial Court of Makati, Metro Manila, Branch 145. Advocating petitioner's position, the trial court categorically
ruled that respondent TransWorld Airlines (TWA) breached its contract of carriage with petitioners and that said breach
was "characterized by bad faith." On appeal, however, the appellate court found that while there was a breach of contract
on respondent TWA's part, there was neither fraud nor bad faith because under the Code of Federal Regulations by the
Civil Aeronautics Board of the United States of America it is allowed to overbook flights.

The factual backdrop of the case is as follows:

Petitioners-spouses Cesar C. Zalamea and Suthira Zalamea, and their daughter, Liana Zalamea, purchased three (3)
airline tickets from the Manila agent of respondent TransWorld Airlines, Inc. for a flight to New York to Los Angeles on
June 6, 1984. The tickets of petitioners-spouses were purchased at a discount of 75% while that of their daughter was a
full fare ticket. All three tickets represented confirmed reservations.

While in New York, on June 4, 1984, petitioners received notice of the reconfirmation of their reservations for said flight.
On the appointed date, however, petitioners checked in at 10:00 a.m., an hour earlier than the scheduled flight at 11:00
a.m. but were placed on the wait-list because the number of passengers who had checked in before them had already
taken all the seats available on the flight. Liana Zalamea appeared as the No. 13 on the wait-list while the two other
Zalameas were listed as "No. 34, showing a party of two." Out of the 42 names on the wait list, the first 22 names were
eventually allowed to board the flight to Los Angeles, including petitioner Cesar Zalamea. The two others, on the other
hand, at No. 34, being ranked lower than 22, were not able to fly. As it were, those holding full-fare tickets were given first
priority among the wait-listed passengers. Mr. Zalamea, who was holding the full-fare ticket of his daughter, was allowed
to board the plane; while his wife and daughter, who presented the discounted tickets were denied boarding. According to
Mr. Zalamea, it was only later when he discovered the he was holding his daughter's full-fare ticket.

Even in the next TWA flight to Los Angeles Mrs. Zalamea and her daughter, could not be accommodated because it was
also fully booked. Thus, they were constrained to book in another flight and purchased two tickets from American Airlines
at a cost of Nine Hundred Eighteen ($918.00) Dollars.

Upon their arrival in the Philippines, petitioners filed an action for damages based on breach of contract of air carriage
before the Regional Trial Court of Makati, Metro Manila, Branch 145. As aforesaid, the lower court ruled in favor of
1
petitioners in its decision dated January 9, 1989 the dispositive portion of which states as follows:

WHEREFORE, judgment is hereby rendered ordering the defendant to pay plaintiffs the following
amounts:

(1) US $918.00, or its peso equivalent at the time of payment representing the price of the tickets bought
by Suthira and Liana Zalamea from American Airlines, to enable them to fly to Los Angeles from New
York City;

(2) US $159.49, or its peso equivalent at the time of payment, representing the price of Suthira Zalamea's
ticket for TWA Flight 007;

(3) Eight Thousand Nine Hundred Thirty-Four Pesos and Fifty Centavos (P8,934.50, Philippine Currency,
representing the price of Liana Zalamea's ticket for TWA Flight 007,

(4) Two Hundred Fifty Thousand Pesos (P250,000.00), Philippine Currency, as moral damages for all the
plaintiffs'

(5) One Hundred Thousand Pesos (P100,000.00), Philippine Currency, as and for attorney's fees; and

(6) The costs of suit.

2
SO ORDERED.
On appeal, the respondent Court of Appeals held that moral damages are recoverable in a damage suit predicated upon a
breach of contract of carriage only where there is fraud or bad faith. Since it is a matter of record that overbooking of
flights is a common and accepted practice of airlines in the United States and is specifically allowed under the Code of
Federal Regulations by the Civil Aeronautics Board, no fraud nor bad faith could be imputed on respondent TransWorld
Airlines.

Moreover, while respondent TWA was remiss in not informing petitioners that the flight was overbooked and that even a
person with a confirmed reservation may be denied accommodation on an overbooked flight, nevertheless it ruled that
such omission or negligence cannot under the circumstances be considered to be so gross as to amount to bad faith.

Finally, it also held that there was no bad faith in placing petitioners in the wait-list along with forty-eight (48) other
passengers where full-fare first class tickets were given priority over discounted tickets.

3
The dispositive portion of the decision of respondent Court of Appeals dated October 25, 1991 states as follows:

WHEREFORE, in view of all the foregoing, the decision under review is hereby MODIFIED in that the
award of moral and exemplary damages to the plaintiffs is eliminated, and the defendant-appellant is
hereby ordered to pay the plaintiff the following amounts:

(1) US$159.49, or its peso equivalent at the time of the payment, representing the price of Suthira
Zalamea's ticket for TWA Flight 007;

(2) US$159.49, or its peso equivalent at the time of the payment, representing the price of Cesar
Zalamea's ticket for TWA Flight 007;

(3) P50,000.00 as and for attorney's fees.

(4) The costs of suit.

4
SO ORDERED.

Not satisfied with the decision, petitioners raised the case on petition for review on certiorari and alleged the following
errors committed by the respondent Court of Appeals, to wit:

I.

. . . IN HOLDING THAT THERE WAS NO FRAUD OR BAD FAITH ON THE PART OF RESPONDENT
TWA BECAUSE IT HAS A RIGHT TO OVERBOOK FLIGHTS.

II.

. . . IN ELIMINATING THE AWARD OF EXEMPLARY DAMAGES.

III.

. . . IN NOT ORDERING THE REFUND OF LIANA ZALAMEA'S TWA TICKET AND PAYMENT FOR THE
AMERICAN AIRLINES
5
TICKETS.

That there was fraud or bad faith on the part of respondent airline when it did not allow petitioners to board their flight for
Los Angeles in spite of confirmed tickets cannot be disputed. The U.S. law or regulation allegedly authorizing overbooking
has never been proved. Foreign laws do not prove themselves nor can the courts take judicial notice of them. Like any
6
other fact, they must be alleged and proved. Written law may be evidenced by an official publication thereof or by a copy
attested by the officer having the legal custody of the record, or by his deputy, and accompanied with a certificate that
such officer has custody. The certificate may be made by a secretary of an embassy or legation, consul general, consul,
vice-consul, or consular agent or by any officer in the foreign service of the Philippines stationed in the foreign country in
7
which the record is kept, and authenticated by the seal of his office.

Respondent TWA relied solely on the statement of Ms. Gwendolyn Lather, its customer service agent, in her deposition
dated January 27, 1986 that the Code of Federal Regulations of the Civil Aeronautics Board allows overbooking. Aside
from said statement, no official publication of said code was presented as evidence. Thus, respondent court's finding that
overbooking is specifically allowed by the US Code of Federal Regulations has no basis in fact.

Even if the claimed U.S. Code of Federal Regulations does exist, the same is not applicable to the case at bar in
accordance with the principle of lex loci contractus which require that the law of the place where the airline ticket was
issued should be applied by the court where the passengers are residents and nationals of the forum and the ticket is
8
issued in such State by the defendant airline. Since the tickets were sold and issued in the Philippines, the applicable law
in this case would be Philippine law.
Existing jurisprudence explicitly states that overbooking amounts to bad faith, entitling the passengers concerned to an
9
award of moral damages. In Alitalia Airways v. Court of Appeals, where passengers with confirmed bookings were
refused carriage on the last minute, this Court held that when an airline issues a ticket to a passenger confirmed on a
particular flight, on a certain date, a contract of carriage arises, and the passenger has every right to expect that he would
fly on that flight and on that date. If he does not, then the carrier opens itself to a suit for breach of contract of carriage.
Where an airline had deliberately overbooked, it took the risk of having to deprive some passengers of their seats in case
all of them would show up for the check in. For the indignity and inconvenience of being refused a confirmed seat on the
last minute, said passenger is entitled to an award of moral damages.

10
Similarly, in Korean Airlines Co., Ltd. v. Court of Appeals, where private respondent was not allowed to board the plane
because her seat had already been given to another passenger even before the allowable period for passengers to check
in had lapsed despite the fact that she had a confirmed ticket and she had arrived on time, this Court held that petitioner
airline acted in bad faith in violating private respondent's rights under their contract of carriage and is therefore liable for
the injuries she has sustained as a result.

In fact, existing jurisprudence abounds with rulings where the breach of contract of carriage amounts to bad faith. In Pan
11
American World Airways, Inc. v. Intermediate Appellate Court, where a would-be passenger had the necessary ticket,
baggage claim and clearance from immigration all clearly and unmistakably showing that she was, in fact, included in the
passenger manifest of said flight, and yet was denied accommodation in said flight, this Court did not hesitate to affirm the
lower court's finding awarding her damages.

A contract to transport passengers is quite different in kind and degree from any other contractual relation. So ruled this
12
Court in Zulueta v. Pan American World Airways, Inc. This is so, for a contract of carriage generates a relation attended
with public duty — a duty to provide public service and convenience to its passengers which must be paramount to self-
interest or enrichment. Thus, it was also held that the switch of planes from Lockheed 1011 to a smaller Boeing 707
because there were only 138 confirmed economy class passengers who could very well be accommodated in the smaller
planes, thereby sacrificing the comfort of its first class passengers for the sake of economy, amounts to bad faith. Such
inattention and lack of care for the interest of its passengers who are entitled to its utmost consideration entitles the
13
passenger to an award of moral damages.

Even on the assumption that overbooking is allowed, respondent TWA is still guilty of bad faith in not informing its
passengers beforehand that it could breach the contract of carriage even if they have confirmed tickets if there was
overbooking. Respondent TWA should have incorporated stipulations on overbooking on the tickets issued or to properly
inform its passengers about these policies so that the latter would be prepared for such eventuality or would have the
choice to ride with another airline.

Respondent TWA contends that Exhibit I, the detached flight coupon upon which were written the name of the passenger
and the points of origin and destination, contained such a notice. An examination of Exhibit I does not bear this out. At any
rate, said exhibit was not offered for the purpose of showing the existence of a notice of overbooking but to show that
Exhibit I was used for flight 007 in first class of June 11, 1984 from New York to Los Angeles.

Moreover, respondent TWA was also guilty of not informing its passengers of its alleged policy of giving less priority to
discounted tickets. While the petitioners had checked in at the same time, and held confirmed tickets, yet, only one of
them was allowed to board the plane ten minutes before departure time because the full-fare ticket he was holding was
given priority over discounted tickets. The other two petitioners were left behind.

It is respondent TWA's position that the practice of overbooking and the airline system of boarding priorities are
reasonable policies, which when implemented do not amount to bad faith. But the issue raised in this case is not the
reasonableness of said policies but whether or not said policies were incorporated or deemed written on petitioners'
contracts of carriage. Respondent TWA failed to show that there are provisions to that effect. Neither did it present any
argument of substance to show that petitioners were duly apprised of the overbooked condition of the flight or that there is
a hierarchy of boarding priorities in booking passengers. It is evident that petitioners had the right to rely upon the
assurance of respondent TWA, thru its agent in Manila, then in New York, that their tickets represented confirmed seats
without any qualification. The failure of respondent TWA to so inform them when it could easily have done so thereby
enabling respondent to hold on to them as passengers up to the last minute amounts to bad faith. Evidently, respondent
TWA placed its self-interest over the rights of petitioners under their contracts of carriage. Such conscious disregard of
petitioners' rights makes respondent TWA liable for moral damages. To deter breach of contracts by respondent TWA in
similar fashion in the future, we adjudge respondent TWA liable for exemplary damages, as well.

Petitioners also assail the respondent court's decision not to require the refund of Liana Zalamea's ticket because the
ticket was used by her father. On this score, we uphold the respondent court. Petitioners had not shown with certainty that
the act of respondent TWA in allowing Mr. Zalamea to use the ticket of her daughter was due to inadvertence or
deliberate act. Petitioners had also failed to establish that they did not accede to said agreement. The logical conclusion,
therefore, is that both petitioners and respondent TWA agreed, albeit impliedly, to the course of action taken.

The respondent court erred, however, in not ordering the refund of the American Airlines tickets purchased and used by
petitioners Suthira and Liana. The evidence shows that petitioners Suthira and Liana were constrained to take the
American Airlines flight to Los Angeles not because they "opted not to use their TWA tickets on another TWA flight" but
14
because respondent TWA could not accommodate them either on the next TWA flight which was also fully booked. The
purchase of the American Airlines tickets by petitioners Suthira and Liana was the consequence of respondent TWA's
unjustifiable breach of its contracts of carriage with petitioners. In accordance with Article 2201, New Civil Code,
respondent TWA should, therefore, be responsible for all damages which may be reasonably attributed to the non-
15
performance of its obligation. In the previously cited case of Alitalia Airways v. Court of Appeals, this Court explicitly
held that a passenger is entitled to be reimbursed for the cost of the tickets he had to buy for a flight to another airline.
Thus, instead of simply being refunded for the cost of the unused TWA tickets, petitioners should be awarded the actual
cost of their flight from New York to Los Angeles. On this score, we differ from the trial court's ruling which ordered not
only the reimbursement of the American Airlines tickets but also the refund of the unused TWA tickets. To require both
prestations would have enabled petitioners to fly from New York to Los Angeles without any fare being paid.

The award to petitioners of attorney's fees is also justified under Article 2208(2) of the Civil Code which allows recovery
when the defendant's act or omission has compelled plaintiff to litigate or to incur expenses to protect his interest.
However, the award for moral damages and exemplary damages by the trial court is excessive in the light of the fact that
only Suthira and Liana Zalamea were actually "bumped off." An award of P50,000.00 moral damages and another
P50,000.00 exemplary damages would suffice under the circumstances obtaining in the instant case.

WHEREFORE, the petition is hereby GRANTED and the decision of the respondent Court of Appeals is hereby
MODIFIED to the extent of adjudging respondent TransWorld Airlines to pay damages to petitioners in the following
amounts, to wit:

(1) US$918.00 or its peso equivalent at the time of payment representing the price of the tickets bought by Suthira and
Liana Zalamea from American Airlines, to enable them to fly to Los Angeles from New York City;

(2) P50,000.00 as moral damages;

(3) P50,000.00 as exemplary damages;

(4) P50,000.00 as attorney's fees; and

(5) Costs of suit.

SO ORDERED.

G.R. No. 123498 November 23, 2007

BPI FAMILY BANK, Petitioner,

vs.
AMADO FRANCO and COURT OF APPEALS, Respondents.

DECISION

NACHURA, J.:

Banks are exhorted to treat the accounts of their depositors with meticulous care and utmost fidelity. We reiterate this
exhortation in the case at bench.

1
Before us is a Petition for Review on Certiorari seeking the reversal of the Court of Appeals (CA) Decision in CA-G.R. CV
2
No. 43424 which affirmed with modification the judgment of the Regional Trial Court, Branch 55, Manila (Manila RTC), in
Civil Case No. 90-53295.

This case has its genesis in an ostensible fraud perpetrated on the petitioner BPI Family Bank (BPI-FB) allegedly by
3
respondent Amado Franco (Franco) in conspiracy with other individuals, some of whom opened and maintained separate
accounts with BPI-FB, San Francisco del Monte (SFDM) branch, in a series of transactions.

On August 15, 1989, Tevesteco Arrastre-Stevedoring Co., Inc. (Tevesteco) opened a savings and current account with
BPI-FB. Soon thereafter, or on August 25, 1989, First Metro Investment Corporation (FMIC) also opened a time deposit
account with the same branch of BPI-FB with a deposit of ₱100,000,000.00, to mature one year thence.

4 5 6
Subsequently, on August 31, 1989, Franco opened three accounts, namely, a current, savings, and time deposit, with
BPI-FB. The current and savings accounts were respectively funded with an initial deposit of ₱500,000.00 each, while the
time deposit account had ₱1,000,000.00 with a maturity date of August 31, 1990. The total amount of ₱2,000,000.00 used
to open these accounts is traceable to a check issued by Tevesteco allegedly in consideration of Franco’s introduction of
7
Eladio Teves, who was looking for a conduit bank to facilitate Tevesteco’s business transactions, to Jaime Sebastian,
who was then BPI-FB SFDM’s Branch Manager. In turn, the funding for the ₱2,000,000.00 check was part of the
₱80,000,000.00 debited by BPI-FB from FMIC’s time deposit account and credited to Tevesteco’s current account
pursuant to an Authority to Debit purportedly signed by FMIC’s officers.

8
It appears, however, that the signatures of FMIC’s officers on the Authority to Debit were forged. On September 4, 1989,
9
Antonio Ong, upon being shown the Authority to Debit, personally declared his signature therein to be a forgery.
Unfortunately, Tevesteco had already effected several withdrawals from its current account (to which had been credited
the ₱80,000,000.00 covered by the forged Authority to Debit) amounting to ₱37,455,410.54, including the ₱2,000,000.00
paid to Franco.
On September 8, 1989, impelled by the need to protect its interests in light of FMIC’s forgery claim, BPI-FB, thru its Senior
10
Vice-President, Severino Coronacion, instructed Jesus Arangorin to debit Franco’s savings and current accounts for the
11
amounts remaining therein. However, Franco’s time deposit account could not be debited due to the capacity limitations
12
of BPI-FB’s computer.

13
In the meantime, two checks drawn by Franco against his BPI-FB current account were dishonored upon presentment
for payment, and stamped with a notation "account under garnishment." Apparently, Franco’s current account was
garnished by virtue of an Order of Attachment issued by the Regional Trial Court of Makati (Makati RTC) in Civil Case No.
14
89-4996 (Makati Case), which had been filed by BPI-FB against Franco et al., to recover the ₱37,455,410.54
representing Tevesteco’s total withdrawals from its account.

Notably, the dishonored checks were issued by Franco and presented for payment at BPI-FB prior to Franco’s receipt of
15
notice that his accounts were under garnishment. In fact, at the time the Notice of Garnishment dated September 27,
1989 was served on BPI-FB, Franco had yet to be impleaded in the Makati case where the writ of attachment was issued.

It was only on May 15, 1990, through the service of a copy of the Second Amended Complaint in Civil Case No. 89-4996,
16
that Franco was impleaded in the Makati case. Immediately, upon receipt of such copy, Franco filed a Motion to
Discharge Attachment which the Makati RTC granted on May 16, 1990. The Order Lifting the Order of Attachment was
served on BPI-FB on even date, with Franco demanding the release to him of the funds in his savings and current
accounts. Jesus Arangorin, BPI-FB’s new manager, could not forthwith comply with the demand as the funds, as
previously stated, had already been debited because of FMIC’s forgery claim. As such, BPI-FB’s computer at the SFDM
Branch indicated that the current account record was "not on file."

With respect to Franco’s savings account, it appears that Franco agreed to an arrangement, as a favor to Sebastian,
whereby ₱400,000.00 from his savings account was temporarily transferred to Domingo Quiaoit’s savings account,
subject to its immediate return upon issuance of a certificate of deposit which Quiaoit needed in connection with his visa
application at the Taiwan Embassy. As part of the arrangement, Sebastian retained custody of Quiaoit’s savings account
passbook to ensure that no withdrawal would be effected therefrom, and to preserve Franco’s deposits.

On May 17, 1990, Franco pre-terminated his time deposit account. BPI-FB deducted the amount of ₱63,189.00 from the
remaining balance of the time deposit account representing advance interest paid to him.

These transactions spawned a number of cases, some of which we had already resolved.

17
FMIC filed a complaint against BPI-FB for the recovery of the amount of ₱80,000,000.00 debited from its account. The
18
case eventually reached this Court, and in BPI Family Savings Bank, Inc. v. First Metro Investment Corporation, we
upheld the finding of the courts below that BPI-FB failed to exercise the degree of diligence required by the nature of its
obligation to treat the accounts of its depositors with meticulous care. Thus, BPI-FB was found liable to FMIC for the
debited amount in its time deposit. It was ordered to pay ₱65,332,321.99 plus interest at 17% per annum from August 29,
1989 until fully restored. In turn, the 17% shall itself earn interest at 12% from October 4, 1989 until fully paid.

19
In a related case, Edgardo Buenaventura, Myrna Lizardo and Yolanda Tica (Buenaventura, et al.), recipients of a
₱500,000.00 check proceeding from the ₱80,000,000.00 mistakenly credited to Tevesteco, likewise filed suit.
20
Buenaventura et al., as in the case of Franco, were also prevented from effecting withdrawals from their current account
with BPI-FB, Bonifacio Market, Edsa, Caloocan City Branch. Likewise, when the case was elevated to this Court docketed
21
as BPI Family Bank v. Buenaventura, we ruled that BPI-FB had no right to freeze Buenaventura, et al.’s accounts and
adjudged BPI-FB liable therefor, in addition to damages.

Meanwhile, BPI-FB filed separate civil and criminal cases against those believed to be the perpetrators of the multi-million
22
peso scam. In the criminal case, Franco, along with the other accused, except for Manuel Bienvenida who was still at
large, were acquitted of the crime of Estafa as defined and penalized under Article 351, par. 2(a) of the Revised Penal
23 24
Code. However, the civil case remains under litigation and the respective rights and liabilities of the parties have yet to
be adjudicated.

Consequently, in light of BPI-FB’s refusal to heed Franco’s demands to unfreeze his accounts and release his deposits
therein, the latter filed on June 4, 1990 with the Manila RTC the subject suit. In his complaint, Franco prayed for the
25
following reliefs: (1) the interest on the remaining balance of his current account which was eventually released to him
26 27
on October 31, 1991; (2) the balance on his savings account, plus interest thereon; (3) the advance interest paid to
him which had been deducted when he pre-terminated his time deposit account; and (4) the payment of actual, moral and
exemplary damages, as well as attorney’s fees.

BPI-FB traversed this complaint, insisting that it was correct in freezing the accounts of Franco and refusing to release his
deposits, claiming that it had a better right to the amounts which consisted of part of the money allegedly fraudulently
withdrawn from it by Tevesteco and ending up in Franco’s accounts. BPI-FB asseverated that the claimed consideration
of ₱2,000,000.00 for the introduction facilitated by Franco between George Daantos and Eladio Teves, on the one hand,
and Jaime Sebastian, on the other, spoke volumes of Franco’s participation in the fraudulent transaction.

On August 4, 1993, the Manila RTC rendered judgment, the dispositive portion of which reads as follows:

WHEREFORE, in view of all the foregoing, judgment is hereby rendered in favor of [Franco] and against [BPI-FB],
ordering the latter to pay to the former the following sums:
 1. ₱76,500.00 representing the legal rate of interest on the amount of ₱450,000.00 from May 18, 1990 to October
31, 1991;

2. ₱498,973.23 representing the balance on [Franco’s] savings account as of May 18, 1990, together with the
interest thereon in accordance with the bank’s guidelines on the payment therefor;

3. ₱30,000.00 by way of attorney’s fees; and

4. ₱10,000.00 as nominal damages.

The counterclaim of the defendant is DISMISSED for lack of factual and legal anchor.

Costs against [BPI-FB].

28
SO ORDERED.

Unsatisfied with the decision, both parties filed their respective appeals before the CA. Franco confined his appeal to the
Manila RTC’s denial of his claim for moral and exemplary damages, and the diminutive award of attorney’s fees. In
affirming with modification the lower court’s decision, the appellate court decreed, to wit:

WHEREFORE, foregoing considered, the appealed decision is hereby AFFIRMED with modification ordering [BPI-FB] to
pay [Franco] ₱63,189.00 representing the interest deducted from the time deposit of plaintiff-appellant. ₱200,000.00 as
moral damages and ₱100,000.00 as exemplary damages, deleting the award of nominal damages (in view of the award of
moral and exemplary damages) and increasing the award of attorney’s fees from ₱30,000.00 to ₱75,000.00.

Cost against [BPI-FB].

29
SO ORDERED.

In this recourse, BPI-FB ascribes error to the CA when it ruled that: (1) Franco had a better right to the deposits in the
subject accounts which are part of the proceeds of a forged Authority to Debit; (2) Franco is entitled to interest on his
current account; (3) Franco can recover the ₱400,000.00 deposit in Quiaoit’s savings account; (4) the dishonor of
Franco’s checks was not legally in order; (5) BPI-FB is liable for interest on Franco’s time deposit, and for moral and
exemplary damages; and (6) BPI-FB’s counter-claim has no factual and legal anchor.

The petition is partly meritorious.

We are in full accord with the common ruling of the lower courts that BPI-FB cannot unilaterally freeze Franco’s accounts
and preclude him from withdrawing his deposits. However, contrary to the appellate court’s ruling, we hold that Franco is
not entitled to unearned interest on the time deposit as well as to moral and exemplary damages.

First. On the issue of who has a better right to the deposits in Franco’s accounts, BPI-FB urges us that the legal
consequence of FMIC’s forgery claim is that the money transferred by BPI-FB to Tevesteco is its own, and considering
that it was able to recover possession of the same when the money was redeposited by Franco, it had the right to set up
its ownership thereon and freeze Franco’s accounts.

BPI-FB contends that its position is not unlike that of an owner of personal property who regains possession after it is
stolen, and to illustrate this point, BPI-FB gives the following example: where X’s television set is stolen by Y who
thereafter sells it to Z, and where Z unwittingly entrusts possession of the TV set to X, the latter would have the right to
keep possession of the property and preclude Z from recovering possession thereof. To bolster its position, BPI-FB cites
Article 559 of the Civil Code, which provides:

Article 559. The possession of movable property acquired in good faith is equivalent to a title. Nevertheless, one who has
lost any movable or has been unlawfully deprived thereof, may recover it from the person in possession of the same.

If the possessor of a movable lost or of which the owner has been unlawfully deprived, has acquired it in good faith at a
public sale, the owner cannot obtain its return without reimbursing the price paid therefor.

BPI-FB’s argument is unsound. To begin with, the movable property mentioned in Article 559 of the Civil Code pertains to
30
a specific or determinate thing. A determinate or specific thing is one that is individualized and can be identified or
31
distinguished from others of the same kind.

In this case, the deposit in Franco’s accounts consists of money which, albeit characterized as a movable, is generic and
32
fungible. The quality of being fungible depends upon the possibility of the property, because of its nature or the will of
33
the parties, being substituted by others of the same kind, not having a distinct individuality.

Significantly, while Article 559 permits an owner who has lost or has been unlawfully deprived of a movable to recover the
exact same thing from the current possessor, BPI-FB simply claims ownership of the equivalent amount of money, i.e.,
the value thereof, which it had mistakenly debited from FMIC’s account and credited to Tevesteco’s, and subsequently
traced to Franco’s account. In fact, this is what BPI-FB did in filing the Makati Case against Franco, et al. It staked its
claim on the money itself which passed from one account to another, commencing with the forged Authority to Debit.

34
It bears emphasizing that money bears no earmarks of peculiar ownership, and this characteristic is all the more
manifest in the instant case which involves money in a banking transaction gone awry. Its primary function is to pass from
35
hand to hand as a medium of exchange, without other evidence of its title. Money, which had passed through various
transactions in the general course of banking business, even if of traceable origin, is no exception.

Thus, inasmuch as what is involved is not a specific or determinate personal property, BPI-FB’s illustrative example,
ostensibly based on Article 559, is inapplicable to the instant case.

There is no doubt that BPI-FB owns the deposited monies in the accounts of Franco, but not as a legal consequence of its
unauthorized transfer of FMIC’s deposits to Tevesteco’s account. BPI-FB conveniently forgets that the deposit of money
36
in banks is governed by the Civil Code provisions on simple loan or mutuum. As there is a debtor-creditor relationship
between a bank and its depositor, BPI-FB ultimately acquired ownership of Franco’s deposits, but such ownership is
37
coupled with a corresponding obligation to pay him an equal amount on demand. Although BPI-FB owns the deposits in
Franco’s accounts, it cannot prevent him from demanding payment of BPI-FB’s obligation by drawing checks against his
current account, or asking for the release of the funds in his savings account. Thus, when Franco issued checks drawn
against his current account, he had every right as creditor to expect that those checks would be honored by BPI-FB as
debtor.

More importantly, BPI-FB does not have a unilateral right to freeze the accounts of Franco based on its mere suspicion
that the funds therein were proceeds of the multi-million peso scam Franco was allegedly involved in. To grant BPI-FB, or
any bank for that matter, the right to take whatever action it pleases on deposits which it supposes are derived from shady
transactions, would open the floodgates of public distrust in the banking industry.

38
Our pronouncement in Simex International (Manila), Inc. v. Court of Appeals continues to resonate, thus:

The banking system is an indispensable institution in the modern world and plays a vital role in the economic life of every
civilized nation. Whether as mere passive entities for the safekeeping and saving of money or as active instruments of
business and commerce, banks have become an ubiquitous presence among the people, who have come to regard them
with respect and even gratitude and, most of all, confidence. Thus, even the humble wage-earner has not hesitated to
entrust his life’s savings to the bank of his choice, knowing that they will be safe in its custody and will even earn some
interest for him. The ordinary person, with equal faith, usually maintains a modest checking account for security and
convenience in the settling of his monthly bills and the payment of ordinary expenses. x x x.

In every case, the depositor expects the bank to treat his account with the utmost fidelity, whether such account consists
only of a few hundred pesos or of millions. The bank must record every single transaction accurately, down to the last
centavo, and as promptly as possible. This has to be done if the account is to reflect at any given time the amount of
money the depositor can dispose of as he sees fit, confident that the bank will deliver it as and to whomever directs. A
blunder on the part of the bank, such as the dishonor of the check without good reason, can cause the depositor not a
little embarrassment if not also financial loss and perhaps even civil and criminal litigation.

The point is that as a business affected with public interest and because of the nature of its functions, the bank is under
obligation to treat the accounts of its depositors with meticulous care, always having in mind the fiduciary nature of their
relationship. x x x.

Ineluctably, BPI-FB, as the trustee in the fiduciary relationship, is duty bound to know the signatures of its customers.
Having failed to detect the forgery in the Authority to Debit and in the process inadvertently facilitate the FMIC-Tevesteco
transfer, BPI-FB cannot now shift liability thereon to Franco and the other payees of checks issued by Tevesteco, or
prevent withdrawals from their respective accounts without the appropriate court writ or a favorable final judgment.

Further, it boggles the mind why BPI-FB, even without delving into the authenticity of the signature in the Authority to
Debit, effected the transfer of ₱80,000,000.00 from FMIC’s to Tevesteco’s account, when FMIC’s account was a time
deposit and it had already paid advance interest to FMIC. Considering that there is as yet no indubitable evidence
establishing Franco’s participation in the forgery, he remains an innocent party. As between him and BPI-FB, the latter,
which made possible the present predicament, must bear the resulting loss or inconvenience.

Second. With respect to its liability for interest on Franco’s current account, BPI-FB argues that its non-compliance with
the Makati RTC’s Order Lifting the Order of Attachment and the legal consequences thereof, is a matter that ought to be
taken up in that court.

The argument is tenuous. We agree with the succinct holding of the appellate court in this respect. The Manila RTC’s
order to pay interests on Franco’s current account arose from BPI-FB’s unjustified refusal to comply with its obligation to
pay Franco pursuant to their contract of mutuum. In other words, from the time BPI-FB refused Franco’s demand for the
release of the deposits in his current account, specifically, from May 17, 1990, interest at the rate of 12% began to accrue
39
thereon.

Undeniably, the Makati RTC is vested with the authority to determine the legal consequences of BPI-FB’s non-compliance
with the Order Lifting the Order of Attachment. However, such authority does not preclude the Manila RTC from ruling on
BPI-FB’s liability to Franco for payment of interest based on its continued and unjustified refusal to perform a contractual
obligation upon demand. After all, this was the core issue raised by Franco in his complaint before the Manila RTC.
Third. As to the award to Franco of the deposits in Quiaoit’s account, we find no reason to depart from the factual findings
of both the Manila RTC and the CA.

Noteworthy is the fact that Quiaoit himself testified that the deposits in his account are actually owned by Franco who
simply accommodated Jaime Sebastian’s request to temporarily transfer ₱400,000.00 from Franco’s savings account to
40
Quiaoit’s account. His testimony cannot be characterized as hearsay as the records reveal that he had personal
41
knowledge of the arrangement made between Franco, Sebastian and himself.

BPI-FB makes capital of Franco’s belated allegation relative to this particular arrangement. It insists that the transaction
with Quiaoit was not specifically alleged in Franco’s complaint before the Manila RTC. However, it appears that BPI-FB
had impliedly consented to the trial of this issue given its extensive cross-examination of Quiaoit.

Section 5, Rule 10 of the Rules of Court provides:

Section 5. Amendment to conform to or authorize presentation of evidence.— When issues not raised by the pleadings
are tried with the express or implied consent of the parties, they shall be treated in all respects as if they had been raised
in the pleadings. Such amendment of the pleadings as may be necessary to cause them to conform to the evidence and
to raise these issues may be made upon motion of any party at any time, even after judgment; but failure to amend does
not affect the result of the trial of these issues. If evidence is objected to at the trial on the ground that it is now within the
issues made by the pleadings, the court may allow the pleadings to be amended and shall do so with liberality if the
presentation of the merits of the action and the ends of substantial justice will be subserved thereby. The court may grant
a continuance to enable the amendment to be made. (Emphasis supplied)

In all, BPI-FB’s argument that this case is not the right forum for Franco to recover the ₱400,000.00 begs the issue. To
reiterate, Quiaoit, testifying during the trial, unequivocally disclaimed ownership of the funds in his account, and pointed to
Franco as the actual owner thereof. Clearly, Franco’s action for the recovery of his deposits appropriately covers the
deposits in Quiaoit’s account.

Fourth. Notwithstanding all the foregoing, BPI-FB continues to insist that the dishonor of Franco’s checks respectively
dated September 11 and 18, 1989 was legally in order in view of the Makati RTC’s supplemental writ of attachment issued
on September 14, 1989. It posits that as the party that applied for the writ of attachment before the Makati RTC, it need
not be served with the Notice of Garnishment before it could place Franco’s accounts under garnishment.

The argument is specious. In this argument, we perceive BPI-FB’s clever but transparent ploy to circumvent Section
42
4, Rule 13 of the Rules of Court. It should be noted that the strict requirement on service of court papers upon the
parties affected is designed to comply with the elementary requisites of due process. Franco was entitled, as a matter of
right, to notice, if the requirements of due process are to be observed. Yet, he received a copy of the Notice of
Garnishment only on September 27, 1989, several days after the two checks he issued were dishonored by BPI-FB on
September 20 and 21, 1989. Verily, it was premature for BPI-FB to freeze Franco’s accounts without even awaiting
service of the Makati RTC’s Notice of Garnishment on Franco.

Additionally, it should be remembered that the enforcement of a writ of attachment cannot be made without including in
the main suit the owner of the property attached by virtue thereof. Section 5, Rule 13 of the Rules of Court specifically
provides that "no levy or attachment pursuant to the writ issued x x x shall be enforced unless it is preceded, or
contemporaneously accompanied, by service of summons, together with a copy of the complaint, the application for
attachment, on the defendant within the Philippines."

Franco was impleaded as party-defendant only on May 15, 1990. The Makati RTC had yet to acquire jurisdiction over the
43
person of Franco when BPI-FB garnished his accounts. Effectively, therefore, the Makati RTC had no authority yet to
bind the deposits of Franco through the writ of attachment, and consequently, there was no legal basis for BPI-FB to
dishonor the checks issued by Franco.

Fifth. Anent the CA’s finding that BPI-FB was in bad faith and as such liable for the advance interest it deducted from
Franco’s time deposit account, and for moral as well as exemplary damages, we find it proper to reinstate the ruling of the
trial court, and allow only the recovery of nominal damages in the amount of ₱10,000.00. However, we retain the CA’s
award of ₱75,000.00 as attorney’s fees.

In granting Franco’s prayer for interest on his time deposit account and for moral and exemplary damages, the CA
attributed bad faith to BPI-FB because it (1) completely disregarded its obligation to Franco; (2) misleadingly claimed that
Franco’s deposits were under garnishment; (3) misrepresented that Franco’s current account was not on file; and (4)
refused to return the ₱400,000.00 despite the fact that the ostensible owner, Quiaoit, wanted the amount returned to
Franco.

In this regard, we are guided by Article 2201 of the Civil Code which provides:

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

In case of fraud, bad faith, malice or wanton attitude, the obligor shall be responsible for all damages which may be
reasonably attributed to the non-performance of the obligation. (Emphasis supplied.)
We find, as the trial court did, that BPI-FB acted out of the impetus of self-protection and not out of malevolence or ill will.
BPI-FB was not in the corrupt state of mind contemplated in Article 2201 and should not be held liable for all damages
now being imputed to it for its breach of obligation. For the same reason, it is not liable for the unearned interest on the
time deposit.

Bad faith does not simply connote bad judgment or negligence; it imports a dishonest purpose or some moral obliquity
44
and conscious doing of wrong; it partakes of the nature of fraud. We have held that it is a breach of a known duty
45
through some motive of interest or ill will. In the instant case, we cannot attribute to BPI-FB fraud or even a motive of
self-enrichment. As the trial court found, there was no denial whatsoever by BPI-FB of the existence of the accounts. The
computer-generated document which indicated that the current account was "not on file" resulted from the prior debit by
BPI-FB of the deposits. The remedy of freezing the account, or the garnishment, or even the outright refusal to honor any
transaction thereon was resorted to solely for the purpose of holding on to the funds as a security for its intended court
46
action, and with no other goal but to ensure the integrity of the accounts.

47
We have had occasion to hold that in the absence of fraud or bad faith, moral damages cannot be awarded; and that the
adverse result of an action does not per se make the action wrongful, or the party liable for it. One may err, but error alone
48
is not a ground for granting such damages.

An award of moral damages contemplates the existence of the following requisites: (1) there must be an injury clearly
sustained by the claimant, whether physical, mental or psychological; (2) there must be a culpable act or omission
factually established; (3) the wrongful act or omission of the defendant is the proximate cause of the injury sustained by
49
the claimant; and (4) the award for damages is predicated on any of the cases stated in Article 2219 of the Civil Code.

50
Franco could not point to, or identify any particular circumstance in Article 2219 of the Civil Code, upon which to base
his claim for moral damages.1âwphi1

Thus, not having acted in bad faith, BPI-FB cannot be held liable for moral damages under Article 2220 of the Civil Code
51
for breach of contract.

We also deny the claim for exemplary damages. Franco should show that he is entitled to moral, temperate, or
compensatory damages before the court may even consider the question of whether exemplary damages should be
52
awarded to him. As there is no basis for the award of moral damages, neither can exemplary damages be granted.

53
While it is a sound policy not to set a premium on the right to litigate, we, however, find that Franco is entitled to
reasonable attorney’s fees for having been compelled to go to court in order to assert his right. Thus, we affirm the CA’s
grant of ₱75,000.00 as attorney’s fees.

54
Attorney’s fees may be awarded when a party is compelled to litigate or incur expenses to protect his interest, or when
55
the court deems it just and equitable. In the case at bench, BPI-FB refused to unfreeze the deposits of Franco despite
the Makati RTC’s Order Lifting the Order of Attachment and Quiaoit’s unwavering assertion that the ₱400,000.00 was part
of Franco’s savings account. This refusal constrained Franco to incur expenses and litigate for almost two (2) decades in
order to protect his interests and recover his deposits. Therefore, this Court deems it just and equitable to grant Franco
₱75,000.00 as attorney’s fees. The award is reasonable in view of the complexity of the issues and the time it has taken
56
for this case to be resolved.

Sixth. As for the dismissal of BPI-FB’s counter-claim, we uphold the Manila RTC’s ruling, as affirmed by the CA, that BPI-
FB is not entitled to recover ₱3,800,000.00 as actual damages. BPI-FB’s alleged loss of profit as a result of Franco’s suit
is, as already pointed out, of its own making. Accordingly, the denial of its counter-claim is in order.

WHEREFORE, the petition is PARTIALLY GRANTED. The Court of Appeals Decision dated November 29, 1995 is
AFFIRMED with the MODIFICATION that the award of unearned interest on the time deposit and of moral and exemplary
damages is DELETED.

No pronouncement as to costs.

SO ORDERED.

G.R. No. 169641 September 10, 2009

PEOPLE OF THE PHILIPPINES, Plaintiff-Appellee,

vs.
RICHARD O. SARCIA, Accused-Appellant.

DECISION

LEONARDO-DE CASTRO, J.:

1
On automatic review is the decision dated July 14, 2005 of the Court of Appeals (CA) in CA-G.R. CR-HC No. 00717
2
which affirmed, with modifications, an earlier decision of the Regional Trial Court (RTC) of Ligao City, Branch 13, in
Criminal Case No. 4134, finding herein accused-appellant Richard O. Sarcia alias "Nogi" guilty beyond reasonable doubt
3 4
of the crime of rape committed against AAA, and sentenced him to suffer the penalty of Reclusion Perpetua and to pay
the amount of ₱50,000.00 as civil indemnity, ₱50,000.00 as moral damages, and the cost of the suit. However, the CA
modified the penalties imposed by the RTC by imposing the death penalty, increasing the award of civil indemnity to
₱75,000.00, and awarding ₱25,000.00 as exemplary damages, aside from the ₱50,000.00 for moral damages.

The crime of rape was allegedly committed sometime in 1996 against AAA, a five (5) year old girl. After almost four (4)
5
years, AAA’s father filed a complaint for acts of lasciviousness against herein accused-appellant on July 7, 2000. Upon
6
review of the evidence, the Office of the Provincial Prosecutor at Ligao, Albay upgraded the charge to rape. The
7
Information dated September 5, 2000 reads:

That sometime in 1996 at Barangay Doña Tomasa, Municipality of Guinobatan, Province of Albay, Philippines, and within
the jurisdiction of this Honorable Court, the above-named accused, with lewd and unchaste design, and by means of
force, threats and intimidation, did then and there willfully, unlawfully and feloniously have sexual intercourse with [AAA],
who was then 6 years of age, against her will and consent, to her damage and prejudice.

ACTS CONTRARY TO LAW.

At his arraignment on October 25, 2000, accused-appellant, with the assistance of his counsel, entered a plea of not
8
guilty. Thereafter, trial on the merits ensued.

The prosecution presented the oral testimonies of the victim AAA; her minor cousin; her father; and Dr. Joana Manatlao,
the Municipal Health Officer of Guinobatan, Albay. The defense presented the accused-appellant himself, who
vehemently denied committing the crimes imputed to him and Manuel Casimiro, Clerk of Court II of the Municipal Trial
Court at Guinobatan, Albay.

9
On January 17, 2003, the trial court rendered its Decision finding the accused-appellant guilty of the crime of rape and
imposed the penalty mentioned above.

10
The record of this case was forwarded to this Court in view of the Notice of Appeal filed by the accused- appellant.

11
Accused-appellant filed his Appellant’s Brief on July 15, 2004, while the People, through the Office of the Solicitor
12
General, filed its Appellee’s Brief on December 15, 2004.

13
Pursuant to our pronouncement in People v. Mateo, modifying the pertinent provisions of the Revised Rules on Criminal
Procedure insofar as they provide for direct appeals from the RTC to this Court in cases in which the penalty imposed by
the trial court is death, reclusion perpetua or life imprisonment, and the Resolution dated September 19, 1995 in "Internal
Rules of the Supreme Court," the case was transferred, for appropriate action and disposition, to the CA where it was
docketed as CA-G.R. CR-H.C. No. 00717.

As stated at the beginning hereof, the CA, in its decision of July 14, 2005, in CA-G.R. CR-H.C. No. 000717, affirmed with
modification the judgment of conviction pronounced by the trial court. We quote the fallo of the CA decision:

WHEREFORE, the judgment of conviction is AFFIRMED. The accused, Richard Sarcia y Olivera, is ordered to suffer the
penalty of DEATH, and to pay the victim, [AAA], the amount of (1) ₱75,000.00 as civil indemnity; (2) ₱50,000.00 as moral
damages, and (3) ₱25,000.00 as exemplary damages.

Let the entire records of this case be elevated to the Supreme Court for review, pursuant to A.M. No. 00-5-03-SC
(Amendments to the Revised Rules of Criminal Procedure to Govern Death Penalty Cases), which took effect on October
15, 2004.

SO ORDERED.

14
On September 30, 2005, the case was elevated to this Court for further review.

15
In our Resolution of November 15, 2005, we required the parties to simultaneously submit their respective supplemental
16
briefs. Accused-appellant filed his Supplemental Brief on April 7, 2006. Having failed to submit one, the Office of the
Solicitor General (OSG) was deemed to have waived the filing of its supplemental brief.

In his Brief filed before the CA, accused-appellant raised the following assignment of errors:

THE LOWER COURT GRAVELY ERRED IN GIVING CREDENCE TO THE TESTIMONY OF [AAA], [her cousin] and [her
father].

II

THE LOWER COURT GLARINGLY ERRED IN REJECTING THE DEFENSE OF ALIBI INTERPOSED BY THE
ACCUSED WHICH IS MORE CREDIBLE.

III
THE LOWER COURT GRAVELY ERRED IN NOT ACQUITTING THE ACCUSED RICHARD SARCIA.

The evidence for the prosecution is summarized by the OSG in the Appellee's Brief, as follows:

On December 16, 1996, five-year-old [AAA], together with her [cousin and two other playmates], was playing in the yard
of Saling Crisologo near a mango tree.

Suddenly, appellant appeared and invited [AAA] to go with him to the backyard of Saling Crisologo’s house. She agreed.
Unknown to appellant, [AAA’s cousin] followed them.

Upon reaching the place, appellant removed [AAA’s] shorts and underwear. He also removed his trousers and brief.
Thereafter, he ordered [AAA] to lie down on her back. Then, he lay on top of her and inserted his penis into [AAA’s]
private organ. Appellant made an up-and-down movement ("Nagdapadapa tabi"). [AAA] felt severe pain inside her private
part and said "aray." She also felt an intense pain inside her stomach.

[AAA’s cousin], who positioned herself around five (5) meters away from them, witnessed appellant’s dastardly act.
Horrified, [AAA’s cousin] instinctively rushed to the house of [AAA’s] mother, her aunt Emily, and told the latter what she
had seen. [AAA’s] mother answered that they (referring to {AAA and her cousin} were still very young to be talking about
such matters.

Meanwhile, after satisfying his lust, appellant stood up and ordered [AAA] to put on her clothes. Appellant then left.

Perplexed, [AAA’s cousin] immediately returned to the backyard of Saling Crisologo where she found [AAA] crying.
Appellant, however, was gone. [AAA’s cousin] approached [AAA] and asked her what appellant had done to her. When
[AAA] did not answer, [her cousin] did not ask her any further question and just accompanied her home.

At home, [AAA] did not tell her mother what appellant had done to her because she feared that her mother might slap her.
Later, when her mother washed her body, she felt a grating sensation in her private part. Thereafter, [AAA] called for [her
cousin]. [AAA’s cousin] came to their house and told [AAA’s] mother again that appellant had earlier made an up-and-
down movement on top of [AAA]. [AAA’s mother], however did not say anything. At that time, [AAA’s] father was working
in Manila.

Dr. Joana Manatloa is the Municipal Health Officer of Guinobatan, Albay. She testified that: (1) it was the rural health
officer, Dr. Reantaso, who conducted a physical examination on [AAA]; (2) Dr. Reantaso prepared and signed a medico-
legal certificate containing the result of [AAA]’s examination; (3) Dr. Reantaso, however, had already resigned as rural
health officer of Guinobatan, Albay; (4) as a medical doctor, she can interpret, the findings in said medico-legal certificate
issued to [AAA]; (5) [AAA]’s medical findings are as follows: "negative for introital vulvar laceration nor scars, perforated
hymen, complete, pinkish vaginal mucosa, vaginal admits little finger with resistance; (6) the finding "negative for introital
bulvar laceration nor scars" means, in layman’s language, that there was no showing of any scar or wound, and (7) there
is a complete perforation of the hymen which means that it could have been subjected to a certain trauma or pressure
17
such as strenuous exercise or the entry of an object like a medical instrument or penis.

On the other hand, the trial court summarized the version of the defense as follows:

Richard Sarcia, 24 years old, single, student and a resident of Doña Tomasa, Guinobatan, Albay denied he raped [AAA].
While he knows [AAA’s] parents, because sometimes they go to their house looking for his father to borrow money, he
does not know [AAA] herself. His father retired as a fireman from Crispa in 1991 while his mother worked as an
agriculturist in the Municipality of Teresa, Antipolo, Rizal. As an agriculturist of the Department of Agriculture, his mother
would bring seedlings and attend seminars in Batangas and Baguio. They were residing in Cainta, Rizal when sometime
in 1992 they transferred residence to Guinobatan, Albay. His father is from barangay Masarawag while his mother is from
barangay Doña Tomasa both of Guinobatan, Albay. After their transfer in Guinobatan, his mother continued to be an
agriculturist while his father tended to his 1-hectare coconut land. Richard testified he was between fourteen (14) and
fifteen (15) years old in 1992 when they transferred to Guinobatan. Between 1992 and 1994 he was out of school. But
from 1994 to 1998 he took his high school at Masarawag High School. His daily routine was at about 4:00 o’clock in the
afternoon after school before proceeding home he would usually play basketball at the basketball court near the church in
Doña Tomasa about 1 kilometer away from their house. When her mother suffered a stroke in 1999 he and his father took
turns taking care of his mother. Richard denied molesting other girls ... and was most surprised when he was accused of
raping [AAA]. He knows Saling Crisologo and the latter’s place which is more than half kilometer to their house. Richard
claimed Salvacion Bobier, grandmother of Mae Christine Camu, whose death on May 7, 2000 was imputed to him and for
which a case for Murder under Criminal Case No. 4087 was filed against him with the docile cooperation of [AAA’s]
parents who are related to Salvacion, concocted and instigated [AAA’s] rape charge against him to make the case for
Murder against him stronger and life for him miserable. He was incarcerated on May 10, 2000 for the Murder charge and
two (2) months later while he already in detention, the rape case supposedly committed in 1996 was filed against him in
the Municipal Trial Court (MTC) of Guinobatan, Albay. He was to learn about it from his sister, Marivic, on a Sunday
afternoon sometime on July 20, 2000 when his sister visited him in jail. He naturally got angry when he heard of this rape
charge because he did not do such thing and recalled telling his sister they can go to a doctor and have the child examine
to prove he did not rape her. Subsequently, from his sister again he was to learn that the rape case was ordered
dismissed.

On cross-examination, Richard admitted [AAA’s] mother, is also related to his father, [AAA mother’s] father, being a
second cousin of his father. Richard is convinced it is not the lending of money by his father to the AAA’s family as the
motive for the latter to file the rape case against him but the instigation of Salvacion Bobier.
Manuel A. Casimiro, Clerk of Court II of the Municipal Trial Court (MTC), Guinobatan, Albay, testified on the records of
Criminal Case No. 7078 filed in MTC Guinobatan, Albay against Richard Sarcia for Rape in relation to RA 7610 relative to
the alleged withdrawal of said rape case but the accused through counsel failed to formally offer the marked exhibits
18
relative to said case.

Accused-appellant alleges that the trial court erred in convicting him, as the prosecution was not able to prove his guilt
beyond reasonable doubt. He assailed the credibility of the prosecution witnesses, AAA, her cousin and her father on the
following grounds: (1) the testimonies of AAA and her cousin were inconsistent with each other; (2) the victim was
confused as to the date and time of the commission of the offense; (3) there was a four-year delay in filing the criminal
case, and the only reason why they filed the said case was "to help Salvacion Bobier get a conviction of this same
accused in a murder case filed by said Salvacion Bobier for the death of her granddaughter Mae Christine Camu on May
7, 2000." Accused-appellant stressed that the same Salvacion Bobier helped AAA’s father in filing the said case for rape.
Accused-appellant also claimed that the prosecution failed to prove that he employed force, threats or intimidation to
achieve his end. Finally, accused-appellant harped on the finding in the medical certificate issued by Dr. Reantaso and
interpreted by Dr. Joana Manatlao, stating "negative for introital bulvar laceration nor scar which means that there was no
showing of any scar or wound."

In his Appellee's Brief accused-appellant pointed out the inconsistencies between AAA’s and her cousin’s testimonies as
follows: (1) the cousin testified that she played with AAA at the time of the incident, while AAA testified that she was doing
nothing before accused-appellant invited her to the back of the house of a certain Saling; (2) the cousin testified that when
she saw accused-appellant doing the push-and-pull motion while on top of AAA, the latter shouted in a loud voice contrary
to AAA’s testimony that when accused-appellant was inside her and started the up-and-down motion, she said "aray"; (3)
when the cousin returned to AAA after telling the latter’s mother what accused-appellant had done to AAA, she found AAA
crying. AAA however testified that, after putting on her clothes, she invited the cousin to their house; and (4) the cousin
testified that other children were playing at the time of the incident, but AAA testified that there were only four of them who
were playing at that time.

As it is oft-repeated, inconsistencies in the testimonies of witnesses, which refer only to minor details and collateral
matters, do not affect the veracity and weight of their testimonies where there is consistency in relating the principal
occurrence and the positive identification of the accused. Slight contradictions in fact even serve to strengthen the
credibility of the witnesses and prove that their testimonies are not rehearsed. Nor are such inconsistencies, and even
19
improbabilities, unusual, for there is no person with perfect faculties or senses. The alleged inconsistencies in this case
are too inconsequential to overturn the findings of the court a quo. It is important that the two prosecution witnesses were
one in saying that it was accused-appellant who sexually abused AAA. Their positive, candid and straightforward
narrations of how AAA was sexually abused by accused-appellant evidently deserve full faith and credence. When the
rape incident happened, AAA was only five (5) years old; and when she and her cousin testified, they were barely 9 and
11 years old, respectively. This Court has had occasion to rule that the alleged inconsistencies in the testimonies of the
witnesses can be explained by their age and their inexperience with court proceedings, and that even the most candid of
witnesses commit mistakes and make confused and inconsistent statements. This is especially true of young witnesses,
who could be overwhelmed by the atmosphere of the courtroom. Hence, there is more reason to accord them ample
20
space for inaccuracy.

Accused-appellant capitalizes on AAA’s inability to recall the exact date when the incident in 1996 was committed. Failure
to recall the exact date of the crime, however, is not an indication of false testimony, for even discrepancies regarding
21
exact dates of rapes are inconsequential and immaterial and cannot discredit the credibility of the victim as a witness. In
22
People v. Purazo, We ruled:

We have ruled, time and again that the date is not an essential element of the crime of rape, for the gravamen of the
offense is carnal knowledge of a woman. As such, the time or place of commission in rape cases need not be accurately
stated. As early as 1908, we already held that where the time or place or any other fact alleged is not an essential
element of the crime charged, conviction may be had on proof of the commission of the crime, even if it appears that the
crime was not committed at the precise time or place alleged, or if the proof fails to sustain the existence of some
immaterial fact set out in the complaint, provided it appears that the specific crime charged was in fact committed prior to
the date of the filing of the complaint or information within the period of the statute of limitations and at a place within the
jurisdiction of the court.

23
Also in People v. Salalima, the Court held:

Failure to specify the exact dates or time when the rapes occurred does not ipso facto make the information defective on
its face. The reason is obvious. The precise date or time when the victim was raped is not an element of the offense. The
gravamen of the crime is the fact of carnal knowledge under any of the circumstances enumerated under Article 335 of
the Revised Penal Code. As long as it is alleged that the offense was committed at any time as near to the actual date
when the offense was committed an information is sufficient. In previous cases, we ruled that allegations that rapes were
committed "before and until October 15, 1994," "sometime in the year 1991 and the days thereafter," "sometime in
November 1995 and some occasions prior and/or subsequent thereto" and "on or about and sometime in the year 1988"
constitute sufficient compliance with Section 11, Rule 110 of the Revised Rules on Criminal Procedure.

In this case, AAA’s declaration that the rape incident took place on December 15, 1996 was explained by the trial court,
and we quote:

The rape took place in 1996. As earlier noted by the Court the date December 15, 1996 mentioned by [AAA] may have
been arbitrarily chosen by the latter due to the intense cross-examination she was subjected but the Court believes it
could have been in any month and date in the year 1996 as in fact neither the information nor [AAA’s] sworn statement
24
mention the month and date but only the year.

Likewise, witnesses’ credibility is not affected by the delay in the filing of the case against accused-appellant. Neither does
the delay bolster accused-appellant’s claim that the only reason why this case was filed against him was "to help
Salvacion Bobier get a conviction of this same accused-appellant in the case of murder filed by Salvacion Bobier for the
death of her granddaughter Mae Christine Camu on May 7, 2000."

The rape victim’s delay or hesitation in reporting the crime does not destroy the truth of the charge nor is it an indication of
deceit. It is common for a rape victim to prefer silence for fear of her aggressor and the lack of courage to face the public
25
stigma of having been sexually abused. In People v. Coloma we even considered an 8-year delay in reporting the long
history of rape by the victim’s father as understandable and not enough to render incredible the complaint of a 13-year-old
daughter. Thus, in the absence of other circumstances that show that the charge was a mere concoction and impelled by
some ill motive, delay in the filing of the complainant is not sufficient to defeat the charge. Here, the failure of AAA’s
parents to immediately file this case was sufficiently justified by the complainant’s father in the latter’s testimony, thus:

Q But, did you not say, please correct me if I am wrong, you got angry when your wife told you that something
happened to Hazel way back in 1996?

A Yes, sir.

Q Yet, despite your anger you were telling us that you waited until June to file this case?

A After I heard about the incident, I and my wife had a talk for which reason that during that time we had no
money yet to use in filing the case, so we waited. When we were able to save enough amounts, we filed the
26
case.

Accused-appellant also contends that he could not be liable for rape because there is no proof that he employed force,
threats or intimidation in having carnal knowledge of AAA. Where the girl is below 12 years old, as in this case, the only
subject of inquiry is whether "carnal knowledge" took place. Proof of force, intimidation or consent is unnecessary, since
none of these is an element of statutory rape. There is a conclusive presumption of absence of free consent when the
27
rape victim is below the age of twelve.

Accused-appellant harps on the medical report, particularly the conclusion quoted as follows: "negative for introital bulvar
laceration nor scars, which means, in layman language, that there was no showing of any scar or wound." The Court has
consistently ruled that the presence of lacerations in the victim’s sexual organ is not necessary to prove the crime of rape
28
and its absence does not negate the fact of rape. A medical report is not indispensable in a prosecution for rape. What is
important is that AAA’s testimony meets the test of credibility, and that is sufficient to convict the accused.

Accused-appellant’s defense of denial was properly rejected. Time and time again, we have ruled that denial like alibi is
the weakest of all defenses, because it is easy to concoct and difficult to disprove. Furthermore, it cannot prevail over the
positive and unequivocal identification of appellant by the offended party and other witnesses. Categorical and consistent
positive identification, absent any showing of ill motive on the part of the eyewitness testifying on the matter, prevails over
29
the appellants’ defense of denial and alibi. The shallow hypothesis put forward by accused-appellant that he was
accused of raping AAA due to the instigation of Salvacion Bobier hardly convinces this Court. On this score, the trial court
aptly reached the following conclusion:

…True, Salvacion Bobier actively assisted AAA’s family file the instant case against the accused, but the Court believes
[AAA’s] parents finally decided to file the rape case because after they have come to realize after what happened to Mae
Christine Camu that what previously [AAA and her cousin] told her mother and which the latter had continually ignored is
after all true.

AAA was barely 9 years of age when she testified. It has been stressed often enough that the testimony of rape victims
who are young and immature deserve full credence. It is improbable for a girl of complainant’s age to fabricate a charge
so humiliating to herself and her family had she not been truly subjected to the painful experience of sexual abuse. At any
rate, a girl of tender years, innocent and guileless, cannot be expected to brazenly impute a crime so serious as rape to
30
any man if it were not true. Parents would not sacrifice their own daughter, a child of tender years at that, and subject
her to the rigors and humiliation of public trial for rape, if they were not motivated by an honest desire to have their
31
daughter’s transgressor punished accordingly. Hence, the logical conclusion is that no such improper motive exists and
that her testimony is worthy of full faith and credence.

The guilt of accused-appellant having been established beyond reasonable doubt, we discuss now the proper penalty to
be imposed on him.

32
Article 335 of the Revised Penal Code, as amended by Republic Act No. 7659, was the governing law at the time the
accused-appellant committed the rape in question. Under the said law, the penalty of death shall be imposed when the
victim of rape is a child below seven years of age. In this case, as the age of AAA, who was five (5) years old at the time
the rape was committed, was alleged in the information and proven during trial by the presentation of her birth certificate,
which showed her date of birth as January 16, 1991, the death penalty should be imposed.

However, this Court finds ground for modifying the penalty imposed by the CA. We cannot agree with the CA’s conclusion
that the accused-appellant cannot be deemed a minor at the time of the commission of the offense to entitle him to the
 33
privileged mitigating circumstance of minority pursuant to Article 68(2) of the Revised Penal Code. When accused
appellant testified on March 14, 2002, he admitted that he was 24 years old, which means that in 1996, he was 18 years
of age. As found by the trial court, the rape incident could have taken place "in any month and date in the year 1996."
Since the prosecution was not able to prove the exact date and time when the rape was committed, it is not certain that
the crime of rape was committed on or after he reached 18 years of age in 1996. In assessing the attendance of the
mitigating circumstance of minority, all doubts should be resolved in favor of the accused, it being more beneficial to the
latter. In fact, in several cases, this Court has appreciated this circumstance on the basis of a lone declaration of the
34
accused regarding his age.

Under Article 68 of the Revised Penal Code, when the offender is a minor under 18 years, the penalty next lower than that
prescribed by law shall be imposed, but always in the proper period. However, for purposes of determining the proper
penalty because of the privileged mitigating circumstance of minority, the penalty of death is still the penalty to be
35
reckoned with. Thus, the proper imposable penalty for the accused-appellant is reclusion perpetua.

It is noted that the Court is granted discretion in awarding damages provided in the Civil Code, in case a crime is
committed. Specifically, Article 2204 of the Civil Code provides that "in crimes, the damages to be adjudicated may be
respectively increased or lessened according to the aggravating or mitigating circumstances." The issue now is whether
the award of damages should be reduced in view of the presence here of the privileged mitigating circumstance of
minority of the accused at the time of the commission of the offense.

A review of the nature and purpose of the damages imposed on the convicted offender is in order. Article 107 of the
Revised Penal Code defines the term "indemnification," which is included in the civil liability prescribed by Article 104 of
the same Code, as follows:

Art. 107. Indemnification-What is included. – Indemnification for consequential damages shall include not only those
caused the injured party, but also those suffered by his family or by a third person by reason of the crime.

36
Relative to civil indemnity, People v. Victor ratiocinated as follows:

The lower court, however, erred in categorizing the award of ₱50,000.00 to the offended party as being in the nature of
moral damages. We have heretofore explained in People v. Gementiza that the indemnity authorized by our criminal law
as civil liability ex delicto for the offended party, in the amount authorized by the prevailing judicial policy and aside from
other proven actual damages, is itself equivalent to actual or compensatory damages in civil law. It is not to be considered
as moral damages thereunder, the latter being based on different jural foundations and assessed by the court in the
exercise of sound discretion.

One other point of concern has to be addressed. Indictments for rape continue unabated and the legislative response has
been in the form of higher penalties. The Court believes that, on like considerations, the jurisprudential path on the civil
aspect should follow the same direction. Hence, starting with the case at bar, if the crime of rape is committed or
effectively qualified by any of the circumstances under which the death penalty is authorized by the present amended law,
the indemnity for the victim shall be in the increased amount of not less than ₱75,000.00. This is not only a reaction to the
apathetic societal perception of the penal law, and the financial fluctuations over time, but also an expression of the
displeasure of the Court over the incidence of heinous crimes against chastity. (Emphasis Supplied)

The Court has had the occasion to rule that moral damages are likewise compensatory in nature. In San Andres v. Court
37
of Appeals, we held:

x x x Moral damages, though incapable of pecuniary estimation, are in the category of an award designed
to compensate the claimant for actual injury suffered and not to impose a penalty on the wrongdoer. (Emphasis Supplied)

In another case, this Court also explained:

What we call moral damages are treated in American jurisprudence as compensatory damages awarded for mental pain
38
and suffering or mental anguish resulting from a wrong (25 C.J.S. 815). (Emphasis Supplied)

Thus, according to law and jurisprudence, civil indemnity is in the nature of actual and compensatory damages for the
injury caused to the offended party and that suffered by her family, and moral damages are likewise compensatory in
nature. The fact of minority of the offender at the time of the commission of the offense has no bearing on the gravity and
extent of injury caused to the victim and her family, particularly considering the circumstances attending this case. Here,
the accused-appelant could have been eighteen at the time of the commission of the rape. He was accorded the benefit of
the privileged mitigating circumstance of minority because of a lack of proof regarding his actual age and the date of the
rape rather than a moral or evidentiary certainty of his minority.

In any event, notwithstanding the presence of the privileged mitigating circumstance of minority, which warrants the
lowering of the public penalty by one degree, there is no justifiable ground to depart from the jurisprudential trend in the
award of damages in the case of qualified rape, considering the compensatory nature of the award of civil indemnity and
39
moral damages. This was the same stance this Court took in People v. Candelario, a case decided on July 28, 1999,
which did not reduce the award of damages. At that time, the damages amounted to ₱75,000.00 for civil indemnity and
₱50,000.00 for moral damages, even if the public penalty imposed on the accused was lowered by one degree, because
of the presence of the privileged mitigating circumstance of minority.
 40 41
The principal consideration for the award of damages, under the ruling in People v. Salome and People v. Quiachon is
the penalty provided by law or imposable for the offense because of its heinousness, not the public penalty actually
imposed on the offender.

Regarding the civil indemnity and moral damages, People v. Salome explained the basis for increasing the amount of said
civil damages as follows:

The Court, likewise, affirms the civil indemnity awarded by the Court of Appeals to Sally in accordance with the ruling in
People v. Sambrano which states:

"As to damages, we have held that if the rape is perpetrated with any of the attending qualifying circumstances that
require the imposition of the death penalty, the civil indemnity for the victim shall ₱75,000.00 … Also, in rape cases, moral
damages are awarded without the need proof other than the fact of rape because it is assumed that the victim has
suffered moral injuries entitling her to such an award. However, the trial court’s award of ₱50,000.00 as moral damages
should also be increased to ₱75,000 pursuant to current jurisprudence on qualified rape."

It should be noted that while the new law prohibits the imposition of the death penalty, the penalty provided for by law for a
heinous offense is still death and the offense is still heinous. Consequently, the civil indemnity for the victim is still
₱75,000.00.

People v. Quiachon also ratiocinates as follows:

With respect to the award of damages, the appellate court, following prevailing jurisprudence, correctly awarded the
following amounts; ₱75,000.00 as civil indemnity which is awarded if the crime is qualified by circumstances warranting
the imposition of the death penalty; ₱75,000.00.00 as moral damages because the victim is assumed to have suffered
moral injuries, hence, entitling her to an award of moral damages even without proof thereof, x x x

Even if the penalty of death is not to be imposed on the appellant because of the prohibition in R.A. No. 9346, the civil
indemnity of ₱75,000.00 is still proper because, following the ratiocination in People v. Victor, the said award is not
dependent on the actual imposition of the death penalty but on the fact that qualifying circumstances warranting the
imposition of the death penalty attended the commission of the offense. The Court declared that the award of ₱75,000.00
shows "not only a reaction to the apathetic societal perception of the penal law and the financial fluctuations over time but
also the expression of the displeasure of the court of the incidence of heinous crimes against chastity."

The litmus test therefore, in the determination of the civil indemnity is the heinous character of the crime committed, which
would have warranted the imposition of the death penalty, regardless of whether the penalty actually imposed is reduced
to reclusion perpetua.

As to the award of exemplary damages, Article 2229 of the Civil Code provides that exemplary or corrective damages are
imposed in addition to the moral, temperate, liquidated or compensatory damages. Exemplary damages are not
recoverable as a matter of right. The requirements of an award of exemplary damagees are: (1) they may be imposed by
way of example in addition to compensatory damages, and only after the claimant’s right to them has been established;
(2) they cannot be recovered as a matter of right, their determination depending upon the amount of compensatory
damages that may be awarded to the claimant; (3) the act must be accompanied by bad faith or done in a wanton,
42
fraudulent, oppressive or malevolent manner. Since the compensatory damages, such as the civil indemnity and moral
damages, are increased when qualified rape is committed, the exemplary damages should likewise be increased in
43
accordance with prevailing jurisprudence.

In sum, the increased amount of ₱75,000.00 each as civil indemnity and moral damages should be maintained. It is also
proper and appropriate that the award of exemplary damages be likewise increased to the amount of ₱30,000.00 based
on the latest jurisprudence on the award of damages on qualified rape. Thus, the CA correctly awarded ₱75,000.00 as
44
civil indemnity. However the award of ₱50,000.00 as moral damages is increased to ₱75,000.00 and that of ₱25,000.00
45
as exemplary damages is likewise increased to ₱30,000.00.

Meanwhile, when accused-appellant was detained at the New Bilibid Prison pending the outcome of his appeal before this
Court, Republic Act (R.A.) No. 9344, the Juvenile Justice and Welfare Act of 2006 took effect on May 20, 2006. The RTC
decision and CA decision were promulgated on January 17, 2003 and July 14, 2005, respectively. The promulgation of
the sentence of conviction of accused-appellant handed down by the RTC was not suspended as he was about 25 years
of age at that time, in accordance with Article 192 of Presidential Decree (P.D.) No. 603, The Child and Youth Welfare
46 47
Code and Section 32 of A.M. No. 02-1-18-SC, the Rule on Juveniles in Conflict with the Law. Accused-appellant is
now approximately 31 years of age. He was previously detained at the Albay Provincial Jail at Legaspi City and
transferred to the New Bilibid Prison, Muntinlupa City on October 13, 2003.

R.A. No. 9344 provides for its retroactive application as follows:

Sec. 68. Children Who Have Been Convicted and are Serving Sentence. – Persons who have been convicted and are
serving sentence at the time of the effectivity of this Act, and who were below the age of eighteen (18) years at the time of
the commission of the offense for which they were convicted and are serving sentence, shall likewise benefit from the
retroactive application of this Act. x x x

The aforequoted provision allows the retroactive application of the Act to those who have been convicted and are serving
sentence at the time of the effectivity of this said Act, and who were below the age of 18 years at the time of the
commission of the offense. With more reason, the Act should apply to this case wherein the conviction by the lower court
is still under review. Hence, it is necessary to examine which provisions of R.A. No. 9344 shall apply to accused-
appellant, who was below 18 years old at the time of the commission of the offense.

Sec. 38 of R.A. No. 9344 provides for the automatic suspension of sentence of a child in conflict with the law, even if
he/she is already 18 years of age or more at the time he/she is found guilty of the offense charged. It reads:

Sec. 38. Automatic Suspension of Sentence. – Once the child who is under eighteen (18) years of age at the time of the
commission of the offense is found guilty of the offense charged, the court shall determine and ascertain any civil liability
which may have resulted from the offense committed. However, instead of pronouncing the judgment of conviction, the
court shall place the child in conflict with the law under suspended sentence, without need of application: Provided,
however, That suspension of sentence shall still be applied even if the juvenile is already eighteen (18) of age or more at
the time of the pronouncement of his/her guilt.

Upon suspension of sentence and after considering the various circumstances of the child, the court shall impose the
appropriate disposition measures as provided in the Supreme Court on Juvenile in Conflict with the Law.

The above-quoted provision makes no distinction as to the nature of the offense committed by the child in conflict with the
48
law, unlike P.D. No. 603 and A.M. No. 02-1-18-SC. The said P.D. and Supreme Court (SC) Rule provide that the benefit
of suspended sentence would not apply to a child in conflict with the law if, among others, he/she has been convicted of
an offense punishable by death, reclusion perpetua or life imprisonment. In construing Sec. 38 of R.A. No. 9344, the Court
is guided by the basic principle of statutory construction that when the law does not distinguish, we should not
49
distinguish. Since R.A. No. 9344 does not distinguish between a minor who has been convicted of a capital offense and
another who has been convicted of a lesser offense, the Court should also not distinguish and should apply the automatic
suspension of sentence to a child in conflict with the law who has been found guilty of a heinous crime.

Moreover, the legislative intent, to apply to heinous crimes the automatic suspension of sentence of a child in conflict with
50
the law can be gleaned from the Senate deliberations on Senate Bill No. 1402 (Juvenile Justice and Delinquency
Prevention Act of 2005), the pertinent portion of which is quoted below:

If a mature minor, maybe 16 years old to below 18 years old is charged, accused with, or may have committed a serious
offense, and may have acted with discernment, then the child could be recommended by the Department of Social
Welfare and Development (DSWD), by the Local Council for the Protection of Children (LCPC), or by my proposed Office
of Juvenile Welfare and Restoration to go through a judicial proceeding; but the welfare, best interests, and restoration of
the child should still be a primordial or primary consideration. Even in heinous crimes, the intention should still be the
child’s restoration, rehabilitation and reintegration. xxx (Italics supplied)1avvphi1

Nonetheless, while Sec. 38 of R.A. No. 9344 provides that suspension of sentence can still be applied even if the child in
conflict with the law is already eighteen (18) years of age or more at the time of the pronouncement of his/her guilt, Sec.
40 of the same law limits the said suspension of sentence until the said child reaches the maximum age of 21, thus:

Sec. 40. Return of the Child in Conflict with the Law to Court. – If the court finds that the objective of the disposition
measures imposed upon the child in conflict with the law have not been fulfilled, or if the child in conflict with the law has
willfully failed to comply with the condition of his/her disposition or rehabilitation program, the child in conflict with the law
shall be brought before the court for execution of judgment.

If said child in conflict with the law has reached eighteen (18) years of age while under suspended sentence, the court
shall determine whether to discharge the child in accordance with this Act, to order execution of sentence, or to extend the
suspended sentence for a certain specified period or until the child reaches the maximum age of twenty-one (21) years.
(emphasis ours)

To date, accused-appellant is about 31 years of age, and the judgment of the RTC had been promulgated, even before
the effectivity of R.A. No. 9344. Thus, the application of Secs. 38 and 40 to the suspension of sentence is now moot and
51
academic. However, accused-appellant shall be entitled to appropriate disposition under Sec. 51 of R.A. No. 9344,
which provides for the confinement of convicted children as follows:

Sec. 51. Confinement of Convicted Children in Agricultural Camps and Other Training Facilities. – A child in conflict with
the law may, after conviction and upon order of the court, be made to serve his/her sentence, in lieu of confinement in a
regular penal institution, in an agricultural camp and other training facilities that may be established, maintained,
supervised and controlled by the BUCOR, in coordination with the DSWD.

The civil liability resulting from the commission of the offense is not affected by the appropriate disposition measures and
52
shall be enforced in accordance with law.

WHEREFORE, the decision of the CA dated July 14, 2005 in CA-G.R. CR-H.C. No. 00717 is hereby AFFIRMED with the
following MODIFICATIONS: (1) the penalty of death imposed on accused-appellant is reduced to reclusion
53
perpetua; and (2) accused-appellant is ordered to pay the victim the amount of ₱75,000.00 and ₱30,000.00 as moral
damages and exemplary damages, respectively. The award of civil indemnity in the amount of ₱75,000.00 is maintained.
However, the case shall be REMANDED to the court a quo for appropriate disposition in accordance with Sec. 51 of R.A.
9344.
SO ORDERED.

G.R. No. 107518 October 8, 1998

PNOC SHIPPING AND TRANSPORT CORPORATION, petitioner,

vs.
HONORABLE COURT OF APPEALS and MARIA EFIGENIA FISHING CORPORATION, respondents.

ROMERO, J.:

1
A party is entitled to adequate compensation only for such pecuniary loss actually suffered and duly proved. Indeed, basic
is the rule that to recover actual damages, the amount of loss must not only be capable of proof but must actually be
proven with a reasonable degree of certainty, premised upon competent proof or best evidence obtainable of the actual
2
amount thereof. The claimant is duty-bound to point out specific facts that afford a basis for measuring whatever
3
compensatory damages are borne. A court cannot merely rely on speculations, conjectures, or guesswork as to the fact
4 5 6
and amount of damages as well as hearsay or uncorroborated testimony whose truth is suspect. Such are the
jurisprudential precepts that the Court now applies in resolving the instant petition.

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

After investigation was conducted by the Board of Marine Inquiry, Philippine Coast Guard Commandant Simeon N.
Alejandro rendered a decision finding the Petroparcel at fault. Based on this finding by the Board and after unsuccessful
7
demands on petitioner, private respondent sued the LSC and the Petroparcelcaptain, Edgardo Doruelo, before the then
Court of First Instance of Caloocan City, paying thereto the docket fee of one thousand two hundred fifty-two pesos
8
(P1,252.00) and the legal research fee of two pesos (P2.00). In particular, private respondent prayed for an award of
P692,680.00, allegedly representing the value of the fishing nets, boat equipment and cargoes of M/V Maria Efigenia
XV, with interest at the legal rate plus 25% thereof as attorney's fees. Meanwhile, during the pendency of the case,
petitioner PNOC Shipping and Transport Corporation sought to be substituted in place of LSC as it had already acquired
9
ownership of the Petroparcel.

For its part, private respondent later sought the amendment of its complaint on the ground that the original complaint
10
failed to plead for the recovery of the lost value of the hull of M/V Maria Efigenia XV. Accordingly, in the amended
complaint, private respondent averred that M/V Maria Efigenia XV had an actual value of P800,000.00 and that, after
deducting the insurance payment of P200,000.00, the amount of P600,000.00 should likewise be claimed. The amended
complaint also alleged that inflation resulting from the devaluation of the Philippine peso had affected the replacement
value of the hull of the vessel, its equipment and its lost cargoes, such that there should be a reasonable determination
thereof. Furthermore, on account of the sinking of the vessel, private respondent supposedly incurred unrealized profits
11
and lost business opportunities that would thereafter be proven.

12
Subsequently, the complaint was further amended to include petitioner as a defendant which the lower court granted in
its order of September 16,
13
1985. After petitioner had filed its answer to the second amended complaint, on February 5, 1987, the lower court
14
issued a pre-trial order containing, among other things, a stipulations of facts, to wit:

1. On 21 September 1977, while the fishing boat "M/V MARIA EFIGENIA" owned by plaintiff was
navigating in the vicinity of Fortune Island in Nasugbu, Batangas, on its way to Navotas, Metro Manila,
said fishing boat was hit by the LSCO tanker "Petroparcel" causing the former to sink.

2. The Board of Marine Inquiry conducted an investigation of this marine accident and on 21 November
1978, the Commandant of the Philippine Coast Guard, the Honorable Simeon N. Alejandro, rendered a
decision finding the cause of the accident to be the reckless and imprudent manner in which Edgardo
Doruelo navigated the LSCO "Petroparcel" and declared the latter vessel at fault.

3. On 2 April 1978, defendant Luzon Stevedoring Corporation (LUSTEVECO), executed in favor of PNOC
Shipping and Transport Corporation a Deed of Transfer involving several tankers, tugboats, barges and
pumping stations, among which was the LSCO Petroparcel.

4. On the same date on 2 April 1979 (sic), defendant PNOC STC again entered into an Agreement of
Transfer with co-defendant Lusteveco whereby all the business properties and other assets appertaining
to the tanker and bulk oil departments including the motor tanker LSCO Petroparcel of defendant
Lusteveco were sold to PNOC STC.

5. The aforesaid agreement stipulates, among others, that PNOC-STC assumes, without qualifications,
all obligations arising from and by virtue of all rights it obtained over the LSCO "Petroparcel".
 6. On 6 July 1979, another agreement between defendant LUSTEVECO and PNOC-STC was executed
wherein Board of Marine Inquiry Case No. 332 (involving the sea accident of 21 September 1977) was
specifically identified and assumed by the latter.

7. On 23 June 1979, the decision of Board of Marine Inquiry was affirmed by the Ministry of National
Defense, in its decision dismissing the appeal of Capt. Edgardo Doruelo and Chief mate Anthony Estenzo
of LSCO "Petroparcel".

8. LSCO "Petroparcel" is presently owned and operated by PNOC-STC and likewise Capt. Edgardo
Doruelo is still in their employ.

9. As a result of the sinking of M/V Maria Efigenia caused by the reckless and imprudent manner in which
LSCO Petroparcel was navigated by defendant Doruelo, plaintiff suffered actual damages by the loss of
its fishing nets, boat equipments (sic) and cargoes, which went down with the ship when it sank the
replacement value of which should be left to the sound discretion of this Honorable Court.

15
After trial, the lower court rendered on November 18, 1989 its decision disposing of Civil Case No. C-9457 as follows:

WHEREFORE, and in view of the foregoing, judgment is hereby rendered in favor of the plaintiff and
against the defendant PNOC Shipping & Transport Corporation, to pay the plaintiff:

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

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

c. The costs of suit.

The counterclaim is hereby DISMISSED for lack of merit. Likewise, the case against defendant Edgardo
Doruelo is hereby DISMISSED, for lack of jurisdiction.

SO ORDERED.

In arriving at the above disposition, the lower court cited the evidence presented by private respondent consisting of the
testimony of its general manager and sole witness, Edilberto del Rosario. Private respondent's witness testified that M/V
Maria Efigenia XV was owned by private respondent per Exhibit A, a certificate of ownership issued by the Philippine
Coast Guard showing that M/V Maria Efigenia XV was a wooden motor boat constructed in 1965 with 128.23 gross
tonnage. According to him, at the time the vessel sank, it was then carrying 1,060 tubs (bañeras) of assorted fish the
value of which was never recovered. Also lost with the vessel were two cummins engines (250 horsepower), radar,
pathometer and compass. He further added that with the loss of his flagship vessel in his fishing fleet of fourteen (14)
vessels, he was constrained to hire the services of counsel whom he paid P10,000 to handle the case at the Board of
Marine Inquiry and P50,000.00 for commencing suit for damages in the lower court.

As to the award of P6,438,048.00 in actual damages, the lower court took into account the following pieces of
documentary evidence that private respondent proffered during trial:

(a) Exhibit A — certified xerox copy of the certificate of ownership of M/V Maria Efigenia
XV;

(b) Exhibit B — a document titled "Marine Protest" executed by Delfin Villarosa, Jr. on
September 22, 1977 stating that as a result of the collision, the M/V Maria Efigenia
XV sustained a hole at its left side that caused it to sink with its cargo of
1,050 bañeras valued at P170,000.00;

(c) Exhibit C — a quotation for the construction of a 95-footer trawler issued by Isidoro A.
Magalong of I. A. Magalong Engineering and Construction on January 26, 1987 to Del
Rosario showing that construction of such trawler would cost P2,250,000.00;

(d) Exhibit D — pro forma invoice No. PSPI-05/87-NAV issued by E.D. Daclan of Power
Systems, Incorporated on January 20, 1987 to Del Rosario showing that two (2) units of
CUMMINS Marine Engine model N855-M, 195 bhp. at 1800 rpm. would cost
P1,160,000.00;

(e) Exhibit E — quotation of prices issued by Scan Marine Inc. on January 20, 1987 to
Del Rosario showing that a unit of Furuno Compact Daylight Radar, Model FR-604D,
would cost P100,000.00 while a unit of Furuno Color Video Sounder, Model FCV-501
would cost P45,000.00 so that the two units would cost P145,000.00;

(f) Exhibit F — quotation of prices issued by Seafgear Sales, Inc. on January 21, 1987 to
Del Rosario showing that two (2) rolls of nylon rope (5" cir. X 300fl.) would cost
P140,000.00; two (2) rolls of nylon rope (3" cir. X 240fl.), P42,750.00; one (1) binocular (7
 x 50), P1,400.00, one (1) compass (6"), P4,000.00 and 50 pcs. of floats, P9,000.00 or a
total of P197,150.00;

(g) Exhibit G — retainer agreement between Del Rosario and F. Sumulong Associates
Law Offices stipulating an acceptance fee of P5,000.00, per appearance fee of P400.00,
monthly retainer of P500.00, contingent fee of 20% of the total amount recovered and
that attorney's fee to be awarded by the court should be given to Del Rosario; and

(h) Exhibit H — price quotation issued by Seafgear Sales, Inc. dated April 10, 1987 to Del
Rosario showing the cost of poly nettings as: 50 rolls of 400/18 3kts. 100md x 100mtrs.,
P70,000.00; 50 rolls of 400/18 5kts. 100md x 100mtrs., P81,500.00; 50 rolls of 400/18
8kts. 100md x 100mtrs., P116,000.00, and 50 rolls of 400/18 10kts. 100md x 100mtrs.,
P146,500 and bañera (tub) at P65.00 per piece or a total of P414,065.00.

The lower court held that the prevailing replacement value of P6,438,048.00 of the fishing boat and all its equipment
would regularly increase at 30% every year from the date the quotations were given.

On the other hand, the lower court noted that petitioner only presented Lorenzo Lazaro, senior estimator at PNOC
Dockyard & Engineering Corporation, as sole witness and it did not bother at all to offer any documentary evidence to
support its position. Lazaro testified that the price quotations submitted by private respondent were "excessive" and that
as an expert witness, he used the quotations of his suppliers in making his estimates. However, he failed to present such
quotations of prices from his suppliers, saying that he could not produce a breakdown of the costs of his estimates as it
was "a sort of secret scheme." For this reason, the lower court concluded:

Evidently, the quotation of prices submitted by the plaintiff relative to the replacement value of the fishing
boat and its equipments in the tune of P6,438,048.00 which were lost due to the recklessness and
imprudence of the herein defendants were not rebutted by the latter with sufficient evidence. The
defendants through their sole witness Lorenzo Lazaro relied heavily on said witness' bare claim that the
amount afore-said is excessive or bloated, but they did not bother at all to present any documentary
evidence to substantiate such claim. Evidence to be believed must not only proceed from the mouth of
the credible witness, but it must be credible in itself. (Vda. de Bonifacio vs. B. L. T. Bus Co., Inc. L-26810,
August 31, 1970).

Aggrieved, petitioner filed a motion for the reconsideration of the lower court's decision contending that: (1) the lower court
erred in holding it liable for damages; that the lower court did not acquire jurisdiction over the case by paying only
P1,252.00 as docket fee; (2) assuming that plaintiff was entitled to damages, the lower court erred in awarding an amount
greater than that prayed for in the second amended complaint; and (3) the lower court erred when it failed to resolve the
16
issues it had raised in its memorandum. Petitioner likewise filed a supplemental motion for reconsideration expounding
on whether the lower court acquired jurisdiction over the subject matter of the case despite therein plaintiff's failure to pay
17
the prescribed docket fee.

18
On January 25, 1990, the lower court declined reconsideration for lack of merit. Apparently not having received the
order denying its motion for reconsideration, petitioner still filed a motion for leave to file a reply to private respondent's
19
opposition to said motion. Hence, on February 12, 1990, the lower court denied said motion for leave to file a reply on
20
the ground that by the issuance of the order of January 25, 1990, said motion had become moot and academic.

Unsatisfied with the lower court's decision, petitioner elevated the matter to the Court of Appeals which, however, affirmed
21
the same in toto on October 14, 1992. On petitioner's assertion that the award of P6,438,048.00 was not convincingly
proved by competent and admissible evidence, the Court of Appeals ruled that it was not necessary to qualify Del Rosario
as an expert witness because as the owner of the lost vessel, "it was well within his knowledge and competency to identify
and determine the equipment installed and the cargoes loaded" on the vessel. Considering the documentary evidence
presented as in the nature of market reports or quotations, trade journals, trade circulars and price lists, the Court of
Appeals held, thus:

Consequently, until such time as the Supreme Court categorically rules on the admissibility or
inadmissibility of this class of evidence, the reception of these documentary exhibits (price quotations) as
evidence rests on the sound discretion of the trial court. In fact, where the lower court is confronted with
evidence which appears to be of doubtful admissibility, the judge should declare in favor of admissibility
rather than of non-admissibility (The Collector of Palakadhari, 124 [1899], p. 13, cited in Francisco,
Revised Rules of Court, Evidence, Volume VII, Part I, 1990 Edition, p. 18). Trial courts are enjoined to
observe the strict enforcement of the rules of evidence which crystallized through constant use and
practice and are very useful and effective aids in the search for truth and for the effective administration of
justice. But in connection with evidence which may appear to be of doubtful relevancy or incompetency or
admissibility, it is the safest policy to be liberal, not rejecting them on doubtful or technical grounds, but
admitting them unless plainly irrelevant, immaterial or incompetent, for the reason that their rejection
places them beyond the consideration of the court. If they are thereafter found relevant or competent, can
easily be remedied by completely discarding or ignoring them. (Banaria vs. Banaria, et al., C.A. No. 4142,
May 31, 1950; cited in Francisco, Supra). [Emphasis supplied].

Stressing that the alleged inadmissible documentary exhibits were never satisfactorily rebutted by appellant's own sole
witness in the person of Lorenzo Lazaro, the appellate court found that petitioner ironically situated itself in an
"inconsistent posture by the fact that its own witness, admittedly an expert one, heavily relies on the very same pieces of
evidence (price quotations) appellant has so vigorously objected to as inadmissible evidence." Hence, it concluded:

. . . The amount of P6,438,048.00 was duly established at the trial on the basis of appellee's documentary
exhibits (price quotations) which stood uncontroverted, and which already included the amount by way of
adjustment as prayed for in the amended complaint. There was therefore no need for appellee to amend
the second amended complaint in so far as to the claim for damages is concerned to conform with the
evidence presented at the trial. The amount of P6,438,048.00 awarded is clearly within the relief prayed
for in appellee's second amended complaint.

On the issue of lack of jurisdiction, the respondent court held that following the ruling in Sun Insurance Ltd. v.
22
Asuncion, the additional docket fee that may later on be declared as still owing the court may be enforced as a lien on
the judgment.

Hence, the instant recourse.

In assailing the Court of Appeals' decision, petitioner posits the view that the award of P6,438,048 as actual damages
should have been in light of these considerations, namely: (1) the trial court did not base such award on the actual value
of the vessel and its equipment at the time of loss in 1977; (2) there was no evidence on extraordinary inflation that would
warrant an adjustment of the replacement cost of the lost vessel, equipment and cargo; (3) the value of the lost cargo and
the prices quoted in respondent's documentary evidence only amount to P4,336,215.00; (4) private respondent's failure to
adduce evidence to support its claim for unrealized profit and business opportunities; and (5) private respondent's failure
23
to prove the extent and actual value of damages sustained as a result of the 1977 collision of the vessels.

Under Article 2199 of the Civil Code, actual or compensatory damages are those awarded in satisfaction of, or in
recompense for, loss or injury sustained. They proceed from a sense of natural justice and are designed to repair the
24
wrong that has been done, to compensate for the injury inflicted and not to impose a penalty. In actions based on torts
or quasi-delicts, actual damages include all the natural and probable consequences of the act or omission complained
25
of. There are two kinds of actual or compensatory damages: one is the loss of what a person already possesses (daño
emergente), and the other is the failure to receive as a benefit that which would have pertained to him (lucro
26
cesante). Thus:

Where goods are destroyed by the wrongful act of the defendant the plaintiff is entitled to their value at
the time of destruction, that is, normally, the sum of money which he would have to pay in the market for
identical or essentially similar goods, plus in a proper case damages for the loss of use during the period
before replacement. In other words, in the case of profit-earning chattels, what has to be assessed is the
value of the chattel to its owner as a going concern at the time and place of the loss, and this means, at
least in the case of ships, that regard must be had to existing and pending engagements, . . .

. . . . If the market value of the ship reflects the fact that it is in any case virtually certain of profitable
employment, then nothing can be added to that value in respect of charters actually lost, for to do so
would be pro tanto to compensate the plaintiff twice over. On the other hand, if the ship is valued without
reference to its actual future engagements and only in the light of its profit-earning potentiality, then it may
be necessary to add to the value thus assessed the anticipated profit on a charter or other engagement
which it was unable to fulfill. What the court has to ascertain in each case is the "capitalised value of the
vessel as a profit-earning machine not in the abstract but in view of the actual circumstances," without, of
27
course, taking into account considerations which were too remote at the time of the loss. [Emphasis
supplied].

As stated at the outset, to enable an injured party to recover actual or compensatory damages, he is required to prove the
actual amount of loss with reasonable degree of certainty premised upon competent proof and on the best evidence
28
available. The burden of proof is on the party who would be defeated if no evidence would be presented on either side.
He must establish his case by a preponderance of evidence which means that the evidence, as a whole, adduced by one
29
side is superior to that of the other. In other words, damages cannot be presumed and courts, in making an award must
30
point out specific facts that could afford a basis for measuring whatever compensatory or actual damages are borne.

In this case, actual damages were proven through the sole testimony of private respondent's general manager and certain
pieces of documentary evidence. Except for Exhibit B where the value of the 1,050 bañeras of fish were pegged at their
September 1977 value when the collision happened, the pieces of documentary evidence proffered by private respondent
with respect to items and equipment lost show similar items and equipment with corresponding prices in early 1987 or
approximately ten (10) years after the collision. Noticeably, petitioner did not object to the exhibits in terms of the time
index for valuation of the lost goods and equipment. In objecting to the same pieces of evidence, petitioner commented
that these were not duly authenticated and that the witness (Del Rosario) did not have personal knowledge on the
31
contents of the writings and neither was he an expert on the subjects thereof. Clearly ignoring petitioner's objections to
the exhibits, the lower court admitted these pieces of evidence and gave them due weight to arrive at the award of
P6,438,048.00 as actual damages.

The exhibits were presented ostensibly in the course of Del Rosario's testimony. Private respondent did not present any
other witnesses especially those whose signatures appear in the price quotations that became the bases of the award.
We hold, however, that the price quotations are ordinary private writings which under the Revised Rules of Court should
have been proffered along with the testimony of the authors thereof. Del Rosario could not have testified on the veracity of
the contents of the writings even though he was the seasoned owner of a fishing fleet because he was not the one who
issued the price quotations. Section 36, Rule 130 of the Revised Rules of Court provides that a witness can testify only to
those facts that he knows of his personal knowledge.

For this reason, Del Rosario's claim that private respondent incurred losses in the total amount of P6,438,048.00 should
be admitted with extreme caution considering that, because it was a bare assertion, it should be supported by
32
independent evidence. Moreover, because he was the owner of private respondent corporation whatever testimony he
would give with regard to the value of the lost vessel, its equipment and cargoes should be viewed in the light of his self-
interest therein. We agree with the Court of Appeals that his testimony as to the equipment installed and the cargoes
33
loaded on the vessel should be given credence considering his familiarity thereto. However, we do not subscribe to the
34
conclusion that his valuation of such equipment, cargo and the vessel itself should be accepted as gospel truth. We
must, therefore, examine the documentary evidence presented to support Del Rosario's claim as regards the amount of
losses.

The price quotations presented as exhibits partake of the nature of hearsay evidence considering that the persons who
35
issued them were not presented as witnesses. Any evidence, whether oral or documentary, is hearsay if its probative
value is not based on the personal knowledge of the witness but on the knowledge of another person who is not on the
witness stand. Hearsay evidence, whether objected to or not, has no probative value unless the proponent can show that
36
the evidence falls within the exceptions to the hearsay evidence rule. On this point, we believe that the exhibits do not
37
fall under any of the exceptions provided under Sections 37 to 47 of Rule 130.

It is true that one of the exceptions to the hearsay rule pertains to "commercial lists and the like" under Section 45, Rule
130 of the Revised Rules on Evidence. In this respect, the Court of Appeals considered private respondent's exhibits as
"commercial lists." It added, however, that these exhibits should be admitted in evidence "until such time as the Supreme
Court categorically rules on the admissibility or inadmissibility of this class of evidence" because "the reception of these
38
documentary exhibits (price quotations) as evidence rests on the sound discretion of the trial court." Reference to
Section 45, Rule 130, however, would show that the conclusion of the Court of Appeals on the matter was arbitrarily
arrived at. This rule states:

Commercial lists and the like. — Evidence of statements of matters of interest to persons engaged in an
occupation contained in a list, register, periodical, or other published compilation is admissible as tending
to prove the truth of any relevant matter so stated if that compilation is published for use by persons
engaged in that occupation and is generally used and relied upon by them there.

Under Section 45 of the aforesaid Rule, a document is a commercial list if: (1) it is a statement of matters of interest to
persons engaged in an occupation; (2) such statement is contained in a list, register, periodical or other published
compilation; (3) said compilation is published for the use of persons engaged in that occupation, and (4) it is generally
used and relied upon by persons in the same occupation.

39
Based on the above requisites, it is our considered view that Exhibits B, C, D, E, F and H are not "commercial lists" for
these do not belong to the category of "other published compilations" under Section 45 aforequoted. Under the principle
of ejusdem generis, "(w)here general words follow an enumeration of persons or things, by words of a particular and
specific meaning, such general words are not to be construed in their widest extent, but are to be held as applying only to
40
persons or things of the same kind or class as those specifically mentioned." The exhibits mentioned are mere price
quotations issued personally to Del Rosario who requested for them from dealers of equipment similar to the ones lost at
the collision of the two vessels. These are not published in any list, register, periodical or other compilation on the relevant
subject matter. Neither are these "market reports or quotations" within the purview of "commercial lists" as these are not
"standard handbooks or periodicals, containing data of everyday professional need and relied upon in the work of the
41
occupation." These are simply letters responding to the queries of Del Rosario. Thus, take for example Exhibit D which
reads:

January 20, 1987

PROFORMA INVOICE NO. PSPI-05/87-NAV

MARIA EFIGINIA FISHING CORPORATION

Navotas, Metro Manila

Attention: MR. EDDIE DEL ROSARIO

Gentlemen:

In accordance to your request, we are pleated to quote our Cummins Marine Engine, to wit.

Two (2) units CUMMINS Marine Engine model N855-M, 195 bhp. at
1800 rpm., 6-cylinder in-line, 4-stroke cycle, natural aspirated, 5 1/2 in. x
6 in. bore and stroke, 855 cu. In. displacement, keel-cooled, electric
starting coupled with Twin-Disc Marine gearbox model MG-509, 4.5:1
reduction ratio, includes oil cooler, companion flange, manual and
standard accessories as per attached sheet.
 Price FOB Manila P580,000.00/unit

Total FOB Manila P1,160,000.00

TERMS : CASH

DELIVERY : 60-90 days from date of order.

VALIDITY : Subject to our final confirmation.

WARRANTY : One (1) full year against factory defect.

Very truly
yours,

POWER
SYSTEMS,
INC.

(Sgd.)

E. D. Daclan

To be sure, letters and telegrams are admissible in evidence but these are, however, subject to the general principles of
42
evidence and to various rules relating to documentary evidence. Hence, in one case, it was held that a letter from an
automobile dealer offering an allowance for an automobile upon purchase of a new automobile after repairs had been
completed, was not a "price current" or "commercial list" within the statute which made such items presumptive evidence
of the value of the article specified therein. The letter was not admissible in evidence as a "commercial list" even though
43
the clerk of the dealer testified that he had written the letter in due course of business upon instructions of the dealer.

But even on the theory that the Court of Appeals correctly ruled on the admissibility of those letters or communications
when it held that unless "plainly irrelevant, immaterial or incompetent," evidence should better be admitted rather than
44
rejected on "doubtful or technical grounds," the same pieces of evidence, however, should not have been given
probative weight. This is a distinction we wish to point out. Admissibility of evidence refers to the question of whether or
45
not the circumstance (or evidence) is to considered at all. On the other hand, the probative value of evidence refers to
46
the question of whether or not it proves an issue. Thus, a letter may be offered in evidence and admitted as such but its
evidentiary weight depends upon the observance of the rules on evidence. Accordingly, the author of the letter should be
presented as witness to provide the other party to the litigation the opportunity to question him on the contents of the
letter. Being mere hearsay evidence, failure to present the author of the letter renders its contents suspect. As earlier
stated, hearsay evidence, whether objected to or not, has no probative value. Thus:

The courts differ as to the weight to be given to hearsay evidence admitted without objection. Some hold
that when hearsay has been admitted without objection, the same may be considered as any other
properly admitted testimony. Others maintain that it is entitled to no more consideration than if it had been
excluded.

The rule prevailing in this jurisdiction is the latter one. Our Supreme Court held that although the question
of admissibility of evidence can not be raised for the first time on appeal, yet if the evidence is hearsay it
has no probative value and should be disregarded whether objected to or not. "If no objection is made" —
quoting Jones on Evidence — "it (hearsay) becomes evidence by reason of the want of such objection
even though its admission does not confer upon it any new attribute in point of weight. Its nature and
quality remain the same, so far as its intrinsic weakness and incompetency to satisfy the mind are
concerned, and as opposed to direct primary evidence, the latter always prevails.

The failure of the defense counsel to object to the presentation of incompetent evidence, like hearsay
evidence or evidence that violates the rules of res inter alios acta, or his failure to ask for the striking out
of the same does not give such evidence any probative value. But admissibility of evidence should not be
47
equated with weight of evidence. Hearsay evidence whether objected to or not has no probative value.

48
Accordingly, as stated at the outset, damages may not be awarded on the basis of hearsay evidence.

Nonetheless, the non-admissibility of said exhibits does not mean that it totally deprives private respondent of any redress
for the loss of its vessel. This is because in Lufthansa German Airlines v. Court of Appeals, 49 the Court said:

In the absence of competent proof on the actual damage suffered, private respondent is "entitled to
nominal damages which, as the law says, is adjudicated in order that a right of the plaintiff, which has
been violated or invaded by defendant, may be vindicated and recognized, and not for the purpose of
indemnifying the plaintiff for any loss suffered." [Emphasis supplied].

Nominal damages are awarded in every obligation arising from law, contracts, quasi-contracts, acts or omissions
50
punished by law, and quasi-delicts, or in every case where property right has been invaded. Under Article 2223 of the
Civil Code, "(t)he adjudication of nominal damages shall preclude further contest upon the right involved and all accessory
questions, as between the parties to the suit, or their respective heirs and assigns."

Actually, nominal damages are damages in name only and not in fact. Where these are allowed, they are not treated as
51
an equivalent of a wrong inflicted but simply in recognition of the existence of a technical injury. However, the amount to
be awarded as nominal damages shall be equal or at least commensurate to the injury sustained by private respondent
52
considering the concept and purpose of such damages. The amount of nominal damages to be awarded may also
53
depend on certain special reasons extant in the case.

Applying now such principles to the instant case, we have on record the fact that petitioner's vesselPetroparcel was at
fault as well as private respondent's complaint claiming the amount of P692,680.00 representing the fishing nets, boat
equipment and cargoes that sunk with the M/V Maria Efigenia XV. In its amended complaint, private respondent alleged
that the vessel had an actual value of P800,000.00 but it had been paid insurance in the amount of P200,000.00 and,
therefore, it claimed only the amount of P600,000.00. Ordinarily, the receipt of insurance payments should diminish the
total value of the vessel quoted by private respondent in his complaint considering that such payment is causally related
to the loss for which it claimed compensation. This Court believes that such allegations in the original and amended
complaints can be the basis for determination of a fair amount of nominal damages inasmuch as a complaint alleges the
ultimate facts constituting the plaintiffs cause of
54
action. Private respondent should be bound by its allegations on the amount of its claims.

With respect to petitioner's contention that the lower court did not acquire jurisdiction over the amended complaint
increasing the amount of damages claimed to P600,000.00, we agree with the Court of Appeals that the lower court
acquired jurisdiction over the case when private respondent paid the docket fee corresponding to its claim in its original
complaint. Its failure to pay the docket fee corresponding to its increased claim for damages under the amended
complaint should not be considered as having curtailed the lower court's jurisdiction. Pursuant to the ruling in Sun
55
Insurance Office, Ltd. (SIOL) v. Asuncion, the unpaid docket fee should be considered as a lien on the judgment even
though private respondent specified the amount of P600,000.00 as its claim for damages in its amended complaint.

Moreover, we note that petitioner did not question at all the jurisdiction of the lower court on the ground of insufficient
docket fees in its answers to both the amended complaint and the second amended complaint. It did so only in its motion
for reconsideration of the decision of the lower court after it had received an adverse decision. As this Court held
56
in Pantranco North Express, Inc. v. Court of Appeals, participation in all stages of the case before the trial court, that
included invoking its authority in asking for affirmative relief, effectively barred petitioner by estoppel from challenging the
court's jurisdiction. Notably, from the time it filed its answer to the second amended complaint on April 16,
57 58
1985, petitioner did not question the lower court's jurisdiction. It was only on December 29, 1989 when it filed its
motion for reconsideration of the lower court's decision that petitioner raised the question of the lower court's lack of
jurisdiction. Petitioner thus foreclosed its right to raise the issue of jurisdiction by its own inaction.

WHEREFORE, the challenged decision of the Court of Appeals dated October 14, 1992 in CA-G.R. CV No. 26680
affirming that of the Regional Trial Court of Caloocan City, Branch 121, is hereby MODIFIED insofar as it awarded actual
damages to private respondent Maria Efigenia Fishing Corporation in the amount of P6,438,048.00 for lack of evidentiary
bases therefor. Considering the fact, however, that: (1) technically petitioner sustained injury but which, unfortunately, was
not adequately and properly proved, and (2) this case has dragged on for almost two decades, we believe that an award
59
of Two Million (P2,000,000.00) in favor of private respondent as and for nominal damages is in order.

No pronouncement as to costs.

SO ORDERED.

G.R. No. 85464 October 3, 1991

DAVID P. LLORENTE, petitioner,

vs.
THE SANDIGANBAYAN (THIRD DIVISION), and PEOPLE OF THE PHILIPPINES, respondents.

Padilla Law Office for petitioner.

SAMIENTO, J.:

*
The petitioner questions the Decision of the Sandiganbayan holding him civilly liable in spite of an acquittal. The facts
are not disputed:

Atty. Llorente was employed in the PCA, a public corporation (Sec. 1, PD 1468) from 1975 to August 31, 1986,
when he resigned. He occupied the positions of Assistant Corporate Secretary for a year, then Corporate Legal
Counsel until November 2, 1981, and, finally, Deputy Administrator for Administrative Services, Finance Services,
Legal Affairs Departments. ...
As a result of a massive reorganization in 1981, hundreds of PCA employees resigned effective October 31,
1981. Among them were Mr. Curio, Mrs. Perez, Mr. Azucena, and Mrs. Javier (TSN, Oct. 22/87, p. 2; Exhs. M-2,
N-1, and O-1). They were all required to apply for PCA clearances in support of their gratuity benefits (Exhs. C,
M-2, N-1, and 0-1). Condition (a) of the clearance provided:

The clearance shall be signed by the PCA officers concemed only when there is no item appearing under
"PENDING ACCOUNTABILITY" or after every item previously entered thereunder is fully settled.
Settlement thereof shall be written in RED ink. (Exhs. D or D-1 and 1-B)

After the clearance was signed by the PCA officers concerned, it was to be approved, first, by Atty. Llorente, in
the case of a rank-and-file employee, or by Col. Duefias, the acting administrator, in the case of an officer, and
then by Atty. Rodriguez, the corporate auditor ...

Notwithstanding Condition (a) just quoted, the clearances of Mrs Perez and Mr. Azucena both dated October 30,
1981, were favorably acted upon by the CPA officers concerned, including Mrs. Sotto, acting for the accounting
division, even if the clearances showed they had pending accountabilities to the GSIS and the UCPB, and
subsequently approved by Attys. Llorente and Rodriguez (Exhs. M and N). Thereafter, the vouchers for their
gratuity benefits, also indicating their outstanding obligations were approved, among others, by Atty Llorente, and
their gratuity benefits released to them after deducting those accountabilities. ...

The clearanceof Mrs. Javier of the same date of October 30, 1991 was also signed by all PCA officers concerned,
including Mrs. Sotto even though the former had unsettled obligations noted thereon, viz 'SIS loan — P5,387.00
and UCPB car loan P19,705.00, or a total of P25,092.00, and later on approveed by Col. Dueñas, Mrs Javier
being an officer, and Atty. Rodriguez "Exh. (O)". Similariv the, voucher of Mrs Javier for her gratuity benefits
likewise recited her accountabilities of P25,092.00 plus P92.000.00, which was handwritten. Both accounts were
deducted from her gratuity benefits, and the balance released to her on November 16, 1981. The voucher passed
post-audit by Atty. Rodriguez on December 1, 1981 (Exhs. L,
L-1, L-2, and L-3).

The said P92,000.00 was the disallowed portion of the cash advances received by Mr. Curio in connection with
his duties as "super cargo" in the distribution of seed nuts throughout the country. He received them through and
in the name of Mrs. Javier from the UCPB. When the amount was disallowed, the UCPB withheld from the PCA
certain receivables; the latter, in turn, deducted the same amount from the gratuity benefits of Mrs. Javier, she
being primarily liable therefor (Exhs, L, L-1, L-2, and L-3), At the time of the deduction, the additional liquidation
papers had already been submitted and were in process. Just in case she would not be successful in having the
entire amount wiped out, she requested Mr. Curio, who admittedly received it, to execute, as he did, an affidavit
dated November 26, 1981, in which he assumed whatever portion thereof might not be allowed ...

The clearance of Mr. Curio dated November 4,1981, (Exh. D or D-1) likewise favorably passed all officers
concerned, including Mrs. Sotto, the latter signing despite the notation handwritten on December 8, 1981, that Mr.
Curio had pending accountabilities, namely: GSIS loan — 2,193.74, 201 accounts receivable — P3,897.75, and
UCPB loan — P3,623.49, or a total of P10,714.78. However, when the clearance was submitted to Atty. Llorente
for approval, he refused to approve it. For this reason, the clearance was held up in his office and did not reach
Atty. Rodriguez, ...

The reason given by Atty. Llorente was that when the clearance was presented to him on December 8, 1981, he
was already aware of the affidavit dated November 26, 1981, in which Mr. Curio assumed to pay any residual
liability for the disallowed cash advances, which at the time, December 8, 1981, stood at P92,000.00 (Exhs. 2 and
2-A). Moreover, Mr. Curio had other pending obligations noted on his clearance totalling Pl0,714.98 (Exh. 1-a). To
justify his stand, Atty. Llorente invoked Condition (a) of the clearance (Exhs. D and I-B), which, he said, was "very
stringent" and could not be interpreted in any other way ...

On December 1, 1982, Mr. Curio brought the matter of his unapproved clearance to Col. Dueñas (Exh. G), who
referred it to the Legal Department, which was under Atty. Llorente as Deputy Administrator for legal affairs. After
follow-up in that department, Mr. Curio received the answer of Col. Dueñas dated February 11, 1983, saying that
the clearance was being withheld until the former settled his alleged accountability for P92,000.00 reduced
already to P56,000.00 (Exh. I). Mr. Curio elevated the matter to the Chairman of the PCA Board, who indorsed it
to Col. Dueñas, who, in turn, sent it to the Legal Department. This time the latter, through its Manager, Manuel F.
Pastor, Jr., first cousin of Atty. Llorente, submitted a formal report under date of August 14, 1986, to the PCA
Chairman, justifying the action taken by Atty. Llorente and Col. Dueñas (Exh. 12). The PCA Chairman did not
respond in writing, but advised Mr. Curio to wait for the resolution of the Tanodbayan with which he (Mr. Curio)
had filed this case initially against Atty. Llorente and, later on, against Col. Duerias also. On August 31, 1986,
Atty. Llorente resigned from the PCA; the clearance, however, could not be issued because, according to the
PCA Corporate Legal Counsel, Arthur J. Liquate, the PCA did not want to preempt the Tanodbayan. On
November 12, 1986, the latter decided to institlite this case in court ...

Nine days thereafter, or on November 21, 1986, Mr. Curio accomplished another clearance, which no longer
imposed Condition (a) of his earlier clearance (Exh. E). The new clearance was approved, even if he still had
pending accountabilities, totalling P10,714.78 that had remained unsettled since December 1981. His voucher
was also approved, and his gratuity benefits paid to him in the middle of December 1986, after deducting those
obligations (Exh. F). Nothing was mentioned anymore about the disallowed cash advances of P92,000.00, which
had been reduced to P55,000.00 ...
 Between December 1981 and December 1986, Mr. Curio failed to get gainful employment; as a result, his family
literally went hungry, In 1981, he applied for work with the Philippine Cotton Authority, but was refused, because
he could not present his PCA clearance. The same thing happened when he sought employment with the
Philippine Fish Marketing Administration in January 1982. In both prospective employers, the item applied for was
P2,500.00 a month. At that time, he was only about 45 years old and still competitive in the job market. But in
1986, being already past 50 years, he could no longer be hired permanently, there being a regulation to that
effect. His present employment with the Philippine Ports Authority, which started on March 16, 1987, was casual
for that reason. Had his gratuity benefits been paid in 1981, he would have received a bigger amount, considering
1
that since then interest had accrued and the foreign exchange rate of the peso to the dollar had gone up ...

On December 10, 1986, an Information for violation of Section 3(c) of the Anti-Graft and Corrupt Practices Act was filed against the petitioner:

That on or about December 8, 1981 and/or subsequent thereto, in Quezon City, Philippines, and within the jurisdiction of this Honorable Court, accused David Pastor Llorente,
Deputy Administrator for the Philippine Coconut Authority (PCA), and as such was empowered among others to approve clearances of employees thereat, taking advantage of
his position, through evident bad faith, did then and there, wilfully and unlawfully refuse to issue a certificate of clearance to Herminigildo M. Curio, an employee thereat, who
was forced to resign as a result of the abolition of his item pursuant to the 1981 reorganization of the PCA, resulting in his deprivation to receive his gratuity benefits amounting
to P29,854.90, and to secure employment with other offices to his damage and prejudice, and that of the public service.

CONTRARY TO LAW.

Manila, Philippines, December 10, 1986. 2

As indicated at the outset, the Sandiganbayan acquitted the petitioner in the absence of any evidence that he acted in bad faith. 3
The Sandiganbayan cited three
considerations that precluded bad faith:

First, when Atty. Llorente withheld favorable action on the clearance on and after December 8, 1981, there was
still the possibility, remote though it was when viewed after the fact, that the accountability, which Mrs. Javier was
primarily liable therefor and which was fully settled by deduction from her gratuity benefits on November 16, 1981
(Exhs. L, L-1, L-2, and
L-3), would be reinstated and charged directly to Mr. Curio, for the latter executed on November 26, 1981, an
affidavit assuming responsibility for the obligation to the extent of the amount finally disallowed, and the affidavit
was on December 8, 1981, already pending consideration by the PCA management (Exhs. 2 and 2-A).

Second, Atty. Llorente was appointed Deputy Administrator for administrative services, finance services, and legal
affairs departments only on November 2,1981 (TSN, March 9/87, p. 3). Being new in his job, it was but natural
that he was zealous in the performance of his functions — in fact, overzealous in the protection of the PCA
interests, even if that protection was not necessary, as the P92,000.00 accountability had already been paid (See
Exh. 12, 4th paragraph).

Finally, Atty. Llorente was officiously, though incidentally, taking care also of the interest of Mrs. Javier who,
justice and equity demanded, should not be made to shoulder the P92,000.00 unliquidated cash advances, for the
reason that it was Mr. Curio who admittedly spent them or who, at the very least, should be able to get
reimbursement of what she paid, totally or partially, from his gratuity benefits (See Exh. 5, pp. 2-3 ). 4

The Sandiganbayan, as we also indicated earlier, took the petitioner to task civilly, and ordered him to pay
"compensatory damages" in the sum of P90,000.00. According to the Sandiganbayan, the petitioner was guilty
nonetheless of abuse of right under Article 19 of the Civil Code and as a public officer, he was liable for damages
suffered by the aggrieved party (under Article 27).

The petitioner claims that the Sandiganbayan's Decision is erroneous even if the Sandiganbayan acquitted him
therein, because he was never in bad faith as indeed found by the Sandiganbayan.

Under the 1985 Rules of Criminal Procedure, amending Rules 110 through 127 of the Rules of Court, the
judgment of the court shall include, in case of acquittal, and unless there is a clear showing that the act from
which the civil liability might arise did not exist, "a finding on the civil liability of the accused in favor of the
5 The rule is based on the provisions of substantive law, 6
offended party." that if acquittal proceeds from reasonable doubt, a civil action,
lies nonetheless.

The challenged judgment found that the petitioner, in refusing to issue a certificate of clearance in favor of the private
offended party, Herminigildo Curio, did not act with "evident bad faith," one of the elements of Section 3(e) of Republic Act
7
No. 3819. We agree with tile judgment, insofar as it found lack of evident bad faith by the petitioner, for the reasons cited
therein basicallv, because the petitioner was acting within the bounds of law in refusing to clear Curio although "[t]he
practice was that the clearance was nevertheless approved, and then the amount of the unsettled obligation was
8
deducted from the gratuity benefits of the employee."
We also agree with the Sandiganbaya (although the Sandiganbayan did not say it) that although the petitioner did not act with evident bad faith, he acted with bad faith nevertheless, for
which he should respond for damages.

The records show that the office practice indeed in the Philippine Coconut Authority was to clear the employee (retiree) and deduct his accountabilities from his gratuity benefits. There
seems to be no debate about the existence of this practice (the petitioner admitted it later on) and in fact, he cleared three employees on the condition that their obligations should be
deducted from their benefits. 9
We quote:

Confronted with these evidence (sic), Atty. Llorente conceded, albeit grudgingly, the existence of the practice by
the accounting division of not complying with Condition (a). He, however, claimed that he learned of the practice
only during the trial of the case and that he must have inadvertently approved the clearances of Mrs. Perez, Mr.
Azucena, and possibly others who were similarly situated (TSN, March 9/88,pp. 4-5). This the evidence
belies. First, he himself testified that when the clearance of Mr. Curio was presented to him in December 1981, it
already bore the signature of Mrs. Sotto of the accounting division and the notation set opposite her name about
the outstanding accountabilities of Mr. Curio; but he (Atty. Llorente) significantly did not ask her why she signed
the clearance (TSN, Nov. 24/87, pp. 24-25). Second, in that month, Atty. Llorente approved Mrs. Perez's and Mr.
Azucena's vouchers showing that hey has pending obligations to the GSIS and the UCPB, which were being
deducted from their gratuity benefits. Attached to those vouchers were the clearances as supporting documents
(Exhs. M-2 and N-1; TSN, Dec. 7/87, pp. 13,23). And third, in the same month, Atty. Llorente was already aware
of the cae of Mrs. Javier whose clearance and voucher were, according to him, preciselywithheld because of her
unsettled accountability for the cash advances of P92,000.00, but here later on given due course; and her gratuity
benefits released on November 16, 1981, minus that amount (TSN, Nov. 24/87, pp. 31-32; Exhs. L, L-1, L-2 and
L-3).

The cash advances of P92,000.00 were the primary obligation of Mrs. Javier, since they were secured through
her and in her name from the UCPB. That was why they were charged to and deducted from, her gratuity
benefits. Consequently, as early as that date and in so far as the PCA and the UCPB were concerned, the
accountability was already fully paid. The assumption of residual liability by Mr. Curio for the cash advances on
10
November 26, 1981, was a matter between him and Mrs. Javier (Exhs. 2 and 2-A).

The general rule is that this Court is bound by the findings of fact of the Sandiganbayan. 11

As we said, the acts of the petitioner were legal (that is, pursuant to procedures), as he insists in this petition, yet it does not follow, as we said, that his acts were done in good faith. For
emphasis, he had no valid reason to "go legal" all of a sudden with respect to Mr. Curio, since he had cleared three employees who, as the Sandiganbayan found, "were all similarly
circumstanced in that they all had pending obligations when, their clearances were filed for consideration, warranting similar official action." 12

The Court is convinced that the petitioner had unjustly discriminated against Mr. Curio.

It is no defense that the petitioner was motivated by no ill-will (a grudge, according to the Sandiganbayan), since the facts speak for themselves. It is no defense either that he was, after all,
complying merely with legal procedures since, as we indicated, he was not as strict with respect to the three retiring other employees. There can be no other logical conclusion that he was
acting unfairly, no more, no less, to Mr. Curio.

It is the essence of Article 19 of the Civil Code, under which the petitioner was made to pay damages, together with Article 27, that the performance of duty be done with justice and good
faith. In the case of Velayo vs. Shell Co. of the Philippines, 13 we held the defendant liable under Article 19 for disposing of its propertv — a perfectly legal act — in order to escape the
reach of a creditor. In two fairly more recent cases, Sevilla vs. Court of Appeals 14 and Valenzuela vs. Court of Appeals, 15
we held that a principal is liable under
Article 19 in terminating the agency — again, a legal act — when terminating the agency would deprive the agent of his
legitimate business.

We believe that the petitioner is liable under Article 19.

The Court finds the award of P90,000.00 to be justified bv Article 2202 of the Civil Code, which holds the defendant liable
for all "natural and probable" damages. Hennenegildo Cunct presented evidence that as a consequence of the petitioner's
refusal to clear him, he failed to land a job at the Philippine Cotton Authority and Philippine First Marketing Authority. He
also testified that a job in either office would have earned him salary of P2,500.00 a month, or P150,000.00 in five years.
Deducting his probable expenses of reasonably about P1,000.00 a month or P60,000.00 in five years, the petitioner owes
him a total actual damages of P90,000.00

WHEREFORE, premises considered, the Petition is DENIED. No pronouncement as to costs.

IT IS SO ORDERED.

G.R. No. L-56487 October 21, 1991

REYNALDA GATCHALIAN, petitioner,
vs.
ARSENIO DELIM and the HON. COURT OF APPEALS, respondents.

Pedro G. Peralta for petitioner.

Florentino G. Libatique for private respondent.

FELICIANO, J.:

At noon time on 11 July 1973, petitioner Reynalda Gatchalian boarded, as a paying passenger, respondent's "Thames"
mini bus at a point in San Eugenio, Aringay, La Union, bound for Bauang, of the same province. On the way, while the
bus was running along the highway in Barrio Payocpoc, Bauang, Union, "a snapping sound" was suddenly heard at one
part of the bus and, shortly thereafter, the vehicle bumped a cement flower pot on the side of the road, went off the road,
turned turtle and fell into a ditch. Several passengers, including petitioner Gatchalian, were injured. They were promptly
taken to Bethany Hospital at San Fernando, La Union, for medical treatment. Upon medical examination, petitioner was
found to have sustained physical injuries on the leg, arm and forehead, specifically described as follows: lacerated wound,
1
forehead; abrasion, elbow, left; abrasion, knee, left; abrasion, lateral surface, leg, left.

On 14 July 1973, while injured. passengers were confined in the hospital, Mrs. Adela Delim, wife of respondent, visited them and later paid for their hospitalization and medical expenses.
She also gave petitioner P12.00 with which to pay her transportation expense in going home from the hospital. However, before Mrs. Delim left, she had the injured passengers, including
petitioner, sign an already prepared Joint Affidavit which stated, among other things:

That we were passengers of Thames with Plate No. 52-222 PUJ Phil. 73 and victims after the said Thames met an accident at Barrio Payocpoc Norte, Bauang, La Union while
passing through the National Highway No. 3;

That after a thorough investigation the said Thames met the accident due to mechanical defect and went off the road and turned turtle to the east canal of the road into a creek
causing physical injuries to us;

xxx xxx xxx

That we are no longer interested to file a complaint, criminal or civil against the said driver and owner of the said Thames, because it was an accident and the said driver and
owner of the said Thames have gone to the extent of helping us to be treated upon our injuries.

xxx xxx xxx 2

(Emphasis supplied)

Notwithstanding this document, petitioner Gathalian filed with the then Court of First Instance of La Union an action extra contractu to recover compensatory and moral damages. She
alleged in the complaint that her injuries sustained from the vehicular mishap had left her with a conspicuous white scar measuring 1 by 1/2 inches on the forehead, generating mental
suffering and an inferiority complex on her part; and that as a result, she had to retire in seclusion and stay away from her friends. She also alleged that the scar diminished her facial
beauty and deprived her of opportunities for employment. She prayed for an award of: P10,000.00 for loss of employment and other opportunities; P10,000.00 for the cost of plastic surgery
for removal of the scar on her forehead; P30,000.00 for moral damages; and P1,000.00 as attorney's fees.

In defense, respondent averred that the vehicular mishap was due to force majeure, and that petitioner had already been paid and moreover had waived any right to institute any action
against him (private respondent) and his driver, when petitioner Gatchalian signed the Joint Affidavit on 14 July 1973.

After trial, the trial court dismissed the complaint upon the ground that when petitioner Gatchalian signed the Joint Affidavit, she relinquished any right of action (whether criminal or civil)
that she may have had against respondent and the driver of the mini-bus.

On appeal by petitioner, the Court of Appeals reversed the trial court's conclusion that there had been a valid waiver, but affirmed the dismissal of the case by denying petitioner's claim for
damages:
 We are not in accord, therefore, of (sic) the ground of the trial court's dismissal of the complaint, although we conform to the trial court's disposition of the case — its dismissal.

IN VIEW OF THE FOREGOING considerations, there being no error committed by the lower court in dismissing the plaintiff-appellant's complaint, the judgment of dismissal is
hereby affirmed.

Without special pronouncement as to costs.

SO ORDERED. 3

In the present Petition for Review filed in forma pauperis, petitioner assails the decision of the Court of Appeals and ask this Court to award her actual or compensatory damages as well as
moral damages.

We agree with the majority of the Court of Appeals who held that no valid waiver of her cause of action had been made by petitioner. The relevant language of the Joint Affidavit may be
quoted again:

That we are no longer interested to file a complaint, criminal or civil against the said driver and owner of the said Thames, because it was an accident and the said driver and
owner of the said Thames have gone to the extent of helping us to be treated upon our injuries. (Emphasis supplied)

A waiver, to be valid and effective, must in the first place be couched in clear and unequivocal terms which leave no doubt as to the intention of a person to give up a right or benefit which
legally pertains to him. 4
A waiver may not casually be attributed to a person when the terms thereof do not explicitly and clearly
evidence an intent to abandon a right vested in such person.

The degree of explicitness which this Court has required in purported waivers is illustrated in Yepes and Susaya v. Samar
Express Transit (supra), where the Court in reading and rejecting a purported waiver said:

. . . It appears that before their transfer to the Leyte Provincial Hospital, appellees were asked to sign as, in fact,
they signed the document Exhibit I wherein they stated that "in consideration of the expenses which said operator
has incurred in properly giving us the proper medical treatment, we hereby manifest our desire to waive any and
all claims against the operator of the Samar Express Transit."

xxx xxx xxx

Even a cursory examination of the document mentioned above will readily show that appellees did not actually
waive their right to claim damages from appellant for the latter's failure to comply with their contract of carriage. All
that said document proves is that they expressed a "desire" to make the waiver — which obviously is not the
same as making an actual waiver of their right. A waiver of the kind invoked by appellant must be clear and
unequivocal (Decision of the Supreme Court of Spain of July 8, 1887) — which is not the case of the one relied
upon in this appeal. (Emphasis supplied)

If we apply the standard used in Yepes and Susaya, we would have to conclude that the terms of the Joint Affidavit in the
instant case cannot be regarded as a waiver cast in "clear and unequivocal" terms. Moreover, the circumstances under
which the Joint Affidavit was signed by petitioner Gatchalian need to be considered. Petitioner testified that she was still
reeling from the effects of the vehicular accident, having been in the hospital for only three days, when the purported
waiver in the form of the Joint Affidavit was presented to her for signing; that while reading the same, she experienced
dizziness but that, seeing the other passengers who had also suffered injuries sign the document, she too signed without
bothering to read the Joint Affidavit in its entirety. Considering these circumstances there appears substantial doubt
whether petitioner understood fully the import of the Joint Affidavit (prepared by or at the instance of private respondent)
she signed and whether she actually intended thereby to waive any right of action against private respondent.

Finally, because what is involved here is the liability of a common carrier for injuries sustained by passengers in respect of
whose safety a common carrier must exercise extraordinary diligence, we must construe any such purported waiver most
strictly against the common carrier. For a waiver to be valid and effective, it must not be contrary to law, morals, public
policy or good
5
customs. To uphold a supposed waiver of any right to claim damages by an injured passenger, under circumstances like
those exhibited in this case, would be to dilute and weaken the standard of extraordinary diligence exacted by the law
6
from common carriers and hence to render that standard unenforceable. We believe such a purported waiver is
offensive to public policy.

Petitioner Gatchalian also argues that the Court of Appeals, having by majority vote held that there was no enforceable
waiver of her right of action, should have awarded her actual or compensatory and moral damages as a matter of course.

We have already noted that a duty to exercise extraordinary diligence in protecting the safety of its passengers is imposed
7
upon a common carrier. In case of death or injuries to passengers, a statutory presumption arises that the common
carrier was at fault or had acted negligently "unless it proves that it [had] observed extraordinary diligence as prescribed in
8
Articles 1733 and 1755." In fact, because of this statutory presumption, it has been held that a court need not even make
 9
an express finding of fault or negligence on the part of the common carrier in order to hold it liable. To overcome this
presumption, the common carrier must slow to the court that it had exercised extraordinary diligence to prevent the
10
injuries. The standard of extraordinary diligence imposed upon common carriers is considerably more demanding than
the standard of ordinary diligence, i.e., the diligence of a good paterfamilias established in respect of the ordinary relations
between members of society. A common carrier is bound to carry its passengers safely" as far as human care and
11
foresight can provide, using the utmost diligence of a very cautious person, with due regard to all the circumstances".

Thus, the question which must be addressed is whether or not private respondent has successfully proved that he had exercised extraordinary diligence to prevent the mishap involving his
mini-bus. The records before the Court are bereft of any evidence showing that respondent had exercised the extraordinary diligence required by law. Curiously, respondent did not even
attempt, during the trial before the court a quo, to prove that he had indeed exercised the requisite extraordinary diligence. Respondent did try to exculpate himself from liability by alleging
that the mishap was the result of force majeure. But allegation is not proof and here again, respondent utterly failed to substantiate his defense of force majeure. To exempt a common
carrier from liability for death or physical injuries to passengers upon the ground of force majeure, the carrier must clearly show not only that the efficient cause of the casualty was entirely
independent of the human will, but also that it was impossible to avoid. Any participation by the common carrier in the occurrence of the injury will defeat the defense of force
majeure. In Servando v. Philippine Steam Navigation Company, 12
the Court summed up the essential characteristics of force majeure by
quoting with approval from the Enciclopedia Juridica Española:

Thus, where fortuitous event or force majeure is the immediate and proximate cause of the loss, the obligor is
exempt from liability non-performance. The Partidas, the antecedent of Article 1174 of the Civil Code, defines
"caso fortuito" as 'an event that takes place by accident and could not have been foreseen. Examples of this are
destruction of houses, unexpected fire, shipwreck, violence of robber.

In its dissertation on the phrase "caso fortuito" the Enciclopedia Juridica Española says: 'In legal sense and,
consequently, also in relation to contracts, a "caso fortuito" presents the following essential characteristics: (1) the
cause of the unforeseen and unexpected occurence, or of the failure of the debtor to comply with his obligation,
must be independent of the human will; (2) it must be impossible to foresee the event which constitutes the "caso
fortuito", or if it can be foreseen, it must be impossible to avoid; (3) the occurrence must be such as to render it
impossible for the debtor to fulfill his obligation in a normal manner; and (4) the obligor must be free from any
participation in the aggravation of the injury resulting to the creditor.

Upon the other hand, the record yields affirmative evidence of fault or negligence on the part of respondent common
carrier. In her direct examination, petitioner Gatchalian narrated that shortly before the vehicle went off the road and into a
ditch, a "snapping sound" was suddenly heard at one part of the bus. One of the passengers, an old woman, cried out,
"What happened?" ("Apay addan samet nadadaelen?"). The driver replied, nonchalantly, "That is only normal" ("Ugali ti
makina dayta"). The driver did not stop to check if anything had gone wrong with the bus. Moreover, the driver's reply
necessarily indicated that the same "snapping sound" had been heard in the bus on previous occasions. This could only
mean that the bus had not been checked physically or mechanically to determine what was causing the "snapping sound"
which had occurred so frequently that the driver had gotten accustomed to it. Such a sound is obviously alien to a motor
vehicle in good operating condition, and even a modicum of concern for life and limb of passengers dictated that the bus
be checked and repaired. The obvious continued failure of respondent to look after the roadworthiness and safety of the
bus, coupled with the driver's refusal or neglect to stop the mini-bus after he had heard once again the "snapping sound"
and the cry of alarm from one of the passengers, constituted wanton disregard of the physical safety of the passengers,
and hence gross negligence on the part of respondent and his driver.

We turn to petitioner's claim for damages. The first item in that claim relates to revenue which petitioner said she failed to
realize because of the effects of the vehicular mishap. Petitioner maintains that on the day that the mini-bus went off the
road, she was supposed to confer with the district supervisor of public schools for a substitute teacher's job, a job which
she had held off and on as a "casual employee." The Court of Appeals, however, found that at the time of the accident,
she was no longer employed in a public school since, being a casual employee and not a Civil Service eligible, she had
been laid off. Her employment as a substitute teacher was occasional and episodic, contingent upon the availability of
vacancies for substitute teachers. In view of her employment status as such, the Court of Appeals held that she could not
13
be said to have in fact lost any employment after and by reason of the accident. Such was the factual finding of the
Court of Appeals, a finding entitled to due respect from this Court. Petitioner Gatchalian has not submitted any basis for
14
overturning this finding of fact, and she may not be awarded damages on the basis of speculation or conjecture.

Petitioner's claim for the cost of plastic surgery for removal of the scar on her forehead, is another matter. A person is entitled to the physical integrity of his or her body; if that integrity is
violated or diminished, actual injury is suffered for which actual or compensatory damages are due and assessable. Petitioner Gatchalian is entitled to be placed as nearly as possible in
the condition that she was before the mishap. A scar, especially one on the face of the woman, resulting from the infliction of injury upon her, is a violation of bodily integrity, giving raise to
a legitimate claim for restoration to her conditio ante. If the scar is relatively small and does not grievously disfigure the victim, the cost of surgery may be expected to be correspondingly
modest. In Araneta, et al. vs. Areglado, et al., 15 this Court awarded actual or compensatory damages for, among other things, the surgical removal of the scar on the face of a young boy
who had been injured in a vehicular collision. The Court there held:

We agree with the appellants that the damages awarded by the lower court for the injuries suffered by Benjamin Araneta are inadequate. In allowing not more than P1,000.00
as compensation for the "permanent deformity and — something like an inferiority complex" as well as for the "pathological condition on the left side of the jaw" caused to said
plaintiff, the court below overlooked the clear evidence on record that to arrest the degenerative process taking place in the mandible and restore the injured boy to a nearly
normal condition, surgical intervention was needed, for which the doctor's charges would amount to P3,000.00, exclusive of hospitalization fees, expenses and
medicines. Furthermore, the operation, according to Dr. Diño, would probably have to be repeated in order to effectuate a complete cure, while removal of the scar on the face
obviously demanded plastic surgery.

xxx xxx xxx

 The father's failure to submit his son to a plastic operation as soon as possible does not prove that such treatment is not called for. The damage to the jaw and the existence of
the scar in Benjamin Araneta's faceare physical facts that can not be reasoned out of existence. That the injury should be treated in order to restore him as far as possible to
his original condition is undeniable. The father's delay, or even his negligence, should not be allowed to prejudice the son who has no control over the parent's action nor
impair his right to a full indemnity.

. . . Still, taking into account the necessity and cost of corrective measures to fully repair the damage; the pain suffered by the injured party; his feelings of inferiority due to
consciousness of his present deformity, as well as the voluntary character of the injury inflicted; and further considering that a repair, however, skillfully conducted, is never
equivalent to the original state, we are of the opinion that the indemnity granted by the trial court should be increased to a total of P18,000.00. (Emphasis supplied)

Petitioner estimated that the cost of having her scar surgically removed was somewhere between P10,000.00 to P15,000.00. 16
Upon the other hand, Dr. Fe Tayao
Lasam, a witness presented as an expert by petitioner, testified that the cost would probably be between P5,000.00 to
17
P10,000.00. In view of this testimony, and the fact that a considerable amount of time has lapsed since the mishap in
1973 which may be expected to increase not only the cost but also very probably the difficulty of removing the scar, we
consider that the amount of P15,000.00 to cover the cost of such plastic surgery is not unreasonable.

Turning to petitioner's claim for moral damages, the long-established rule is that moral damages may be awarded where
18
gross negligence on the part of the common carrier is shown. Since we have earlier concluded that respondent
common carrier and his driver had been grossly negligent in connection with the bus mishap which had injured petitioner
and other passengers, and recalling the aggressive manuevers of respondent, through his wife, to get the victims to waive
their right to recover damages even as they were still hospitalized for their injuries, petitioner must be held entitled to such
moral damages. Considering the extent of pain and anxiety which petitioner must have suffered as a result of her physical
injuries including the permanent scar on her forehead, we believe that the amount of P30,000.00 would be a reasonable
19
award. Petitioner's claim for P1,000.00 as atttorney's fees is in fact even more modest.

WHEREFORE, the Decision of the Court of Appeals dated 24 October 1980, as well as the decision of the then Court of First Instance of La Union dated 4 December 1975 are hereby
REVERSED and SET ASIDE.Respondent is hereby ORDERED to pay petitioner Reynalda Gatchalian the following sums: 1) P15,000.00 as actual or compensatory damages to cover the
cost of plastic surgery for the removal of the scar on petitioner's forehead; 2) P30,000.00 as moral damages; and 3) P1,000.00 as attorney's fees, the aggregate amount to bear interest at
the legal rate of 6% per annum counting from the promulgation of this decision until full payment thereof. Costs against private respondent.

SO ORDERED.

.R. No. 172122 June 22, 2007

MERCURY DRUG CORPORATION and ROLANDO J. DEL ROSARIO, petitioners,

vs.
SPOUSES RICHARD HUANG and CARMEN HUANG, and STEPHEN HUANG, respondents.

DECISION

PUNO, C.J.:

1 2
On appeal are the Decision and Resolution of the Court of Appeals in CA-G.R. CV No. 83981, dated February 16, 2006
3
and March 30, 2006, respectively which affirmed with modification the Decision of the Regional Trial Court (RTC) of
Makati City, dated September 29, 2004. The trial court found petitioners jointly and severally liable to pay respondents
damages for the injuries sustained by respondent Stephen Huang, son of respondent spouses Richard and Carmen
Huang.

First, the facts:

Petitioner Mercury Drug Corporation (Mercury Drug) is the registered owner of a six-wheeler 1990 Mitsubishi Truck with
plate number PRE 641 (truck). It has in its employ petitioner Rolando J. del Rosario as driver. Respondent spouses
Richard and Carmen Huang are the parents of respondent Stephen Huang and own the red 1991 Toyota Corolla GLI
Sedan with plate number PTT 775 (car).

These two vehicles figured in a road accident on December 20, 1996 at around 10:30 p.m. within the municipality of
Taguig, Metro Manila. Respondent Stephen Huang was driving the car, weighing 1,450 kg., while petitioner Del Rosario
was driving the truck, weighing 14,058 kg. Both were traversing the C-5 Highway, north bound, coming from the general
direction of Alabang going to Pasig City. The car was on the left innermost lane while the truck was on the next lane to its
right, when the truck suddenly swerved to its left and slammed into the front right side of the car. The collision hurled the
car over the island where it hit a lamppost, spun around and landed on the opposite lane. The truck also hit a lamppost,
ran over the car and zigzagged towards, and finally stopped in front of Buellah Land Church.

At the time of the accident, petitioner Del Rosario only had a Traffic Violation Receipt (TVR). His driver’s license had been
confiscated because he had been previously apprehended for reckless driving.
The car, valued at ₱300,000.00, was a total wreck. Respondent Stephen Huang sustained massive injuries to his spinal
cord, head, face, and lung. Despite a series of operations, respondent Stephen Huang is paralyzed for life from his chest
down and requires continuous medical and rehabilitation treatment.

Respondents fault petitioner Del Rosario for committing gross negligence and reckless imprudence while driving, and
petitioner Mercury Drug for failing to exercise the diligence of a good father of a family in the selection and supervision of
its driver.

In contrast, petitioners allege that the immediate and proximate cause of the accident was respondent Stephen Huang’s
recklessness. According to petitioner Del Rosario, he was driving on the left innermost lane when the car bumped the
truck’s front right tire. The truck then swerved to the left, smashed into an electric post, crossed the center island, and
stopped on the other side of the highway. The car likewise crossed over the center island and landed on the same portion
of C-5. Further, petitioner Mercury Drug claims that it exercised due diligence of a good father of a family in the selection
and supervision of all its employees.

The trial court, in its Decision dated September 29, 2004, found petitioners Mercury Drug and Del Rosario jointly and
severally liable to pay respondents actual, compensatory, moral and exemplary damages, attorney’s fees, and litigation
expenses. The dispositive portion reads:

WHEREFORE, judgment is rendered finding defendants Mercury Drug Corporation, Inc. and Rolando del Rosario, jointly
and severally liable to pay plaintiffs Spouses Richard Y. Huang and Carmen G. Huang, and Stephen Huang the following
amounts:

1. Two Million Nine Hundred Seventy Three Thousand Pesos (₱2,973,000.00) actual damages;

2. As compensatory damages:

a. Twenty Three Million Four Hundred Sixty One Thousand, and Sixty-Two Pesos (₱23,461,062.00) for life care cost of
Stephen;

b. Ten Million Pesos (₱10,000,000.00) as and for lost or impaired earning capacity of Stephen;

3. Four Million Pesos (₱4,000,000.00) as moral damages;

4. Two Million Pesos (₱2,000,000.00) as exemplary damages; and

4
5. One Million Pesos (₱1,000,000.00) as attorneys fees and litigation expense.

On February 16, 2006, the Court of Appeals affirmed the decision of the trial court but reduced the award of moral
damages to ₱1,000,000.00. The appellate court also denied the motion for reconsideration filed by petitioners.

Hence, this appeal.

Petitioners cite the following grounds for their appeal:

1. That the subject Decision which dismissed the appeal of petitioners herein but AFFIRMED WITH MODIFICATION the
decision of the Regional Trial Court, Branch 64, Makati City, in that the award of moral damages was reduced to
₱1,000,000.00 and its Resolution dated March 30, 2006, which dismissed outright the Motion for Reconsideration must be
set aside because the Honorable Court of Appeals committed reversible error:

A. IN DENYING OUTRIGHTLY THE MOTION FOR RECONSIDERATION ON ALLEGEDLY BEING FILED OUT OF TIME
FOR ONE DAY;

B. IN ACCORDING GREATER WEIGHT TO THE EVIDENCE ADDUCED BY THE RESPONDENTS HEREIN AND
COMPLETELY DISREGARDING THE DEFENSE INTERPOSED BY THE PETITIONERS HEREIN;

C. IN DISREGARDING COMPLETELY ALL EVIDENCES PRESENTED BY THE PETITIONERS HEREIN AND

PROCEEDED TO RENDER ITS DECISION BASED ON PRESUMPTIONS AND PERSONAL OPINIONS OF PEOPLE
WHO ARE NOT WITNESSES TO THE ACCIDENT;

D. IN AWARDING DAMAGES IN FAVOR OF RESPONDENTS HEREIN;

E. IN FINDING THAT MERCURY DRUG CORPORATION FAILED TO EXERCISE THE DILIGENCE REQUIRED IN
SUPERVISING ITS EMPLOYEES DESPITE OVERWHELMING EVIDENCE PRESENTED BY PETITIONER COMPANY;

F. IN FINDING THAT PETITIONER ROLANDO DEL ROSARIO WAS NEGLIGENT IN DRIVING THE TRUCK AT THE
TIME OF ACCIDENT AND TOTALLY DISREGARDING THE EVIDENCES PRESENTED DURING THE TRIAL OF THE
CASE.
G. IN PRESENTING ONLY IN THE DECISION TESTIMONIES FAVORABLE TO THE RESPONDENTS HEREIN AND
COMPLETELY DISREGARDING THE EVIDENCES PRESENTED BY THE PETITIONERS HEREIN WHICH
CONTRADICTED SUCH TESTIMONIES NOT ONLY THROUGH ORAL TESTIMONIES BUT AS WELL AS
5
DOCUMENTARY EVIDENCES.

We affirm the findings of the trial court and the appellate court that petitioner Del Rosario was negligent. The evidence
does not support petitioners’ claim that at the time of the accident, the truck was at the left inner lane and that it was
respondent Stephen Huang’s car, at its right, which bumped the right front side of the truck. Firstly, petitioner Del Rosario
6
could not precisely tell which part of the truck was hit by the car, despite the fact that the truck was snub-nosed and a lot
higher than the car. Petitioner Del Rosario could not also explain why the car landed on the opposite lane of C-5 which
was on its left side. He said that "the car did not pass in front of him after it hit him or under him or over him or behind
7
him." If the truck were really at the left lane and the car were at its right, and the car hit the truck at its front right side, the
car would not have landed on the opposite side, but would have been thrown to the right side of the C-5 Highway.
Noteworthy on this issue is the testimony of Dr. Marlon Rosendo H. Daza, an expert in the field of physics. He conducted
a study based on the following assumptions provided by respondents:

1. Two vehicles collided;

2. One vehicle is ten times heavier, more massive than the other;

3. Both vehicles were moving in the same direction and at the same speed of about 85 to 90 kilometers per hour;

4. The heavier vehicle was driving at the innermost left lane, while the lighter vehicle was at its right.

Dr. Daza testified that given the foregoing assumptions, if the lighter vehicle hits the right front portion of the heavier
vehicle, the general direction of the light vehicle after the impact would be to the right side of the heavy vehicle, not the
other way around. The truck, he opined, is more difficult to move as it is heavier. It is the car, the lighter vehicle, which
would move to the right of, and away from the truck. Thus, there is very little chance that the car will move towards the
opposite side, i.e., to the left of the truck.

Dr. Daza also gave a further study on the basis of the same assumptions except that the car is on the left side of the
truck, in accordance with the testimony of respondent Stephen Huang. Dr. Daza concluded that the general direction of
the car after impact would be to the left of the truck. In this situation, the middle island against which the car was pinned
8
would slow down the car, and enable the truck to catch up and hit the car again, before running over it.

To support their thesis, petitioners tried to show the damages that the truck sustained at its front right side. The attempt
does not impress. The photographs presented were taken a month after the accident, and Rogelio Pantua, the
automechanic who repaired the truck and authenticated the photographs, admitted that there were damages also on the
9
left side of the truck.

Worse still, petitioner Del Rosario further admitted that after the impact, he lost control of the truck and failed to apply his
brakes. Considering that the car was smaller and lighter than the six-wheeler truck, the impact allegedly caused by the car
when it hit the truck could not possibly be so great to cause petitioner to lose all control that he failed to even step on the
brakes. He testified, as follows:

ATTY. DIAZ:

May I proceed, Your Honor. You were able to apply the brakes, were you sir?

WITNESS:

No more, sir, because I went over the island.

ATTY. DIAZ:

Because as you said you lost control, correct sir?

WITNESS:

Yes, sir.

ATTY. DIAZ:

In other words, sir from the time your truck was hit according to you up to the time you rested on the shoulder, you
traveled fifty meters?

WITNESS:

Yes, sir, about that distance.

ATTY. DIAZ:

And this was despite the fact that you were only traveling at the speed of seventy five kilometers per hour, jumped over
the island, hit the lamppost, and traveled the three lanes of the opposite lane of C-5 highway, is that what you want to
impress upon this court?

WITNESS:

10
Yes, sir.

We therefore find no cogent reason to disturb the findings of the RTC and the Court of Appeals. The evidence proves
petitioner Del Rosario’s negligence as the direct and proximate cause of the injuries suffered by respondent Stephen
Huang. Petitioner Del Rosario failed to do what a reasonable and prudent man would have done under the circumstances.

We now come to the liability of petitioner Mercury Drug as employer of Del Rosario. Articles 2176 and 2180 of the Civil
Code provide:

Art. 2176. Whoever by act or omission causes damage to another, there being fault or negligence, is obliged to pay for the
damage done. Such fault or negligence, if there is no pre-existing contractual relation between the parties, is called a
quasi-delict and is governed by the provisions of this Chapter.

Art. 2180. The obligation imposed by article 2176 is demandable not only for one’s own acts or omissions, but also for
those of persons for whom one is responsible.

xxx

The owners and managers of an establishment or enterprise are likewise responsible for damages caused by their
employees in the service of the branches in which the latter are employed or on the occasion of their functions.

xxx

The liability of the employer under Art. 2180 of the Civil Code is direct or immediate. It is not conditioned on a prior
recourse against the negligent employee, or a prior showing of insolvency of such employee. It is also joint and solidary
11
with the employee.

To be relieved of liability, petitioner Mercury Drug should show that it exercised the diligence of a good father of a family,
both in the selection of the employee and in the supervision of the performance of his duties. Thus, in the selection of its
prospective employees, the employer is required to examine them as to their qualifications, experience, and service
12
records. With respect to the supervision of its employees, the employer should formulate standard operating procedures,
monitor their implementation, and impose disciplinary measures for their breach. To establish compliance with these
13
requirements, employers must submit concrete proof, including documentary evidence.

In the instant case, petitioner Mercury Drug presented testimonial evidence on its hiring procedure. According to Mrs.
Merlie Caamic, the Recruitment and Training Manager of petitioner Mercury Drug, applicants are required to take
theoretical and actual driving tests, and psychological examination. In the case of petitioner Del Rosario, however, Mrs.
Caamic admitted that he took the driving tests and psychological examination when he applied for the position of Delivery
Man, but not when he applied for the position of Truck Man. Mrs. Caamic also admitted that petitioner Del Rosario used a
Galant which is a light vehicle, instead of a truck during the driving tests. Further, no tests were conducted on the motor
skills development, perceptual speed, visual attention, depth visualization, eye and hand coordination and steadiness of
petitioner Del Rosario. No NBI and police clearances were also presented. Lastly, petitioner Del Rosario attended only
three driving seminars – on June 30, 2001, February 5, 2000 and July 7, 1984. In effect, the only seminar he attended
before the accident which occurred in 1996 was held twelve years ago in 1984.

It also appears that petitioner Mercury Drug does not provide for a back-up driver for long trips. At the time of the accident,
petitioner Del Rosario has been out on the road for more than thirteen hours, without any alternate. Mrs. Caamic testified
14
that she does not know of any company policy requiring back-up drivers for long trips.

Petitioner Mercury Drug likewise failed to show that it exercised due diligence on the supervision and discipline over its
employees. In fact, on the day of the accident, petitioner Del Rosario was driving without a license. He was holding a TVR
for reckless driving. He testified that he reported the incident to his superior, but nothing was done about it. He was not
15
suspended or reprimanded. No disciplinary action whatsoever was taken against petitioner Del Rosario. We therefore
affirm the finding that petitioner Mercury Drug has failed to discharge its burden of proving that it exercised due diligence
in the selection and supervision of its employee, petitioner Del Rosario.

We now consider the damages which respondents should recover from the petitioners.

The trial court awarded the following amounts:

1. Two Million Nine Hundred Seventy-Three Thousand Pesos (₱2,973,000.00) actual damages;

2. As compensatory damages:
a. Twenty-Three Million Four Hundred Sixty One Thousand, and Sixty-Two Pesos (₱23,461,062.00) for life care cost of
Stephen;

b. Ten Million Pesos (₱10,000,000.00) as and for lost or impaired earning capacity of Stephen;

3. Four Million Pesos (₱4,000,000.00) as moral damages;

4. Two Million Pesos (₱2,000,000.00) as exemplary damages; and

5. One Million Pesos (₱1,000,000.00) as attorney’s fees and litigation expense.

The Court of Appeals affirmed the decision of the trial court but reduced the award of moral damages to ₱1,000,000.00.

With regard to actual damages, Art. 2199 of the Civil Code provides that "[E]xcept as provided by law or by stipulation one
is entitled to an adequate compensation only for such pecuniary loss suffered by him as he has duly proved x x x." In the
instant case, we uphold the finding that the actual damages claimed by respondents were supported by receipts. The
amount of ₱2,973,000.00 represented cost of hospital expenses, medicines, medical services and supplies, and nursing
care services provided respondent Stephen from December 20, 1996, the day of the accident, until December 1998.

Petitioners are also liable for all damages which are the natural and probable consequences of the act or omission
16
complained of. The doctors who attended to respondent Stephen are one in their prognosis that his chances of walking
again and performing basic body functions are nil. For the rest of his life, he will need continuous rehabilitation and
therapy to prevent further complications such as pneumonia, bladder and rectum
infection, renal failure, sepsis and severe bed sores, osteoporosis and fractures, and other spinal cord injury-related
conditions. He will be completely dependent on the care and support of his family. We thus affirm the award of
₱23,461,062.00 for the life care cost of respondent Stephen Huang, based on his average monthly expense and the
actuarial computation of the remaining years that he is expected to live; and the conservative amount of ₱10,000,000.00,
17
as reduced by the trial court, for the loss or impairment of his earning capacity, considering his age, probable life
expectancy, the state of his health, and his mental and physical condition before the accident. He was only seventeen
years old, nearly six feet tall and weighed 175 pounds. He was in fourth year high school, and a member of the school
varsity basketball team. He was also class president and editor-in-chief of the school annual. He had shown very good
leadership qualities. He was looking forward to his college life, having just passed the entrance examinations of the
University of the Philippines, De La Salle University, and the University of Asia and the Pacific. The University of Sto.
Tomas even offered him a chance to obtain an athletic scholarship, but the accident prevented him from attending the
basketball try-outs. Without doubt, he was an exceptional student. He excelled both in his academics and extracurricular
undertakings. He is intelligent and motivated, a go-getter, as testified by Francisco Lopez, respondent Stephen Huang’s
18
godfather and a bank executive. Had the accident not happened, he had a rosy future ahead of him. He wanted to
embark on a banking career, get married and raise children. Taking into account his outstanding abilities, he would have
enjoyed a successful professional career in banking. But, as Mr. Lopez stated, it is highly unlikely for someone like
respondent to ever secure a job in a bank. To his knowledge, no bank has ever hired a person suffering with
19
the kind of disability as Stephen Huang’s.

We likewise uphold the award of moral and exemplary damages and attorney’s fees.

"The award of moral damages is aimed at a restoration, within the limits of the possible, of the spiritual status quo
20
ante." Moral damages are designed to compensate and alleviate in some way the physical suffering, mental anguish,
fright, serious anxiety, besmirched reputation, wounded feelings, moral shock, social humiliation, and similar injury
unjustly caused a person. Although incapable of pecuniary computation, they must be proportionate to the suffering
21
inflicted. The amount of the award bears no relation whatsoever with the wealth or means of the offender.

In the instant case, respondent Stephen Huang and respondent spouses Richard and Carmen Huang testified to the
intense suffering they continue to experience as a result of the accident. Stephen recounted the nightmares and traumas
he suffers almost every night when he relives the accident. He also gets depression when he thinks of his bleak future. He
feels frustration and embarrassment in needing to be helped with almost everything and in his inability to do simple things
he used to do. Similarly, respondent spouses and the rest of the family undergo their own private suffering. They live with
the day-to-day uncertainty of respondent Stephen Huang’s condition. They know that the chance of full recovery is nil.
Moreover, respondent Stephen Huang’s paralysis has made him prone to many other illnesses. His family, especially
respondent spouses, have to make themselves available for Stephen twenty-four hours a day. They have patterned their
daily life around taking care of him, ministering to his daily needs, altering the lifestyle to which they had been
accustomed.

Respondent Carmen Huang’s brother testified on the insensitivity of petitioner Mercury Drug towards the plight of
respondent. Stephen, viz.:

Maybe words cannot describe the anger that we feel towards the defendants. All the time that we were going through the
crisis, there was none (sic) a single sign of nor offer of help, any consolation or anything whatsoever. It is funny because,
you know, I have many colleagues, business associates, people even as far as United States, Japan, that I probably met
only once, when they found out, they make a call, they sent card, they write small notes, but from the defendant, absolute
silence. They didn’t care, and worst, you know, this is a company that have (sic) all the resources to help us. They were
(sic) on our part, it was doubly painful because we have no choice but to go back to them and buy the medicines that we
need for Stephen. So, I don’t know how someone will really have no sense of decency at all to at least find out what
22
happened to my son, what is his condition, or if there is anything that they can do to help us.
On the matter of exemplary damages, Art. 2231 of the Civil Code provides that in cases of quasi-delicts, exemplary
damages may be granted if the defendant acted with gross negligence. The records show that at the time of the accident,
petitioner Del Rosario was driving without a license because he was previously ticketed for reckless driving. The evidence
also shows that he failed to step on his brakes immediately after the impact. Had petitioner Del Rosario done so, the
injuries which respondent Stephen sustained could have been greatly reduced. Wanton acts such as that committed by
petitioner Del Rosario need be suppressed; and employers like petitioner Mercury Drug should be more circumspect in
the observance of due diligence in the selection and supervision of their employees. The award of exemplary damages in
favor of the respondents is therefore justified.

23
With the award of exemplary damages, we also affirm the grant of attorney’s fees to respondents. In addition, attorney’s
fees may be granted when a party is compelled to litigate or incur expenses to protect his interest by reason of an
24
unjustified act of the other party.

Cost against petitioners.

IN VIEW THEREOF, the petition is DENIED. The Decision and Resolution of the Court of Appeals dated February 16,
2006 and March 30, 2006, respectively, in CA-G.R. CV No. 83981, are AFFIRMED.

SO ORDERED.

G.R. No. 172707 October 1, 2013

PEOPLE OF THE PHILIPPINES, PLAINTIFF-APPELLEE,

vs.
HALIL GAMBAO Y ESMAIL, EDDIE KARIM Y USO, EDWIN DUKILMAN Y SUBOH, TONY ABAO Y SULA, RAUL
UDAL Y KAGUI, THENG DILANGALEN Y NANDING, JAMAN MACALINBOL Y KATOL, MONETTE RONAS Y AMPIL,
NORA EVAD Y MULOK, THIAN PERPENIAN Y RAFON A.K.A LARINA PERPENIAN AND JOHN DOES,ACCUSED-
APPELLANTS.

DECISION

PEREZ, J.:

1
Before this Court for Automatic Review is the Decision dated 28 June 2005 of the Court of Appeals (CA) in CA-G.R. CR-
2
H.C. No. 00863, which affirmed with modification the Decision of the Regional Trial Court (RTC) of Pasay City, Branch
109 dated 16 October 1998, finding accused-appellants Halil Gambao y Esmail, Eddie Karim y Uso, Edwin Dukilman y
Suboh, Tony Abao y Sula, Raul Udal y Kagui, Teng Mandao y Haron, Theng Dilangalen y Nanding, Jaman Macalinbol y
Katol, Monette Ronas y Ampil, Nora Evad y Mulok and Thian Perpenian y Rafon guilty beyond reasonable doubt of
kidnapping for ransom as defined and penalized under Article 267 of the Revised Penal Code, as amended by Republic
Act (R.A.) No. 7659.

3
The accused-appellants, along with an unidentified person, were charged under the criminal information which reads:

Criminal Case No. 98-0928

For Kidnapping for Ransom as amended by RA 7659

That on August 12, 1998 at around 7:30 o’clock in the evening at No. 118 FB Harrison Pasay City and within the
jurisdiction of this Honorable Court, the above named-accused conspiring, confederating and mutually helping one
another and grouping themselves together, did then and there by force and intimidation, and the use of high powered
firearms, willfully, unlawfully and feloniously take, carry away and deprive Lucia Chan y Lee of her liberty against her will
for the purpose of extorting ransom as in fact a demand for ransom was made as a condition for her release amounting to
FOUR HUNDRED THOUSAND PESOS (₱400,000.00) to the damage and prejudice of Lucia L. Chan in the said amount
and such other amounts as may be awarded to her under the provisions of the Civil Code.

4
The antecedent facts were culled from the records of the case:

Lucia Chan (Chan) was a fish dealer based in Manila. She usually expected fish deliveries, which were shipped by her
suppliers from the provinces. Sometime in the afternoon of 11 August 1998, two persons, one of whom was identified as
Theng Dilangalen (Dilangalen), went to Chan’s residence at FB Harrison St., Pasay City to inquire about a certain
passport alleged to have been mistakenly placed inside a box of fish to be delivered to her. Unable to locate said
passport, the two left. The next morning, Dilangalen, together with another companion identified as Tony Abao (Abao),
returned looking for Chan but were told that she was out. When the two returned in the afternoon, Chan informed them
that the fish delivery had yet to arrive. Chan offered instead to accompany them to the airport to retrieve the box of fish
allegedly containing the passport. Dilangalen and Abao declined and told Chan that they would be back later that
5
evening.

Dilangalen, accompanied by an unidentified person who remains at large, returned to Chan’s residence that evening.
6
Chan’s houseboy ushered them in and Chan met them by the stairs. Thereat, the unidentified companion of Dilangalen
7
pointed his gun at Chan’s son, Levy Chan (Levy), and the house companions. As the unidentified man forcibly dragged
Chan, her son Levy tried to stop the man by grabbing his mother’s feet. Seeing this, Dilangalen pointed his gun at Levy’s
 8
head forcing the latter to release his grip on Chan’s feet. Levy thereafter proceeded to the Pasay Police Headquarters to
9
report the incident.

10
Chan was forced to board a "Tamaraw FX" van. After travelling for about two hours, the group stopped at a certain
house. Accused-appellant Edwin Dukilman (Dukilman) warned Chan not to shout as he had his gun pointed at her mouth.
11
Chan was ordered to go with two women, later identified in court by Chan as appellants Monette Ronas (Ronas) and
12
Nora Evad (Evad). Chan was brought inside a house and was made to lie down on a bed, guarded by Ronas, Evad,
13
Dukilman and Jaman Macalinbol (Macalinbol). Ronas and Evad threatened Chan that she would be killed unless she
14
paid 20 Million Pesos.

On 13 August 1998, Chan was awakened by Evad and was asked to board the "Tamaraw FX" van. After travelling for
about ten minutes, the van stopped and the group alighted. Chan was brought to a room on the second floor of the house.
Inside the room were three persons whom Chan identified in court as Macalinbol, Raul Udal (Udal) and Halil Gambao
15 16
(Gambao). Another woman, later identified as Thian Perpenian (Perpenian), arrived. At about 9:00 o’clock in the
evening, a man who was later identified as Teng Mandao (Mandao), entered the room with a handgun and asked Chan
17
"Bakit kayo nagsumbong sa pulis?" Another man, whom Chan identified in court as Eddie Karim (Karim), ordered
Mandao out of the room. Karim informed Chan that he was sent by their boss to ask her how much money she
18
has. Chan was instructed to talk to her son through a cell phone and she gave instructions to her son to get the ₱75,
19
000.00 she kept in her cabinet. The group then talked to Chan’s son and negotiated the ransom amount in exchange for
his mother’s release. It was agreed upon that Levy was to deliver ₱400,000.00 at the "Chowking" Restaurant at Buendia
20
Avenue.

Inspectors Narciso Ouano, Jr. (Inspector Ouano) and Cesar Mancao (Inspector Mancao), who were assigned at the
Pasay City area to conduct the investigation regarding the kidnapping, were informed that the abductors called and
21
demanded for ransom in exchange for Chan’s release. During their surveillance the following day, Inspectors Ouano and
Mancao observed a Red Transport taxicab entering the route which led to the victim’s residence. The inspectors observed
that the occupants of the taxicab kept on looking at the second floor of the house. The inspectors and their team tailed the
taxicab until Pansol, Calamba, Laguna, where it entered the Elizabeth Resort and stopped in front of Cottage 1.
Convinced that the woman the team saw in the cottage was the victim, they sought clearance from Philippine Anti
22
Organized Crime Task Force (PAOCTF) to conduct a rescue operation.

On 14 August 1998, P/Insp. Vicente Arnado (Inspector Arnado) received information that the abductors acceded to a
₱400,000.00 ransom money to be delivered at "Chowking" Restaurant at Buendia Avenue at around 2:00 am. Upon
learning of the information, the team immediately and strategically positioned themselves around the vicinity of the
restaurant. At about 2:00 am, a light blue "Tamaraw FX" van with 4 people on board arrived. The four took the ransom
money and headed towards the South Luzon Expressway. The surveillance team successfully intercepted the van and
arrested the 4 men, later identified in court as Karim, Abao, Gambao and Dukilman. The team was also able to recover
23
the ₱400,000.00 ransom.

At about 5:00 o’clock in the morning of the same day, the police team assaulted Cottage No. 1, resulting in the safe
rescue of Chan and the apprehension of seven of her abductors, later identified in court as Dilangalen, Udal, Macalinbol,
24
Mandao, Perpenian, Evad and Ronas.

During the 7 October 1998 hearing, after the victim and her son testified, Karim manifested his desire to change his earlier
plea of "not guilty" to "guilty." The presiding judge then explained the consequences of a change of plea, stating: "It would
mean the moment you withdraw your previous pleas of not guilty and enter a plea of guilty, the court of course, after
receiving evidence, as in fact it has received the testimonies of [the] two witnesses, will [outrightly] sentence you to the
penalty provided by law after the prosecution shall have finished the presentation of its evidence. Now that I have
explained to you the consequences of your entering a plea of guilty, are you still desirous of entering a plea of ‘guilty’?"
25
Eddie Karim answered, "Yes." On hearing this clarification, the other appellants likewise manifested, through their
counsel who had earlier conferred with them and explained to each of them the consequences of a change of plea, their
desire to change the pleas they entered. The trial court separately asked each of the appellants namely: Gambao, Abao,
Udal, Mandao, Dilangalen, Macalinbol, Ronas and Evad if they understood the consequence of changing their pleas. All
26
of them answered in the affirmative. Similarly, Dukilman manifested his desire to change his plea and assured the trial
27
court that he understood the consequences of such change of plea. Thereupon, the trial court ordered their re-
28
arraignment. After they pleaded guilty, the trial court directed the prosecution to present evidence, which it did.

On 16 October 1998, the RTC rendered a decision convicting Gambao, Karim, Dukilman, Abao, Udal, Mandao,
Dilangalen, Macalinbol, Ronas, Evad and Perpenian of Kidnapping for Ransom. Hence, they appealed to the CA.

In a Decision dated 28 June 2005, the appellate court affirmed with modifications the decision of the trial court. The
dispositive portion of the CA decision reads:

WHEREFORE, the decision of the court a quo finding accused-appellants HALIL GAMBAO y ESMAIL, EDDIE KARIM y
USO, EDWIN DUKILMAN y SUBOH, TONY ABAO y SULA, RAUL UDAL y KAGUI, TENG MANDAO y HARON, THENG
DILANGALEN y NANDING, JAMAN MACALINBOL y KATOL, MONETTE RONAS y AMPIL and NORA EVAD y MULOK
guilty beyond reasonable doubt of kidnapping for ransom defined and penalized under Article 267 of the Revised Penal
Code, as amended by RA 7659 and imposing upon each of them the supreme penalty of death is AFFIRMED WITH
MODIFICATION that each of them is ordered to pay jointly and severally the victim in the amount of ₱50,000.00 by way of
moral damages.
It appearing that accused-appellant THIAN PERPENIAN y RAFON was only 17 years old at the time of the commission of
29
the crime, she is hereby sentenced to suffer the penalty of reclusion perpetua.

Pursuant to Section 13, Rule 124 as amended by Administrative Matter No. 00-5-03-SC, the appellate court certified the
case to this Court and accordingly ordered the elevation of the records.

30
In a Resolution dated 20 June 2006, we required the parties to file their respective supplemental briefs. The issues
raised by the accused-appellants in their respective briefs, supplemental briefs and manifestations will be discussed
collectively.

Insufficiency of Evidence

Accused-appellants Dukilman, Ronas, Evad would have this Court believe that the witness, Chan, was not able to
positively identify them because of her failing eyesight due to old age.

This argument is bereft of merit. We note that both the trial court and the CA found Chan’s testimony credible and
straightforward. During her testimony, she positively identified the accused-appellants. If she had not met them before,
she could not have positively identified them in open court. In fact, the participation of these accused-appellants was
further established through the testimonies of the other prosecution witnesses.

Time and again, this Court has maintained that the question of credibility of witnesses is primarily for the trial court to
determine. For this reason, its observations and conclusions are accorded great respect on appeal. They are conclusive
and binding unless shown to be tainted with arbitrariness or unless, through oversight, some fact or circumstance of
31 32
weight and influence has not been considered. In People v. Tañedo, this Court had occasion to reiterate the ruling that
findings of fact of the trial court pertaining to the credibility of witnesses command great respect since it had the
33
opportunity to observe their demeanor while they testified in court. It can be observed that the briefs submitted by the
accused-appellants are replete with generalities and wanting in relevant particulars. It is for this reason that we are giving
full credence to the findings of the trial court regarding the credibility of witness Chan.

Perpenian likewise argued that the evidence for her conviction is insufficient. We also find her argument bereft of merit.

The testimony of Inspector Ouano, establishing Perpenian as one of the seven people apprehended when they conducted
34
the rescue operation at around 5:00 o’clock in the morning of 14 August 1998, and the positive identification of
Perpenian by Chan constituted adequate evidence working against her defense of denial.

Further, it should be noted that the only defense the accused-appellants proffered was denial. It is established
jurisprudence that denial cannot prevail over the witnesses’ positive identification of the accused-appellants, more so
where the defense did not present convincing evidence that it was physically impossible for them to have been present at
35
the crime scene at the time of the commission of the crime.

The foregoing considered, the positive identification by Chan, the relevant testimonies of witnesses and the absence of
evidence other than mere denial proffered by the defense lead this Court to give due weight to the findings of the lower
courts.

Improvident Plea

As provided for by Article 267 of the Revised Penal Code, as amended by RA 7659, the penalty for kidnapping for ransom
36
is death. A review of the records shows that on 7 October 1998, the accused-appellants withdrew their plea of "not
guilty" and were re-arraigned. They subsequently entered pleas of "guilty" to the crime of kidnapping for ransom, a capital
37
offense. This Court, in People v. Oden, laid down the duties of the trial court when the accused pleads guilty to a capital
offense. The trial court is mandated:

(1)

to conduct a searching inquiry into the voluntariness and full comprehension of the consequences of the plea of guilt,

(2)

to require the prosecution to still prove the guilt of the accused and the precise degree of his culpability, and

(3)

38
to inquire whether or not the accused wishes to present evidence in his behalf and allow him to do so if he desires.

The rationale behind the rule is that the courts must proceed with more care where the possible punishment is in its
severest form, namely death, for the reason that the execution of such a sentence is irreversible. The primordial purpose
is to avoid improvident pleas of guilt on the part of an accused where grave crimes are involved since he might be
admitting his guilt before the court and thus forfeiting his life and liberty without having fully understood the meaning,
39
significance and consequence of his plea. Moreover, the requirement of taking further evidence would aid this Court on
40
appellate review in determining the propriety or impropriety of the plea.
Anent the first requisite, the searching inquiry determines whether the plea of guilt was based on a free and informed
judgement. The inquiry must focus on the voluntariness of the plea and the full comprehension of the consequences of
41
the plea. This Court finds no cogent reason for deviating from the guidelines provided by jurisprudence and thus, adopts
the same:

Although there is no definite and concrete rule as to how a trial judge must conduct a "searching inquiry," we have held
that the following guidelines should be observed:

Ascertain from the accused himself

(a) how he was brought into the custody of the law;

(b) whether he had the assistance of a competent counsel during the custodial and preliminary investigations; and

(c) under what conditions he was detained and interrogated during the investigations. This is intended to rule out
the possibility that the accused has been coerced or placed under a state of duress either by actual threats of
physical harm coming from malevolent quarters or simply because of the judge’s intimidating robes.

Ask the defense counsel a series of questions as to whether he had conferred with, and completely explained to, the
accused the meaning and consequences of a plea of guilty.

Elicit information about the personality profile of the accused, such as his age, socio-economic status, and educational
background, which may serve as a trustworthy index of his capacity to give a free and informed plea of guilty.

Inform the accused the exact length of imprisonment or nature of the penalty under the law and the certainty that he will
serve such sentence. For not infrequently, an accused pleads guilty in the hope of a lenient treatment or upon bad advice
or because of promises of the authorities or parties of a lighter penalty should he admit guilt or express remorse. It is the
duty of the judge to ensure that the accused does not labor under these mistaken impressions because a plea of guilty
carries with it not only the admission of authorship of the crime proper but also of the aggravating circumstances attending
it, that increase punishment.

Inquire if the accused knows the crime with which he is charged and fully explain to him the elements of the crime which is
the basis of his indictment. Failure of the court to do so would constitute a violation of his fundamental right to be informed
of the precise nature of the accusation against him and a denial of his right to due process.

All questions posed to the accused should be in a language known and understood by the latter.

The trial judge must satisfy himself that the accused, in pleading guilty, is truly guilty. The accused must be required to
narrate the tragedy or reenact the crime or furnish its missing details.

42
It is evident from the records that the aforesaid rules have not been fully complied with. The questions propounded by
the trial court judge failed to ensure that accused-appellants fully understood the consequences of their plea. In fact, it is
43
readily apparent from the records that Karim had the mistaken assumption that his plea of guilt would mitigate the
imposable penalty and that both the judge and his counsel failed to explain to him that such plea of guilt will not mitigate
the penalty pursuant to Article 63 of the Revised Penal Code. Karim was not warned by the trial court judge that in cases
where the penalty is single and indivisible, like death, the penalty is not affected by either aggravating or mitigating
circumstances. The trial court judge’s seemingly annoyed statement that a conditional plea is not allowed, as provided
below, is inadequate:

Atty. Ferrer:

Your Honor please, may we be allowed to say something before the trial. For accused Eddie Karim we manifest and
petition this court that he be allowed to be re-arraigned Your Honor please, considering that he will plead guilty as
charged but the imposable penalty is lowered, Your Honor.

Court:

You cannot make a conditional plea of guilty, that is what the law says. You plead guilty, no condition attached.
Conditional plea is not allowed.

Atty. Ferrer:

Considering, Your Honor, accused Eddie Karim is already repenting

Court:

Nevertheless. Read the law. If you entered a plea of guilty there should be no condition attached. We cannot make that
44
condition and dictate to the court the penalty.
Although the pleas rendered, save for Perpenian’s, were improvidently made, this Court will still not set aside the
condemnatory judgment. Despite the trial court judge’s shortcomings, we still agree with his ruling on accused-appellants’
culpability.

As a general rule, convictions based on an improvident plea of guilt are set aside and the cases are remanded for further
proceedings if such plea is the sole basis of judgement. If the trial court, however, relied on sufficient and credible
evidence to convict the accused, as it did in this case, the conviction must be sustained, because then it is predicated not
45
merely on the guilty plea but on evidence proving the commission of the offense charged. The manner by which the plea
of guilty is made, whether improvidently or not, loses legal significance where the conviction can be based on independent
46
evidence proving the commission of the crime by the accused.

Contrary to accused-appellants’ assertions, they were convicted by the trial court, not on the basis of their plea of guilty,
47
but on the strength of the evidence adduced by the prosecution, which was properly appreciated by the trial court. The
prosecution was able to prove the guilt of the accused-appellants and their degrees of culpability beyond reasonable
doubt.

Degree of Culpability

Accused-appellants Dukilman, Ronas and Evad argue in their respective briefs that conspiracy, insofar as they were
concerned, was not convincingly established. Dukilman hinges his argument on the fact that he was not one of those
48
arrested during the rescue operation based on the testimony of Inspector Ouano. On the other hand, Ronas and Evad
base their argument on the fact that they had no participation whatsoever in the negotiation for the ransom money.

We hold otherwise. Although Dukilman was not one of those apprehended at the cottage during the rescue operation, the
testimony of Police Inspector Arnado sufficiently established that he was one of the four people apprehended when the
49
police intercepted the "Tamaraw FX" at the Nichols Tollgate. Likewise, the testimony of Police Inspector Ouano
50
sufficiently established that Ronas and Evad were two of those who were arrested during the rescue operation. This
Court has held before that to be a conspirator, one need not participate in every detail of the execution; he need not even
take part in every act or need not even know the exact part to be performed by the others in the execution of the
51
conspiracy. Once conspiracy is shown, the act of one is the act of all the conspirators. The precise extent or modality of
52
participation of each of them becomes secondary, since all the conspirators are principals. Moreover, Chan positively
identified the accused-appellants and placed all of them at the crime scenes.

Under Article 8 of the Revised Penal Code, there is conspiracy when two or more persons come to an agreement
concerning a felony and decide to commit it. It has been a long standing opinion of this Court that proof of the conspiracy
need not rest on direct evidence, as the same may be inferred from the collective conduct of the parties before, during or
after the commission of the crime indicating a common understanding among them with respect to the commission of the
53
offense. The testimonies, when taken together, reveal the common purpose of the accused-appellants and how they
were all united in its execution from beginning to end. There were testimonies proving that (1) before the incident, two of
the accused-appellants kept coming back to the victim’s house; (2) during the kidnapping, accused-appellants changed
shifts in guarding the victim; and (3) the accused appellants were those present when the ransom money was recovered
and when the rescue operation was conducted.

Seeing that conspiracy among Gambao, Karim, Dukilman, Abao, Udal, Mandao, Dilangalen, Macalinbol, Ronas and Evad
was established beyond reasonable doubt based on the proffered evidence of the prosecution, the act of one is the act of
all the conspirators.

54
In Perpenian’s Supplemental Brief, she directs this Court’s attention to the manifestation made by the prosecution
55
regarding their disinterest in prosecuting, insofar as she was concerned. However, pursuant to the ruling of this Court in
56
Crespo v. Judge Mogul, once the information is filed, any disposition of the case or dismissal or acquittal or conviction of
the accused rests within the exclusive jurisdiction, competence and discretion of the courts; more so in this case, where
no Motion to Dismiss was filed by the prosecution.

The trial court took note of the fact that Perpenian gave inconsistent answers and lied several times under oath during the
57
trial. Perpenian lied about substantial details such as her real name, age, address and the fact that she saw Chan at the
Elizabeth Resort. When asked why she lied several times, Perpenian claimed she was scared to be included or identified
with the other accused-appellants. The lying and the fear of being identified with people whom she knew had done wrong
are indicative of discernment. She knew, therefore, that there was an ongoing crime being committed at the resort while
she was there. It is apparent that she was fully aware of the consequences of the unlawful act.

58
As reflected in the records, the prosecution was not able to proffer sufficient evidence to hold her responsible as a
59
principal. Seeing that the only evidence the prosecution had was the testimony of Chan to the effect that on 13 August
1998 Perpenian entered the room where the victim was detained and conversed with Evad and Ronas regarding stories
unrelated to the kidnapping, this Court opines that Perpenian should not be held liable as a co-principal, but rather only as
an accomplice to the crime.

60
Jurisprudence is instructive of the elements required, in accordance with Article 18 of the Revised Penal Code, in order
that a person may be considered an accomplice, namely, (1) that there be community of design; that is knowing the
criminal design of the principal by direct participation, he concurs with the latter in his purpose; (2) that he cooperates in
the execution by previous or simultaneous act, with the intention of supplying material or moral aid in the execution of the
crime in an efficacious way; and (3) that there be a relation between the acts done by the principal and those attributed to
the person charged as accomplice.
The defenses raised by Perpenian are not sufficient to exonerate her criminal liability.1âwphi1 Assuming arguendo that
she just came to the resort thinking it was a swimming party, it was inevitable that she acquired knowledge of the criminal
design of the principals when she saw Chan being guarded in the room. A rational person would have suspected
something was wrong and would have reported such incident to the police. Perpenian, however, chose to keep quiet; and
to add to that, she even spent the night at the cottage. It has been held before that being present and giving moral support
61
when a crime is being committed will make a person responsible as an accomplice in the crime committed. It should be
noted that the accused-appellant’s presence and company were not indispensable and essential to the perpetration of the
62
kidnapping for ransom; hence, she is only liable as an accomplice. Moreover, this Court is guided by the ruling in People
63
v. Clemente, et al., where it was stressed that in case of doubt, the participation of the offender will be considered as
that of an accomplice rather than that of a principal.

Having admitted their involvement in the crime of kidnapping for ransom and considering the evidence presented by the
prosecution, linking accused-appellants’ participation in the crime, no doubt can be entertained as to their guilt. The CA
convicted the accused-appellants of kidnapping for ransom and imposed upon them the supreme penalty of death,
applying the provisions of Article 267 of the Revised Penal Code. Likewise, this Court finds accused-appellants guilty
64
beyond reasonable doubt as principals to the crime of kidnapping for ransom. However, pursuant to R.A. No. 9346, we
modify the penalty imposed by the trial court and reduce the penalty to Reclusion Perpetua, without eligibility for parole.

65
Modification should also be made as to the criminal liability of Perpenian. Pursuant to the passing of R.A. No. 9344, a
determination of whether she acted with or without discernment is necessary. Considering that Perpenian acted with
discernment when she was 17 years old at the time of the commission of the offense, her minority should be appreciated
not as an exempting circumstance, but as a privileged mitigating circumstance pursuant to Article 68 of the Revised Penal
Code.

66
Under Section 38 of R.A. No. 9344, the suspension of sentence of a child in conflict with the law shall still be applied
even if he/she is already eighteen (18) years of age or more at the time of the pronouncement of his/her guilt.

Unfortunately, at the present age of 31, Perpenian can no longer benefit from the aforesaid provision, because under
67
Article 40 of R.A. No. 9344, the suspension of sentence can be availed of only until the child in conflict with the law
reaches the maximum age of twenty-one (21) years. This leaves the Court with no choice but to pronounce judgement.
Perpenian is found guilty beyond reasonable doubt as an accomplice in the crime of kidnapping for ransom. Since this
Court has ruled that death as utilized in Article 71 of the Revised Penal Code shall no longer form part of the equation in
68
the graduation of penalties pursuant to R.A. No. 9346, the penalty imposed by law on accomplices in the commission of
consummated kidnapping for ransom is Reclusion Temporal, the penalty one degree lower than what the principals would
69
bear (Reclusion Perpetua). Applying Article 68 of the Revised Penal Code, the imposable penalty should then be
adjusted to the penalty next lower than that prescribed by law for accomplices. This Court, therefore, holds that as to
Perpenian, the penalty of Prision Mayor, the penalty lower than that prescribed by law (Reclusion Temporal), should be
imposed. Applying the Indeterminate Sentence Law, the minimum penalty, which is one degree lower than the maximum
imposable penalty, shall be within the range of Prision Correccional; and the maximum penalty shall be within the
minimum period of Prision Mayor, absent any aggravating circumstance and there being one mitigating circumstance.
Hence, the Court imposes the indeterminate sentence of six (6) months and one (1) day of Prision Correccional, as
minimum, to six (6) years and one (1) day of Prision Mayor, as maximum.

As regards Perpenian’s possible confinement in an agricultural camp or other training facility in accordance with Section
70
51 of R.A. 9344, this Court held in People v. Jacinto that the age of the child in conflict with the law at the time of the
promulgation of the judgment is not material. What matters is that the offender committed the offense when he/she was
still of tender age. This Court, however, finds such arrangement no longer necessary in view of the fact that Perpenian’s
actual served term has already exceeded the imposable penalty for her offense. For such reason, she may be
immediately released from detention.

71
We note that in the Order dated 9 October 1998, the trial court admitted the documentary evidence offered by the
counsel for the defense proving that the real name of Thian Perpenian is Larina Perpenian.

In view of the death of Mandao during the pendency of this case, he is relieved of all personal and pecuniary penalties
72 73
attendant to the crime, his death having occurred before rendition of final judgement.

74
There is prevailing jurisprudence, on civil liabilities arising from the commission of kidnapping for the purpose of
extorting ransom from the victim or any other person under Article 267 of the Revised Penal Code. The persons convicted
were held liable for ₱75,000.00 as civil indemnity; ₱75,000.00 as moral damages; and ₱30,000.00 as exemplary
damages.

We take this opportunity to increase the amounts of indemnity and damages, where, as in this case, the penalty for the
75
crime committed is death which, however, cannot be imposed because of the provisions of R.A. No. 9346:

1. ₱100,000.00 as civil indemnity;

2. ₱100,000.00 as moral damages which the victim is assumed to have suffered and thus needs no proof; and

3. ₱100,000.00 as exemplary damages to set an example for the public good.

These amounts shall be the minimum indemnity and damages where death is the penalty warranted by the facts but is not
imposable under present law.
 76
The ruling of this Court in People v. Montesclaros is instructive on the apportionment of civil liabilities among all the
accused-appellants. The entire amount of the civil liabilities should be apportioned among all those who cooperated in the
commission of the crime according to the degrees of their liability, respective responsibilities and actual participation.
Hence, each principal accused-appellant should shoulder a greater share in the total amount of indemnity and damages
than Perpenian who was adjudged as only an accomplice.

Taking into account the difference in the degrees of their participation, all of them shall be liable for the total amount of
₱300,000.00 divided among the principals who shall be liable for ₱288,000.00 (or ₱32,000.00 each) and Perpenian who
shall be liable for ₱12,000.00. This is broken down into ₱10,666.67 civil indemnity, ₱10,666.67 moral damages and
₱10,666.67 exemplary damages for each principal; and ₱4,000.00 civil indemnity, ₱4,000.00 moral damages and
₱4,000.00 exemplary damages for the lone accomplice.

WHEREFORE, the 28 June 2005 Decision of the Court of Appeals in CA-G.R. CR–H.C. No. 00863 is hereby AFFIRMED
WITH MODIFICATIONS. Accused-appellants HALIL GAMBAO y ESMAIL, EDDIE KARIM y USO, EDWIN DUKILMAN y
SUBOH, TONY ABAO y SULA, RAUL UDAL y KAGUI, THENG DILANGALEN y NANDING, JAMAN MACALINBOL y
KATOL, MONETTE RONAS y AMPIL and NORA EVAD y MULOK are found guilty beyond reasonable doubt as principals
in the crime of kidnapping for ransom and sentenced to suffer the penalty of Reclusion Perpetua, without eligibility of
parole. Accused-appellant THIAN PERPENIAN y RAFON A.K.A. LARINA PERPENIAN is found guilty beyond reasonable
doubt as accomplice in the crime of kidnapping for ransom and sentenced to suffer the indeterminate penalty of six (6)
months and one (1) day of Prision Correccional, as minimum, to six (6) years and one (1) day of Prision Mayor, as
maximum. Accused-appellants are ordered to indemnify the victim in the amounts of ₱100,000.00 as civil indemnity,
₱100,000.00 as moral damages and ₱100,000.00 as exemplary damages apportioned in the following manner: the
principals to the crime shall jointly and severally pay the victim the total amount of ₱288,000.00 while the accomplice shall
pay the victim ₱12,000.00, subject to Article 110 of the Revised Penal Code on several and subsidiary liability.

The Court orders the Correctional Institute for Women to immediately release THIAN PERPENIAN A.K.A. LARINA
PERPENIAN due to her having fully served the penalty imposed on her, unless her further detention is warranted for any
other lawful causes.

Let a copy of this decision be furnished for immediate implementation to the Director of the Correctional Institute for
Women by personal service. The Director of the Correctional Institute for Women shall submit to this Court, within five (5)
days from receipt of a copy of the decision, the action he has taken thereon.

SO ORDERED.

G.R. No. 188902 February 16, 2011

PEOPLE OF THE PHILIPPINES, Appellee,

vs.
ROBERTO LOPEZ y CABAL, Appellant.

RESOLUTION

CARPIO, J.:

1
This is an appeal from the 12 May 2009 Decision of the Court of Appeals in CA-G.R. CR-H.C. No. 03199. The 12 May
2
2009 Decision affirmed with modification the 15 February 2008 Decision of the Regional Trial Court, National Capital
Judicial Region, Branch 73, Malabon City (trial court), finding accused-appellant Roberto Lopez y Cabal (Lopez) guilty
beyond reasonable doubt of murder and sentencing him to suffer the penalty of reclusion perpetua. The Court of Appeals
also ordered Lopez to pay the heirs of the victim Prudencio Melendres (Melendres) as follows: ₱50,000 as civil indemnity,
₱50,000 as moral damages, ₱33,000 as actual damages and ₱200,000 for loss of earning capacity.

On 10 August 2006, Lopez was charged with the murder of Melendres.

Lopez pleaded not guilty upon arraignment.

During the trial, prosecution witness Leo Acibar (Acibar) testified that on 31 July 2006 at about 8:30 a.m., he saw
Melendres buying cigarettes from a store when Lopez suddenly appeared and shot Melendres from behind with a caliber
.38 revolver, hitting him on the right side of the head. Acibar added that Lopez again shot Melendres on the chest and on
the lower abdomen. Lopez then fled from the scene. Acibar immediately reported the incident to the barangay authorities.

Ma. Liberty Francisco Melendres (Liberty), Melendres’ wife, testified as to the civil liability of Lopez. Liberty presented
3
receipts to show that she spent ₱33,000 for the burial and the interment and ₱7,500 for the wake. She also presented a
certification from Tanod Publishing, Inc. (Tanod Publishing), Melendres’ employer, as to his monthly salary
4 5
range, honoraria and transportation allowance. She also sought to recover moral damages.

For the defense, Lopez maintained his innocence and claimed that he was working on Jaime Domingo’s (Domingo) house
on 31 July 2006.

Domingo testified that Lopez worked for him from 26 to 31 July 2006 to repair the pipelines in his house. However, on
6
cross-examination, Domingo said that Lopez worked for him only until 30 July 2006.
Maritess Padilla (Padilla) also testified that she saw two hooded men with guns tucked in their waist draw their guns and
shoot Melendres. Padilla said the first assailant was dark-skinned and stood about five feet five inches, while the second
assailant was only about four feet eleven inches. Padilla stated that Lopez was not one of the assailants and that she
would be able to identify the assailants if she saw them again.

On 15 February 2008, the trial court rendered its decision finding Lopez guilty of murder and sentenced him to suffer the
penalty of reclusion perpetua. The trial court also ordered Lopez to pay the heirs of Melendres as follows: ₱50,000 as
death indemnity, ₱50,000 as moral damages, ₱40,000 as actual damages and ₱7,570 per month for six months as lost
income.

Lopez appealed to the Court of Appeals. Lopez insisted that the prosecution failed to prove his guilt beyond reasonable
doubt. Lopez also questioned the monetary awards made by the trial court.

In its 12 May 2009 Decision, the Court of Appeals denied Lopez’s appeal and affirmed with modification the trial court’s
decision. The Court of Appeals said that Acibar’s failure to accurately describe Lopez as the perpetrator did not affect his
credibility. Moreover, no ill motive can be attributed to Acibar to conclude that he would falsely testify against Lopez. The
Court of Appeals also agreed with the trial court that the testimonies of the defense witnesses were vague. The Court of
Appeals added that Lopez’s alibi is a weak defense and can easily be fabricated.

On the award of damages, the Court of Appeals reduced the award of actual damages from ₱40,000 to ₱33,000, the
latter amount having been substantiated by receipts. As to the loss of income, the Court of Appeals

noted that there was no accurate way to determine Melendres’ earnings since the certification issued by Tanod Publishing
did not reflect a fixed amount but only a salary range. However, the Court of Appeals held that the heirs of Melendres are
still entitled to a reasonable amount as a result of Melendres’ loss of earning capacity and deemed it proper to increase
the award from ₱45,420 to ₱200,000.1avvphi1

Hence, this petition.

We find the petition without merit. When the trial court’s factual findings are affirmed by the Court of Appeals, such
7
findings are generally conclusive and binding upon the Court. Moreover, where the credibility of the witness is in
question, the findings of the trial court are generally accorded great respect, if not finality, and generally will not be
disturbed on appeal, unless there is a clear showing that the trial court overlooked, misappreciated, or misapplied some
8
facts or circumstances of weight and substance that would have affected the outcome of the case. The rationale for this
rule is that the trial court has the advantage of observing first-hand the demeanor, behavior, and manner of the witness on
9
the stand and, thus, is in a better position to determine the witness’ credibility.

However, we modify the award for loss of earning capacity. The rule is that documentary evidence should be presented to
10
substantiate a claim for loss of earning capacity. In this case, Liberty presented a certification from Tanod Publishing
which showed that Melendres was a photo correspondent for Tanod Newspaper and that "his monthly salary ranges from
11
₱1,780 to ₱3,570 on per story basis." Liberty presented another certification from Tanod Publishing which showed that
Melendres received the total amount of ₱24,990 representing payment of honoraria and transportation allowance from 1
12
January to 31 July 2006. The Court notes that the defense did not object when the prosecution presented these
documents before the trial court. The rule is that evidence not objected to is deemed admitted and may be validly
13
considered by the court in arriving at its judgment. It was also established that at the time of his death, Melendres was
14
41 years old.

15
Thus, Melendres’ net earning capacity can be derived from two sources: (1) his monthly salary and (2) his honorarium
16
and transportation allowance. Loss of earning capacity is computed as follows:

Net Earning
Capacity = Life expectancy x Gross Annual Income – Living Expenses

= [2/3 (80 – age at death)] x GAI – [50% of GAI]

17
= [2/3 (80 – 41)] x ₱74,940 – ₱37,470

= [2/3 (39)] x ₱37,470

= 26 x ₱37,470

Net Earning
Capacity = ₱974,220

WHEREFORE, we AFFIRM the 12 May 2009 Decision of the Court of Appeals finding accused-appellant Roberto Lopez y
Cabal guilty beyond reasonable doubt of murder with the MODIFICATION that accused-appellant Roberto Lopez y Cabal
is ordered to pay the heirs of Prudencio Melendres the amount of ₱974,220 for loss of earning capacity.

SO ORDERED.

G.R. No. 166869 February 16, 2010

PHILIPPINE HAWK CORPORATION, Petitioner,
vs.
VIVIAN TAN LEE, Respondent.

DECISION

PERALTA, J.:

1
This is a Petition for Review on Certiorari of the Decision of the Court of Appeals in CA-G.R. CV No. 70860, promulgated
on August 17, 2004, affirming with modification the Decision of the Regional Trial Court (RTC) of Quezon City, Branch
102, dated March 16, 2001, in Civil Case No. Q-91-9191, ordering petitioner Philippine Hawk Corporation and Margarito
Avila to jointly and severally pay respondent Vivian Tan Lee damages as a result of a vehicular accident.

The facts are as follows:

2
On March 15, 2005, respondent Vivian Tan Lee filed before the RTC of Quezon City a Complaint against petitioner
Philippine Hawk Corporation and defendant Margarito Avila for damages based on quasi-delict, arising from a vehicular
accident that occurred on March 17, 1991 in Barangay Buensoceso, Gumaca, Quezon. The accident resulted in the death
of respondent’s husband, Silvino Tan, and caused respondent physical injuries.

3
On June 18, 1992, respondent filed an Amended Complaint, in her own behalf and in behalf of her children, in the civil
case for damages against petitioner. Respondent sought the payment of indemnity for the death of Silvino Tan, moral and
exemplary damages, funeral and interment expenses, medical and hospitalization expenses, the cost of the motorcycle’s
repair, attorney’s fees, and other just and equitable reliefs.

The accident involved a motorcycle, a passenger jeep, and a bus with Body No. 119. The bus was owned by petitioner
Philippine Hawk Corporation, and was then being driven by Margarito Avila.

4
In its Answer, petitioner denied liability for the vehicular accident, alleging that the immediate and proximate cause of the
accident was the recklessness or lack of caution of Silvino Tan. Petitioner asserted that it exercised the diligence of a
good father of the family in the selection and supervision of its employees, including Margarito Avila.

5
On March 25, 1993, the trial court issued a Pre-trial Order stating that the parties manifested that there was no possibility
of amicable settlement between them. However, they agreed to stipulate on the following facts:

1. On March 17, 1991, in Bgy. Buensoceso, Gumaca, Quezon, plaintiff Vivian Lee Tan and her husband Silvino
Tan, while on board a motorcycle with [P]late No. DA-5480 driven by the latter, and a Metro Bus with [P]late No.
NXR-262 driven by Margarito Avila, were involved in an accident;

2. As a result of the accident, Silvino Tan died on the spot while plaintiff Vivian Lee Tan suffered physical injuries
which necessitated medical attention and hospitalization;

3. The deceased Silvino Tan is survived by his wife, plaintiff Vivian Lee Tan and four children, three of whom are
now residents of the United States; and

6
4. Defendant Margarito Avila is an employee of defendant Philippine Hawk.

The parties also agreed on the following issues:

1. Whether or not the proximate cause of the accident causing physical injuries upon the plaintiff Vivian Lee Tan
and resulting in the death of the latter’s husband was the recklessness and negligence of Margarito Avila or the
deceased Silvino Tan; and

2. Whether or not defendant Philippine Hawk Transport Corporation exercised the diligence of a good father of
7
the family in the selection and supervision of its driver Margarito Avila.

Respondent testified that on March 17, 1991, she was riding on their motorcycle in tandem with her husband, who was on
the wheel, at a place after a Caltex gasoline station in Barangay Buensoceso, Gumaca, Quezon on the way to Lopez,
Quezon. They came from the Pasumbal Machine Shop, where they inquired about the repair of their tanker. They were on
a stop position at the side of the highway; and when they were about to make a turn, she saw a bus running at fast speed
coming toward them, and then the bus hit a jeep parked on the roadside, and their motorcycle as well. She lost
consciousness and was brought to the hospital in Gumaca, Quezon, where she was confined for a week. She was later
transferred to St. Luke’s Hospital in Quezon City, Manila. She suffered a fracture on her left chest, her left arm became
8
swollen, she felt pain in her bones, and had high blood pressure.

Respondent’s husband died due to the vehicular accident. The immediate cause of his death was massive cerebral
9
hemorrhage.

10
Respondent further testified that her husband was leasing and operating a Caltex gasoline station in Gumaca, Quezon
that yielded one million pesos a year in revenue. They also had a copra business, which gave them an income of
11
₱3,000.00 a month or ₱36,000.00 a year.
Ernest Ovial, the driver of the passenger jeep involved in the accident, testified that in the afternoon of March 17, 1991,
his jeep was parked on the left side of the highway near the Pasumbal Machine Shop. He did not notice the motorcycle
before the accident. But he saw the bus dragging the motorcycle along the highway, and then the bus bumped his jeep
12
and sped away.

For the defense, Margarito Avila, the driver of petitioner’s bus, testified that on March 17, 1999, at about 4:30 p.m., he was
driving his bus at 60 kilometers per hour on the Maharlika Highway. When they were at Barangay Buensoceso, Gumaca,
Quezon, a motorcycle ran from his left side of the highway, and as the bus came near, the motorcycle crossed the path of
the bus, and so he turned the bus to the right. He heard a loud banging sound. From his side mirror, he saw that the
motorcycle turned turtle ("bumaliktad"). He did not stop to help out of fear for his life, but drove on and surrendered to the
13
police. He denied that he bumped the motorcycle.

14
Avila further testified that he had previously been involved in sideswiping incidents, but he forgot how many times.

Rodolfo Ilagan, the bus conductor, testified that the motorcycle bumped the left side of the bus that was running at 40
15
kilometers per hour.

Domingo S. Sisperes, operations officer of petitioner, testified that, like their other drivers, Avila was subjected to and
passed the following requirements:

(1) Submission of NBI clearance;

(2) Certification from his previous employer that he had no bad record;

(3) Physical examination to determine his fitness to drive;

(4) Test of his driving ability, particularly his defensive skill; and

16
(5) Review of his driving skill every six months.

Efren Delantar, a Barangay Kagawad in Buensoceso, Gumaca, Quezon, testified that the bus was running on the highway
on a straight path when a motorcycle, with a woman behind its driver, suddenly emerged from the left side of the road
17
from a machine shop. The motorcycle crossed the highway in a zigzag manner and bumped the side of the bus.

In its Decision dated March 16, 2001, the trial court rendered judgment against petitioner and defendant Margarito Avila,
the dispositive portion of which reads:

ACCORDINGLY, MARGARITO AVILA is adjudged guilty of simple negligence, and judgment is hereby rendered in favor
of the plaintiff Vivian Lee Tan and h[er] husband’s heirs ordering the defendants Philippine Hawk Corporation and
Margarito Avila to pay them jointly and solidarily the sum of ₱745,575.00 representing loss of earnings and actual
18
damages plus ₱50,000.00 as moral damages.

The trial court found that before the collision, the motorcycle was on the left side of the road, just as the passenger jeep
was. Prior to the accident, the motorcycle was in a running position moving toward the right side of the highway. The trial
court agreed with the bus driver that the motorcycle was moving ahead of the bus from the left side of the road toward the
right side of the road, but disagreed that the motorcycle crossed the path of the bus while the bus was running on the right
19
side of the road.

The trial court held that if the bus were on the right side of the highway, and Margarito Avila turned his bus to the right in
an attempt to avoid hitting the motorcyle, then the bus would not have hit the passenger jeep, which was then parked on
the left side of the road. The fact that the bus also hit the passenger jeep showed that the bus must have been running
from the right lane to the left lane of the highway, which caused the collision with the motorcycle and the passenger jeep
parked on the left side of the road. The trial court stated that since Avila saw the motorcycle before the collision, he should
20
have stepped on the brakes and slowed down, but he just maintained his speed and veered to the left. The trial court
found Margarito Avila guilty of simple negligence.

The trial court held petitioner bus company liable for failing to exercise the diligence of a good father of the family in the
selection and supervision of Avila, having failed to sufficiently inculcate in him discipline and correct behavior on the
21
road.

On appeal, the Court of Appeals affirmed the decision of the trial court with modification in the award of damages. The
dispositive portion of the decision reads:

WHEREFORE, foregoing premises considered, the appeal is DENIED. The assailed decision dated March 16, 2001 is
hereby AFFIRMED with MODIFICATION. Appellants Philippine Hawk and Avila are hereby ordered to pay jointly and
severally appellee the following amount: (a) ₱168,019.55 as actual damages; (b) ₱10,000.00 as temperate damages; (c)
22
₱100,000.00 as moral damages; (d) ₱590,000.00 as unearned income; and (e) ₱50,000.00 as civil indemnity.

Petitioner filed this petition, raising the following issues:

 1) The Court of Appeals committed grave abuse of discretion amounting to lack of jurisdiction in passing upon an
issue, which had not been raised on appeal, and which had, therefore, attained finality, in total disregard of the
doctrine laid down by this Court in Abubakar v. Abubakar, G.R. No. 134622, October 22, 1999.

2) The Court of Appeals committed reversible error in its finding that the petitioner’s bus driver saw the motorcycle
of private respondent executing a U-turn on the highway "about fifteen (15) meters away" and thereafter held that
the Doctrine of Last Clear was applicable to the instant case. This was a palpable error for the simple reason that
the aforesaid distance was the distance of the witness to the bus and not the distance of the bus to the
respondent’s motorcycle, as clearly borne out by the records.

3) The Court of Appeals committed reversible error in awarding damages in total disregard of the established
doctrine laid down in Danao v. Court of Appeals, 154 SCRA 447 and Viron Transportation Co., Inc. v. Delos
23
Santos, G.R. No. 138296, November 22, 2000.

In short, the issues raised by petitioner are: (1) whether or not negligence may be attributed to petitioner’s driver, and
whether negligence on his part was the proximate cause of the accident, resulting in the death of Silvino Tan and causing
physical injuries to respondent; (2) whether or not petitioner is liable to respondent for damages; and (3) whether or not
the damages awarded by respondent Court of Appeals are proper.

Petitioner seeks a review of the factual findings of the trial court, which were sustained by the Court of Appeals, that
petitioner’s driver was negligent in driving the bus, which caused physical injuries to respondent and the death of
respondent’s husband.

The rule is settled that the findings of the trial court, especially when affirmed by the Court of Appeals, are conclusive on
24
this Court when supported by the evidence on record. The Court has carefully reviewed the records of this case, and
found no cogent reason to disturb the findings of the trial court, thus:

The Court agree[s] with the bus driver Margarito that the motorcycle was moving ahead of the bus towards the right side
from the left side of the road, but disagrees with him that it crossed the path of the bus while the bus was running on the
right side of the highway.

If the bus were on the right side of the highway and Margarito turned his bus to the right in an attempt to avoid hitting it,
then the bus would not have hit the passenger jeep vehicle which was then parked on the left side of the road. The fact
that the bus hit the jeep too, shows that the bus must have been running to the left lane of the highway from right to the
left, that the collision between it and the parked jeep and the moving rightways cycle became inevitable. Besides,
Margarito said he saw the motorcycle before the collision ahead of the bus; that being so, an extra-cautious public utility
driver should have stepped on his brakes and slowed down. Here, the bus never slowed down, it simply maintained its
25
highway speed and veered to the left. This is negligence indeed.

Petitioner contends that the Court of Appeals was mistaken in stating that the bus driver saw respondent’s motorcycle
"about 15 meters away" before the collision, because the said distance, as testified to by its witness Efren Delantar Ong,
was Ong’s distance from the bus, and not the distance of the bus from the motorcycle. Petitioner asserts that this
mistaken assumption of the Court of Appeals made it conclude that the bus driver, Margarito Avila, had the last clear
chance to avoid the accident, which was the basis for the conclusion that Avila was guilty of simple negligence.

A review of the records showed that it was petitioner’s witness, Efren Delantar Ong, who was about 15 meters away from
26
the bus when he saw the vehicular accident. Nevertheless, this fact does not affect the finding of the trial court that
petitioner’s bus driver, Margarito Avila, was guilty of simple negligence as affirmed by the appellate court. Foreseeability is
27
the fundamental test of negligence. To be negligent, a defendant must have acted or failed to act in such a way that an
ordinary reasonable man would have realized that certain interests of certain persons were unreasonably subjected to a
28
general but definite class of risks.

In this case, the bus driver, who was driving on the right side of the road, already saw the motorcycle on the left side of
the road before the collision. However, he did not take the necessary precaution to slow down, but drove on and bumped
the motorcycle, and also the passenger jeep parked on the left side of the road, showing that the bus was negligent in
veering to the left lane, causing it to hit the motorcycle and the passenger jeep.

Whenever an employee’s negligence causes damage or injury to another, there instantly arises a presumption that the
employer failed to exercise the due diligence of a good father of the family in the selection or supervision of its
29
employees. To avoid liability for a quasi-delict committed by his employee, an employer must overcome the presumption
by presenting convincing proof that he exercised the care and diligence of a good father of a family in the selection and
30
supervision of his employee.

The Court upholds the finding of the trial court and the Court of Appeals that petitioner is liable to respondent, since it
failed to exercise the diligence of a good father of the family in the selection and supervision of its bus driver, Margarito
Avila, for having failed to sufficiently inculcate in him discipline and correct behavior on the road. Indeed, petitioner’s tests
were concentrated on the ability to drive and physical fitness to do so. It also did not know that Avila had been previously
involved in sideswiping incidents.

As regards the issue on the damages awarded, petitioner contends that it was the only one that appealed the decision of
the trial court with respect to the award of actual and moral damages; hence, the Court of Appeals erred in awarding other
kinds of damages in favor of respondent, who did not appeal from the trial court’s decision.
Petitioner’s contention is unmeritorious.

Section 8, Rule 51 of the 1997 Rules of Civil Procedure provides:

SEC. 8. Questions that may be decided. -- No error which does not affect the jurisdiction over the subject matter or the
validity of the judgment appealed from or the proceedings therein will be considered unless stated in the assignment of
errors, or closely related to or dependent on an assigned error and properly argued in the brief, save as the court pass
upon plain errors and clerical errors.

31 32
Philippine National Bank v. Rabat cited the book of Justice Florenz D. Regalado to explain the section above, thus:

In his book, Mr. Justice Florenz D. Regalado commented on this section, thus:

1. Sec. 8, which is an amendment of the former Sec. 7 of this Rule, now includes some substantial changes in the
rules on assignment of errors. The basic procedural rule is that only errors claimed and assigned by a party will
be considered by the court, except errors affecting its jurisdiction over the subject matter. To this exception has
now been added errors affecting the validity of the judgment appealed from or the proceedings therein.

Also, even if the error complained of by a party is not expressly stated in his assignment of errors but the same is
closely related to or dependent on an assigned error and properly argued in his brief, such error may now be
considered by the court. These changes are of jurisprudential origin.

2. The procedure in the Supreme Court being generally the same as that in the Court of Appeals, unless
otherwise indicated (see Secs. 2 and 4, Rule 56), it has been held that the latter is clothed with ample authority to
review matters, even if they are not assigned as errors on appeal, if it finds that their consideration is necessary in
arriving at a just decision of the case. Also, an unassigned error closely related to an error properly assigned
(PCIB vs. CA, et al., L-34931, Mar. 18, 1988), or upon which the determination of the question raised by error
properly assigned is dependent, will be considered by the appellate court notwithstanding the failure to assign it
as error (Ortigas, Jr. vs. Lufthansa German Airlines, L-28773, June 30, 1975; Soco vs. Militante, et al., G.R. No.
58961, June 28, 1983).

It may also be observed that under Sec. 8 of this Rule, the appellate court is authorized to consider a plain error,
although it was not specifically assigned by the appellant (Dilag vs. Heirs of Resurreccion, 76 Phil. 649),
33
otherwise it would be sacrificing substance for technicalities.

In this case for damages based on quasi-delict, the trial court awarded respondent the sum of ₱745,575.00, representing
loss of earning capacity (₱590,000.00) and actual damages (₱155,575.00 for funeral expenses), plus ₱50,000.00 as
moral damages. On appeal to the Court of Appeals, petitioner assigned as error the award of damages by the trial court
on the ground that it was based merely on suppositions and surmises, not the admissions made by respondent during the
trial.

In its Decision, the Court of Appeals sustained the award by the trial court for loss of earning capacity of the deceased
Silvino Tan, moral damages for his death, and actual damages, although the amount of the latter award was modified.

The indemnity for loss of earning capacity of the deceased is provided for by Article 2206 of the Civil
34 35
Code. Compensation of this nature is awarded not for loss of earnings, but for loss of capacity to earn money.

As a rule, documentary evidence should be presented to substantiate the claim for damages for loss of earning
36
capacity. By way of exception, damages for loss of earning capacity may be awarded despite the absence of
documentary evidence when: (1) the deceased is self-employed and earning less than the minimum wage under current
labor laws, in which case, judicial notice may be taken of the fact that in the deceased's line of work no documentary
evidence is available; or (2) the deceased is employed as a daily wage worker earning less than the minimum wage under
37
current labor laws.

In this case, the records show that respondent’s husband was leasing and operating a Caltex gasoline station in Gumaca,
Quezon. Respondent testified that her husband earned an annual income of one million pesos. Respondent presented in
38
evidence a Certificate of Creditable Income Tax Withheld at Source for the Year 1990, which showed that respondent’s
husband earned a gross income of P950,988.43 in 1990. It is reasonable to use the Certificate and respondent’s
testimony as bases for fixing the gross annual income of the deceased at one million pesos before respondent’s husband
died on March 17, 1999. However, no documentary evidence was presented regarding the income derived from their
copra business; hence, the testimony of respondent as regards such income cannot be considered.

In the computation of loss of earning capacity, only net earnings, not gross earnings, are to be considered; that is, the
total of the earnings less expenses necessary for the creation of such earnings or income, less living and other incidental
39
expenses. In the absence of documentary evidence, it is reasonable to peg necessary expenses for the lease and
operation of the gasoline station at 80 percent of the gross income, and peg living expenses at 50 percent of the net
income (gross income less necessary expenses).

In this case, the computation for loss of earning capacity is as follows:

 Life Expectancy Reasonable and
Net Earning Gross Annual Income
= [2/3 (80-age at the time of x – Necessary Expenses
Capacity (GAI)
death)] (80% of GAI)

X = [2/3 (80-65)] x ₱1,000,000.00 - ₱800,000.00

X = 2/3 (15) x ₱200,000.00 - ₱100,000.00(Living

Expenses)

X = 30/3 x ₱100,000.00

X = 10 x ₱100,000.00

X = ₱1,000,000.00

The Court of Appeals also awarded actual damages for the expenses incurred in connection with the death, wake, and
interment of respondent’s husband in the amount of ₱154,575.30, and the medical expenses of respondent in the amount
of ₱168,019.55.

Actual damages must be substantiated by documentary evidence, such as receipts, in order to prove expenses incurred
40
as a result of the death of the victim or the physical injuries sustained by the victim. A review of the valid receipts
submitted in evidence showed that the funeral and related expenses amounted only to ₱114,948.60, while the medical
expenses of respondent amounted only to ₱12,244.25, yielding a total of ₱127,192.85 in actual damages.

Moreover, the Court of Appeals correctly sustained the award of moral damages in the amount of ₱50,000.00 for the
death of respondent’s husband. Moral damages are not intended to enrich a plaintiff at the expense of the
41
defendant. They are awarded to allow the plaintiff to obtain means, diversions or amusements that will serve to alleviate
the moral suffering he/she has undergone due to the defendant’s culpable action and must, perforce, be proportional to
42
the suffering inflicted.

In addition, the Court of Appeals correctly awarded temperate damages in the amount of ₱10,000.00 for the damage
caused on respondent’s motorcycle. Under Art. 2224 of the Civil Code, temperate damages "may be recovered when the
court finds that some pecuniary loss has been suffered but its amount cannot, from the nature of the case, be proved with
certainty." The cost of the repair of the motorcycle was prayed for by respondent in her Complaint. However, the evidence
43
presented was merely a job estimate of the cost of the motorcycle’s repair amounting to ₱17, 829.00. The Court of
Appeals aptly held that there was no doubt that the damage caused on the motorcycle was due to the negligence of
petitioner’s driver. In the absence of competent proof of the actual damage caused on the motorcycle or the actual cost of
its repair, the award of temperate damages by the appellate court in the amount of ₱10,000.00 was reasonable under the
44
circumstances.

The Court of Appeals also correctly awarded respondent moral damages for the physical injuries she sustained due to the
45
vehicular accident. Under Art. 2219 of the Civil Code, moral damages may be recovered in quasi-delicts causing
physical injuries. However, the award of ₱50,000.00 should be reduced to ₱30,000.00 in accordance with prevailing
46
jurisprudence.

Further, the Court of Appeals correctly awarded respondent civil indemnity for the death of her husband, which has been
47 48
fixed by current jurisprudence at ₱50,000.00. The award is proper under Art. 2206 of the Civil Code.

In fine, the Court of Appeals correctly awarded civil indemnity for the death of respondent’s husband, temperate damages,
and moral damages for the physical injuries sustained by respondent in addition to the damages granted by the trial court
to respondent. The trial court overlooked awarding the additional damages, which were prayed for by respondent in her
Amended Complaint. The appellate court is clothed with ample authority to review matters, even if they are not assigned
49
as errors in the appeal, if it finds that their consideration is necessary in arriving at a just decision of the case.

WHEREFORE, the petition is DENIED. The Decision of the Court of Appeals dated August 17, 2004 in CA-G.R. CV No.
70860 is hereby AFFIRMED with MODIFICATION. Petitioner Philippine Hawk Corporation and Margarito Avila are hereby
ordered to pay jointly and severally respondent Vivian Lee Tan: (a) civil indemnity in the amount of Fifty Thousand Pesos
(₱50,000.00); (b) actual damages in the amount of One Hundred Twenty-Seven Thousand One Hundred Ninety-Two
Pesos and Eighty-Five Centavos ( ₱127,192.85); (c) moral damages in the amount of Eighty Thousand Pesos
(₱80,000.00); (d) indemnity for loss of earning capacity in the amount of One Million Pesos (₱1,000,000.00); and (e)
temperate damages in the amount of Ten Thousand Pesos (₱10,000.00).

Costs against petitioner.

SO ORDERED.

G.R. No. 148737 June 16, 2004

ERNESTO PLEYTO and PHILIPPINE RABBIT BUS LINES, INC., petitioners,

vs.
MARIA D. LOMBOY and CARMELA LOMBOY, respondents.
 DECISION

QUISUMBING, J.:

1
For review on certiorari is the Decision dated October 31, 2000 of the Court of Appeals in CA-G.R. CV No. 61300, which
2
affirmed with modification the Decision dated June 26, 1998 of the Regional Trial Court (RTC) of Dagupan City, Branch
42, in Civil Case No. 95-00724-D. The RTC ordered herein petitioners to solidarily pay damages to respondents.
3
Petitioners likewise assail the Resolution dated June 21, 2001 of the appellate court, which denied their Motion for
Reconsideration.

Petitioner Philippine Rabbit Bus Lines, Inc. (PRBL), with principal office at Tarlac City, Tarlac, is a public carrier, engaged
in carrying passengers and goods for a fare. It serviced various routes in Central and Northern Luzon. Petitioner Ernesto
Pleyto was a bus driver employed by PRBL at the time of the incident in question.

Respondent Maria D. Lomboy of Calasiao, Pangasinan, is the surviving spouse of the late Ricardo Lomboy, who died in
Pasolingan, Gerona, Tarlac, in a vehicular accident at around 11:30 a.m. of May 16, 1995. The accident was a head-on
collision between the PRBL bus driven by petitioner Pleyto and the car where Ricardo was a passenger. Respondent
Carmela Lomboy is the eldest daughter of Ricardo and Maria Lomboy. Carmela suffered injuries requiring hospitalization
in the same accident which resulted in her father’s death.

On November 29, 1995, herein respondents, as pauper-litigants, filed an action for damages against PRBL and its driver,
Pleyto, with the RTC of Dagupan City. In their complaint, which was docketed as Civil Case No. 95-00724-D, the
Lomboys prayed that they be indemnified for the untimely death of Ricardo Lomboy, his lost earnings, the medical and
hospitalization expenses of Carmela, and moral damages.

The facts, established during trial and affirmed by the appellate court, are as follows:

At approximately 11:30 a.m. of May 16, 1995, PRBL Bus No. 1539, with Plate No. CVD 556, driven by petitioner
Pleyto, was traveling along MacArthur Highway in Gerona, Tarlac bound for Vigan, Ilocos Sur. It was drizzling that
morning and the macadam road was wet. Right in front of the bus, headed north, was the tricycle with Plate No.
CX 7844, owned and driven by one Rodolfo Esguerra.

According to Rolly Orpilla, a witness and one of the bus passengers, Pleyto tried to overtake Esguerra’s tricycle but hit it
instead. Pleyto then swerved into the left opposite lane. Coming down the lane, some fifty meters away, was a
southbound Mitsubishi Lancer car, with Plate No. PRS 941, driven by Arnulfo Asuncion. The car was headed for Manila
with some passengers. Seated beside Arnulfo was his brother-in-law, Ricardo Lomboy, while in the back seat were
Ricardo’s 18-year old daughter Carmela and her friend, one Rhino Daba. PRBL Bus No. 1539 smashed head-on the car,
killing Arnulfo and Ricardo instantly. Carmela and Rhino suffered injuries, but only Carmela required hospitalization.

In their Answer, petitioners PRBL and Ernesto Pleyto both claimed that the bus was running slowly at the time of the
accident. They pointed out that Bus No. 1539 had been inspected by driver Pleyto and examined by a mechanic prior to
the trip, in accordance with the company’s standard operating procedure. It was found in good working condition. Pleyto
claimed that while cruising along the highway at Gerona, Tarlac, he noticed Esguerra’s tricycle and followed it at a safe
distance after he was unable to overtake it. Suddenly and without warning, the tricycle stopped in the middle of the road.
Pleyto stepped on the brakes and the bus lost speed. But, since it skidded towards the direction of the tricycle, he
swerved the bus to the other lane to avoid hitting it, only to collide with the Manila-bound Mitsubishi car.

On June 26, 1998, the trial court decided Civil Case No. 95-00724-D as follows:

WHEREFORE, premises considered, judgment is hereby rendered in favor of the plaintiffs and against the
defendants ordering the defendants to pay solidarily the plaintiffs the following amounts:

1) ₱50,000.00 as indemnification for the death of Ricardo Lomboy;

2) ₱1,642,521.00 for lost earnings of Ricardo Lomboy;

3) ₱59,550.00 as actual damages for the funeral, wake, religious services and prayer for the soul of the
departed;

4) ₱52,000.00 for the medical treatment and medicine of Carmela Lomboy;

5) ₱500,000.00 as moral damages for the wife and children excluding Carmela Lomboy;

6) ₱50,000.00 as moral damages for Carmela Lomboy; and

7) To pay costs.

The filing fee the plaintiffs should have paid is hereby ordered to be paid by the plaintiffs to the Clerk of Court of
this Court upon satisfaction of the foregoing amounts to the plaintiffs by the defendants.
 4
SO ORDERED.

In ruling for respondents, the RTC found Pleyto negligent and lacking in precaution when he overtook the tricycle with
complete disregard of the approaching car in the other lane. It found the testimony of Rolly Orpilla credible and persuasive
as against Pleyto’s self-serving and unbelievable testimony. The court found that Pleyto should have been more prudent
in overtaking a tricycle, considering that it was drizzling, the road was slippery, and another vehicle was approaching from
the opposite direction. The RTC found that Pleyto had clearly violated traffic rules and regulations, and thus was negligent
5
under Article 2185 of the Civil Code of the Philippines because petitioner Pleyto failed to present any proof to rebut the
6
presumption. The lower court likewise held co-petitioner PRBL equally liable under Article 2180 of the Civil Code for its
failure to show that it had maintained proper supervision of its employees notwithstanding strict standards in employee
selection.

Petitioners appealed the judgment of the trial court to the Court of Appeals in CA-G.R. CV No. 61300. The appellate court,
however, affirmed the decision of the trial court, with modification in the award of damages, thus:

Wherefore, with the MODIFICATION that the award for actual damages is reduced to ₱39,550.00 for funeral and
religious services and ₱27,000.00 for medical expenses of Carmela Lomboy; and the award for loss of earning
capacity is accordingly corrected to ₱1,152,000.00, the appealed decision is AFFIRMED.

7
SO ORDERED.

The Court of Appeals affirmed the findings of the RTC with respect to Pleyto’s fault and negligence. The appellate court
noted that this was evident in his overtaking Esguerra’s tricycle despite the drizzle, the slippery road, and an oncoming car
a mere fifty meters away. The court reasoned that the bus must have been speeding since despite braking, the bus still hit
the tricycle, and then rammed the car in the opposite lane with such force as to throw the car off the road. The appellate
court also found petitioner PRBL liable as owner of the bus and as employer of Pleyto pursuant to Article 2180 of the Civil
Code, for its failure to observe the required diligence in its supervision of its employees and the safe maintenance of its
buses. In modifying the award of damages, the appellate court took note of the amounts that were duly supported by
receipts only.

Petitioners then moved for reconsideration, but the appellate court denied it.

Hence, the instant petition, premised on the following grounds:

A. THE SUPREME COURT MAY REVIEW THE CONCLUSION DRAWN BY THE COURT OF APPEALS,
NAMELY, THAT THE PRBL BUS OVERTOOK A TRICYCLE THUS CAUSING THE ACCIDENT, SINCE IT WAS
MADE IN DISREGARD OF FACTS UNDISPUTED BY THE PARTIES.

B. THE COURT OF APPEALS DISREGARDED THE DOCTRINE LAID DOWN IN VILLA REY TRANSIT, INC. v.
COURT OF APPEALS, G.R. NO. L-25499, FEBRUARY 18, 1970, 31 SCRA 511, WHEN IT ARBITRARILY
8
PEGGED THE MONTHLY LIVING EXPENSES AT 50% OF GROSS EARNINGS.

At the outset, it appears that petitioners call for this Court to review the factual findings and conclusions of the Court of
Appeals. Petitioners assail the appellate court’s affirmance of the finding by the trial court that Pleyto was negligent. The
9
issue of negligence is factual and, in quasi-delicts, crucial in the award of damages. But it is well established that under
Rule 45 of the 1997 Rules of Civil Procedure, only questions of law, not of fact, may be raised before the Supreme Court.
It must be stressed that this Court is not a trier of facts, and it is not its function to re-examine and weigh anew the
10
respective evidence of the parties. Factual findings of the trial court, especially those affirmed by the Court of Appeals,
11
are conclusive on this Court when supported by the evidence on record. In the present petition, no compelling reason is
shown by petitioners whatsoever for this Court to reverse those findings. Our examination of the records shows that the
evidence clearly supports the following findings of the appellate court:

The negligence and fault of appellant driver is manifest. He overtook the tricycle despite the oncoming car only fifty (50)
meters away from him. Defendant-appellant’s claim that he was driving at a mere 30 to 35 kilometers per hour does not
deserve credence as it would have been easy to stop or properly maneuver the bus at this speed. The speed of the bus,
the drizzle that made the road slippery, and the proximity of the car coming from the opposite direction were duly
established by the evidence. The speed at which the bus traveled, inappropriate in the light of the aforementioned
circumstances, is evident from the fact despite the application of the brakes, the bus still bumped the tricycle, and then
proceeded to collide with the incoming car with such force that the car was pushed beyond the edge of the road to the
ricefield (Paragraph 8, Affidavit of Rolly Orpilla marked Exh. "D" and Traffic Report marked Exh. "E", Folder of
12
Exhibits)....

Indeed, petitioner Pleyto violated traffic rules and regulations when he overtook the tricycle despite the presence of an
oncoming car in the other lane. Article 2185 of the Civil Code lays down the presumption that a person driving a motor
vehicle has been negligent if at the time of the mishap, he was violating any traffic regulation. As found by both the Court
of Appeals and the trial court, petitioners failed to present any convincing proof rebutting such presumption.

A driver abandoning his proper lane for the purpose of overtaking another vehicle in an ordinary situation has the duty to
see to it that the road is clear and not to proceed if he cannot do so in safety. When a motor vehicle is approaching or
rounding a curve, there is special necessity for keeping to the right side of the road and the driver does not have the right
to drive on the left hand side relying upon having time to turn to the right if a car approaching from the opposite direction
13
comes into view.
 14
The Court of Appeals found PRBL liable for Pleyto’s negligence pursuant to Article 2180 in relation to Article 2176 of the
Civil Code. Under Article 2180, when an injury is caused by the negligence of a servant or an employee, the master or
employer is presumed to be negligent either in the selection or in the supervision of that employee. This presumption may
be overcome only by satisfactorily showing that the employer exercised the care and the diligence of a good father of a
15
family in the selection and the supervision of its employee.

In fine, when the employee causes damage due to his own negligence while performing his own duties, there arises
the juris tantum presumption that the employer is negligent, rebuttable only by proof of observance of the diligence of a
16
good father of a family. Thus, in the selection of prospective employees, employers are required to examine them as to
their qualifications, experience and service records. With respect to the supervision of employees, employers must
formulate standard operating procedures, monitor their implementation and impose disciplinary measures for breaches
17
thereof. These facts must be shown by concrete proof, including documentary evidence.

18
In the present case, petitioners presented several documents in evidence to show the various tests and pre-qualification
requirements imposed upon petitioner Pleyto before his hiring as a driver by PRBL. However, no documentary evidence
was presented to prove that petitioner PRBL exercised due diligence in the supervision of its employees, including Pleyto.
Citing precedents, the Court of Appeals opined,

"in order that the defense of due diligence in the selection and supervision of employees may be deemed
sufficient and plausible, it is not enough for the employer to emptily invoke the existence of company guidelines
and policies on hiring and supervision. As the negligence of the employee gives rise to the presumption of
negligence on the part of the employer, the latter has the burden of proving that it has been diligent not only in the
selection of employees but also in the actual supervision of their work. The mere allegation of the existence of
hiring procedures and supervisory policies without anything more is decidedly not sufficient to overcome such
presumption. (Metro Manila Transit Corp. vs. CA (223 SCRA 521). The trial court ratiocinated:

...

Indeed, the testimony of the said two witnesses of the PRBL would impress one to believe that the PRBL
has always exercised the strictest standard of selecting its employees and of maintaining its vehicles to
avoid injury or damage to the life and limb of people on the road whether of its own passengers or
pedestrians or occupants or other vehicles. It has not however, shown to the satisfaction of the Court that
it has maintained proper supervision of its employees, especially drivers while in the actual operation of
its buses. While it has a list of procedures and testing when it comes to recruitment and another list of
what should be done with its buses before they are allowed to run on the road, it has no list of procedures
and duties to be followed by a driver while he is operating a vehicle to prevent injury to persons and
damage to property. Neither has it proved to the Court that there are people employed by it to supervise
its drivers so that it can be seen to it that all the safety procedures to prevent accident or damage to
property or injury to people on the road have been in place. It is in this aspect of supervising its
19
employees where this Court has found the defendant PRBL deficient." (Decision p. 29, Rollo)

In our view, no reversible error was committed by the Court of Appeals when it sustained what the trial court found after
trial that PRBL had failed to rebut the presumption of negligence on its part. Said finding binds us now in this review on
certiorari.

Hence, the only remaining issue relevant for our resolution concerns the award to herein respondents for damages as well
as the loss of earning capacity of the victim, Ricardo Lomboy.

Petitioners argue that the award of loss of earning capacity to respondents is devoid of legal basis. They fault the
appellate court for pegging the monthly living expenses at 50% of gross earnings since, they claim, this runs contrary
20
to Villa Rey Transit, Inc. v. Court of Appeals, which held that "the amount recoverable is not loss of the entire earning,
but rather the loss of that portion of the earnings which the beneficiary would have received." Petitioners also point out
that respondents failed to prove the gross income of the deceased Ricardo Lomboy, thus, making the computations of the
appellate court doubtful, to say the least.

Respondents counter that the deduction of 50% of the gross income as reasonable and necessary living expenses by the
appellate court is in accord with established jurisprudence, pointing to our decision in Negros Navigation Co., Inc. v. Court
21
of Appeals.

Petitioners, in our view, misread the Villa Rey Transit case, where we emphasized that:

"Thus, it has been consistently held that earning capacity, as an element of damages to one’s estate for his death
by wrongful act is necessarily his net earning capacity or his capacity to acquire money, "less the necessary
expense for his own living". Stated otherwise, the amount recoverable is not loss of the entireearning, but rather
the loss of that portion of the earnings which the beneficiary would have received. In other words, only net
earnings, not gross earning, are to be considered that is, the total of the earnings lessexpenses necessary in the
22
creation of such earnings or income and less living and other incidental expenses."

In considering the earning capacity of the victim as an element of damages, the net earnings, which is computed by
deducting necessary expenses from the gross earnings, and not the gross earnings, is to be utilized in the computation.
Note that in the present case, both the Court of Appeals and the trial court used net earnings, not gross earnings in
computing loss of earning capacity. The amount of net earnings was arrived at after deducting the necessary expenses
(pegged at 50% of gross income) from the gross annual income. This computation is in accord with settled jurisprudence,
including the Villa Rey case.

Petitioners’ claim that no substantial proof was presented to prove Ricardo Lomboy’s gross income lacks merit. Failure to
present documentary evidence to support a claim for loss of earning capacity of the deceased need not be fatal to its
cause. Testimonial evidence suffices to establish a basis for which the court can make a fair and reasonable estimate of
23
the loss of earning capacity. Hence, the testimony of respondent Maria Lomboy, Ricardo’s widow, that her husband was
earning a monthly income of ₱8,000 is sufficient to establish a basis for an estimate of damages for loss of earning
capacity.

It is well-settled in jurisprudence that the factors that should be taken into account in determining the compensable
amount of lost earnings are: (1) the number of years for which the victim would otherwise have lived; and (2) the rate of
loss sustained by the heirs of the deceased. Jurisprudence provides that the first factor, i.e., life expectancy, is computed
by applying the formula (2/3 x [80 - age at death]) adopted in the American Expectancy Table of Mortality or the Actuarial
Combined Experience Table of Mortality. As to the second factor, it is computed by multiplying the life expectancy by the
net earnings of the deceased, i.e., the total earnings less expenses necessary in the creation of such earnings or income
and less living and other incidental expenses. The net earning is ordinarily computed at fifty percent (50%) of the gross
24
earnings. Thus, the formula used by this Court in computing loss of earning capacity is: Net Earning Capacity = [2/3 x
25
(80 – age at time of death) x (gross annual income – reasonable and necessary living expenses)].

It was established that Ricardo Lomboy was 44 years old at the time of his death and is earning a monthly income of
26
₱8,000 or a gross annual income (GAI) of ₱96,000. Using the cited formula, the Court of Appeals correctly computed
the Loss of Net Earning Capacity as ₱1,152,000, net of and after considering a reasonable and necessary living expenses
of 50% of the gross annual income or ₱48,000. A detailed computation is as follows:

NET EARNING LIFE EXPECTANCY [2/3 (80- GROSS ANNUAL LIVING EXPENSES
= x –
CAPACITY (X) age at the time of death)] INCOME (GAI) (50% of GAI)

X = [2/3 (80-44)] x [₱96,000 – (50% x ₱96,000)

X = [2/3 (36)] x [₱96,000 – 48,000]

X = 24 x 48,000

X = ₱ 1,152,000.00

Thus, no reversible error may be attributed to the court a quo in fixing the loss of earning capacity at said amount.

We likewise sustain the reduction of the award of actual damages from ₱59,550 for funeral and burial expenses of
27
Ricardo and ₱52,000 for medical expenses of Carmela Lomboy to ₱39,550 and ₱27,000, respectively, as only these
28
latter amounts were duly supported by receipts. To justify an award of actual damages, there must be competent proof
29
of the actual amount of loss, credence can be given only to claims which are duly supported by receipts.

However, while the award of ₱50,000 as moral damages to Carmela Lomboy is sustained, the award for moral damages
of ₱500,000 to the heirs of Ricardo Lomboy should be reduced for being excessive.

Under Article 2206 of the Civil Code, the spouse, legitimate children and illegitimate descendants and ascendants of the
30
deceased may demand moral damages for mental anguish by reason of the death of the deceased. However, we must
stress that moral damages, though incapable of pecuniary estimation, are in the category of an award designed to
31
compensate the claimant for actual injury and are not meant to enrich complainant at the expense of defendant. Moral
damages are awarded to enable the injured party to obtain means, diversions or amusements that will serve to alleviate
the moral suffering he/she has undergone, by reason of the defendant’s culpable action. Its award is aimed at restoration,
32
as much as possible, of the spiritual status quo ante; thus it must be proportionate to the suffering inflicted. Under the
circumstances of this case, an award of ₱100,000 to the heirs of Ricardo Lomboy would be justified and in keeping with
33
the purpose of the law and jurisprudence in allowing moral damages.

The indemnification award of ₱50,000 is also sustained.

WHEREFORE, the assailed Decision of the Court of Appeals in CA-G.R. CV No. 61300 is AFFIRMED, with the sole
MODIFICATION that the award of moral damages to the heirs of Ricardo Lomboy is reduced from ₱500,000.00 to
₱100,000.00. No pronouncement as to costs.

SO ORDERED.

G.R. No. 197813 September 25, 2013

PEOPLE OF THE PHILIPPINES, Plaintiff-Appellee,

vs.
EDWIN IBANEZ y ALBANTE and ALFREDO (FREDDIE) NULLA y IBANEZ, Accused-appellants.
 DECISION

PEREZ, J.:

Before us is an appeal via a Notice of Appeal from the Decision of the Court of Appeals in CA-G.R. CR-H.C. No.
1 2
04051. The appellate court affirmed in toto the Decision of the Regional Trial Court (RTC), Branch18, Malolos, Bulacan
which convicted accused-appellants Edwin Ibañez y Albante (Edwin) and Alfredo Nulla y Ibañez (Alfredo) of Murder in
Criminal Case No. 3517-M-2004.

Appellants Edwin and Alfredo, with Jesus Monsillo y Taniares (Jesus), were all charged in an Information for Murder
under Article 248 of the Revised Penal Code, which reads:

The undersigned Asst. Provincial Prosecutor accuses Jesus Montisillo y Taniares @ Dodong, Edwin Ibañez y Albante and
Alfredo(Freddie) Nulla y Ibañez of the crime of murder, penalized under the provisions of Article 248 of the Revised Penal
Code, committed as follows:

That on or about the 29th day of August, 2004, in the municipality of Bocaue, province of Bulacan, Philippines, and within
the jurisdiction of this Honorable Court, the above-named accused, armed with a soil digger (bareta) and with intent to kill
one Wilfredo Atendido y Dohenog, conspiring, confederating and helping one another did then and there willfully,
unlawfully and feloniously, with evident premeditation, abuse of superior strength and treachery, attack, assault and hit
with the said soildigger (bareta) the said Wilfredo Atendido y Dohenog, hitting the latter on his head, thereby inflicting
3
upon him serious physical injuries which directly caused his death.

During arraignment, Edwin and Alfredo pleaded not guilty. Jesus, on the other hand, remained at large; the case against
him was archived. Thereafter, trial ensued.

The prosecution’s version was testified to by the victim’s wife and daughter, in succession.

On that fateful day, Wilfredo Atendido y Dohenog (Wilfredo) was invited by Alfredo to a drinking session with Jesus and
Edwin making them a party of four. Rachel, Wilfredo’s daughter, an adolescent at the time, was underneath the house
(silong in the vernacular) of a neighbor, three (3)meters away from the place where Wilfredo and his companions were
ostensibly in merrymaking.

Rachel saw her father step away from the group to urinate. While Wilfredo relieved himself, Edwin snatched a t-shirt from
a nearby clothesline, and hooded the t-shirt over the head and face of Wilfredo. Robbed of vision as his head was fully
covered, Wilfredo was wrestled and pinned down by Edwin, while Alfredo boxed the left side of Wilfredo’s chest. Jesus,
armed with a long iron bar, swung at and hit Wilfredo in the head. Terrified, Rachel stood immobilized as she watched the
attack on father. Thereafter, she saw her mother running out of their house and crying for help.

On that same auspicious date, 29 August 2004, Rowena, Wilfredo’s wife and Rachel’s mother, was inside their house
taking care of their youngest daughter. She heard a commotion coming from the neighboring house, about eight (8) steps
away, so she rushed in that direction. Once outside their house, she saw Wilfredo prostrate on the ground covered with
blood on his face and forehead. Upon reaching Wilfredo, Rowena saw accused Jesus, standing one meter away from
Wilfredo, holding an iron bar. Edwin and Alfredo stood beside Jesus; Edwin held a white shirt. Forthwith, Jesus and
Alfredo ran away while Edwin went home. Rowena asked for help to bring Wilfredo to the hospital. However, Wilfredo did
not reach the hospital alive and was pronounced dead on arrival.

Expectedly, the defense mainly of Edwin and Alfredo, proffered an altogether different version of the events.

The two accused-appellants pointed to Jesus as the sole culprit, proclaimed their innocence and professed to being at the
scene of the crime only because of their curiosity for what had occurred.

Allegedly, on that day, the two buddies were having their regular drinking session at Edwin’s house when they heard a
commotion outside. Curious about the ruckus, they approached and saw Wilfredo prostrate on the ground; Jesus, held an
iron bar and was being held back by his sister who was shouting, "Tama na! Tama na!." Edwin then called for a tricycle so
Wilfredo could be brought to a hospital and given medical attention. Alfredo stood by and merely watched as events
transpired.

To corroborate their claim of innocence, the defense called Aniceta Dosil (Aniceta) to the witness stand who testified as
follows:

(1) She sold doormats for a living which she peddled on the road;

(2) On 29 August 2004, Rachel helped her in selling the doormats;

(3) On that day, they finished at around 6:00 p.m. and headed to their respective residences along the railroad
track;

(4) Upon arriving at their vicinity, Aniceta witnessed the immediate aftermath of the purported fight between Jesus
and Wilfredo;
 (5) At that juncture, Jesus was being embraced by his sister, Marilou, and the two were two meters away from the
body of Wilfredo;

(6) Marilou recounted to Aniceta that Jesus had hit Wilfredo with an iron bar, a preemptive move because
Wilfredo was about to stab Jesus;

(7) While Aniceta and Marilou discussed the incident, Rachel stood and listened to them;

(8) At that time, only the four of them, Jesus, Marilou, Aniceta and Rachel, were at the place of the incident;

(9) After learning the entirety of what had transpired, Aniceta, who was afraid to get involved, and Rachel, ran to
their respective houses;

(10) For the duration of the day, Aniceta did not step out of her house, neither did she volunteer information to the
police when the case was investigated in the following days; and

(11) Aniceta only came forward to testify at the request of Adela Ibañez, wife of Edwin.

As previously adverted to, the trial court convicted Edwin and Alfredo of Murder. It disposed of the case, to wit:

WHEREFORE, accused Edwin Ibañez y Albante and Alfredo (Freddie) Nulla y Ibañez are hereby found GUILTY beyond
reasonable doubt of the crime of murder and are hereby sentenced to suffer imprisonment of reclusion perpetua and to
indemnify the heirs of Wilfredo D. Atendido in the amount of:

a) Fifty Thousand Pesos (₱50,000.00) as civil indemnity;

b) Twenty-Five Thousand Pesos (₱25,000.00) as temperate damages;

c) Fifty Thousand Pesos (₱50,000.00) as moral damages;

d) Twenty-Five Thousand Pesos (₱25,000.00) as exemplary damages; and

e) One Million Nine Hundred Forty-Six Thousand and One Hundred Eighty Pesos (₱1,946,180.00) for the
4
unearned income of Wilfredo Atendido.

On appeal, Edwin and Alfredo found no reprieve. The Court of Appeals did not deviate from the RTC’s ruling and affirmed
in toto its finding of guilt.

In this appeal, Edwin and Alfredo assign the following as errors:

THE LOWER COURTS GRAVELY ERRED IN GIVING FULLWEIGHT AND CREDENCE TO THE TESTIMONY
OF THEALLEGED PROSECUTION EYEWITNESS.

II

THE LOWER COURTS GRAVELY ERRED IN NOT GIVINGWEIGHT AND CREDENCE TO THE DEFENSE‘S
EVIDENCE.

III

THE LOWER COURTS GRAVELY ERRED IN CONVICTING THEACCUSED-APPELLANTS WHEN THEIR

5
GUILT WAS NOT PROVENBEYOND REASONABLE DOUBT.

In sum, the issue is whether the accused are guilty of murder.

Edwin and Alfredo maintain their innocence and point to Jesus as the sole perpetrator of the crime. They insist that they
were at the scene of the crime only because they wanted to know what the commotion was all about. They claim that, in
fact, Edwin called for a tricycle so Wilfredo could be brought to a hospital. To discredit the eyewitness testimony of
Rachel, they presented Aniceta who testified that she and Rachel were out on that day selling doormats and only returned
at 6:00 p.m. Thus, Rachel could not have witnessed the murder of Wilfredo.

Both lower courts, however, found the testimony of Rachel credible:

This Court finds the testimony of Rachel clear and convincing. The testimony flows from a person who was present in the
place where the killing occurred. They are replete with details sufficient to shift the burden of evidence to appellants. We
have no reason to doubt Rachel’s credibility. Her candid account of the incident, standing alone, clearly established the
components of the crime of murder. Appellants’ defense of denial, not sufficiently proven, cannot overcome the
conclusions drawn from said evidence. We find no cogent reason to deviate from the findings and conclusions of the trial
court. Rachel’s testimony was delivered in a firm, candid, and straightforward manner. There is no showing that Rachel
wavered from the basic facts of her testimony, even when she was subjected to a rigorous examination.

Rachel was only ten (10) years old when she witnessed the murder of the victim. She testified in open court two (2) years
later. Thus, she cannot be expected to give an error-free narration of the events that happened two years earlier. The
alleged inconsistencies between her sworn statement and testimony referred to by appellants do not affect her credibility.
What is important is that in all her narrations she consistently and clearly identified appellants as the perpetrators of the
crime. Inconsistencies between the sworn statement and the testimony in court do not militate against witness’ credibility
6
since sworn statements are generally considered inferior to the testimony in open court.

We find no error in the lower courts’ disposal of the issue.

Well-entrenched in jurisprudence is that the trial court's evaluation of the testimony of a witness is accorded the highest
respect because of its direct opportunity to observe the witnesses on the stand and to determine if they are telling the
7
truth or not. This opportunity enables the trial judge to detect better that thin line between fact and prevarication that will
determine the guilt or innocence of the accused. That line may not be discernible from a mere reading of the impersonal
record by the reviewing court. Thus, the trial judge's evaluation of the competence and credibility of a witness will not be
8
disturbed on review, unless it is clear from the records that his judgment is erroneous.

We have scrutinized the testimony of lone eyewitness, Rachel. Throughout her testimony, in her direct, cross and re-direct
and re-cross examinations, she candidly recounted the events surrounding the killing of her father as follows:

PROS. LAGROSA:

Your Honor please, may we invoke the right of the child the provisions (sic) under the child witness wherein we can ask
leading questions and in Tagalog.

COURT:

Anyway, the questions can be interpreted.

PROS. LAGROSA:

Only the leading questions, your Honor.

Q: You said that your father came from sleeping in your house, did you know what time of the day your father went to
sleep?

A: I do not know because I do not know how to read time.

xxxx

Q: But do you know whether or when your father went to sleep? It was morning, noon or afternoon or nighttime or
daytime?

A: "Hapon po." (In the afternoon.)

Q: Early afternoon, late afternoon or mid-afternoon?

A: Late in the afternoon, Your Honor. ("bandang hapon-hapon po.")

Q: Was it already dark?

A: Not yet, your Honor.

PROS. LAGROSA:

Q: According to you, your father went to sleep, where were you when your father went to sleep?

A: I was in the house, ma’am.

xxxx

Q: And when your father woke up, were you still in the house?

A: Yes, ma’am.

Q: Also inside the house?

A: Yes, ma’am.

Q: When your father woke up, what did he do?

A: All of us ate rice, ma’am. ("Kumain po kaming lahat ng kanin.")

Q: Can you tell us if that is already dark or still daytime?

A: It was still daytime, ma’am.

xxxx

Q: After eating rice, will you tell us what happened, if you still remember?

A: My father was called by his compadre, ma’am.

Q: And who was that compadre who called your father?

A: Freddie, ma’am.

Q: Do you know the full name of this Freddie?

A: Freddie Nulla, ma’am.

Q: Why do you know Freddie Nulla?

A: He is a compadre of my father, ma’am.

Q: Did you often see him in your place?

A: Yes, ma’am.

Q: Is Freddie Nulla now here in court?

A: Yes, ma’am.

Q: Will you look around and point to him?

INTERPRETER:

Witness pointed to a detention prisoner (sic) when asked to identify himself answered FREDDIE NULLA.Q: Now, you said
that Freddie Nulla, the compadre, called your father, do you still remember how he was called?

A: Yes, ma’am.

Q: How?

A: "Pare. Pare."

Q: And when your father was called, what did your father do?

A: My father followed Freddie at the back of the house of Kuya Edwin.

Q: At the time your father followed Freddie at the back of the house of your Kuya Edwin, where were you?

A: I was under the house of Kuya Unyo, ma’am.

Q: Now, you mentioned that your father followed Freddie at the back of the house of Kuya Edwin, who is this Kuya
Edwin?

INTERPRETER:

Witness pointing to a detention prisoner who identified himself as EDWIN IBAÑEZ.PROS. LAGROSA:

Q: You said that at that time you were under the house of Kuya Unyo, what is the full name of this Kuya Unyo, if you
know?

A: I do not know, ma’am.

Q: What were you doing under the house of Kuya Unyo?

A: I was throwing stones, ma’am.

Q: And this house of Kuya Unyo, is that near or far from your house?

A: Just near our house, ma’am.

Q: Can you point a place here where you are now sitted (sic) up to this courtroom to show the distance between your
house and the house of Kuya Unyo?

PROS. LAGROSA

The witness pointed up to the wall.

ATTY. MALLILLIN:

Can we estimate, your Honor.

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A: Just near, ma’am, 3 to 4 meters.

xxxx

Q: Rachel, last time you testified that your father followed Freddie Nulla at the back of the house of Kuya Unyo and at that
time you were under the house of Kuya Unyo, do you remember having stated that last time?

A: Yes, ma’am.

Q: While you were at the house of Kuya Unyo, do you remember anything unusual that happened at that time?

A: When my father was being killed, ma’am.

Q: You said that your father was being killed or "pinapatay na po si papa ko," who killed your father?

A: Kuya Edwin, Kuya Freddie and Kuya Dodong, ma’am.

Q: You said that Kuya Freddie, Kuya Edwin and Kuya Dodong were killing your father, how did Kuya Edwin, how was he
killing your father as you said?

A: "Pinuluputan po sa mukha ng damit ni Kuya Edwin." (Kuya Edwin put around a piece of cloth).

Q: You said that Kuya Edwin put around a piece of cloth on your papa, in what part of your father’s body (sic) that cloth
being put around by Kuya Edwin?

A: He put it around all over the face and the head, ma’am.

PROS. LAGROSA:

The witness was demonstrating by making a circling movement or motion of her hand all over the head and the face.

Q: And then what happened when Kuya Edwin put around that piece of cloth all over the head and face of your papa?

A: "Itinumba po siya."

Q: You said "itinumba po siya," who caused your father to tumble down?

A: After Kuya Edwin had put around the piece of cloth on my father, he tumbled him down.

Q: And when your father tumbled down, what else happened?

A: Kuya Freddie boxed him, ma’am.

Q: Did you see in what part of your father’s body was he boxed by Kuya Freddie?

A: Yes, ma’am.

Q: What part of his body was boxed?

A: On the left portion of the shoulder blade, ma’am.

Q: And how about Kuya Dodong when Kuya Edwin put around a piece of cloth and when Kuya Freddie boxed your father,
where was Kuya Dodong at that time?

A: He was also there, ma’am.

Q: And what was he doing, if he was doing anything at that time?

A: "Binareta na po ‘yong papa ko sa ulo."

COURT:

Q: What did he use noong" binareta"?

A: It is a long iron bar used in digging soil?

PROS. LAGROSA:

Q: Now, what happened after Kuya Dodong " binareta" (sic) your father on the head?

A: "Nandoon pa po ako sa silong nila Kuya Unyo nakita ko nalang ponandoon na po ang nanay ko pati po mga kapatid ko
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tsaka na poako lumabas."

As the lower courts have done, we accord full faith and credence to Rachel’s testimony. She was young and unschooled,
but her narration of the incident was categorical, without wavering. It has no markings of a concocted story, impressed
upon her by other people.

The defense, accused-appellants herein, tried to further discredit Rachel’s testimony by arguing that Rachel was a mere
child who had studied only until the first grade of elementary school and could barely read, and did not know how to tell
time.

We cannot take Rachel’s testimony lightly simply because she was a mere child when she witnessed the incident and
when she gave her testimony in court. There is no showing that her mental maturity rendered her incapable of testifying
and of relating the incident truthfully.

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With exceptions provided in the Rules of Court, all persons who can perceive, and perceiving, can make known their
perception to others, may be witnesses. That is even buttressed by the Rule on Examination of a Child Witness which
specifies that every child is presumed qualified to be a witness. To rebut this presumption, the burden of proof lies on the
party challenging the child's competence. Only when substantial doubt exists regarding the ability of the child to perceive,
remember, communicate, distinguish truth from falsehood, or appreciate the duty to tell the truth in court will the court,
12
motu proprio or on motion of a party, conduct a competency examination of a child. Thus, petitioners’ flimsy objections
on Rachel’s lack of education and inability to read and tell time carry no weight and cannot overcome the clear and
convincing testimony of Rachel as to who killed her father.

We likewise note that the line of questioning of the defense during cross-examination on the competency of Rachel to
read and tell time did not distract her in recollecting how her father was attacked by accused-appellants. From her position
underneath the house of her "Kuya Unyo," she saw her father, Wilfredo, attacked by accused-appellants. Although she
was astonished as the happening unfolded, her ability to perceive, remember, and make known her perception was not
diminished.

As regards Aniceta’s version of the events that Jesus was the sole perpetrator of the crime who attacked Wilfredo only in
self-defense, we easily see the fatal flaw: Aniceta arrived after the supposed fight between Wilfredo and Jesus, and what
transpired was merely relayed to her by Jesus’ sister, Marilou.

Quite apparent from Aniceta’s narration of events is that she has no personal knowledge of Wilfredo’s killing. Aniceta’s
testimony is mainly hearsay, specially on the purported fight between Wilfredo and Jesus that ended in Wilfredo’s death.
Aniceta’s testimony as such carries no probative weight. At best, Aniceta’s testimony is an independent relevant
statement: offered only as to the fact of its declaration and the substance of what had been relayed to Aniceta by Marilou,
13
not as to the truth thereof.

Section 36 of Rule 130 of the Rules of Court explicitly provides:

SEC. 36. Testimony generally confined to personal knowledge; hearsay excluded. – A witness can testify only to those
facts which he knows of his personal knowledge; that is, which are derived from his own perception, except as otherwise
provided in these rules.

We detect a clever, albeit transparent ploy, to pin Jesus who had already fled and is temporarily out of reach of the law.
Thus, with Jesus temporarily shielded from punishment, accused-appellants freely accuse and point to him as the sole
perpetrator of the crime. This cannot trump the solid testimony of Rachel on accused-appellants’ direct participation in
killing Wilfredo.

We likewise affirm the lower courts’ appreciation of the aggravating circumstance of treachery:

The essence of treachery is the sudden and unexpected attack by an aggressor without the slightest provocation on the
part of the victim, depriving the latter of any real chance to defend himself, thereby ensuring its commission without risk to
the aggressor. Treachery attended the killing of the victim because he was unarmed and the attack on him was swift and
sudden. He had not means and there was no time for him to defend himself. Indeed, nothing can be more sudden and
unexpected than when petitioners Edwin and Alfredo attacked the victim. The latter did not have the slightest idea that he
was going to be attacked because he was urinating and his back was turned from his assailants. The prosecution was
able to establish that petitioners’ attack on the victim was without any slightest provocation on the latter’s part and that it
14
was sudden and unexpected. This is a clear case of treachery.

15
Finally, we affirm the lower court’s award of damages consistent with jurisprudence: (1) ₱50,000.00 as civil indemnity;
(2) ₱25,000.00 as temperate damages; and (3) ₱50,000.00 as moral damages. Consistent with current jurisprudence, we
16
increase the award of exemplary damages from ₱25,000.00 to ₱30,000.00. However, we delete the award of
₱1,946,180.00 representing the unearned income of Wilfredo.

To obviate confusion on the award of loss of earning capacity, we reiterate herein that compensation for lost income is in
the nature of damages and as such requires due proof of the damages suffered; there must be unbiased proof of the
17
deceased’s average income. In this case, we only had he testimony of Wilfredo’s spouse, Rowena, who claimed that
Wilfredo earned ₱400.00 to ₱500.00 daily as a doormat vendor.

On more than one occasion, we have held that the bare testimony of a deceased’s mother or spouse as to the income or
18
earning capacity of the deceased must be supported by competent evidence like income tax returns or receipts.

19
In People v. Caraig, we have drawn two exceptions to the rule that "documentary evidence should be presented to
substantiate the claim for damages for loss of earning capacity," and have thus awarded damages where there is
testimony that the victim was either (1) self-employed earning less than the minimum wage under current labor laws, and
judicial notice may be taken of the fact that in the victim's line of work no documentary evidence is available; or (2)
employed as a daily-wage worker earning less than the minimum wage under current labor laws."

Although Wilfredo’s occupation as a doormat vendor may fall under the first exception, the minimum wage for Region III,
which includes the province of Bulacan, is below ₱400.00 as per the National Wages and Productivity Commission
20
Regional Daily Minimum Wage Rates as of August 2013. Regrettably, except for the bare assertion of Rowena,
Wilfredo's spouse, we have nothing to anchor the award for loss of earning capacity. Thus, we delete the award for loss of
earning capacity in the amount of ₱1,946,180.00.

WHEREFORE, the appeal is DISMISSED. The Decisions of the Court of Appeals in CA-G.R. H.C. No. 04051 and the
Regional Trial Court, Branch 18, Malolos, Bulacan in Criminal Case No. 3517-M-2004 are AFFIRMED with
MODIFICATION. The award of exemplary damages is increased from ₱25,000.00 to ₱30,000.00 and we delete the award
for loss of earning capacity in the amount of ₱1,946, 180.00.

SO ORDERED.

G.R. No. 169873 June 8, 2007

PEOPLE OF THE PHILIPPINES, Plaintiff-Appellee,

vs.
NORBERTO ASTROLOGO y DE DIOS, Accused-Appellant.

DECISION

CHICO-NAZARIO, J.:

1
For review is the Decision dated 29 April 2005 of the Court of Appeals in CA-G.R. CR No. 0013, which affirmed the
2
Decision dated 10 March 2003 of the Regional Trial Court (RTC) of Quezon City, Branch 102, in Criminal Case No. Q-00-
89343 finding herein appellant Norberto Astrologo y De Dios guilty beyond reasonable doubt of the crime of rape as
defined and penalized under Article 266 of the Revised Penal Code committed against his own daughter and sentencing
him to suffer the penalty of reclusion perpetua, with the modification which reduced the amount of civil indemnity to
₱50,000.00; moral damages to ₱50,000.00; and ordering the appellant to pay the victim exemplary damages in the
amount of ₱25,000.00.

3
An Information dated 3 January 2000 was filed against appellant Astrologo charging him with the crime of rape
4
committed against his own daughter, AAA. The Information reads as follows:

5
The undersigned upon prior sworn complaint filed by AAA, assisted by Aida Zipagan accuses [NORBERTO]
ASTROLOGO Y DE DIOS of the crime of Rape, committed as follows:
That on or about the 28th day of December, 1999, in xxx City, Philippines, the said accused, by means of force and
intimidation, did then and there wilfully (sic), unlawfully and feloniously and at knife point have sexual intercourse with said
6
AAA, his own daughter inside their residence located at Phase xxx, Purok xxx, xxx, Bgy. xxx, this City, against her will
7
and without her consent.

On 1 March 1999, the appellant was arraigned, in which he entered a plea of NOT GUILTY to the crime charged against
him. Thereafter, trial ensued.

The prosecution presented the following witnesses: AAA, the victim, Aida Zepadan (Aida), Mauricio Cabrera (Mauricio),
and Dr. Francisco Supe, Jr. (Dr. Supe, Jr.).

AAA testified that she is the daughter of the appellant. She stated that before the incident, she used to live with her
grandmother in Montalban. But, on 23 December 1999, she was fetched by the appellant at her grandmother’s house to
live with him and his family. On 28 December 1999, at around 10:00 p.m., she went home after watching television from
their neighbor’s house. Shortly thereafter, she slept beside her two siblings, namely: BBB, nine years old; and CCC,
seven years old. At around 11:00 p.m., while she was sleeping inside a room in their house located in Phase XXX, Purok
XXX, XXX, Barangay XXX, XXX City, she woke up when she felt someone kissing her lips. She opened her eyes and
recognized that it was her father, herein appellant. She struggled in refusal. She noticed then that her polo shirt was
already open. The appellant started mashing her breasts, and when she resisted, he pointed a knife at her. Then, the
appellant touched her vagina, lifted her skirt and succeeded in inserting his penis into her vagina despite her continuing
refusal, thereby causing her so much pain. After satisfying his lust, the appellant fell asleep. AAA immediately dressed up
and proceeded to their neighbor’s (Aida) house. Aida brought AAA to her stepmother, who was at another neighbor’s
house that time. AAA narrated to her stepmother how the appellant sexually abused her. Subsequently, Aida brought AAA
to the Barangay authorities, particularly to Mauricio who is a Barangay Security and Development Officer (BSDO) of
Barangay XXX, to report the incident.

Mauricio affirmed that between 11:00 p.m. and 12:00 midnight of 28 December 1999 or almost 29 December 1999, while
he was at a Christmas Party, AAA, together with a neighbor, approached him to seek his assistance as she was raped by
her father earlier that night. Thereafter, he and the rest of the BSDO went to appellant’s house but the latter had already
left the premises. The group spread out to search for the appellant and when they saw him, they chased him for some
distance until he was overran and caught by SPO3 David Laciste. They brought the appellant to the police station at
around 1:00 a.m. on 29 December 1999. Also on 29 December 1999, AAA, assisted by some barangay officials, reported
8
the incident to the police authorities where she executed an Affidavit on what had happened. AAA was also subjected to
a physical examination at Camp Crame conducted by Dr. Supe, Jr. on the basis of the complaint filed by her against her
own father.

During Dr. Supe, Jr.’s testimony in court, he declared that AAA suffered a deep fresh hymenal laceration at six and seven
9
o’clock positions. Such declaration affirmed his findings as stated in Medico-Legal Report No. M-3479-A-99 that AAA
suffered a "compatible loss of virginity," which loss could have occurred within 24 hours before the examination.

On the other hand, the defense merely presented the lone testimony of the appellant. The appellant denied having
committed the crime of rape against his own daughter, AAA. This Court will quote the defense’s own version of the facts
of the case according to the testimony of the appellant as summarized by the RTC and the appellate court. Thus-

On [23 December 1999], [herein appellant’s] mother instructed him to fetch [AAA] because his daughter was frequently
meeting her boyfriend late in the evening at the back of her grandmother’s house and that this would happen about twice
or thrice in one evening. [The appellant] then fetched his daughter and brought her to his house in [Barangay] XXX, XXX
City.

On [26 December 1999], herein [appellant] celebrated his birthday. The next day, a friend came to his house to continue
the birthday celebration. The [appellant] and his friends started the party at about 10:30 [a.m.], about four (4) blocks from
his house. At around 10:30 [p.m.], the [appellant] went home from the party. On his way home, he passed by his daughter
who was still out in the street. He ordered her to go home as it was getting late. At around 12:30 o’ clock past midnight, or
early morning of [28 December 1999], he went out of his house for some fresh air. Shortly thereafter, he was arrested [for
10
allegedly raping his daughter (AAA) and brought to Police Station 6 where he was detained.

After trial, the RTC rendered a Decision on 10 March 2003, finding the appellant guilty beyond reasonable doubt of the
11
crime of simple rape. The RTC did not give credence to the defense offered by the appellant which consisted merely of
his bare denial. The decretal portion of the aforesaid Decision reads, thus:

WHEREFORE, in view of the foregoing, the Court finds the [appellant] Norberto Astrologo y De Dios GUILTY beyond
reasonable doubt of the crime of Rape, as defined and penalized under Article 266 of the Revised Penal Code, and is
hereby sentenced to suffer the penalty of imprisonment of reclusion perpetua.

The [appellant] is likewise ordered to pay [AAA] the following amounts:

(1) ₱75,000.00 as civil indemnity; and

12
(2) ₱75,000.00 as moral damages.

The records of this case were originally transmitted to this Court on appeal.
In his brief, the appellant’s lone assignment of error was, the trial court gravely erred in convicting the appellant for the
13
crime of rape.

14
Pursuant to People v. Mateo, the records of the present case were transferred to the Court of Appeals for appropriate
action and disposition.

Accordingly, the Court of Appeals, taking into consideration the assignment of error stated by the appellant in his
Appellant’s Brief and after a thorough study of the records of the case, rendered a Decision on 29 April 2005 affirming the
conviction of the appellant with the modification which reduced the amount of civil indemnity and moral damages awarded
and ordering the payment of exemplary damages to the victim, AAA. The dispositive portion of the said Decision reads as
follows:

IN LIGHT OF ALL THE FOREGOING, the Decision of the Regional Trial Court of Quezon City, Branch 102 in Criminal
Case No. Q-00-89343 is hereby AFFIRMED WITH MODIFICATIONS, to wit:

1. Reducing the civil indemnity from ₱75,000.00 to ₱50,000.00;

2. Reducing the award of moral damages from ₱75,000.00 to ₱50,000.00; and

3. Appellant Norberto Astrologo y De Dios is ordered to pay [the victim, AAA] ₱25,000.00 as exemplary damages.

15
Let the records of this case be forwarded to the Supreme Court for automatic review.

16
Aggrieved by the aforesaid Decision of the appellate court, the appellant filed a Notice of Appeal. In view of the said
Notice of Appeal, the Court of Appeals forwarded to this Court the records of this case.

On 4 September 2006, this Court resolved to accept the present case and to require the parties to simultaneously submit
their respective supplemental briefs. The Office of the Solicitor General filed a Manifestation in lieu of Supplemental Brief
wherein it re-pleads and re-submits all the arguments in the Appellee’s Brief dated 20 May 2004. The appellant also filed
a Manifestation in lieu of Supplemental Brief which merely adopts the defenses and arguments raised in the Appellant’s
Brief.

After a careful review of the records of this case, this Court affirms appellant’s conviction.

A rape charge is a serious matter with pernicious consequences both for the appellant and the complainant; hence,
17
utmost care must be taken in the review of a decision involving conviction of rape. Thus, in reviewing rape cases, the
Court is guided by these principles: First, the prosecution has to show the guilt of the accused by proof beyond
reasonable doubt or that degree of proof that, to an unprejudiced mind, produces conviction. Second, unless there are
special reasons, the findings of trial courts, especially regarding the credibility of witnesses, are entitled to great respect
and will not be disturbed on appeal. Third, the disposition of rape cases is governed by the following guidelines: (1) an
accusation of rape can be made with facility; it is difficult to prove but more difficult for the person accused, though
innocent, to disprove; (2) in view of the intrinsic nature of the crime of rape where only two persons are usually involved,
the testimony of the complainant must be scrutinized with extreme caution; and (3) the evidence for the prosecution must
18
stand or fall on its own merits and cannot draw strength from the weakness of the evidence of the defense.

In the present case, appellant contends that the court a quo erred in disregarding the appellant’s defense of denial.
According to appellant, he could not have raped the victim as he was arrested during the early hours of 28 December
1999, while the rape incident allegedly committed by him happened in the evening of the same day at around 10:00 p.m.
Therefore, he was arrested even before the commission of the crime. This Court finds this contention indefensible.

This Court has consistently held that when the victim says that she has been raped, she says in effect all that is
necessary to show that rape has been committed, and if her testimony meets the test of credibility, the accused may be
19
convicted on the basis thereof. This is all the more true where the complainant is the daughter of the accused because a
daughter would not concoct a story of defloration against her father, accused him of so grave a crime as rape, allow an
examination of her private parts, submit herself to public humiliation and scrutiny via an open trial, if she were not truly
aggrieved or her sordid tale was not true and her sole motivation was not to have the culprit apprehended and
20
punished. It is likewise against human nature for a girl to fabricate a story that would expose herself as well as her family
21
to a lifetime of dishonor, especially when her charge could mean the death or a lifetime in prison of her own father.

In this case, when AAA testified before the trial court, she described in detail the horrible experience she suffered at the
hands of her own father on that fateful night of 28 December 1999. Her testimony can be characterized as categorical and
unqualified. She gave a vivid and clear account on how the appellant raped her. She also made a positive identification of
the person who raped her and she declared in an unequivocal manner that it was her father, herein appellant, who raped
her. It is worthy to note that after she was raped, she took effort to report that incident to their neighbor, but since she
could not utter a word, her neighbor brought her to her stepmother to whom she narrated how the appellant raped her and
subsequently, sought the help of the barangay officials to report what had happened as affirmed by Mauricio, one of the
prosecution’s witnesses. Mauricio averred that indeed, between 11:00 p.m. and 12:00 midnight of 28 December 1999, or
almost 29 December 1999, AAA, together with a neighbor, approached him asking for assistance as she was raped by
her father. He then informed the Barangay Chairman of XXX, Barangay XXX, and the latter ordered the barangay tanods
to apprehend the appellant. Mauricio testified that it was already 1:00 a.m. of 29 December 1999 and not 28 December
1999, as alleged by the appellant, when the latter was arrested and brought to Police Station 6.
The testimony of AAA as to the fact of rape was corroborated by the medical findings conducted on 29 December 1999 by
Dr. Supe, Jr. of the Philippine National Police (PNP) Crime Laboratory at Camp Crame. In his testimony, he declared to
have found a deep fresh hymenal laceration at six and seven o’clock positions, which means AAA suffered a "compatible
loss of virginity." He avowed that such loss of virginity could have occurred within 24 hours before the examination, which
coincides with the date the rape incident happened, which was 28 December 1999. It has been said that when the
testimony of a rape victim is consistent with the medical findings, sufficient basis exists to warrant a conclusion that the
22
essential requisite of carnal knowledge has thereby been established. Thus, such testimony of Dr. Supe, Jr. strengthens
the charge of rape against appellant.

As compared to the aforesaid evidence of the prosecution, the defense of bare denial offered by the appellant cannot hold
water.

The defense of denial is an intrinsically weak defense, which must be buttressed by strong evidence of non-culpability to
23
merit credibility. It is merely a negative and self-serving allegation that cannot be given any weight on the scale of
24
justice. And although denial is a legitimate defense in rape cases, mere bare assertions to this effect cannot overcome
the positive, straightforward, unequivocal and categorical testimony of the victim. It is an established rule that an
affirmative testimony is far stronger than a negative testimony, especially so when it comes from a credible
25
witness. Likewise, it is hornbook doctrine that such positive and categorical testimony of a rape victim-daughter,
identifying her own father as the one who sexually attacked her, prevails over his bare denial because no daughter will
charge a father, especially a good father, with rape. The charge is not only embarrassing to the victim and the family. It
26
means death to the head of the family. A father so charged cannot exculpate himself by a bare-bone denial.

In the case at bar, the appellant repeatedly denied having committed the crime of rape as charged against him because
he was arrested even before its commission. Such defense of denial offered by the appellant must be rejected. It is a well-
settled doctrine that denial being a weak defense must be substantiated by a clear and convincing evidence to merit
27
credibility. In this case, the defense merely relied on the lone testimony of the appellant. The appellant did not bother to
present other evidence to prove his contention that on the early hours of 28 December 1999, he was already arrested and
brought to Police Station 6 where he was detained thereby making it impossible for him to have committed the offense
charged. The appellant could have presented the records or the logbook of the Police Station where he was detained to
establish the truthfulness of his assertion that he was already confined in prison when the alleged rape incident happened.
In stark contrast, Mauricio, the BSDO of the Barangay, categorically stated that it was 1:00 a.m. of 29 December 1999
when appellant was arrested.

Q: Where were you on [28 December 1999] at around 11:00 p.m., Mr. Witness?

A: I was attending a Christmas party, sir.

Q: Where was it held, Mr. Witness?

A: At the compound of our Barangay Captain.

Q: Where is that compound?

A: XXX.

xxxx

Q: What time when you arrived at the residence of the [appellant] in this case?

A: It was nighttime but we could not determine the time when arrested the [appellant] (sic) because when [the
complainant] arrived to complain our Christmas party (sic) was already between 11:00 and 12:00.

Q: What time was the [appellant] apprehended?

28
A: When we brought him to the police station, more or less it was 1:00 o’clock in the morning.

Therefore, the appellant’s bare denial, which was unsubstantiated by convincing evidence, was not sufficient to create a
reasonable doubt as to his commission of the crime.

The contention of the appellant that the trial court failed to consider that his arrest was legally objectionable because the
barangay tanods and the arresting officer who arrested him had no personal knowledge of the facts indicating that he had
committed the crime is grossly weak. We quote here the findings of the appellate court, viz:

Appellant cannot possibly claim that the arresting officers did not have personal knowledge of the facts indicating that he
committed the alleged rape. The victim herself reported to the barangay authorities that it was appellant who raped her.
The arresting officers therefore, had probable cause to believe that appellant raped the victim.

Nevertheless, it is a well-entrenched rule that any objection, defect or irregularity attending an arrest must be made before
the accused enters his plea on arraignment. And, having failed to move for the quashing of the Information against him
29
before the arraignment, appellant is estopped from questioning the legality of his arrest.
Finally, this Court agrees in the amount of civil indemnity, moral damages and exemplary damages which the appellate
court awarded to the victim. Civil indemnity, which is actually in the nature of actual or compensatory damages, is
30
mandatory upon the finding of the fact of rape. The case law also requires automatic award of moral damages to a rape
victim without need of proof because from the nature of the crime, it can be assumed that she has suffered moral injuries
31
entitling her to such award. Such award is separate and distinct from civil indemnity. The reduction of civil indemnity to
₱50,000.00 and moral damages to ₱50,000.00 is proper because the crime committed by the appellant is only simple
rape. The award of ₱25,000.00 as exemplary damages to AAA is likewise proper in order to deter other fathers with
32
perverse tendencies or aberrant sexual behaviors from sexually abusing their own daughters.

WHEREFORE, premises considered, the Decision of the Court of Appeals in CA-G.R. CR No. 0013 dated 29 April 2005
finding appellant Norberto Astrologo y De Dios guilty beyond reasonable doubt of the crime of rape, as defined and
penalized under Article 266 of the Revised Penal Code, committed against his own daughter, AAA, and sentencing him to
suffer the penalty of reclusion perpetua, is hereby AFFIRMED. Costs against appellant.

SO ORDERED.

G.R. No. 193188 August 10, 2011

PEOPLE OF THE PHILIPPINES, Plaintiff-Appellee,

vs.
JUANITO APATTAD,Accused-Appellant.

DECISION

VELASCO, JR., J.:

The Case

1
This is an appeal from the August 28, 2009 Decision of the Court of Appeals (CA) in CA-G.R. CR-H.C. No. 03173, which
2
affirmed, with modification, an earlier Decision in Criminal Case Nos. 10172-10175 of the Regional Trial Court (RTC),
Branch 4 in Tuguegarao City, Cagayan. The RTC found accused Juanito Apattad guilty beyond reasonable doubt of three
(3) counts of rape.

The Facts

Accused was charged in four (4) separate informations, the accusatory portions of which read:

CRIMINAL CASE NO. 10172

That sometime in the year 2001, in the evening[,] in the Municipality of Peñablanca, Province of Cagayan, and within the
3
jurisdiction of this Honorable Court, the said accused, JUANITO APATTAD[,] father of the offended party, [AAA], a minor
below 12 years of age, thus have moral ascendancy over the complainant, with lewd design and by the use of force, did,
then and there, willfully, unlawfully and feloniously have sexual intercourse with his own daughter, the herein offended
party, [AAA], a minor woman below 12 years of age against her will.

4
CONTRARY TO LAW. (Emphasis in the original.)

CRIMINAL CASE NO. 10173

That sometime in the year 2002, in the evening[,] in the Municipality of Peñablanca, Province of Cagayan, and within the
jurisdiction of this Honorable Court, the said accused, JUANITO APATTAD[,] father of the offended party, [AAA], a minor
below 12 years of age, thus have moral ascendancy over the complainant, with lewd design and by the use of force, did,
then and there, willfully, unlawfully and feloniously have sexual intercourse with his own daughter, the herein offended
party, [AAA], a minor woman below 12 years of age against her will.

5
CONTRARY TO LAW. (Emphasis in the original.)

CRIMINAL CASE NO. 10174

That on or about June 10, 2003, in the Municipality of Peñablanca, Province of Cagayan, and within the jurisdiction of this
Honorable Court, the said accused, JUANITO APATTAD[,] father of the offended party, [AAA], a minor below 12 years of
age, thus have moral ascendancy over the complainant, with lewd design and by the use of force, did, then and there,
willfully, unlawfully and feloniously have sexual intercourse with his own daughter, the herein offended party, [AAA], a
minor woman below 12 years of age against her will.

6
CONTRARY TO LAW. (Emphasis in the original.)

CRIMINAL CASE NO. 10175

That on or about June 11, 2003, in the Municipality of Peñablanca, Province of Cagayan, and within the jurisdiction of this
Honorable Court, the said accused, JUANITO APATTAD[,] father of the offended party, [AAA], a minor below 12 years of
age, thus have moral ascendancy over the complainant, with lewd design and by the use of force, did, then and there,
willfully, unlawfully and feloniously have sexual intercourse with his own daughter, the herein offended party, [AAA], a
minor woman below 12 years of age against her will

7
CONTRARY TO LAW. (Emphasis in the original.)

On June 1, 2004, the accused, with the assistance of his counsel, pleaded not guilty to all the charges against
8
him. Subsequently, on June 8, 2004, pre-trial conference was held and was terminated on the same day, with the parties
stipulating on the following:

(a) The identities of the accused and AAA;

(b) AAA is the daughter of the accused;

(c) AAA was a minor, being born on October 14, 1994, and was only ten (10) years old during the commission of
the crime;

(d) The existence of the Certificate of Live Birth of AAA; and

(e) The existence of the Medico Legal Report of AAA issued by Dr. Mila Lingan-Simangan, Health Officer of
9
Peñablanca, Cagayan.

Thereafter, trial on the merits ensued. During trial, the prosecution offered the oral testimonies of AAA and Dr. Mila
10
Lingan-Simangan. On the other hand, the defense presented as its witnesses the accused himself and Louie Calimag.

Version of the Prosecution

AAA testified that sometime in 2001, while she was sleeping with her sisters, the accused pulled and positioned her just
11
below the feet of her siblings, and right then and there, succeeded in molesting her. AAA was just seven (7) years old
12
then.

On June 10, 2003, the accused sexually abused AAA again. While she was sleeping beside her younger sister in their
13
room, accused carried her from the bed through the window and placed her on the floor. Afterwards, accused removed
14
his own shirt and used it to cover the mouth of AAA. Accused then removed his underwear and AAA’s underwear, and
15
inserted his penis inside AAA’s vagina, while telling her not to report the incident to her mother. When the accused was
finished in satisfying his lust, he put AAA’s clothes back on, carried her back to bed, and untied the shirt covering AAA’s
16
mouth.

The same incident happened on June 11, 2003, when accused carried AAA once again through the window, placed her
17
on the floor, covered her mouth, undressed her, and inserted his penis into her vagina. The accused also threatened to
18
kill her if she reports the incident to her mother.

When AAA finally told her mother on June 13, 2003 that she was being abused by her own father, her mother whipped
19
her for not telling her about it immediately. Thereafter, they went to the Department of Social Welfare and Development
(DSWD) office in Peñablanca, Cagayan, where AAA was interviewed by a certain Ms. Abrena, a DSWD
20
personnel. Afterwards, they proceeded to the police station where AAA executed a sworn statement narrating what
21
happened. Dr. Mila Lingan-Simangan (Dr. Simangan) also subsequently conducted a physical examination on AAA.

On cross-examination, AAA explained that the reason why it was only on June 13, 2003 that she reported the incidents to
22
her mother was because she was afraid that her father would kill them. AAA also confirmed that her parents often
23
quarrel and shout at each other. She even admitted that she had seen her father slap her mother and that because of
24
this, she sympathized and took pity on her. When asked whether she would do anything that her mother would tell her to
25
do, AAA answered in the affirmative. However, on re-direct examination, AAA clarified that her mother did not teach her
26
to claim that she was raped and that she was only telling the truth.

Dr. Simangan, the prosecution’s other witness, testified that on June 16, 2003, she conducted a physical examination on
AAA and discovered that the latter had a healed hymen laceration at 4 and 7 o’clock positions, and that her vagina
27 28
admitted the tip of the fifth finger easily. She stated that the laceration could have been caused by a blunt object. She
also testified that after conducting the physical examination, she interviewed AAA and the latter gave her the name of the
29
person who raped her. However, Dr. Simangan admitted that she can no longer remember the name that was
30 31
mentioned by AAA. Dr. Simangan also identified the Medico-Legal Report that she prepared.

Version of the Defense

The accused denied the accusation of rape hurled against him and claimed that his wife was the one who initiated the
32
criminal complaint against him because she thinks that he has a mistress.

The other defense witness, Louie Calimag (Calimag), testified that from June 3, 2003 until July 8, 2003, he employed the
33
services of the accused to help him in the operation of the chainsaw. As part of their routine, he and the accused would
 34
saw logs in the forest from 7:00 a.m. to 5:00 p.m., go back to his house, and sleep there at night. Calimag further
35
testified that when the accused was arrested by the police in the forest on July 8, 2003, he was also with him. Thus,
when he found out that the accused was arrested for rape allegedly committed on June 10 and 11, 2003, Calimag claimed
36
that he did not believe this because the accused stayed in his house on those days.

Calimag likewise added that after the accused was arrested, he saw AAA, who admitted to him that she was not raped by
the accused and that it was her mother who instructed her to give false information. AAA allegedly told him that her
37
parents had a fight due to her father’s illicit relationship with another woman.

On cross-examination, Calimag admitted that the house of the accused was only three (3) kilometers away from his house
38
and that the accused’s house may be reached by jeepney in an hour and by foot in four (4) hours.

Ruling of the Trial Court

Between the two versions of the incident, the trial court gave credence to the version of the prosecution and rendered its
Decision dated October 24, 2007, finding the accused guilty of three (3) counts of rape. The decretal portion reads:

ACCORDINGLY, this Court finds accused JUANITO APATTAD GUILTY beyond reasonable doubt of the crime of rape for
three (3) counts in Criminal Cases Nos. 10172, 10174 and 10175 and hereby imposes upon him the penalty of
RECLUSION PERPETUA for each case. He is further ordered to pay [AAA] the amount of One Hundred Fifty Thousand
(P150,000.00) Pesos as civil indemnity.

Accused is acquitted in Criminal Case No. 10173 for lack of sufficient evidence.

39
No pronouncement as to costs.

40
On December 19, 2007, accused-appellant filed his Notice of Appeal of the Decision dated October 24, 2007 rendered
by the trial court. On April 15, 2008, the CA, where the case was docketed as CA-G.R. C.R.-H.C. No. 03173, issued a
41
notice to file brief to the parties.

42
On September 5, 2008, accused-appellant filed his Brief for the Accused-Appellant, while the People of the Philippines,
43
through the Office of the Solicitor General, filed its Brief for the Plaintiff-Appellee on March 27, 2009.

Ruling of the Appellate Court

44
As stated above, the CA, in its Decision dated August 28, 2009, affirmed with modification the judgment of conviction by
the trial court, the dispositive portion of which reads:

WHEREFORE, in view of the foregoing, the instant appeal is DISMISSED. The assailed Decision of Branch 4 of the
Regional Trial Court of Tuguegarao City in Criminal Case Nos. 10172, 10174 and 10175 is hereby AFFIRMED with the
MODIFICATION that the civil indemnity awarded should be P75,000.00 for each count of rape. In addition, moral
damages and exemplary damages in the amounts of P75,000.00 and Php25,000.00 respectively, for each count of rape
are hereby awarded.

45
SO ORDERED.

46
On September 22, 2009, accused-appellant filed his Notice of Appeal from the CA Decision dated August 28, 2009.

In Our Resolution dated October 4, 2010, We notified the parties that they may file their respective supplemental briefs.
Both parties manifested that they are no longer filing supplemental briefs and they are adopting their respective main
briefs before the CA.

The Issues

47
Accused-appellant contends in his Brief that:

THE COURT A QUO GRAVELY ERRED IN FINDING ACCUSED-APPELLANT GUILTY DESPITE THE
PROSECUTION’S FAILURE TO PROVE HIS GUILT BEYOND REASONABLE DOUBT.

The Court’s Ruling

We sustain accused-appellant’s conviction.

Denial and alibi are inherently weak defenses

In his Brief, accused-appellant contends that while, generally, the defense of alibi is frowned upon by the court, it assumes
48
significance when it is corroborated by credible and disinterested witnesses. Accused-appellant claims that Calimag’s
49
testimony was categorical, concise and persistent in affirming that he was innocent of the crimes charged. Accused-
appellant also maintains that although he was not able to adduce any evidence to corroborate his stand that it was his
wife, motivated by revenge and anger, who ultimately caused the filing of the criminal charges against him, this should not
50
be entirely taken against him.

51
In People v. Estoya, this Court laid down the jurisprudential guidelines in assessing the proffered defense of alibi.
Particularly:

Jurisprudential rules and precepts guide this Court in assessing the proffered defense. One, alibis and denials are
generally disfavored by the courts for being weak. Two, they cannot prevail over the positive identification of the accused
as the perpetrators of the crime. Three, for alibi to prosper, the accused must prove not only that they were somewhere
else when the crime was committed, but also that it was physically impossible for them to be at the scene of the crime at
the time of its commission. Fourth, alibi assumes significance or strength only when it is amply corroborated by credible
and disinterested witnesses. Fifth, alibi is an issue of fact that hinges on the credibility of witnesses, and the assessment
52
made by the trial court — unless patently and clearly inconsistent — must be accepted. (Emphasis supplied.)

Measured against the foregoing yardstick, accused-appellant’s defenses of alibi and denial cannot prosper. As mentioned
above, alibis and denials are inherently weak defenses. This is understandably so because said defenses can be easily
53
fabricated by an accused in order to escape criminal liability.

Likewise, it was stated in Estoya that alibi and denial cannot prevail over the positive identification of the accused as the
54
perpetrator of the crime. Notably, these defenses crumble in light of positive identification by truthful witnesses. An alibi
is evidence negative in nature and self-serving, and, thus, cannot attain more credibility than the testimonies of
55
prosecution witnesses who testify on clear and positive evidence. In the present case, AAA positively identified accused-
appellant in her testimony as the very perpetrator of the crime of rape committed against her, to wit:

Q: While you were sleeping, do you remember any untoward incident that happened to you?

A: Yes, ma’am.

Q: What was that?

A: Somebody carried me, ma’am.

Q: Who carried you?

A: My father, ma’am.

Q: Where did he bring you?

A: From the bed, he brought me to the floor.

Q: Why do you have light in the room?

A: Yes, ma’am.

Q: What is that light?

A: Electric light, ma’am.

Q: After carrying you and brought [sic] you to the floor, what did he do to you?

A: He removed his t-shirt and tied my mouth.

Q: You mean to say he used his t-shirt in tying your mouth?

A: He tied his t-shirt covering my mouth.

Q: After removing his t-shirt and tying your mouth, what did he do next?

A: He removed my t-shirt and short[s], ma’am.

Q: When he undressed you, what happened next?

A: He also removed his short[s] and brief, ma’am, and he also removed my panty.

Q: After undressing himself and undressed [sic] you, what happened next?

A: He inserted his pennis [sic] into my vagina, ma’am.

Q: While inserting his pennis [sic] into your vagina, did he utter something to you?
 A: He ordered me not to report the incident to my mother because they just quarell [sic].

Q: Did your two (2) sisters wake up?

A: No ma’am.

Q: Can you estimate what time was that?

A: Its [sic] already late at that time, ma’am.

Q: Aside from putting his pennis [sic] into your vagina, what are the things that he do [sic] to you?

Atty Doran: That is assuming the fact, your honor.

Prosecutor Ugale: I will reform my question, your honor.

Prosecutor Ugale:

Q: Is that all the things that he did to you?

A: Not only that, ma’am.

Q: What else did he do to you?

A: He out my shorts and panty and my t-shirt, he dressed himself [sic] and then he put me back to be beside my
sister then he untied me.

Q: What did you feel when your father inserted his pennis [sic] into your vagina?

A: I felt pain, ma’am.

Q: Did he also kiss you?

A: He kissed my cheek, ma’am.

Q: Did he kiss your lips?

A: No ma’am.

Q: How about your neck?

A: No ma’am.

Q: What did you feel when your papa inserted his pennis [sic] into your vagina?

56
A: It is hard and I felt pain. (Emphasis supplied.)

Moreover, for alibi to prosper, it is not enough for the accused to prove that he was in another place when the crime was
committed as he must likewise prove that it was physically impossible for him to be present at the crime scene or its
57
immediate vicinity at the time of its commission. As correctly observed by the trial court, a distance of three (3)
kilometers does not make it physically impossible for accused-appellant to be at the scene of the crime at the time it was
58
committed. Calimag himself admitted during cross-examination that the house of accused-appellant may be reached by
jeepney in an hour. Significantly, even if accused-appellant indeed stayed in Calimag’s house on the dates that he
committed rape, it was still not physically impossible for accused-appellant to go home and commit the said crime at the
time it was said to have been committed.

Also, alibi assumes significance or strength only when it is amply corroborated by credible and disinterested witnesses. In
this regard, it should be noted that alibi becomes unworthy of merit not only because accused-appellant was positively
identified by AAA but also in cases where it is established mainly by the accused himself, his relatives, friends and
59 60
comrades-in-arms, and not by credible persons.

Finally, as mentioned in Estoya, alibi is an issue of fact that hinges on the credibility of witnesses, and that the
assessment made by the trial court must be accepted unless it is patently and clearly inconsistent.

Indeed, "it is a hornbook doctrine that the findings of fact of the trial court are entitled to great weight on appeal and
should not be disturbed except for strong and valid reasons, because the trial court is in a better position to examine the
61
demeanor of the witnesses while testifying." In People v. Lusabio, Jr., this Court held:
All in all, we find the evidence of the prosecution to be more credible than that adduced by accused-appellant. When it
comes to credibility, the trial court's assessment deserves great weight, and is even conclusive and binding, if not tainted
with arbitrariness or oversight of some fact or circumstance of weight and influence. The reason is obvious. Having the full
opportunity to observe directly the witnesses’ deportment and manner of testifying, the trial court is in a better position
62
than the appellate court to evaluate testimonial evidence properly. (Emphasis supplied; citations omitted.)

Since accused-appellant failed to show any palpable error, arbitrariness, or capriciousness on the findings of fact of the
trial and appellate courts, these findings deserve great weight and are deemed conclusive and binding.

The guilt of accused-appellant has been

established beyond reasonable doubt

After a careful examination of the records of this case, this Court is satisfied that the prosecution’s evidence established
the guilt of accused-appellant beyond reasonable doubt.

In reviewing the evidence in rape cases, the following considerations should be made: (1) an accusation for rape can be
made with facility, it is difficult to prove but more difficult for the person, though innocent, to disprove; (2) in view of the
intrinsic nature of the crime of rape where only two persons are usually involved, the testimony of the complainant must
be scrutinized with extreme caution; and (3) the evidence for the prosecution must stand or fall on its own merits and
63
cannot be allowed to draw strength from the weakness of the evidence for the defense. Nonetheless, it also bears
stressing that rape is essentially committed in relative isolation or secrecy; thus, it is most often only the victim who can
64
testify with regard to the fact of forced coitus.

Under Article 266-A of the Revised Penal Code, as amended, the crime of rape is committed by a man having carnal
knowledge of a woman under any of the following circumstances: (1) through force, threat or intimidation; (2) when the
offended party is deprived of reason or otherwise unconscious; (3) by means of fraudulent machination or grave abuse of
authority; and (4) when the offended party is under twelve (12) years of age or is demented, even though none of the
65
circumstances mentioned above be present.

66
In People v. Orillosa, this Court held that in incestuous rape of a minor, actual force or intimidation need not be
67
employed where the overpowering moral influence of the father would suffice. Thus, in order for the accused to be found
guilty of the crime of statutory rape in this jurisdiction, only two (2) elements must concur: (1) that the offender had carnal
68
knowledge of the victim; and (2) that the victim is below twelve (12) years old.

In the present case, it is undisputed that the victim, AAA, was below twelve (12) years old when the crime was committed.
A copy of AAA’s birth certificate to prove her age was duly presented in evidence by the prosecution, indicating that she
69
was indeed born on October 14, 1994. Concomitantly, AAA was only seven (7) years old when the crime of rape was
first committed against her in 2001, and was only nine (9) years old when the accused once again succeeded in
70
committing the same crime in 2003. Also, it is undisputed that accused-appellant is the father of AAA, as stipulated by
71
the parties during the pre-trial conference and as also indicated in AAA’s birth certificate. Thus, what only remains to be
proved is the fact of carnal knowledge by the accused of the victim.

Verily, the prosecution has sufficiently established the foregoing element, thus proving that accused-appellant is guilty
beyond reasonable doubt of three (3) counts of rape.1avvphi1

When AAA was called to the witness stand, she gave a detailed narration of how she was sexually molested by her father,
which narration is difficult, if not improbable, for a 10-year-old girl to concoct. As aptly observed by the CA, "[AAA] was
able to describe in detail how her father carried her through the window, laid her down the floor, tied her mouth, removed
her clothes and inserted his penis inside her vagina. She even described that she felt pain while her father was performing
72
the carnal act against her."

Pertinently, "it is settled jurisprudence that the testimony of a child-victim is given full weight and credence, considering
that when a woman, specially a minor, says that she has been raped, she says in effect all that is necessary to show that
73
rape was committed. Youth and immaturity are generally badges of truth and sincerity."

Moreover, the fact that AAA’s testimony was able to withstand scrutiny during cross-examination bolsters her credibility
74
and makes her statements more credible.

Further, it should be noted that the findings in the medical examination of Dr. Simangan corroborate the testimony of AAA.
In this regard, while a medical examination of the victim is not indispensable in the prosecution of a rape case, and no law
requires a medical examination for its successful prosecution, the medical examination conducted and the medical
75
certificate issued are veritable corroborative evidence, which strongly bolster AAA’s testimony.

In addition, this Court is not convinced that a child of a tender age would concoct a story as sordid as in the instant case
due to her mother’s alleged ill motive. In People v. Padilla, We held that accused-appellant’s imputation of ill motive on the
victim’s mother for being jealous of another woman is clearly unmeritorious, for no mother in her right mind would possibly
wish to stamp her child with the stigma that follows the crime of rape only because she is consumed with hatred and
revenge. Specifically:

Appellant, nonetheless, imputes ill-motive on Laiza and her mother Elisa in charging him with rape contending that the
latter was jealous when she found that he was courting a woman in their place.
Again, appellant’s excuse is simply too frail to cause resentment and ill will on the part of Laiza and her mother against
him. Though one may be consumed with much hatred and revenge, it takes nothing less than psychological depravity for
a mother to concoct a story too damaging to the welfare and well-being of her own daughter. Certainly, no mother in her
right mind would possibly wish to stamp her child with the stigma that follows a despicable crime of rape. We are
convinced that the victim and her mother boldly initiated the present case to seek justice for the abominable act committed
by appellant. (Emphasis supplied; citations omitted.)

All told, We accordingly sustain accused-appellant’s conviction.

Award of Damages

The Decision of the CA as to the damages awarded must be modified.

In rape cases, when the victim is under 18 years of age and the offender is a parent, ascendant, step-parent, guardian,
relative by consanguinity or affinity within the third civil degree, or the common-law-spouse of the parent of the victim, the
76
imposable penalty is death. However, with the enactment of Republic Act No. (RA) 9346 or An Act Prohibiting the
77
Imposition of Death Penalty in the Philippines, the imposition of death penalty is now prohibited. In lieu of the penalty of
death, the penalty of reclusion perpetua shall be imposed when the law violated makes use of the nomenclature of the
78
penalties of the RPC.

Consequently, courts can no longer impose the penalty of death. Instead, they have to impose reclusion perpetua.
Nonetheless, the principal consideration for the award of damages is "the penalty provided by law or imposable for the
offense because of its heinousness, not the public penalty actually imposed on the offender."

Pertinently, as early as July 9, 1998, this Court has held that when the circumstances surrounding the crime would justify
the imposition of the penalty of death were it not for RA 9346, the award of civil indemnity for the crime of rape should be
79
PhP 75,000, racionating that "[t]his is not only a reaction to the apathetic societal perception of the penal law and the
financial fluctuations over time, but also an expression of the displeasure of the Court over the incidence of heinous
80
crimes against chastity." 1avvphi1

81
Likewise, the award of moral damages in the amount of PhP 75,000 is warranted, without need of pleading or proving
82
them. In rape cases, it is recognized that the victim’s injury is concomitant with and necessarily results from the odious
83
crime of rape to warrant per se the award of moral damages.

Further, the Court also awards exemplary damages in the amount of PhP 30,000, despite the lack of any aggravating
84 85
circumstances, to deter others from committing similar acts or for correction for the public good.

WHEREFORE, the appeal is DENIED. The CA Decision dated August 28, 2009 in CA-G.R. CR-H.C. No. 03173 finding
accused-appellant Juanito Apattad guilty of rape is AFFIRMED with MODIFICATIONS. As thus modified, accused-
appellant is ordered to pay AAA for each count of rape, PhP 75,000 as civil indemnity, PhP 75,000 as moral damages,
and PhP 30,000 as exemplary damages.

SO ORDERED.

G.R. No. 128384 June 29, 1999

PEOPLE OF THE PHILIPPINES, plaintiff-appellee,

vs.
REYNALDO SAHOR BAÑAGO, accused-appellant.

PUNO, J.:

Accused-appellant Reynaldo Sahor Bañago was charged before the Regional Trial Court of Malolos, Bulacan with the
crime of rape committed as follows:

That on or about the 15th day of October, 1993, in the municipality of Marilao, province of Bulacan,
Philippines, and within the jurisdiction of this Honorable Court, the above-named accused, armed with a
gun, did then and there wilfully, unlawfully and feloniously, by means of force and intimidation and with
lewd designs, have carnal knowledge to (sic) said Dolores C. Jaurigue, against her will and without her
1
consent.

2
Accused-appellant pleaded "not guilty" to the charge. Hence, trial proceeded in due course.

The prosecution presented the testimony of the thirteen-year-old victim, Dolores Jaurigue. She testified that on October
15, 1993, she visited her sister, Dorotea Jaurigue-Mejico, who was staying with her husband at the bodega of Bauer
Company in Marilao, Bulacan. That evening, she was left alone in the bodega as her sister attended a party. She went to
bed at around seven o'clock. She was later roused from her sleep when she felt someone embracing her. It turned out to
be accused-appellant. Accused-appellant poked a gun at her and started to remove her short pants and underwear. She
tried to shout but accused-appellant slapped her twice. Then, he took off his pants and underwear and succeeded in
having carnal knowledge of Dolores. He admonished her not to tell anybody about the incident. Thereafter, accused-
3
appellant put on his pants and left the room.

When Dorotea arrived from the party, she saw accused-appellant coming out of the bodega zipping his pants. Dorotea
4
asked Dolores what happened but she did not answer.

The following day, Dorotea again asked Dolores what happened the previous night. Dolores told her sister that accused-
appellant raped her. Afraid of what accused-appellant might do to them, Dolores and Dorotea kept the incident to
5
themselves.

It was only on March 18, 1994 that Dolores had the courage to tell her aunt, Lourdes Corcuera, about the assault on her
6
womanhood. Lourdes tried to talk to accused-appellant but nothing happened.

During an altercation with Dolores' mother, Antonina Jaurigue, Lourdes divulged that Dolores was no longer a virgin.
Shocked about the revelation, Antonina sought for an explanation. Dolores was compelled to tell her mother about the
7
rape incident.

Antonina brought Dolores to the Philippine National Police Crime Laboratory for physical examination on March 29, 1994.
The medico-legal report executed by Dr. Jesusa N. Vergara of the Philippine National Police Crime Laboratory revealed
that Dolores was "in non-virgin state physically" and that "there (were) no signs of recent application of any form of
8
violence."

On July 14, 1994, Dolores, assisted by her mother, filed a criminal complaint for rape against accused-appellant.

For their part, the defense presented the testimonies of accused-appellant and Delfin Castillo.

Accused-appellant testified that he was a welder at Bauer Company. In the afternoon of October 15, 1993, he, together
with Delfin Castillo and Rolando Pambico, went to the office of their employer, Mr. Mariano Takbas, in Quezon City to get
their salary. They left the office at about six o'clock in the evening and then they went home to Marilao, Bulacan. They
reached Marilao at about eight o'clock in the evening. Accused-appellant proceeded to his residence in Constantino
Street, Poblacion, Marilao, Bulacan. Accused-appellant denied having raped Dolores Jaurigue on the evening of October
9
15, 1993.

Defense witness Delfin Castillo corroborated accused-appellant's testimony. Castillo testified that he was with accused-
appellant in the afternoon of October 15, 1993 when they went to Quezon City to get their salary. From Quezon City, they
proceeded to Marilao, Bulacan. He spent the night at the bodega of Bauer Company but he did not see private
10
complainant there. He also stated that accused-appellant did not go to the bodega that evening.

The trial court found accused-appellant guilty beyond reasonable doubt of the crime charged. It sentenced him
11
to reclusion perpetua and ordered him to indemnify the victim the sum of P50,000.00 as moral damages.

Accused-appellant appealed the decision of the trial court. He raised the following errors:

1. The court a quo erred in finding accused-appellant guilty beyond reasonable doubt of
the crime of rape; and

2. The court a quo erred in ordering accused-appellant to indemnify (the) victim in the
12
amount of P50,000.00 as moral damages.

Accused-appellant assailed the credibility of private complainant who alone testified for the prosecution. In his brief,
accused-appellant harped on the alleged flaws in the testimony of private complainant. He contended that it was unlikely
for Dorotea Jaurigue-Mejico and her husband to use the bodega as their living quarters since the bodega had no division
and was open to anyone who wished to enter; that although private complainant testified that her sister saw accused-
appellant coming out of the bodega, the prosecution did not present her sister to testify on such fact; and that private
complainant admitted that she never saw accused-appellant again after the rape although she earlier testified that she
told her aunt about the incident only on March 18, 1994 because she was afraid of what accused-appellant might do to
her. Accused-appellant also cited the nine-month delay in the filing of the criminal complaint.

Accused-appellant's contentions deserve scant consideration as they pertain merely to minor details and do not negate
private complainant's positive testimony that accused-appellant violated her on the evening of October 15, 1993. Even the
delay in the filing of the complaint does not favor accused-appellant's cause. The records show that private complainant
did not report the incident to the authorities because accused-appellant threatened to harm her if she tells anybody about
it. It is understandable for any woman, especially a young girl, to hide such a traumatic and horrible experience even from
the persons closest to her because of shame and fear.

The parameters for scrutinizing the credibility of witnesses have been set forth as follows:

First, the appellate court will not disturb the factual findings of the lower court unless there is a showing
that it had overlooked, misunderstood, or misapplied some fact or circumstances of weight and substance
that would have affected the result of the case;
 Second, the findings of the trial court pertaining to the credibility of witnesses are entitled to great respect
since it had the opportunity to examine their demeanor as they testified on the witness stand; and

Third, a witness who testified in a categorical straightforward, spontaneous and frank manner and
13
remained consistent on cross-examination is a credible witness.

We find no reason in the case at bar to disturb the findings of the trial court regarding private complainant's credibility. A
reading of the transcript of the trial shows that private complainant, young and innocent as she was, was able to recount
clearly and candidly before the court how accused-appellant ravished her on the evening of October 15, 1993. Her
testimony must be given full weight, especially since it is supported by the medical report submitted by the Philippine
National Police Crime Laboratory. As a rule, testimonies of rape victims who are young and immature deserve full
credence, considering that no young woman, especially of tender age, would concoct a story of defloration, allow an
examination of her private parts, and thereafter pervert herself by being subject to a public trial, if she was not motivated
14
solely by the desire to obtain justice for the wrong committed against her. Hence, we affirm accused-appellant's
conviction.

We likewise affirm the award of moral damages to private complainant. In rape cases, the court may, in its discretion,
award moral damages to the victim without need for pleading or proof of the basis thereof. We held in People vs.
15
Prades that "the conventional requirement of allegata et probata in civil procedure and for essentially civil cases should
be dispensed with in criminal prosecutions for rape with the civil aspect included therein, since no appropriate pleadings
are filed wherein such allegations can be made." As the fact of rape has been sufficiently proved in this case, we find the
award of moral damages proper and correct.

We note, however, that the trial court failed to award civil indemnity to private complainant. Time and again, we have held
that moral damages is separate and distinct from the civil indemnity awarded to rape victims. The moral damages cannot
take the place of the civil indemnity. While the award of moral damages is discretionary on the part of the court, the civil
indemnity, which is actually in the nature of actual or compensatory damages, is mandatory upon the finding of the fact of
16
rape. Hence, in addition to the P50,000.00 moral damages, accused appellant is ordered to pay private complainant the
amount of P75,000.00 by way of civil indemnity.

IN VIEW WHEREOF, the judgment appealed from is AFFIRMED with the MODIIFICATION that in addition to the
P50,000.00 moral damages, accused-appellant is also ordered to pay private complainant P75,000.00 as civil
indemnity.1âwphi1.nêt

SO ORDERED.

[G.R. No. 179498 : August 03, 2010]

PEOPLE OF THE PHILIPPINES, APPELLEE, VS. RUSTICO BARTOLINI Y AMPIS, APPELLANT.

DECISION

VILLARAMA, JR., J.:

[1]
We review the May 31, 2007 Decision of the Court of Appeals (CA) which affirmed the guilty verdict rendered by Branch
[2]
29 of the Regional Trial Court (RTC) of Bislig City in Criminal Case Nos. 99-1-2083-H, 99-1-2084-H and 99-1-2085-H,
finding appellant Rustico Bartolini y Ampis guilty of three (3) counts of incestuous rape against his two (2) daughters, AAA
[3]
and BBB.

The facts are culled from the findings of both the trial and appellate courts.

Appellant Bartolini was charged with three (3) counts of rape before the RTC, Branch 29, of Bislig City, Surigao del Sur.
The informations filed against him read:

Criminal Case No. 99-1-2083-H:

That on or about 7:00 o'clock in the morning sometime in the month of March 1995, at Sitio [ABC], Barangay [123],
Municipality of Hinatuan, Province of Surigao del Sur, Philippines, and within the jurisdiction of this Honorable Court, the
above-named accused with lewd and unchaste designs, did then and there wilfully, unlawfully and feloniously rape [his]
daughter, [AAA], by means of force and intimidation, and against his daughter's will, to the damage and prejudice of the
said [AAA], who was then 14 years old.

CONTRARY TO LAW: In violation of Article 335 of the Revised Penal Code as amended by Section 11 of Republic Act
No. 7659.
[4]
Bislig, Surigao del Sur, November 23, 1998.

Criminal Case No. 99-1-2084-H:

That on or about March 2, 1998, at 8:00 o'clock in the morning, more or less, at Sitio [ABC], Barangay [123], Municipality
of Hinatuan, Province of Surigao del Sur, Philippines, and within the jurisdiction of this Honorable Court, the above-named
accused, with lewd and unchaste designs and by means of force and intimidation, did then and there wilfully, unlawfully
and feloniously [have] carnal knowledge or rape his own daughter, [BBB], against the latter's will, to the damage and
prejudice of said [BBB].

CONTRARY TO LAW: In violation of Article 335 of the Revised Penal Code, as amended by Section 11 of Republic Act
No. 7659.
[5]
Bislig, Surigao del Sur, November 27, 1998.

Criminal Case No. 99-1-2085-H:

That on or about 3:00 o'clock in the afternoon sometime in the month of March 1994, at Sitio [ABC], Barangay [123],
Municipality of Hinatuan, Province of Surigao del Sur, Philippines, and within the jurisdiction of this Honorable Court, the
above-named accused with lewd and unchaste designs and by means of force and intimidation, did then and there
wilfully, unlawfully and feloniously rape [his] daughter [BBB], 16 years old, against the latter's will, to the damage and
prejudice of the said [BBB].

CONTRARY TO LAW: In violation of Article 335 of the Revised Penal Code as amended by Section 11 of Republic Act
No. 7659.
[6]
Bislig, Surigao del Sur, November 27, 1998.
[7]
Upon arraignment on May 4, 1999, Bartolini pleaded not guilty to all the three (3) charges filed against him. The three (3)
criminal cases were thereafter tried jointly.

In the course of the trial, the prosecution presented four (4) witnesses: AAA; BBB; CCC, appellant's wife and mother of
both victims; and Dr. Emelie S. Viola, the Municipal Health Officer of Hinatuan District Hospital who conducted the
physical examination of both victims.

Below are the facts established by their testimonies.

[8]
Bartolini is married to CCC. They begot six (6) children, the eldest being BBB who was born on January 14,
[9] [10]
1978, followed by AAA who was born on June 16, 1980.

Sometime in March 1994, at around 3:00 in the afternoon, while BBB was weeding the grass on their vegetable garden
with her father, the latter suddenly pulled her to the ground and forced her to lie down. Bartolini then lifted BBB's skirt,
removed her panty and proceeded to have sexual intercourse with her. As BBB struggled, appellant punched her and hit
her at her back. Afterwards, appellant put back his clothes and left. When BBB went inside their house, appellant, who
was waiting for her, warned her not to tell CCC about the incident. Despite the warning, BBB reported the incident to her
[11]
mother, but the latter told her to just keep quiet.

After the said incident, appellant repeatedly had sexual intercourse with BBB, the last of which happened on March 2,
1998 at about 8:00 in the morning inside their house while her mother was away selling fish and while all her siblings were
attending school. That morning, appellant ordered BBB to get his clothes for him. Appellant then followed BBB to the
[12]
room, took off her clothes and raped her.

It also appears that sometime in March 1995, at about 6:30 in the morning, while having breakfast, appellant instructed his
second eldest daughter, AAA, to burn the dried leaves in their garden. Dutifully, AAA went to the garden at around 7:00
that morning and met her father there. To her surprise, appellant immediately pulled her and brought her near a big fallen
tree while threatening to kill her and all the members of their family if she would not acquiesce to his demands. Appellant
told her to remove her panties, but since AAA was crying and pushing her father away, appellant himself took off AAA's
panties, laid her on the ground and placed one (1) of her feet on top of the fallen tree. Afterwards, appellant removed his
pants and raped her. After having sexual intercourse with AAA, appellant put back his pants and went to the barangay hall
to report for duty as appellant was a barangay kagawad at that time. Like her sister, AAA also told the incident to their
mother, but the latter told her to keep silent for fear that appellant would fulfill his threats. Consequently, AAA was
[13]
repeatedly raped by appellant until sometime in October 1998, a month before she gave birth to appellant's child.

When CCC discovered that AAA was pregnant, she confided the matter to her sister-in-law, DDD, who, in turn, reported
the incident to the barangay captain and to a representative of the Department of Social Welfare and Development
[14]
(DSWD) in Butuan City. On November 19, 1998, while under the custody of the DSWD, AAA gave birth to her child.

During the trial, CCC testified that sometime in March 1994, her daughter BBB confided to her that she was raped by
appellant. She just kept silent about the incident for fear that her husband will maul her when confronted. AAA also
reported to her that she was raped by her father sometime in 1995. In one (1) instance, CCC even saw appellant touching
AAA's vagina while the two (2) were inside their kitchen. She got angry and told her parents-in-law about the incident, but
the latter replied that she has no other evidence to prove her accusation. CCC also testified that appellant, despite being
an elected barangay kagawad, was a drunkard, violent and an irresponsible individual. She added that she had received a
letter from appellant threatening to kill them.

Dr. Emelie S. Viola, Municipal Health Officer of Hinatuan District Hospital, testified that sometime in October 1998, BBB
and AAA were brought to her clinic for physical examination. Although there were no visible signs of physical trauma, Dr.
Viola found that BBB had deep healed hymenal lacerations at the 6 and 7 o'clock positions, as well as superficial healed
hymenal laceration at the 10 o'clock position, which indicate that there was a penetration of an object or a male
[15]
reproductive organ at BBB's female genitalia.

Dr. Viola also examined AAA and found that the latter had deep healed lacerations at the 12 o'clock position and
superficial healed hymenal lacerations at the 3, 9 and 10 o'clock positions, also indicating penetration of an object or a
 [16]
male reproductive organ at AAA's vagina. AAA was also pregnant.

The defense, on the other hand, presented its lone witness, appellant Bartolini, who interposed the defense of denial and
alibi. According to him, he could not have raped BBB in the morning of March 2, 1998 because he has been out of their
house from 4:00 a.m. that day to deliver shrimps, prawns, and crabs to a certain Benjamin Castañas who resides in
Hinatuan, Surigao del Sur. Appellant claims that he arrived at Castañas's house at around 4:20 a.m. and stayed there
for breakfast upon the latter's invitation. After getting paid, he left for home at around 10:00 a.m. and reached his house
[17]
fifteen (15) minutes later.

On September 4, 2000, a subpoena was issued for Benjamin Castañas to appear as witness for the
[18]
defense. Castañas, however, failed to appear before the trial court. A warrant of arrest was thereafter issued against
[19] [20]
him, but to no avail. Thus, on July 24, 2002, the trial court issued another subpoena to Castañas. When Castañas
[21]
still failed to appear, the trial court issued an order declaring the case submitted for decision.

On September 18, 2002, the RTC promulgated its decision finding appellant guilty beyond reasonable doubt of three (3)
counts of rape committed against AAA and BBB. The fallo reads:

WHEREFORE, finding the accused RUSTICO BARTOLINI Y AMPIS, forty-four (44) years of age, a fisherman and a
resident of [ABC, 123,] Hinatuan, Surigao del Sur, guilty beyond reasonable doubt of the crime of RAPE pursuant to
Article 335 of the Revised Penal Code, as amended by Section 11, Republic Act No. 7659, paragraph (1), this Court
hereby sentences him:

1. In Criminal Case No. [99-1-]2083-H, to suffer the penalty of Death by Lethal Injection. To pay Seventy-Five
Thousand (P75,000.00) pesos as civil indemnity and Fifty Thousand (P50,000.00) pesos as moral damages and
to pay the costs;

2. In Criminal Case No. [99-1-]2084-H, to suffer the penalty of Death by Lethal Injection. To pay Seventy-Five
Thousand (P75,000.00) pesos as civil indemnity and Fifty Thousand (P50,000.00) pesos as moral damages and
to pay the costs; [and]

3. In Criminal Case No. [99-1-]2085-H, to suffer the penalty of Death by Lethal Injection. To pay Seventy-Five
Thousand (P75,000.00) pesos as civil indemnity and Fifty Thousand (P50,000.00) pesos as moral damages and
to pay the costs.

Let the entire records of this case be forwarded to the Supreme Court for automatic review pursuant to Section 22 of
Republic Act No. 7659.
[22]
SO ORDERED.

At the CA, Bartolini argued that he should not have been convicted of the crime of qualified rape since the information in
Criminal Case No. 99-1-2085-H was defective because it failed to allege that the act was committed by force or
intimidation as required by law, while there was no allegation of minority of the victim in the information for Criminal Case
[23]
No. 99-1-2084-H. Bartolini also argued that the prosecution failed to prove his guilt beyond reasonable doubt.

After an extensive discussion on the issues raised by Bartolini, the appellate court found no compelling reason to deviate
from the findings of the trial court. Nevertheless, the CA modified the penalties by reducing the penalty of death
to reclusion perpetua following the abolition of the death penalty and by modifying the monetary award in favor of the
victims. The dispositive portion of the appellate court's decision reads,
th
WHEREFORE, the Decision dated September 18, 2002 of the Regional Trial Court, 11 Judicial Region, Branch 29, Bislig
City, in Criminal Case Nos. [99-1-]2083-H, [99-1-]2084-H and [99-1-]2085-H finding appellant Rustico Bartolini y Ampis
guilty beyond reasonable doubt for three counts of rape is AFFIRMED with the following MODIFICATIONS:

(a) in Criminal Case Nos. [99-1-]2083-H and [99-1-]2085-H, the penalty of death is reduced to reclusion perpetua; and to
pay the amount of seventy-five thousand pesos (P75,000.00) as civil indemnity, seventy-five thousand pesos
(P75,000.00) as moral damages and twenty-five thousand pesos (P25,000.00) as exemplary damages for each count;
and

(b) in Criminal Case No. [99-1-]2084-H, the accused is sentenced to suffer the penalty of reclusion perpetua; and to pay
the amount of fifty thousand pesos (P50,000.00) as civil indemnity, the amount of fifty thousand pesos (P50,000.00) as
moral damages, and twenty-five thousand pesos (P25,000.00) as exemplary damages;

(c) with costs.

[24]
SO ORDERED.
[25]
On August 30, 2007, the records of the case were forwarded to this Court for automatic review. The Court accepted the
appeal and directed the parties to file their respective supplemental briefs if they so desire. However, both the Office of
[26]
the Solicitor General, for the appellee, and the appellant submitted manifestations stating that they replead and adopt
[27]
the arguments raised in their respective briefs before the CA.

Appellant raises the following issues:

 I. Whether the trial court erred in convicting the appellant;

II. Whether the trial court erred in convicting the appellant in Criminal Case No. 99-1-2085-H despite the fact that the
information therein was allegedly defective; and

III. Whether the trial court erred in imposing the death penalty upon the appellant after finding him guilty in Criminal
[28]
Case No. 99-1-2084-H considering the failure of the information to allege minority.

We shall first discuss the second and third issues raised by the appellant, i.e., whether the element of force and
intimidation was correctly alleged in the information in Criminal Case No. 99-1-2085-H and whether the penalty of death
was properly imposed upon the appellant in Criminal Case No. 99-1-2084-H.

The appellant's arguments are partially meritorious.

Rape is committed by having carnal knowledge of a woman under any of the following circumstances: (1) when force or
intimidation is used; (2) when the woman is deprived of reason or is otherwise unconscious; and (3) when she is under 12
[29]
years of age.

A perusal of the information used as basis for Criminal Case No. 99-1-2085-H readily reveals the allegation that appellant
employed force and intimidation in raping BBB. We reproduce the contents of the information below:

Criminal Case No. 99-1-2085-H:

That on or about 3:00 o'clock in the afternoon sometime in the month of March 1994, at Sitio [ABC], Barangay [123],
Municipality of Hinatuan, Province of Surigao del Sur, Philippines, and within the jurisdiction of this Honorable Court, the
above-named accused with lewd and unchaste designs and by means of force and intimidation, did then and there
wilfully, unlawfully and feloniously rape [his] daughter [BBB], 16 years old, against the latter's will, to the damage and
prejudice of the said [BBB].

CONTRARY TO LAW: In violation of Article 335 of the Revised Penal Code as amended by Section 11 of Republic Act
No. 7659.
[30]
Bislig, Surigao del Sur, November 27, 1998.

The same allegation was proven during the trial. We quote BBB's testimony during her direct examination:

Q: Do you recall of any unusual incident that happened on March 1994, while you were still residing at [Sitio
ABC], [123], Lingig, Surigao del Sur, together with your parents?
A: Yes, sir.

Q: What was that unusual incident all about?

A: We were weeding grasses, sir.

Q: Where were you [weeding] grasses?

A: We were weeding grasses near to our house, sir.

Q: Were you alone while you were weeding grasses at [Sitio ABC], [123], Lingig, Surigao del Sur?
A: We were two, me and my father, sir.

Q: What time was that?

A: Afternoon, sir.

Q: Now, while you were weeding grasses near your house in the afternoon of March 1994, with your father, what
happened if any?
A: He pulled me, sir.

Q: Where did he bring you?

A: At the place where we were weeding grasses, sir.

Q: What happened next after you[r] father brought you near the place where you were weeding grasses?
A: He made me lie down, sir.

Q: What did you do when your father made you lie down?
A: He lift[ed] my skirt and took up my panty, sir.

Q: What did you do when your father pulled you[r] panty?

A: I pushed aside his hands, sir.

Q: What did your father do next?

A: He made me lie down, sir.

Q: Afterward[s], what happened next?

A: He also took [off] his brief and his pant[s], sir.
Q: You want to tell this Honorable Court that you were already [lying] down when your father removed his brief
and his pant[s]?
A: Yes, sir.

Q: In relation to you[,] where was your father situated when he removed his brief and pant[s]?
A: [Just by] my side[,] just near me, sir.

Q: What happened after your father removed his pant[s] and brief?
A: He inserted his penis in my vagina, sir.

xxxx

Q: While his penis was inside your vagina, what happened?

A: He boxed me, sir.

Q: Were you hit by the blow?

A: Yes, sir.

Q: Where?
A: [O]n my back, sir.

xxxx

Q: When you reached to your house, what did [he] do?

A: He scolded me, sir.

Q: Who scolded you?

A: My father, sir.

Q: Why did he scold you?

A: He was afraid I might tell my mother, sir.

Q: Did you tell your mother about the incident?

[31]
A: Yes, sir.

We are adequately convinced that the prosecution proved that appellant employed force and intimidation upon his victim.
This being so, we find no cogent reason to disturb the ruling of both the RTC and the appellate court on this matter.

However, we disagree with the trial court's ruling convicting appellant Bartolini for qualified rape under Criminal Case No.
99-1-2084-H. The appellate court was correct in sustaining appellant's argument that the special qualifying circumstance
cannot be appreciated in Criminal Case No. 99-1-2084-H since the age of the victim was not specifically alleged in the
[32]
information.
[33]
Our disquisition in People v. Tagud, Sr. succinctly explains the matter. There, we said:

To justify the imposition of the death penalty in this case, the single special qualifying circumstance of the minority of the
victim and her relationship to the offender must be specifically alleged in the Information and proven during the trial. x x x

xxxx

Even under the old Rules of Criminal Procedure, jurisprudence already required that qualifying circumstances must be
specifically alleged in the Information to be appreciated as such.

xxxx

Notably, the amended Information merely stated that appellant had carnal knowledge of his minor daughter without stating
Arwin's actual age. In a rape case where the very life of the accused is at stake, such an inexact allegation of the age of
the victim is insufficient to qualify the rape and raise the penalty to death. The sufficiency of the Information is held to
a higher standard when the only imposable penalty is death. The constitutional right of the accused to be
properly informed of the nature and cause of the accusation against him assumes the greatest importance when
[34]
the only imposable penalty in case of conviction is death.

Similar to Tagud, the qualifying circumstance of relationship of BBB to appellant was specifically alleged and proven
during the trial. Notably absent in the information, however, is a specific averment of the victim's age at the time the
offense against her was committed. Such an omission committed by the prosecutor is fatal in the imposition of the
supreme penalty of death against the offender. It must be borne in mind that the requirement for complete allegations on
the particulars of the indictment is based on the right of the accused to be fully informed of the nature of the charges
against him so that he may adequately prepare for his defense pursuant to the constitutional requirement on due
[35]
process, specially so if the case involves the imposition of the death penalty in case the accused is convicted. Thus,
even if the victim is below eighteen (18) years of age and the offender is her parent, but these facts are not alleged in the
information, or if only one (1) is so alleged such as what happened in the instant case, their proof as such by evidence
[36]
offered during trial cannot sanction the imposition of the death penalty.

Appellant also argues that both the trial court and the CA committed reversible errors when he was found guilty for the
three (3) counts of rape even if his guilt was not proven beyond reasonable doubt. In particular, appellant attacks AAA's
credibility by arguing that it would have been physically impossible for him to rape said victim on top of a log as claimed by
AAA in her testimony. Appellant also questions the motive of both victims saying that it is unnatural for both to report the
abuses made on them only after the lapse of several years.

We cannot subscribe to appellant's desperate attempt to save himself from the consequences of his dastardly acts.

Settled is the rule that when the issue is one (1) of credibility of witnesses, appellate courts will generally not disturb the
findings of the trial courts considering that the latter are in a better position to decide the question as they have heard the
witnesses and observed their deportment and manner of testifying during the trial. It is for this reason that the findings of
the trial court are given the highest degree of respect. These findings will not ordinarily be disturbed by an appellate court
absent any clear showing that the trial court has overlooked, misunderstood, or misapplied some facts or circumstances
[37]
of weight or substance which could very well affect the outcome of the case.

Moreover, AAA's testimony was vivid and precise. She said:

Q: What was your position at that time when you said your father spread your legs apart?
[38]
A: When I spread my legs, I was laying (sic), and he put my one leg on top of the fallen tree.

We note with approval the CA's observation that such revelation is plausible and consistent with human experience.
Indeed, if there is any incongruity in the manner of intercourse as portrayed by the appellant, the same would be trivial
[39]
and will not smother AAA's revelation of sexual abuse.

How the victims managed to endure the bestial treatment of their father to them for four (4) long years, with one (1) even
having to live with the shame of siring an offspring from her very own father, should not be taken against them. Children of
tender age have natural respect and reverence for their loved ones. More often than not, they would try to keep to
themselves if anything unnatural was committed against them, especially if the offender is one (1) of their relatives. A
father is known to have a strong natural, cultural and psychological hold upon his child. Hence, it would be too assuming
for us to ask the victims why they have kept these facts of abuse to themselves, when their very own mother decided to
be mum on the matter as well.

Anent the award of damages, we find modifications to be in order. We increase the award of civil indemnity and moral
[40]
damages in Criminal Case No. 99-1-2084-H from P50,000.00 to P75,000.00 each. In People v. Catubig, we explained
that the commission of an offense has a two (2)-pronged effect, one (1) on the public as it breaches the social order and
the other upon the private victim as it causes personal sufferings. Each effect is respectively addressed by the
prescription of heavier punishment for the accused and by an award of additional damages to the victim.The increase of
the penalty or a shift to a graver felony underscores the exacerbation of the offense by the attendance of aggravating
circumstances, whether ordinary or qualifying, in its commission.But unlike the criminal liability which is basically the
State's concern, the award of damages is in general intended for the offended party who suffers thereby. Hence, although
[41] [42]
it is essential to observe the requirements imposed by Sections 8 and 9 of Rule 110 of the Revised Rules of Criminal
Procedure, as amended, the requirements should affect only the criminal liability of the accused, which is the State's
concern, and should not affect the civil liability of the accused, which is for the benefit of the injured party. Where the
special qualifying circumstances of age and relationship, although not alleged in the information, are nonetheless
established during the trial, the award of civil indemnity and moral damages in a conviction for simple rape should equal
the award of civil indemnity and moral damages in convictions for qualified rape. Truly, BBB's moral suffering is just as
great as when her father who raped her is convicted for qualified rape as when he is convicted only for simple rape due to
a technicality.

Likewise, we modify the award for exemplary damages. Pursuant to prevailing jurisprudence, the award of exemplary
damages for the two (2) counts of qualified rape under Criminal Case Nos. 99-1-2083-H and 99-1-2085-H and for the
[43]
crime of simple rape in Criminal Case No. 99-1-2084-H is increased to P30,000.00 for each count of rape.

WHEREFORE, the judgment on review is AFFIRMED with MODIFICATIONS.

In Criminal Case Nos. 99-1-2083-H and 99-1-2085-H, appellant Rustico Bartolini y Ampis is found GUILTY beyond
reasonable doubt of two (2) counts of QUALIFIED RAPE and is hereby sentenced to suffer the penalty of reclusion
perpetua, in lieu of death, without the possibility of parole. He is ORDERED to pay each of his two (2) victims, AAA and
BBB, P75,000.00 as civil indemnity, P75,000.00 as moral damages, and P30,000.00 as exemplary damages.

In Criminal Case No. 99-1-2084-H, appellant is found GUILTY beyond reasonable doubt of the crime of RAPE and is
hereby sentenced to suffer the penalty of reclusion perpetua. He is ORDERED to pay the victim, BBB, P75,000.00 as civil
indemnity, P75,000.00 as moral damages, and P30,000.00 as exemplary damages.

Costs against the appellant.

SO ORDERED.

G.R. No. 158911 March 4, 2008

MANILA ELECTRIC COMPANY, Petitioner,

vs.
MATILDE MACABAGDAL RAMOY, BIENVENIDO RAMOY, ROMANA RAMOY-RAMOS, ROSEMARIE RAMOY,
OFELIA DURIAN and CYRENE PANADO, Respondents.

DECISION

AUSTRIA-MARTINEZ, J.:

1
This resolves the Petition for Review on Certiorari under Rule 45 of the Rules of Court, praying that the Decision of the
Court of Appeals (CA) dated December 16, 2002, ordering petitioner Manila Electric Company (MERALCO) to pay
2 3
Leoncio Ramoy moral and exemplary damages and attorney's fees, and the CA Resolution dated July 1, 2003, denying
petitioner's motion for reconsideration, be reversed and set aside.

The Regional Trial Court (RTC) of Quezon City, Branch 81, accurately summarized the facts as culled from the records,
thus:

The evidence on record has established that in the year 1987 the National Power Corporation (NPC) filed with the MTC
Quezon City a case for ejectment against several persons allegedly illegally occupying its properties in Baesa, Quezon
City. Among the defendants in the ejectment case was Leoncio Ramoy, one of the plaintiffs in the case at bar. On April
28, 1989 after the defendants failed to file an answer in spite of summons duly served, the MTC Branch 36, Quezon City
rendered judgment for the plaintiff [MERALCO] and "ordering the defendants to demolish or remove the building and
structures they built on the land of the plaintiff and to vacate the premises." In the case of Leoncio Ramoy, the Court found
that he was occupying a portion of Lot No. 72-B-2-B with the exact location of his apartments indicated and encircled in
the location map as No. 7. A copy of the decision was furnished Leoncio Ramoy (Exhibits 2, 2-A, 2-B, 2-C, pp. 128-131,
Record; TSN, July 2, 1993, p. 5).

On June 20, 1990 NPC wrote Meralco requesting for the "immediate disconnection of electric power supply to all
residential and commercial establishments beneath the NPC transmission lines along Baesa, Quezon City (Exh. 7, p. 143,
Record). Attached to the letter was a list of establishments affected which included plaintiffs Leoncio and Matilde Ramoy
(Exh. 9), as well as a copy of the court decision (Exh. 2). After deliberating on NPC's letter, Meralco decided to comply
with NPC's request (Exhibits 6, 6-A, 6-A-1, 6-B) and thereupon issued notices of disconnection to all establishments
affected including plaintiffs Leoncio Ramoy (Exhs. 3, 3-A to 3-C), Matilde Ramoy/Matilde Macabagdal (Exhibits 3-D to 3-
E), Rosemarie Ramoy (Exh. 3-F), Ofelia Durian (Exh. 3-G), Jose Valiza (Exh. 3-H) and Cyrene S. Panado (Exh. 3-I).

In a letter dated August 17, 1990 Meralco requested NPC for a joint survey to determine all the establishments which are
considered under NPC property in view of the fact that "the houses in the area are very close to each other" (Exh. 12).
Shortly thereafter, a joint survey was conducted and the NPC personnel pointed out the electric meters to be
disconnected (Exh. 13; TSN, October 8, 1993, p. 7; TSN, July 1994, p. 8).

In due time, the electric service connection of the plaintiffs [herein respondents] was disconnected (Exhibits D to G, with
submarkings, pp. 86-87, Record).

Plaintiff Leoncio Ramoy testified that he and his wife are the registered owners of a parcel of land covered by TCT No.
326346, a portion of which was occupied by plaintiffs Rosemarie Ramoy, Ofelia Durian, Jose Valiza and Cyrene S.
Panado as lessees. When the Meralco employees were disconnecting plaintiffs' power connection, plaintiff Leoncio
Ramoy objected by informing the Meralco foreman that his property was outside the NPC property and pointing out the
monuments showing the boundaries of his property. However, he was threatened and told not to interfere by the armed
men who accompanied the Meralco employees. After the electric power in Ramoy's apartment was cut off, the plaintiffs-
lessees left the premises.

During the ocular inspection ordered by the Court and attended by the parties, it was found out that the residence of
plaintiffs-spouses Leoncio and Matilde Ramoy was indeed outside the NPC property. This was confirmed by defendant's
witness R.P. Monsale III on cross-examination (TSN, October 13, 1993, pp. 10 and 11). Monsale also admitted that he did
not inform his supervisor about this fact nor did he recommend re-connection of plaintiffs' power supply (Ibid., p. 14).

The record also shows that at the request of NPC, defendant Meralco re-connected the electric service of four customers
4
previously disconnected none of whom was any of the plaintiffs (Exh. 14).

The RTC decided in favor of MERALCO by dismissing herein respondents' claim for moral damages, exemplary damages
and attorney's fees. However, the RTC ordered MERALCO to restore the electric power supply of respondents.

Respondents then appealed to the CA. In its Decision dated December 16, 2002, the CA faulted MERALCO for not
requiring from National Power Corporation (NPC) a writ of execution or demolition and in not coordinating with the court
sheriff or other proper officer before complying with the NPC's request. Thus, the CA held MERALCO liable for moral and
exemplary damages and attorney's fees. MERALCO's motion for reconsideration of the Decision was denied per
Resolution dated July 1, 2003.

Hence, herein petition for review on certiorari on the following grounds:

I
THE COURT OF APPEALS GRAVELY ERRED WHEN IT FOUND MERALCO NEGLIGENT WHEN IT DISCONNECTED
THE SUBJECT ELECTRIC SERVICE OF RESPONDENTS.

II

THE COURT OF APPEALS GRAVELY ERRED WHEN IT AWARDED MORAL AND EXEMPLARY DAMAGES AND
ATTORNEY'S FEES AGAINST MERALCO UNDER THE CIRCUMSTANCES THAT THE LATTER ACTED IN GOOD
5
FAITH IN THE DISCONNECTION OF THE ELECTRIC SERVICES OF THE RESPONDENTS.

The petition is partly meritorious.

6
MERALCO admits that respondents are its customers under a Service Contract whereby it is obliged to supply
respondents with electricity. Nevertheless, upon request of the NPC, MERALCO disconnected its power supply to
respondents on the ground that they were illegally occupying the NPC's right of way. Under the Service Contract, "[a]
customer of electric service must show his right or proper interest over the property in order that he will be provided with
7
and assured a continuous electric service." MERALCO argues that since there is a Decision of the Metropolitan Trial
Court (MTC) of Quezon City ruling that herein respondents were among the illegal occupants of the NPC's right of way,
MERALCO was justified in cutting off service to respondents.

Clearly, respondents' cause of action against MERALCO is anchored on culpa contractual or breach of contract for the
latter's discontinuance of its service to respondents under Article 1170 of the Civil Code which provides:

Article 1170. 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.

8
In Radio Communications of the Philippines, Inc. v. Verchez, the Court expounded on the nature of culpa contractual,
thus:

"In culpa contractual x x x the mere proof of the existence of the contract and the failure of its compliance justify,
prima facie, a corresponding right of relief. The law, recognizing the obligatory force of contracts, will not permit a
party to be set free from liability for any kind of misperformance of the contractual undertaking or a contravention of the
tenor thereof. A breach upon the contract confers upon the injured party a valid cause for recovering that which may have
been lost or suffered. The remedy serves to preserve the interests of the promissee that may include his "expectation
interest," which is his interest in having the benefit of his bargain by being put in as good a position as he would have
been in had the contract been performed, or his "reliance interest," which is his interest in being reimbursed for loss
caused by reliance on the contract by being put in as good a position as he would have been in had the contract not been
made; or his "restitution interest," which is his interest in having restored to him any benefit that he has conferred on the
other party. Indeed, agreements can accomplish little, either for their makers or for society, unless they are made the
basis for action. The effect of every infraction is to create a new duty, that is, to make recompense to the one who has
been injured by the failure of another to observe his contractual obligation unless he can show extenuating circumstances,
like proof of his exercise of due diligence x x x or of the attendance of fortuitous event, to excuse him from his ensuing
9
liability. (Emphasis supplied)

Article 1173 also provides that the fault or negligence of the obligor consists in the omission of that diligence which is
required by the nature of the obligation and corresponds with the circumstances of the persons, of the time and of the
10
place. The Court emphasized in Ridjo Tape & Chemical Corporation v. Court of Appeals that "as a public utility,
11
MERALCO has the obligation to discharge its functions with utmost care and diligence."

The Court agrees with the CA that under the factual milieu of the present case, MERALCO failed to exercise the utmost
degree of care and diligence required of it. To repeat, it was not enough for MERALCO to merely rely on the Decision of
the MTC without ascertaining whether it had become final and executory. Verily, only upon finality of said Decision can it
be said with conclusiveness that respondents have no right or proper interest over the subject property, thus, are not
entitled to the services of MERALCO.

Although MERALCO insists that the MTC Decision is final and executory, it never showed any documentary evidence to
support this allegation. Moreover, if it were true that the decision was final and executory, the most prudent thing for
MERALCO to have done was to coordinate with the proper court officials in determining which structures are covered by
said court order. Likewise, there is no evidence on record to show that this was done by MERALCO.

The utmost care and diligence required of MERALCO necessitates such great degree of prudence on its part, and failure
to exercise the diligence required means that MERALCO was at fault and negligent in the performance of its obligation.
12
In Ridjo Tape, the Court explained:

[B]eing a public utility vested with vital public interest, MERALCO is impressed with certain obligations towards its
customers and any omission on its part to perform such duties would be prejudicial to its interest. For in the final analysis,
the bottom line is that those who do not exercise such prudence in the discharge of their duties shall be made to bear the
13
consequences of such oversight.

This being so, MERALCO is liable for damages under Article 1170 of the Civil Code.

The next question is: Are respondents entitled to moral and exemplary damages and attorney's fees?
Article 2220 of the Civil Code provides:

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.

In the present case, MERALCO wilfully caused injury to Leoncio Ramoy by withholding from him and his tenants the
supply of electricity to which they were entitled under the Service Contract. This is contrary to public policy because, as
discussed above, MERALCO, being a vital public utility, is expected to exercise utmost care and diligence in the
performance of its obligation. It was incumbent upon MERALCO to do everything within its power to ensure that the
improvements built by respondents are within the NPC’s right of way before disconnecting their power supply. The Court
14
emphasized in Samar II Electric Cooperative, Inc. v. Quijano that:

Electricity is a basic necessity the generation and distribution of which is imbued with public interest, and its provider is a
public utility subject to strict regulation by the State in the exercise of police power. Failure to comply with these
15
regulations will give rise to the presumption of bad faith or abuse of right. (Emphasis supplied)

Thus, by analogy, MERALCO's failure to exercise utmost care and diligence in the performance of its obligation to
Leoncio Ramoy, its customer, is tantamount to bad faith. Leoncio Ramoy testified that he suffered wounded feelings
16
because of MERALCO's actions. Furthermore, due to the lack of power supply, the lessees of his four apartments on
17
subject lot left the premises. Clearly, therefore, Leoncio Ramoy is entitled to moral damages in the amount awarded by
the CA.

Leoncio Ramoy, the lone witness for respondents, was the only one who testified regarding the effects on him of
MERALCO's electric service disconnection. His co-respondents Matilde Ramoy, Rosemarie Ramoy, Ofelia Durian and
Cyrene Panado did not present any evidence of damages they suffered.

18
It is a hornbook principle that damages may be awarded only if proven. In Mahinay v. Velasquez, Jr., the Court held
thus:

In order that moral damages may be awarded, there must be pleading and proof of moral suffering, mental anguish,
fright and the like. While respondent alleged in his complaint that he suffered mental anguish, serious anxiety, wounded
feelings and moral shock, he failed to prove them during the trial. Indeed, respondent should have taken the witness
stand and should have testified on the mental anguish, serious anxiety, wounded feelings and other emotional and
mental suffering he purportedly suffered to sustain his claim for moral damages. Mere allegations do not suffice; they
must be substantiated by clear and convincing proof. No other person could have proven such damages except the
respondent himself as they were extremely personal to him.

In Keirulf vs. Court of Appeals, we held:

"While no proof of pecuniary loss is necessary in order that moral damages may be awarded, the amount of indemnity
being left to the discretion of the court, it is nevertheless essential that the claimant should satisfactorily show the
existence of the factual basis of damages and its causal connection to defendant’s acts. This is so because moral
damages, though incapable of pecuniary estimation, are in the category of an award designed to compensate the
claimant for actual injury suffered and not to impose a penalty on the wrongdoer. In Francisco vs. GSIS, the Court held
that there must be clear testimony on the anguish and other forms of mental suffering. Thus, if the plaintiff fails to
take the witness stand and testify as to his/her social humiliation, wounded feelings and anxiety, moral damages cannot
be awarded. In Cocoland Development Corporation vs. National Labor Relations Commission, the Court held that
"additional facts must be pleaded and proven to warrant the grant of moral damages under the Civil Code, these being, x
x x social humiliation, wounded feelings, grave anxiety, etc. that resulted therefrom."

x x x The award of moral damages must be anchored to a clear showing that respondent actually experienced mental
anguish, besmirched reputation, sleepless nights, wounded feelings or similar injury. There was no better witness to this
experience than respondent himself. Since respondent failed to testify on the witness stand, the trial court did not
19
have any factual basis to award moral damages to him. (Emphasis supplied)

20
Thus, only respondent Leoncio Ramoy, who testified as to his wounded feelings, may be awarded moral damages.

With regard to exemplary damages, Article 2232 of the Civil Code provides that in contracts and quasi-contracts, the court
may award exemplary damages if the defendant, in this case MERALCO, acted in a wanton, fraudulent, reckless,
oppressive, or malevolent manner, while Article 2233 of the same Code provides that such damages cannot be
recovered as a matter of right and the adjudication of the same is within the discretion of the court.1avvphi1

The Court finds that MERALCO fell short of exercising the due diligence required, but its actions cannot be considered
wanton, fraudulent, reckless, oppressive or malevolent. Records show that MERALCO did take some measures, i.e.,
coordinating with NPC officials and conducting a joint survey of the subject area, to verify which electric meters should be
disconnected although these measures are not sufficient, considering the degree of diligence required of it. Thus, in this
case, exemplary damages should not be awarded.

Since the Court does not deem it proper to award exemplary damages in this case, then the CA's award for attorney's
fees should likewise be deleted, as Article 2208 of the Civil Code states that in the absence of stipulation, attorney's fees
cannot be recovered except in cases provided for in said Article, to wit:
Article 2208. In the absence of stipulation, attorney’s fees and expenses of litigation, other than judicial costs, cannot be
recovered, except:

(1) When exemplary damages are awarded;

(2) When the defendant’s act or omission has compelled the plaintiff to litigate with third persons or to incur
expenses to protect his interest;

(3) In criminal cases of malicious prosecution against the plaintiff;

(4) In case of a clearly unfounded civil action or proceeding against the plaintiff;

(5) Where the defendant acted in gross and evident bad faith in refusing to satisfy the plaintiff’s plainly valid, just
and demandable claim;

(6) In actions for legal support;

(7) In actions for the recovery of wages of household helpers, laborers and skilled workers;

(8) In actions for indemnity under workmen’s compensation and employer’s liability laws;

(9) In a separate civil action to recover civil liability arising from a crime;

(10) When at least double judicial costs are awarded;

(11) In any other case where the court deems it just and equitable that attorney’s fees and expenses of litigation
should be recovered.

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

None of the grounds for recovery of attorney's fees are present.

WHEREFORE, the petition is PARTLY GRANTED. The Decision of the Court of Appeals
is AFFIRMED with MODIFICATION. The award for exemplary damages and attorney's fees is DELETED.

No costs.

SO ORDERED

G.R. No. 150666 August 3, 2010

LUCIANO BRIONES and NELLY BRIONES, Petitioners,

vs.
JOSE MACABAGDAL, FE D. MACABAGDAL and VERGON REALTY INVESTMENTS CORPORATION,Respondents.

DECISION

VILLARAMA, JR., J.:

1
On appeal under Rule 45 of the 1997 Rules of Civil Procedure, as amended, is the Decision dated December 11, 2000 of
2
the Court of Appeals (CA) in CA-G.R. CV No. 48109 which affirmed the September 29, 1993 Decision of the Regional
Trial Court (RTC) of Makati City, Branch 135, ordering petitioners Luciano and Nelly Briones to remove the improvements
they have made on the disputed property or to pay respondent-spouses Jose and Fe Macabagdal the prevailing price of
the land as compensation.

The undisputed factual antecedents of the case are as follows:

Respondent-spouses purchased from Vergon Realty Investments Corporation (Vergon) Lot No. 2-R, a 325-square-meter
land located in Vergonville Subdivision No. 10 at Las Piñas City, Metro Manila and covered by Transfer Certificate of Title
No. 62181 of the Registry of Deeds of Pasay City. On the other hand, petitioners are the owners of Lot No. 2-S, which is
adjacent to Lot No. 2-R.

Sometime in 1984, after obtaining the necessary building permit and the approval of Vergon, petitioners constructed a
house on Lot No. 2-R which they thought was Lot No. 2-S. After being informed of the mix up by Vergon’s manager,
respondent-spouses immediately demanded petitioners to demolish the house and vacate the property. Petitioners,
however, refused to heed their demand. Thus, respondent-spouses filed an action to recover ownership and possession
3
of the said parcel of land with the RTC of Makati City.
Petitioners insisted that the lot on which they constructed their house was the lot which was consistently pointed to them
as theirs by Vergon’s agents over the seven (7)-year period they were paying for the lot. They interposed the defense of
being buyers in good faith and impleaded Vergon as third-party defendant claiming that because of the warranty against
4
eviction, they were entitled to indemnity from Vergon in case the suit is decided against them.

The RTC ruled in favor of respondent-spouses and found that petitioners’ house was undoubtedly built on Lot No. 2-R.
The dispositive portion of the trial court’s decision reads as follows:

PREMISES CONSIDERED, let judgment be rendered declaring, to wit:

1. That plaintiffs are the owners of Lot No. 2-R of subdivision plan (LRC) Psd-147392 at Vergonville Subdivision,
No. 10, Las Piñas, Metro Manila covered by TCT No. 62181 of the Registry of Deeds of Pasay City on which
defendants have constructed their house;

2. Defendants, jointly and severally, are ordered to demolish their house and vacate the premises and return the
possession of the portion of Lot No. 2-R as above-described to plaintiffs within thirty (30) days from receipt of this
decision, or in the alternative, plaintiffs should be compensated by defendants, jointly and severally, by the
payment of the prevailing price of the lot involved as Lot No. 2-R with an area of 325 square meters which should
not be less than ₱1,500.00 per square meter, in consideration of the fact that prices of real estate properties in
the area concerned have increased rapidly;

3. Defendants, jointly and severally, pay to plaintiffs for moral damages with plaintiffs’ plans and dreams of
building their own house on their own lot being severely shattered and frustrated due to defendants’ incursion as
interlopers of Lot No. 2-R in the sum of ₱50,000.00;

4. Defendants, jointly and severally, to pay plaintiffs in the amount of ₱30,000.00 as attorney’s fees; and,

5. to pay the costs of the proceedings.

Defendants’ counterclaim against plaintiffs is dismissed for lack of merit and with no cause of action.

Defendants’ third-party complaint against third-party defendant Vergonville Realty and Investments Corporation is likewise
ordered dismissed for lack of cause of action and evidently without merit.

On the other hand, defendants, jointly and severally, are liable for the litigation expenses incurred by Vergonville Realty by
way of counterclaim, which is also proven by the latter with a mere preponderance of evidence, and are hereby ordered to
pay the sum of ₱20,000.00 as compensatory damage; and attorney’s fees in the sum of ₱10,000.00

5
SO ORDERED.

On appeal, the CA affirmed the RTC’s finding that the lot upon which petitioners built their house was not the one (1)
which Vergon sold to them. Based on the documentary evidence, such as the titles of the two (2) lots, the contracts to sell,
and the survey report made by the geodetic engineer, petitioners’ house was built on the lot of the respondent-
6
spouses. There was no basis to presume that the error was Vergon’s fault. Also the warranty against eviction under
Article 1548 of the Civil Code was not applicable as there was no deprivation of property: the lot on which petitioners built
7
their house was not the lot sold to them by Vergon, which remained vacant and ready for occupation. The CA further
8
ruled that petitioners cannot use the defense of allegedly being a purchaser in good faith for wrongful occupation of land.

9
Aggrieved, petitioners filed a motion for reconsideration, but it was denied by the appellate court. Hence, this petition for
review on certiorari.

Petitioners raise the following assignment of errors:

I.

THE COURT OF APPEALS DECIDED A QUESTION OF SUBSTANCE CONTRARY TO LAW AND APPLICABLE
DECISIONS OF THE SUPREME COURT IN AFFIRMING THE DECISION OF THE TRIAL COURT ORDERING
PETITIONERS TO DEMOLISH THEIR ONLY HOUSE AND VACATE THE LOT AND TO PAY MORAL AND
COMPENSATORY DAMAGES AS WELL AS ATTORNEY’S FEE IN THE TOTAL AMOUNT OF PS[₱] 110,000; AND

II.

THE COURT OF APPEALS SANCTIONED THE DEPARTURE OF THE LOWER COURT FROM THE ACCEPTED AND
USUAL COURSE OF JUDICIAL PROCEEDINGS AS TO CALL FOR AN EXERCISE OF THE POWER OF
10
SUPERVISION.

In the main, it is petitioners’ position that they must not bear the damage alone. Petitioners insist that they relied with full
faith and confidence in the reputation of Vergon’s agents when they pointed the wrong property to them. Even the
President of Vergon, Felix Gonzales, consented to the construction of the house when he signed the building
11 12
permit. Also, petitioners are builders in good faith.
The petition is partly meritorious.

At the outset, we note that petitioners raise factual issues, which are beyond the scope of a petition for review on certiorari
under Rule 45 of the Rules. Well settled is the rule that the jurisdiction of this Court in cases brought to it from the CA via
a petition for review on certiorari under Rule 45 is limited to the review of errors of law. The Court is not bound to weigh all
over again the evidence adduced by the parties, particularly where the findings of both the trial court and the appellate
court coincide. The resolution of factual issues is a function of the trial court whose findings on these matters are, as a
13
general rule, binding on this Court, more so where these have been affirmed by the CA. We note that the CA and RTC
did not overlook or fail to appreciate any material circumstance which, when properly considered, would have altered the
result of the case. Indeed, it is beyond cavil that petitioners mistakenly constructed their house on Lot No. 2-R which they
thought was Lot No. 2-S.

However, the conclusiveness of the factual findings notwithstanding, we find that the trial court nonetheless erred in
outrightly ordering petitioners to vacate the subject property or to pay respondent spouses the prevailing price of the land
14
as compensation. Article 527 of the Civil Code presumes good faith, and since no proof exists to show that the mistake
was done by petitioners in bad faith, the latter should be presumed to have built the house in good faith.

When a person builds in good faith on the land of another, Article 448 of the Civil Code governs. Said article provides,

ART. 448. The owner of the land on which anything has been built, sown or planted in good faith, shall have the right to
appropriate as his own the works, sowing or planting, after payment of the indemnity provided for in Articles 546 and 548,
or to oblige the one who built or planted to pay the price of the land, and the one who sowed, the proper rent. However,
the builder or planter cannot be obliged to buy the land if its value is considerably more than that of the building or trees.
In such case, he shall pay reasonable rent, if the owner of the land does not choose to appropriate the building or trees
after proper indemnity. The parties shall agree upon the terms of the lease and in case of disagreement, the court shall fix
the terms thereof. (Emphasis ours.)

The above-cited article covers cases in which the builders, sowers or planters believe themselves to be owners of the
15
land or, at least, to have a claim of title thereto. The builder in good faith can compel the landowner to make a choice
between appropriating the building by paying the proper indemnity or obliging the builder to pay the price of the land. The
choice belongs to the owner of the land, a rule that accords with the principle of accession, i.e., that the accessory follows
the principal and not the other way around. However, even as the option lies with the landowner, the grant to him,
16
nevertheless, is preclusive. He must choose one. He cannot, for instance, compel the owner of the building to remove
the building from the land without first exercising either option. It is only if the owner chooses to sell his land, and the
builder or planter fails to purchase it where its value is not more than the value of the improvements, that the owner may
remove the improvements from the land. The owner is entitled to such remotion only when, after having chosen to sell his
17
land, the other party fails to pay for the same.

Moreover, petitioners have the right to be indemnified for the necessary and useful expenses they may have made on the
subject property. Articles 546 and 548 of the Civil Code provide,

ART. 546. Necessary expenses shall be refunded to every possessor; but only the possessor in good faith may retain the
thing until he has been reimbursed therefor.

Useful expenses shall be refunded only to the possessor in good faith with the same right of retention, the person who
has defeated him in the possession having the option of refunding the amount of the expenses or of paying the increase
in value which the thing may have acquired by reason thereof.

ART. 548. Expenses for pure luxury or mere pleasure shall not be refunded to the possessor in good faith; but he may
remove the ornaments with which he has embellished the principal thing if it suffers no injury thereby, and if his successor
in the possession does not prefer to refund the amount expended.

Consequently, the respondent-spouses have the option to appropriate the house on the subject land after payment to
petitioners of the appropriate indemnity or to oblige petitioners to pay the price of the land, unless its value is considerably
more than the value of the structures, in which case petitioners shall pay reasonable rent.

18
In accordance with Depra v. Dumlao, this case must be remanded to the RTC which shall conduct the appropriate
proceedings to assess the respective values of the improvement and of the land, as well as the amounts of reasonable
rentals and indemnity, fix the terms of the lease if the parties so agree, and to determine other matters necessary for the
proper application of Article 448, in relation to Articles 546 and 548, of the Civil Code.

As to the liability of Vergon, petitioners failed to present sufficient evidence to show negligence on Vergon’s part.
Petitioners’ claim is obviously one (1) for tort, governed by Article 2176 of the Civil Code, which provides:

ART. 2176. Whoever by act or omission causes damage to another, there being fault or negligence, is obliged to pay for
the damage done. Such fault or negligence, if there is no preexisting contractual relation between the parties, is called a
quasi-delict and is governed by the provisions of this Chapter. (Emphasis ours.)

Under this provision, it is the plaintiff who has to prove by a preponderance of evidence: (1) the damages suffered by the
plaintiff; (2) the fault or negligence of the defendant or some other person for whose act he must respond; and (3) the
19
connection of cause and effect between the fault or negligence and the damages incurred. This the petitioners failed to
do. The President of Vergon signed the building permit as a precondition for its approval by the local government, but it
did not guarantee that petitioners were constructing the structure within the metes and bounds of petitioners’ lot. The
signature of the President of Vergon on the building permit merely proved that petitioners were authorized to make
constructions within the subdivision project of Vergon. And while petitioners acted in good faith in building their house on
Lot No. 2-R, petitioners did not show by what authority the agents or employees of Vergon were acting when they pointed
to the lot where the construction was made nor was petitioners’ claim on this matter corroborated by sufficient evidence.

One (1) last note on the award of damages. Considering that petitioners acted in good faith in building their house on the
subject property of the respondent-spouses, there is no basis for the award of moral damages to respondent-spouses.
Likewise, the Court deletes the award to Vergon of compensatory damages and attorney’s fees for the litigation expenses
Vergon had incurred as such amounts were not specifically prayed for in its Answer to petitioners’ third-party complaint.
20
Under Article 2208 of the Civil Code, attorney’s fees and expenses of litigation are recoverable only in the concept of
actual damages, not as moral damages nor judicial costs. Hence, such must be specifically prayed for—as was not done
in this case—and may not be deemed incorporated within a general prayer for "such other relief and remedy as this court
21
may deem just and equitable." It must also be noted that aside from the following, the body of the trial court’s decision
was devoid of any statement regarding attorney’s fees. In Scott Consultants & Resource Development Corporation, Inc. v.
22
Court of Appeals, we reiterated that attorney’s fees are not to be awarded every time a party wins a suit. The power of
the court to award attorney’s fees under Article 2208 of the Civil Code demands factual, legal, and equitable justification;
its basis cannot be left to speculation or conjecture. Where granted, the court must explicitly state in the body of the
decision, and not only in the dispositive portion thereof, the legal reason for the award of attorney’s fees.1avvphi1

WHEREFORE, the Decision dated December 11, 2000 of the Court of Appeals in CA-G.R. CV No. 48109 is AFFIRMED
WITH MODIFICATION. The award of moral damages in favor of respondent-spouses Jose and Fe Macabagdal and the
award of compensatory damages and attorney’s fees to respondent Vergon Realty Investments Corporation
are DELETED. The case is REMANDED to the Regional Trial Court of Makati City, Branch 135, for further proceedings
consistent with the proper application of Articles 448, 546 and 548 of the Civil Code, as follows:

1. The trial court shall determine:

a. the present fair price of the respondent-spouses’ lot;

b. the amount of the expenses spent by petitioners for the building of their house;

c. the increase in value ("plus value") which the said lot may have acquired by reason thereof; and

d. whether the value of said land is considerably more than that of the house built thereon.

2. After said amounts shall have been determined by competent evidence, the Regional Trial Court shall render
judgment, as follows:

a. The trial court shall grant the respondent-spouses a period of fifteen (15) days within which to exercise
their option under Article 448 of the Civil Code, whether to appropriate the house as their own by paying
to petitioners either the amount of the expenses spent by petitioners for the building of the house, or the
increase in value ("plus value") which the said lot may have acquired by reason thereof, or to oblige
petitioners to pay the price of said land. The amounts to be respectively paid by the respondent-spouses
and petitioners, in accordance with the option thus exercised by written notice of the other party and to
the Court, shall be paid by the obligor within fifteen (15) days from such notice of the option by tendering
the amount to the Court in favor of the party entitled to receive it;

b. The trial court shall further order that if the respondent-spouses exercises the option to oblige
petitioners to pay the price of the land but the latter rejects such purchase because, as found by the trial
court, the value of the land is considerably more than that of the house, petitioners shall give written
notice of such rejection to the respondent-spouses and to the Court within fifteen (15) days from notice of
the respondent-spouses’ option to sell the land. In that event, the parties shall be given a period of fifteen
(15) days from such notice of rejection within which to agree upon the terms of the lease, and give the
Court formal written notice of such agreement and its provisos. If no agreement is reached by the parties,
the trial court, within fifteen (15) days from and after the termination of the said period fixed for
negotiation, shall then fix the terms of the lease, payable within the first five (5) days of each calendar
month. The period for the forced lease shall not be more than two (2) years, counted from the finality of
the judgment, considering the long period of time since petitioners have occupied the subject area. The
rental thus fixed shall be increased by ten percent (10%) for the second year of the forced lease.
Petitioners shall not make any further constructions or improvements on the house. Upon expiration of
the two (2)-year period, or upon default by petitioners in the payment of rentals for two (2) consecutive
months, the respondent-spouses shall be entitled to terminate the forced lease, to recover their land, and
to have the house removed by petitioners or at the latter’s expense. The rentals herein provided shall be
tendered by petitioners to the Court for payment to the respondent-spouses, and such tender shall
constitute evidence of whether or not compliance was made within the period fixed by the Court.

c. In any event, petitioners shall pay the respondent-spouses reasonable compensation for the
occupancy of the respondent-spouses’ land for the period counted from the year petitioners occupied the
subject area, up to the commencement date of the forced lease referred to in the preceding paragraph;
 d. The periods to be fixed by the trial court in its Decision shall be inextendible, and upon failure of the
party obliged to tender to the trial court the amount due to the obligee, the party entitled to such payment
shall be entitled to an order of execution for the enforcement of payment of the amount due and for
compliance with such other acts as may be required by the prestation due the obligee.

No costs.

SO ORDERED.

G.R. No. 150228 July 30, 2009

BANK OF AMERICA NT & SA, Petitioner,

vs.
PHILIPPINE RACING CLUB, Respondent.

DECISION

LEONARDO-DE CASTRO, J.:

1
This is a petition for review on certiorari under Rule 45 of the Rules of Court from the Decision promulgated on July 16,
2001 by the former Second Division of the Court of Appeals (CA), in CA-G.R. CV No. 45371 entitled "Philippine Racing
2
Club, Inc. v. Bank of America NT & SA," affirming the Decision dated March 17, 1994 of the Regional Trial Court (RTC)
of Makati, Branch 135 in Civil Case No. 89-5650, in favor of the respondent. Likewise, the present petition assails the
3
Resolution promulgated on September 28, 2001, denying the Motion for Reconsideration of the CA Decision.

The facts of this case as narrated in the assailed CA Decision are as follows:

Plaintiff-appellee PRCI is a domestic corporation which maintains several accounts with different banks in the Metro
Manila area. Among the accounts maintained was Current Account No. 58891-012 with defendant-appellant BA (Paseo
de Roxas Branch). The authorized joint signatories with respect to said Current Account were plaintiff-appellee’s
President (Antonia Reyes) and Vice President for Finance (Gregorio Reyes).

On or about the 2nd week of December 1988, the President and Vice President of plaintiff-appellee corporation were
scheduled to go out of the country in connection with the corporation’s business. In order not to disrupt operations in their
absence, they pre-signed several checks relating to Current Account No. 58891-012. The intention was to insure
continuity of plaintiff-appellee’s operations by making available cash/money especially to settle obligations that might
become due. These checks were entrusted to the accountant with instruction to make use of the same as the need arose.
The internal arrangement was, in the event there was need to make use of the checks, the accountant would prepare the
corresponding voucher and thereafter complete the entries on the pre-signed checks.

It turned out that on December 16, 1988, a John Doe presented to defendant-appellant bank for encashment a couple of
plaintiff-appellee corporation’s checks (Nos. 401116 and 401117) with the indicated value of P110,000.00 each. It is
admitted that these 2 checks were among those presigned by plaintiff-appellee corporation’s authorized signatories.

The two (2) checks had similar entries with similar infirmities and irregularities. On the space where the name of the payee
should be indicated (Pay To The Order Of) the following 2-line entries were instead typewritten: on the upper line was the
word "CASH" while the lower line had the following typewritten words, viz: "ONE HUNDRED TEN THOUSAND PESOS
ONLY." Despite the highly irregular entries on the face of the checks, defendant-appellant bank, without as much as
verifying and/or confirming the legitimacy of the checks considering the substantial amount involved and the obvious
infirmity/defect of the checks on their faces, encashed said checks. A verification process, even by was of a telephone call
to PRCI office, would have taken less than ten (10) minutes. But this was not done by BA. Investigation conducted by
plaintiff-appellee corporation yielded the fact that there was no transaction involving PRCI that call for the payment of
P220,000.00 to anyone. The checks appeared to have come into the hands of an employee of PRCI (one Clarita Mesina
who was subsequently criminally charged for qualified theft) who eventually completed without authority the entries on the
4
pre-signed checks. PRCI’s demand for defendant-appellant to pay fell on deaf ears. Hence, the complaint.

After due proceedings, the trial court rendered a Decision in favor of respondent, the dispositive portion of which reads:

PREMISES CONSIDERED, judgment is hereby rendered in favor of plaintiff and against the defendant, and the latter is
ordered to pay plaintiff:

(1) The sum of Two Hundred Twenty Thousand (₱220,000.00) Pesos, with legal interest to be computed from
date of the filing of the herein complaint;

(2) The sum of Twenty Thousand (₱20,000.00) Pesos by way of attorney’s fees;

(3) The sum of Ten Thousand (₱10,000.00) Pesos for litigation expenses, and

(4) To pay the costs of suit.

 5
SO ORDERED.

Petitioner appealed the aforesaid trial court Decision to the CA which, however, affirmed said decision in toto in its July
16, 2001 Decision. Petitioner’s Motion for Reconsideration of the CA Decision was subsequently denied on September
28, 2001.

Petitioner now comes before this Court arguing that:

I. The Court of Appeals gravely erred in holding that the proximate cause of respondent’s loss was petitioner’s
encashment of the checks.

A. The Court of Appeals gravely erred in holding that petitioner was liable for the amount of the checks
despite the fact that petitioner was merely fulfilling its obligation under law and contract.

B. The Court of Appeals gravely erred in holding that petitioner had a duty to verify the encashment,
despite the absence of any obligation to do so.

C. The Court of Appeals gravely erred in not applying Section 14 of the Negotiable Instruments Law,
despite its clear applicability to this case;

II. The Court of Appeals gravely erred in not holding that the proximate cause of respondent’s loss was its own grossly
negligent practice of pre-signing checks without payees and amounts and delivering these pre-signed checks to its
employees (other than their signatories).

III. The Court of Appeals gravely erred in affirming the trial court’s award of attorney’s fees despite the absence of any
applicable ground under Article 2208 of the Civil Code.

IV. The Court of Appeals gravely erred in not awarding attorney’s fees, moral and exemplary damages, and costs of suit
6
in favor of petitioner, who clearly deserves them.

From the discussions of both parties in their pleadings, the key issue to be resolved in the present case is whether the
proximate cause of the wrongful encashment of the checks in question was due to (a) petitioner’s failure to make a
verification regarding the said checks with the respondent in view of the misplacement of entries on the face of the checks
or (b) the practice of the respondent of pre-signing blank checks and leaving the same with its employees.

Petitioner insists that it merely fulfilled its obligation under law and contract when it encashed the aforesaid checks.
7 8
Invoking Sections 126 and 185 of the Negotiable Instruments Law (NIL), petitioner claims that its duty as a drawee bank
to a drawer-client maintaining a checking account with it is to pay orders for checks bearing the drawer-client’s genuine
signatures. The genuine signatures of the client’s duly authorized signatories affixed on the checks signify the order for
payment. Thus, pursuant to the said obligation, the drawee bank has the duty to determine whether the signatures
appearing on the check are the drawer-client’s or its duly authorized signatories. If the signatures are genuine, the bank
has the unavoidable legal and contractual duty to pay. If the signatures are forged and falsified, the drawee bank has the
9
corollary, but equally unavoidable legal and contractual, duty not to pay.

Furthermore, petitioner maintains that there exists a duty on the drawee bank to inquire from the drawer before encashing
a check only when the check bears a material alteration. A material alteration is defined in Section 125 of the NIL to be
one which changes the date, the sum payable, the time or place of payment, the number or relations of the parties, the
currency in which payment is to be made or one which adds a place of payment where no place of payment is specified,
or any other change or addition which alters the effect of the instrument in any respect. With respect to the checks at
10
issue, petitioner points out that they do not contain any material alteration. This is a fact which was affirmed by the trial
11
court itself.

There is no dispute that the signatures appearing on the subject checks were genuine signatures of the respondent’s
authorized joint signatories; namely, Antonia Reyes and Gregorio Reyes who were respondent’s President and Vice-
President for Finance, respectively. Both pre-signed the said checks since they were both scheduled to go abroad and it
was apparently their practice to leave with the company accountant checks signed in black to answer for company
obligations that might fall due during the signatories’ absence. It is likewise admitted that neither of the subject checks
contains any material alteration or erasure.

However, on the blank space of each check reserved for the payee, the following typewritten words appear: "ONE
HUNDRED TEN THOUSAND PESOS ONLY." Above the same is the typewritten word, "CASH." On the blank reserved
for the amount, the same amount of One Hundred Ten Thousand Pesos was indicated with the use of a check writer. The
presence of these irregularities in each check should have alerted the petitioner to be cautious before proceeding to
encash them which it did not do.

It is well-settled that banks are engaged in a business impressed with public interest, and it is their duty to protect in return
their many clients and depositors who transact business with them. They have the obligation to treat their client’s account
meticulously and with the highest degree of care, considering the fiduciary nature of their relationship. The diligence
12
required of banks, therefore, is more than that of a good father of a family.
Petitioner asserts that it was not duty-bound to verify with the respondent since the amount below the typewritten word
"CASH," expressed in words, is the very same amount indicated in figures by means of a check writer on the amount
portion of the check. The amount stated in words is, therefore, a mere reiteration of the amount stated in figures.
Petitioner emphasizes that a reiteration of the amount in words is merely a repetition and that a repetition is not an
13
alteration which if present and material would have enjoined it to commence verification with respondent.

We do not agree with petitioner’s myopic view and carefully crafted defense. Although not in the strict sense "material
alterations," the misplacement of the typewritten entries for the payee and the amount on the same blank and the
repetition of the amount using a check writer were glaringly obvious irregularities on the face of the check. Clearly,
someone made a mistake in filling up the checks and the repetition of the entries was possibly an attempt to rectify the
mistake. Also, if the check had been filled up by the person who customarily accomplishes the checks of respondent, it
should have occurred to petitioner’s employees that it would be unlikely such mistakes would be made. All these
circumstances should have alerted the bank to the possibility that the holder or the person who is attempting to encash
the checks did not have proper title to the checks or did not have authority to fill up and encash the same. As noted by the
CA, petitioner could have made a simple phone call to its client to clarify the irregularities and the loss to respondent due
to the encashment of the stolen checks would have been prevented.

In the case at bar, extraordinary diligence demands that petitioner should have ascertained from respondent the
authenticity of the subject checks or the accuracy of the entries therein not only because of the presence of highly
irregular entries on the face of the checks but also of the decidedly unusual circumstances surrounding their encashment.
Respondent’s witness testified that for checks in amounts greater than Twenty Thousand Pesos (₱20,000.00) it is the
14
company’s practice to ensure that the payee is indicated by name in the check. This was not rebutted by petitioner.
Indeed, it is highly uncommon for a corporation to make out checks payable to "CASH" for substantial amounts such as in
this case. If each irregular circumstance in this case were taken singly or isolated, the bank’s employees might have been
justified in ignoring them. However, the confluence of the irregularities on the face of the checks and circumstances that
depart from the usual banking practice of respondent should have put petitioner’s employees on guard that the checks
were possibly not issued by the respondent in due course of its business. Petitioner’s subtle sophistry cannot exculpate it
from behavior that fell extremely short of the highest degree of care and diligence required of it as a banking institution.

Indeed, taking this with the testimony of petitioner’s operations manager that in case of an irregularity on the face of the
check (such as when blanks were not properly filled out) the bank may or may not call the client depending on how busy
15
the bank is on a particular day, we are even more convinced that petitioner’s safeguards to protect clients from check
fraud are arbitrary and subjective. Every client should be treated equally by a banking institution regardless of the amount
of his deposits and each client has the right to expect that every centavo he entrusts to a bank would be handled with the
same degree of care as the accounts of other clients. Perforce, we find that petitioner plainly failed to adhere to the high
standard of diligence expected of it as a banking institution.

16 17
In defense of its cashier/teller’s questionable action, petitioner insists that pursuant to Sections 14 and 16 of the NIL, it
could validly presume, upon presentation of the checks, that the party who filled up the blanks had authority and that a
valid and intentional delivery to the party presenting the checks had taken place. Thus, in petitioner’s view, the sole blame
for this debacle should be shifted to respondent for having its signatories pre-sign and deliver the subject
18
checks. Petitioner argues that there was indeed delivery in this case because, following American jurisprudence, the
gross negligence of respondent’s accountant in safekeeping the subject checks which resulted in their theft should be
19
treated as a voluntary delivery by the maker who is estopped from claiming non-delivery of the instrument.

Petitioner’s contention would have been correct if the subject checks were correctly and properly filled out by the thief and
presented to the bank in good order. In that instance, there would be nothing to give notice to the bank of any infirmity in
the title of the holder of the checks and it could validly presume that there was proper delivery to the holder. The bank
could not be faulted if it encashed the checks under those circumstances. However, the undisputed facts plainly show that
there were circumstances that should have alerted the bank to the likelihood that the checks were not properly delivered
to the person who encashed the same. In all, we see no reason to depart from the finding in the assailed CA Decision that
20
the subject checks are properly characterized as incomplete and undelivered instruments thus making Section 15 of the
NIL applicable in this case.

However, we do agree with petitioner that respondent’s officers’ practice of pre-signing of blank checks should be deemed
seriously negligent behavior and a highly risky means of purportedly ensuring the efficient operation of businesses. It
should have occurred to respondent’s officers and managers that the pre-signed blank checks could fall into the wrong
hands as they did in this case where the said checks were stolen from the company accountant to whom the checks were
entrusted.

Nevertheless, even if we assume that both parties were guilty of negligent acts that led to the loss, petitioner will still
emerge as the party foremost liable in this case. In instances where both parties are at fault, this Court has consistently
applied the doctrine of last clear chance in order to assign liability.

21
In Westmont Bank v. Ong, we ruled:

…[I]t is petitioner [bank] which had the last clear chance to stop the fraudulent encashment of the subject checks had it
exercised due diligence and followed the proper and regular banking procedures in clearing checks. As we had earlier
ruled, the one who had a last clear opportunity to avoid the impending harm but failed to do so is chargeable with the
22
consequences thereof. (emphasis ours)
In the case at bar, petitioner cannot evade responsibility for the loss by attributing negligence on the part of respondent
because, even if we concur that the latter was indeed negligent in pre-signing blank checks, the former had the last clear
chance to avoid the loss. To reiterate, petitioner’s own operations manager admitted that they could have called up the
client for verification or confirmation before honoring the dubious checks. Verily, petitioner had the final opportunity to
avert the injury that befell the respondent. Failing to make the necessary verification due to the volume of banking
transactions on that particular day is a flimsy and unacceptable excuse, considering that the "banking business is so
impressed with public interest where the trust and confidence of the public in general is of paramount importance such
23
that the appropriate standard of diligence must be a high degree of diligence, if not the utmost diligence." Petitioner’s
24
negligence has been undoubtedly established and, thus, pursuant to Art. 1170 of the NCC, it must suffer the
consequence of said negligence.

In the interest of fairness, however, we believe it is proper to consider respondent’s own negligence to mitigate petitioner’s
liability. Article 2179 of the Civil Code provides:

Art. 2179. When the plaintiff’s own negligence was the immediate and proximate cause of his injury, he cannot recover
damages. But if his negligence was only contributory, the immediate and proximate cause of the injury being the
defendant’s lack of due care, the plaintiff may recover damages, but the courts shall mitigate the damages to be
awarded.1avvph!1

25
Explaining this provision in Lambert v. Heirs of Ray Castillon, the Court held:

The underlying precept on contributory negligence is that a plaintiff who is partly responsible for his own injury should not
be entitled to recover damages in full but must bear the consequences of his own negligence. The defendant must thus
be held liable only for the damages actually caused by his negligence. xxx xxx xxx

As we previously stated, respondent’s practice of signing checks in blank whenever its authorized bank signatories would
travel abroad was a dangerous policy, especially considering the lack of evidence on record that respondent had
appropriate safeguards or internal controls to prevent the pre-signed blank checks from falling into the hands of
unscrupulous individuals and being used to commit a fraud against the company. We cannot believe that there was no
other secure and reasonable way to guarantee the non-disruption of respondent’s business. As testified to by petitioner’s
expert witness, other corporations would ordinarily have another set of authorized bank signatories who would be able to
26
sign checks in the absence of the preferred signatories. Indeed, if not for the fortunate happenstance that the thief failed
to properly fill up the subject checks, respondent would expectedly take the blame for the entire loss since the defense of
forgery of a drawer’s signature(s) would be unavailable to it. Considering that respondent knowingly took the risk that the
pre-signed blank checks might fall into the hands of wrongdoers, it is but just that respondent shares in the responsibility
for the loss.

We also cannot ignore the fact that the person who stole the pre-signed checks subject of this case from respondent’s
accountant turned out to be another employee, purportedly a clerk in respondent’s accounting department. As the
employer of the "thief," respondent supposedly had control and supervision over its own employee. This gives the Court
more reason to allocate part of the loss to respondent.

27
Following established jurisprudential precedents, we believe the allocation of sixty percent (60%) of the actual damages
involved in this case (represented by the amount of the checks with legal interest) to petitioner is proper under the
premises. Respondent should, in light of its contributory negligence, bear forty percent (40%) of its own loss.

Finally, we find that the awards of attorney’s fees and litigation expenses in favor of respondent are not justified under the
circumstances and, thus, must be deleted. The power of the court to award attorney’s fees and litigation expenses under
28
Article 2208 of the NCC demands factual, legal, and equitable justification.

29
An adverse decision does not ipso facto justify an award of attorney’s fees to the winning party. Even when a claimant is
compelled to litigate with third persons or to incur expenses to protect his rights, still attorney’s fees may not be awarded
where no sufficient showing of bad faith could be reflected in a party’s persistence in a case other than an erroneous
30
conviction of the righteousness of his cause.

WHEREFORE, the Decision of the Court of Appeals dated July 16, 2001 and its Resolution dated September 28, 2001
are AFFIRMED with the following MODIFICATIONS: (a) petitioner Bank of America NT & SA shall pay to respondent
Philippine Racing Club sixty percent (60%) of the sum of Two Hundred Twenty Thousand Pesos (₱220,000.00) with legal
interest as awarded by the trial court and (b) the awards of attorney’s fees and litigation expenses in favor of respondent
are deleted.

Proportionate costs.

SO ORDERED.

G.R. No. 156448 February 23, 2011

SPS. MOISES and CLEMENCIA ANDRADA, Petitioners,

vs.
PILHINO SALES CORPORATION, represented by its Branch Manager, JOJO S. SAET, Respondent.
 DECISION

BERSAMIN, J.:

An appeal by petition for review on certiorari under Rule 45 shall raise only questions of law. Thus, the herein petition for
review must fail for raising a question essentially of fact.

Antecedents

On December 28, 1990, respondent Pilhino Sales Corporation (Pilhino) sued Jose Andrada, Jr. and his wife, Maxima, in
the Regional Trial Court in Davao City (RTC) to recover the principal sum of ₱240,863.00, plus interest and incidental
charges (Civil Case No. 20,489-90). Upon Pilhino’s application, the RTC issued a writ of preliminary attachment, which
came to be implemented against a Hino truck and a Fuso truck both owned by Jose Andrada, Jr. However, the levies on
attachment were lifted after Jose filed a counter-attachment bond.

In due course, the RTC rendered a decision against Jose Andrada, Jr. and his wife. Pilhino opted to enforce the writ of
execution against the properties of the Andradas instead of claiming against the counter-attachment bond considering that
the premium on the bond had not been paid. As a result, the sheriff seized the Hino truck and sold it at the ensuing public
auction, with Pilhino as the highest bidder. However, the Hino truck could not be transferred to Pilhino’s name due to its
having been already registered in the name of petitioner Moises Andrada. It appears that the Hino truck had been
meanwhile sold by Jose Andrada, Jr. to Moises Andrada, which sale was unknown to Pilhino, and that Moises had
mortgaged the truck to BA Finance Corporation (BA Finance) to secure his own obligation.

BA Finance sued Moises Andrada for his failure to pay the loan (Civil Case No. 5117). After a decision was rendered in
the action in favor of BA Finance, a writ of execution issued, by which the sheriff levied upon and seized the Hino truck
while it was in the possession of Pilhino and sold it at public auction, with BA Finance as the highest bidder.

Consequently, Pilhino instituted this action in the RTC in Davao City against Spouses Jose Andrada, Jr. and Maxima
Andrada, Spouses Moises Andrada and Clemencia Andrada, Jose Andrada, Sr., BA Finance, Land Transportation Office
(in Surallah, South Cotabato), and the Registrar of Deeds of General Santos City to annul the following: (a) the deed of
sale between Jose Andrada, Jr. and Moises Andrada; (b) the chattel mortgage involving the Hino truck between Moises
Andrada and BA Finance; (c) the deed of conveyance executed by Jose Andrada, Jr. in favor of his father, Jose Andrada,
Sr., involving a hard-top jeep; and (d) the certificate of registration of the Hino truck in the name of Moises Andrada as
well as the registration of the chattel mortgage with the Registry of Deeds of General Santos City. The action was
docketed as Civil Case No. 21,898-93.

Of the Andradas who were defendants in Civil Case No. 21,898-93, only Moises Andrada and his wife filed their
responsive pleading. Later on, Jose Andrada, Jr. and his wife and Pilhino submitted a compromise agreement dated
August 20, 1993. They submitted a second compromise agreement dated March 4, 1994 because the first was found to
be defective and incomplete. The RTC thereafter rendered a partial judgment on March 21, 1994 based on the second
compromise agreement. After that, further proceedings were taken in Civil Case No. 21,898-93 only with respect to
Moises Andrada and his wife, and BA Finance.

Moises Andrada and his wife averred as defenses that they had already acquired the Hino truck from Jose Andrada, Jr.
free from any lien or encumbrance prior to its seizure by the sheriff pursuant to the writ of execution issued in Civil Case
No. 20,489-90; that their acquisition had been made in good faith, considering that at the time of the sale the preliminary
attachment had already been lifted; and that Pilhino’s recourse was to proceed against the counter-attachment bond.

For its part, BA Finance claimed lack of knowledge of the truth of the material allegations of the complaint of Pilhino; and
insisted that the Hino truck had been validly mortgaged to it by Moises Andrada, the lawful owner, to secure his own valid
obligation.

On March 25, 1998, the RTC, citing the compromise agreement between Pilhino and Jose Andrada, Jr. that had settled all
the claims of Pilhino against Jose Andrada, Jr., and the good faith of Pilhino and BA Finance in filing their respective
1
actions, rendered its decision in Civil Case No. 21,898-93, disposing:

WHEREFORE, judgment is rendered dismissing this case insofar as the spouses Moises Andrada and Clemencia
Andrada, Jose Andrada, Sr. and BA Finance Corporation, now accordingly BA Savings Bank, including the counterclaims.

SO ORDERED.

Spouses Moises and Clemencia Andrada appealed the decision rendered on March 25, 1998 to the extent that the RTC
thereby: (a) dismissed their counterclaim; (b) declared that the deed of sale of the Hino truck between Jose Andrada, Jr.
and Moises Andrada had been simulated; and (c) approved the compromise agreement between Pilhino and Spouses
Jose Andrada, Jr. and Maxima Andrada.

2
On December 13, 2001, the Court of Appeals (CA) promulgated its decision, as follows:

WHEREFORE, the judgment appealed from is AFFIRMED with the modification that the sale of the Hino truck by
defendant Jose Andrada, Jr. in favor of defendant-appellant Moises Andrada is declared valid, subject to the rights of BA
Finance as mortgagee and highest bidder.
SO ORDERED.

Spouses Moises and Clemencia Andrada are now before the Court via petition for review on certiorari to pose the
3
following issues:

1. Whether or not Pilhino should be held liable for the damages the petitioners sustained from Pilhino’s levy on
execution upon the Hino truck under Civil Case No. 20,489-90; and

2. Whether or not Pilhino was guilty of bad faith when it proceeded with the levy on execution upon the Hino truck
owned by Moises Andrada.

Ruling

We find no merit in the petition for review.

The petitioners assail the decision promulgated by the CA to the extent that it denied their claim for the damages they had
sought by way of counterclaim. They anchored their claim on Article 21 of the Civil Code, which provides that "any person
who willfully causes loss or injury to another in a manner that is contrary to morals, good customs or public policy shall
compensate the latter for damage."

Article 21 of the Civil Code, in conjunction with Article 19 of the Civil Code, is part of the cause of action known in this
jurisdiction as "abuse of rights." The elements of abuse of rights are: (a) there is a legal right or duty; (b) exercised in bad
4
faith; and (c) for the sole intent of prejudicing or injuring another.

In its assailed decision, the CA found that Pilhino had acted in good faith in bringing Civil Case No. 21,898-93 to annul the
deed of sale involving the Hino truck executed by Jose Andrada, Jr. in favor of Moises Andrada, considering that Pilhino
had "believed that the sale in favor of defendants-appellants [had been] resorted to so that Jose Andrada [might] evade
5
his obligations." The CA concluded that no remedy was available for any damages that the petitioners sustained from the
filing of Civil Case No. 21,898-93 against them because "the law affords no remedy for such damages resulting from an
6
act which does not amount to a legal injury or wrong."

Worthy to note is that the CA’s finding and conclusion rested on the RTC’s own persuasion that the sale of the Hino truck
7
to Moises Andrada had been simulated.

Yet, the petitioners still insist in this appeal that both lower courts erred in their conclusion on the absence of bad faith on
the part of Pilhino.

We cannot side with the petitioners. Their insistence, which represents their disagreement with the CA’s declaration that
the second and third elements of abuse of rights, supra, were not established, requires the consideration and review of
factual issues. Hence, this appeal cannot succeed, for an appeal by petition for review on certiorari cannot determine
factual issues. In the exercise of its power of review, the Court is not a trier of facts and does not normally undertake the
re-examination of the evidence presented by the contending parties during the trial. Perforce, the findings of fact by the
CA are conclusive and binding on the Court. This restriction of the review to questions of law has been institutionalized in
Section 1, Rule 45 of the Rules of Court, viz:

Section 1. Filing of petition with Supreme Court. — A party desiring to appeal by certiorari from a judgment or final order
or resolution of the Court of Appeals, the Sandiganbayan, the Regional Trial Court or other courts whenever authorized by
law, may file with the Supreme Court a verified petition for review on certiorari. The petition shall raise only questions of
8
law which must be distinctly set forth. (1a, 2a)

It is true that the Court has, at times, allowed exceptions from the restriction. Among the recognized exceptions are the
9
following, to wit:

(a) When the findings are grounded entirely on speculation, surmises, or conjectures;

(b) When the inference made is manifestly mistaken, absurd, or impossible;

(c) When there is grave abuse of discretion;

(d) When the judgment is based on a misapprehension of facts;

(e) When the findings of facts are conflicting;

(f) When in making its findings the CA went beyond the issues of the case, or its findings are contrary to the
admissions of both the appellant and the appellee;

(g) When the CA’s findings are contrary to those by the trial court;

(h) When the findings are conclusions without citation of specific evidence on which they are based;
 (i) When the facts set forth in the petition as well as in the petitioner’s main and reply briefs are not disputed by
the respondent;

(j) When the findings of fact are premised on the supposed absence of evidence and contradicted by the evidence
on record; or

(k) When the CA manifestly overlooked certain relevant facts not disputed by the parties, which, if properly
considered, would justify a different conclusion.

However, the circumstances of this case do not warrant reversing or modifying the findings of the CA, which are
consistent with the established facts. Verily, the petitioners did not prove the concurrence of the elements of abuse of
rights.

The petitioners further seek attorney’s fees based on Article 2208 (4) of the Civil Code, which provides that "in the
absence of stipulation, attorney’s fees and expenses of litigation, other than judicial costs, cannot be recovered, except
xxx (4) in cases of clearly unfounded civil action or proceeding against the plaintiff xxx."

The petitioners are not entitled to attorney’s fees.

It is well accepted in this jurisdiction that no premium should be placed on the right to litigate and that not every winning
10
party is entitled to an automatic grant of attorney’s fees. Indeed, before the effectivity of the new Civil Code, such fees
11
could not be recovered in the absence of a stipulation. It was only with the advent of the new Civil Code that the right to
12
collect attorney’s fees in the instances mentioned in Article 2208 was recognized, and such fees are now included in the
13
concept of actual damages. One such instance is where the defendant is guilty of gross and evident bad faith in refusing
14
to satisfy the plaintiff’s plainly valid, just and demandable claim. This is a corollary of the general principle expressed in
Article 19 of the Civil Code that everyone must, in the performance of his duties, observe honesty and good faith and the
rule embodied in Article 1170 that anyone guilty of fraud (bad faith) in the performance of his obligation shall be liable for
damages.

15
But, as noted by the Court in Morales v. Court of Appeals, the award of attorney’s fees is the exception rather than the
rule. The power of a court to award attorney’s fees under Article 2208 of the Civil Code demands factual, legal, and
16
equitable justification; its basis cannot be left to speculation and conjecture. The general rule is that attorney’s fees
cannot be recovered as part of damages because of the policy that no premium should be placed on the right to
17
litigate. 1avvphi1

Herein, the element of bad faith on the part of Pilhino in commencing and prosecuting Civil Case No. 21,898-93, which
was necessary to predicate the lawful grant of attorney’s fees based on Article 2208 (4) of the Civil Code, was not
established. Accordingly, the petitioners’ demand for attorney’s fees must fail.

WHEREFORE, we deny the petition for review on certiorari for its lack of merit, and affirm the decision of the Court of
Appeals.

SO ORDERED.

G.R. No. 183804 September 11, 2013

S.C. MEGAWORLD CONSTRUCTION and DEVELOPMENT CORPORATION, Petitioner,

vs.
ENGR. LUIS U. PARADA, represented by ENGR. LEONARDO A. PARADA of GENLITE INDUSTRIES,Respondent.

DECISION

REYES, J.:

1 2
Before us on appeal by certiorari is the Decision dated April 30, 2008 of the Court of Appeals (CA) in CA-G.R. CV No.
3
83811 which upheld the Decision dated May 8, 2004 of the Regional Trial Court (RTC) of Quezon City, Branch 100, in
Civil Case No. Q-01-45212.

Factual Antecedents

S.C. Megaworld Construction and Development Corporation (petitioner) bought electrical lighting materials from Gentile
Industries, a sole proprietorship owned by Engineer Luis U. Parada (respondent), for its Read-Rite project in Canlubang,
Laguna. The petitioner was unable to pay for the above purchase on due date, but blamed it on its failure to collect under
its sub-contract with the Enviro KleenTechnologies, Inc. (Enviro Kleen). It was however able to persuade Enviro Kleen to
4
agree to settle its above purchase, but after paying the respondent ₱250,000.00 on June 2, 1999, Enviro Kleen stopped
making further payments, leaving an outstanding balance of ₱816,627.00. It also ignored the various demands of the
respondent, who then filed a suit in the RTC, docketed as Civil Case No.Q-01-45212, to collect from the petitioner the said
balance, plus damages, costs and expenses, as summarized in the RTC’s decision, as follows:

The petitioner in its answer denied liability, claiming that it was released from its indebtedness to the respondent by
reason of the novation of their contract, which, it reasoned, took place when the latter accepted the partial payment of
Enviro Kleen in its behalf, and thereby acquiesced to the substitution of Enviro Kleen as the new debtor in the petitioner’s
6
place. After trial, the RTC rendered judgment on May 28, 2004 in favor of the respondent, the fallo of which reads, as
follows:

WHEREFORE, judgment is hereby rendered for the respondent. The petitioner is hereby ordered to pay the respondent
the following:

A. the sum of ₱816,627.00 representing the principal obligation due;

B. the sum equivalent to twenty percent (20%)per month of the principal obligation due from date of judicial
demand until fully paid as and for interest; and

C. the sum equivalent to twenty-five percent (25%) of the principal sum due as and for attorney’s fees and other
costs of suits. The compulsory counterclaim interposed by the petitioner is hereby ordered dismissed for lack of
merit.

7
SO ORDERED. (Emphasis supplied)

On appeal to the CA, the petitioner maintained that the trial court erred in ruling that no novation of the contract took place
through the substitution of Enviro Kleen as the new debtor. But for the first time, it further argued that the trial court should
have dismissed the complaint for failure of the respondent to implead Genlite Industries as "a proper party in interest", as
provided in Section 2 of Rule 3 of the 1997 Rules of Civil Procedure. The said section provides:

SEC. 2. Parties in interest. — A real party in interest is the party who stands to be benefited or injured by the judgment in
the suit, or the party entitled to the avails of the suit. Unless otherwise authorized by law or these Rules, every action must
be prosecuted or defended in the name of the real party in interest.

In Section 1(g) of Rule 16 of the Rules of Court, it is also provided that the defendant may move to dismiss the suit on the
ground that it was not brought in the name of or against the real party in interest, with the effect that the complaint is then
deemed to state no cause of action.

In dismissing the appeal, the CA noted that the petitioner in its answer below raised only the defense of novation, and that
at no stage in the proceedings did it raise the question of whether the suit was brought in the name of the real party in
interest. Moreover, the appellate court found from the sales invoices and receipts that the respondent is the sole
proprietor of Genlite Industries, and therefore the real party-plaintiff. Said the CA:

Settled is the rule that litigants cannot raise an issue for the first time on appeal as this would contravene the basic rules
of fair play and justice.

In any event, there is no question that respondent Engr.Luis U. Parada is the proprietor of Genlite Industries, as shown on
the sales invoice and delivery receipts. There is also no question that a special power of attorney was executed by
respondent Engr.Luis U. Parada in favor of Engr. Leonardo A. Parada authorizingthe latter to file a complaint against the
8
petitioner. (Citations omitted)

The petitioner also contended that a binding novation of the purchase contract between the parties took place when the
respondent accepted the partial payment of Enviro Kleen of ₱250,000.00 in its behalf, and thus acquiesced to the
substitution by Enviro Kleen of the petitioner as the new debtor. But the CA noted that there is nothing in the two (2)
letters of the respondent to Enviro Kleen, dated April 14, 1999 and June 16, 1999, which would imply that he consented to
the alleged novation, and, particularly, that he intended to release the petitioner from its primary obligation to pay him for
9
its purchase of lighting materials. The appellate court cited the RTC’s finding that the respondent informed Enviro Kleen
in his first letter that he had served notice to the petitioner that he would take legal action against it for its overdue
account, and that he retained his option to pull out the lighting materials and charge the petitioner for any damage they
might sustain during the pull-out:

Respondent x x x has served notice to the petitioner that unless the overdue account is paid, the matter will be referred to
its lawyers and there may be a pull-out of the delivered lighting fixtures. It was likewise stated therein that incidental
10
damages that may result to the structure in the course of the pull-out will be to the account of the petitioner.

The CA concurred with the RTC that by retaining his option to seek satisfaction from the petitioner, any acquiescence
which the respondent had made was limited to merely accepting Enviro Kleen as an additional debtor from whom he
could demand payment, but without releasing the petitioner as the principal debtor from its debt to him.

11
On motion for reconsideration, the petitioner raised for the first time the issue of the validity of the verification and
certification of non-forum shopping attached to the complaint. On July 18, 2008, the CA denied the said motion for lack of
12
merit.

Petition for Review in the Supreme Court

In this petition, the petitioner insists, firstly, that the complaint should have been dismissed outright by the trial court for an
invalid non-forum shopping certification; and, secondly, that the appellate court erred in not declaring that there was a
novation of the contract between the parties through substitution of the debtor, which resulted in the release of the
13
petitioner from its obligation to pay the respondent the amount of its purchase.

Our Ruling

The petition is devoid of merit.

The verification and certification of

non-forum shopping in the
complaint is not a jurisdictional but
a formal requirement, and any
objection as to non-compliance
therewith should be raised in the
proceedings below and not for the
first time on appeal.

"It is well-settled that no question will be entertained on appeal unless it has been raised in the proceedings below. Points
of law, theories, issues and arguments not brought to the attention of the lower court, administrative agency or quasi-
judicial body, need not be considered by are viewing court, as they cannot be raised for the first time at that late stage.
Basic considerations of fairness and due process impel this rule. Any issue raised for the first time on appeal is barred by
14
estoppel."

Through a Special Power of Attorney (SPA), the respondent authorized Engr. Leonardo A. Parada (Leonardo), the eldest
of his three children, to perform the following acts in his behalf: a) to file a complaint against the petitioner for sum of
money with damages; and b) to testify in the trial thereof and sign all papers and documents related thereto, with full
15
powers to enter into stipulation and compromise. Incidentally, the respondent, a widower, died of cardio-pulmonary
16
arrest on January 21,2009, survived by his legitimate children, namely, Leonardo, Luis, Jr., and Lalaine, all surnamed
Parada. They have since substituted him in this petition, per the Resolution of the Supreme Court dated September 2,
17
2009. Also, on July 23, 2009, Luis, Jr. and Lalaine Parada executed an SPA authorizing their brother Leonardo to
18
represent them in the instant petition.

In the verification and certification of non-forum shopping attached to the complaint in Civil Case No. Q01-45212,
Leonardo as attorney-in-fact of his father acknowledged as follows:

xxxx

That I/we am/are the Plaintiff in the above-captioned case;

That I/we have caused the preparation of this Complaint;

That I/we have read the same and that all the allegations therein are true and correct to the best of my/our knowledge;

19
x x x x.

In this petition, the petitioner reiterates its argument before the CA that the above verification is invalid, since the SPA
executed by the respondent did not specifically include an authority for Leonardo to sign the verification and certification of
non-forum shopping, thus rendering the complaint defective for violation of Sections 4 and 5 of Rule 7. The said sections
provide, as follows:

Sec. 4. Verification. — A pleading is verified by an affidavit that the affiant has read the pleading and that the allegations
therein are true and correct of his personal knowledge or based on authentic records.

Sec. 5. Certification against forum shopping. –– The plaintiff or principal party shall certify under oath in the complaint or
other initiatory pleading asserting a claim for relief, or in a sworn certification annexed thereto and simultaneously filed
therewith: (a) that he has not thereto fore commenced any action or filed any claim involving the same issues in any court,
or tribunal x x x and, to the best of his knowledge, no such other action or claim is pending therein; (b) if there is such
other pending action or claim, a complete statement of the present status thereof; and (c) if he should thereafter learn that
the same or similar action or claim has been filed or is pending, he shall report that fact x x x to the court wherein his
aforesaid complaint or initiatory pleading has been filed.

Failure to comply with the foregoing requirements shall not be curable by mere amendment of the complaint or other
initiatory pleading but shall be cause for the dismissal of the case without prejudice, unless otherwise provided, upon
motion and after hearing.

The petitioner’s argument is untenable. The petitioner failed to reckon that any objection as to compliance with the
requirement of verification in the complaint should have been raised in the proceedings below, and not in the appellate
20 21
court for the first time. In KILUSAN-OLALIA v. CA, it was held that verification is a formal, not a jurisdictional requisite:

We have emphasized, time and again, that verification is a formal, not a jurisdictional requisite, as it is mainly intended to
secure an assurance that the allegations therein made are done in good faith or are true and correct and not mere
speculation. The Court may order the correction of the pleading, if not verified, or act on the unverified pleading if the
attending circumstances are such that a strict compliance with the rule may be dispensed with in order that the ends of
justice may be served.

Further, in rendering justice, courts have always been, as they ought to be, conscientiously guided by the norm that on the
22
balance, technicalities take a backseat vis-à-vis substantive rights, and not the other way around. x x x. (Citations
omitted)

23
In Young v. John Keng Seng, it was also held that the question of forum shopping cannot be raised in the CA and in the
Supreme Court, since such an issue must be raised at the earliest opportunity in a motion to dismiss or a similar pleading.
The high court even warned that "invoking it in the later stages of the proceedings or on appeal may result in the dismissal
24
of the action x x x."

Moreover, granting that Leonardo has no personal knowledge of the transaction subject of the complaint below, Section 4
of Rule 7 provides that the verification need not be based on the verifier’s personal knowledge but even only on authentic
records. Sales invoices, statements of accounts, receipts and collection letters for the balance of the amount still due to
the respondent from the petitioner are such records. There is clearly substantial compliance by the respondent’s attorney-
in-fact with the requirement of verification.

Lastly, it is well-settled that a strict compliance with the rules may be dispensed with in order that the ends of substantial
25
justice may be served. It is clear that the present controversy must be resolved on its merits, lest for a technical
oversight the respondent should be deprived of what is justly due him.

A sole proprietorship has no

juridical personality separate and
distinct from that of its owner, and
need not be impleaded as a party-
plaintiff in a civil case.

On the question of whether Genlite Industries should have been impleaded as a party-plaintiff, Section 1 of Rule 3 of the
Rules of Court provides that only natural or juridical persons or entities authorized by law may be parties in a civil case.
Article 44 of the New Civil Code enumerates who are juridical persons:

Art. 44. The following are juridical persons:

(1) The State and its political subdivisions;

(2) Other corporations, institutions and entities for public interest or purpose, created by law; their personality
begins as soon as they have been constituted according to law;

(3) Corporations, partnerships and associations for private interest or purpose to which the law grants a juridical
personality, separate and distinct from that of each shareholder, partner or member.

Genlite Industries is merely the DTI-registered trade name or style of the respondent by which he conducted his business.
As such, it does not exist as a separate entity apart from its owner, and therefore it has no separate juridical personality to
26
sue or be sued. As the sole proprietor of Genlite Industries, there is no question that the respondent is the real party in
interest who stood to be directly benefited or injured by the judgment in the complaint below. There is then no necessity
for Genlite Industries to be impleaded as a party-plaintiff, since the complaint was already filed in the name of its
proprietor, Engr. Luis U. Parada. To heed the petitioner’s sophistic reasoning is to permit a dubious technicality to
frustrate the ends of substantial justice.

Novation is never presumed but

must be clearly and unequivocally
shown.

Novation is a mode of extinguishing an obligation by changing its objects or principal obligations, by substituting a new
27
debtor in place of the old one, or by subrogating a third person to the rights of the creditor. It is "the substitution of a new
28
contract, debt, or obligation for an existing one between the same or different parties." Article 1293 of the Civil Code
defines novation as follows:

Art. 1293. Novation which consists in substituting a new debtor in the place of the original one, may be made even without
the knowledge or against the will of the latter, but not without the consent of the creditor. Payment by the new debtor gives
him rights mentioned in Articles 1236and 1237.

Thus, in order to change the person of the debtor, the former debtor must be expressly released from the obligation, and
29
the third person or new debtor must assume the former’s place in the contractual relation. Article 1293 speaks of
substitution of the debtor, which may either be in the form of expromision or delegacion, as seems to be the case here. In
both cases, the old debtor must be released from the obligation, otherwise, there is no valid novation. As explained in
30
Garcia :

In general, there are two modes of substituting the person of the debtor: (1) expromision and (2) delegacion. In
expromision, the initiative for the change does not come from—and may even be made without the knowledge of—the
debtor, since it consists of a third person’s assumption of the obligation. As such, it logically requires the consent of the
third person and the creditor. In delegacion, the debtor offers, and the creditor accepts, a third person who consents to the
substitution and assumes the obligation; thus, the consent of these three persons are necessary. Both modes of
31
substitution by the debtor require the consent of the creditor. (Citations omitted)

From the circumstances obtaining below, we can infer no clear and unequivocal consent by the respondent to the release
of the petitioner from the obligation to pay the cost of the lighting materials. In fact, from the letters of the respondent to
Enviro Kleen, it can be said that he retained his option to go after the petitioner if Enviro Kleen failed to settle the
petitioner’s debt. As the trial court held:

The fact that Enviro Kleen Technologies, Inc. made payments to the respondent and the latter accepted it does not ipso
facto result innovation. Novation to be given its legal effect requires that the creditor should consent to the substitution of a
new debtor and the old debtor be released from its obligation (Art. 1293, New Civil Code). A reading of the letters dated
14 April 1999 (Exh. 1) and dated 16 June 1999 (Exhs. 4 &4-a) sent by the respondent to Enviro Kleen Technologies, Inc.
clearly shows that there was nothing therein that would evince that the[respondent] has consented to the exchange of the
person of the debtor from the petitioner to Enviro Kleen Technologies, Inc.

xxxx

Notably in Exh. 1, albeit addressed to Enviro Kleen Technologies, Inc., the respondent expressly stated that it has served
notice to the petitioner that unless the overdue account is paid, the matter will be referred to its lawyers and there may be
a pull-out of the delivered lighting fixtures. It was likewise stated therein that incident damages that may result to the
structure in the course of the pull-out will be to the account of the petitioner.

It is evident from the two (2) aforesaid letters that there is no indication of the respondent’s intention to release the
petitioner from its obligation to pay and to transfer it to Enviro Kleen Technologies, Inc. The acquiescence of Enviro Kleen
Technologies, Inc. to assume the obligation of the petitioner to pay the unpaid balance of [P]816,627.00 to the respondent
when there is clearly no agreement to release the petitioner will result merely to the addition of debtors and not novation.
Hence, the creditor can still enforce the obligation against the original debtor x x x. A fact which points strongly to the
conclusion that the respondent did not assent to the substitution of Enviro Kleen Technologies, Inc. as the new debtor is
the present action instituted by the respondent against the petitioner for the fulfillment of its obligation. A mere recital that
the respondent has agreed or consented to the substitution of the debtor is not sufficient to establish the fact that there
32
was a novation. x x x.

33 34
The settled rule is that novation is never presumed, but must be clearly and unequivocally shown. In order for a new
agreement to supersede the old one, the parties to a contract must expressly agree that they are abrogating their old
35 36
contract in favor of a new one. Thus, the mere substitution of debtors will not result innovation, and the fact that the
creditor accepts payments from a third person, who has assumed the obligation, will result merely in the addition of
37
debtors and not novation, and the creditor may enforce the obligation against both debtors. If there is no agreement as
38 39
to solidarity, the first and new debtors are considered obligated jointly. As explained in Reyes v. CA :

The consent of the creditor to a novation by change of debtor is as indispensable as the creditor’s consent in conventional
subrogation in order that a novation shall legally take place. The mere circumstance of AFP-MBAI receiving payments
from respondent Eleazar who acquiesced to assume the obligation of petitioner under the contract of sale of securities,
when there is clearly no agreement to release petitioner from her responsibility, does not constitute novation. At most, it
only creates a juridical relation of co-debtorship or surety ship on the part of respondent Eleazar to the contractual
obligation of petitioner to AFP-MBAI and the latter can still enforce the obligation against the petitioner. In Ajax Marketing
and Development Corporation vs. Court of Appeals which is relevant in the instant case, we stated that —

"In the same vein, to effect a subjective novation by a change in the person of the debtor, it is necessary that the old
debtor be released expressly from the obligation, and the third person or new debtor assumes his place in the relation.
There is no novation without such release as the third person who has assumed the debtor’s obligation becomes merely a
co-debtor or surety. xxx. Novation arising from a purported change in the person of the debtor must be clear and express
xxx."

In the civil law setting, novatio is literally construed as to make new. So it is deeply rooted in the Roman Law
jurisprudence, the principle – novatio non praesumitur — that novation is never presumed. At bottom, for novation to be a
jural reality, its animus must be ever present, debitum pro debito — basically extinguishing the old obligation for the new
40
one. (Citation omitted)

The trial court found that the respondent never agreed to release the petitioner from its obligation, and this conclusion was
upheld by the CA. We generally accord utmost respect and great weight to factual findings of the trial court and the CA,
unless there appears in the record some fact or circumstance of weight and influence which has been overlooked, or the
41
significance of which has been misinterpreted, that if considered would have affected the result of the case. We find no
such oversight in the appreciation of the facts below, nor such a misinterpretation thereof, as would otherwise provide a
clear and unequivocal showing that a novation has occurred in the contract between the parties resulting in the release of
the petitioner.

Pursuant to Article 2209 of the

Civil Code, except as provided
under Central Bank Circular
No. 905, and now under Bangko
Sentral ng Pilipinas Circular
No. 799, which took effect on
July 1, 2013, the respondent may
be awarded interest of six percent
(6%) of the judgment amount by
way of actual and compensatory
damages.

It appears from the recital of facts in the trial court’s decision that the respondent demanded interest of two percent (2%)
per month upon the balance of the purchase price of ₱816,627.00, from judicial demand until full payment. There is then
an obvious clerical error committed in the fallo of the trial court’s decision, for it incorrectly ordered the defendant there
into pay "the sum equivalent to twenty percent (20%) per month of the principal obligation due from date of judicial
42
demand until fully paid as and for interest."

A clerical mistake is one which is visible to the eyes or obvious to the understanding; an error made by a clerk or a
43
transcriber; a mistake in copying or writing. The Latin maxims Error placitandi aequitatem non tollit ("A clerical error does
not take away equity"), and Error scribentis nocere non debit ("An error made by a clerk ought not to injure; a clerical error
44 45
may be corrected") are apt in this case. Viewed against the landmark case of Medel v. CA , an award of interest of 20%
per month on the amount due is clearly excessive and iniquitous. It could not have been the intention of the trial court, not
to mention that it is way beyond what the plaintiff had prayed for below.

It is settled that other than in the case of judgments which are void ab initio for lack of jurisdiction, or which are null and
void per se, and thus may be questioned at any time, when a decision is final, even the court which issued it can no
46
longer alter or modify it, except to correct clerical errors or mistakes.

The foregoing notwithstanding, of more important consideration in the case before us is the fact that it is nowhere stated
in the trial court’s decision that the parties had in fact stipulated an interest on the amount due to the respondent. Even
granting that there was such an agreement, there is no finding by the trial court that the parties stipulated that the
outstanding debt of the petitioner would be subject to two percent (2%) monthly interest. The most that the decision
discloses is that the respondent demanded a monthly interest of 2% on the amount outstanding.

Article 2209 of the Civil Code provides that "if the obligation consists in the payment of a sum of money, and the debtor
incurs in delay, the indemnity for damages, there being no stipulation to the contrary, shall be the payment of the interest
agreed upon, and in the absence of stipulation, the legal interest, which is six percent per annum." Pursuant to the said
provision, then, since there is no finding of a stipulation by the parties as to the imposition of interest, only the amount of
47
12% per annum may be awarded by the court by way of damages in its discretion, not two percent(2%) per month,
48
following the guidelines laid down in the landmark case of Eastern Shipping Lines v. Court of Appeals, to wit:

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

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

2. When an obligation, not constituting a loan or forbearance of money, is breached, an interest on the amount of
damages awarded may be imposed at the discretion of the court at the rate of 6% per annum. No interest,
however, shall be adjudged on unliquidated claims or damages except when or until the demand can be
established with reasonable certainty. Accordingly, where the demand is established with reasonable certainty,
the interest shall begin to run from the time the claim is made judicially or extrajudicially (Art. 1169, Civil Code) but
when such certainty cannot be so reasonably established at the time the demand is made, the interest shall begin
to run only from the date the judgment of the court is made (at which time the quantification of damages may be
deemed to have been reasonably ascertained).The actual base for the computation of legal interest shall, in any
case, be on the amount finally adjudged.

3. When the judgment of the court awarding a sum of money becomes final and executory, the rate of legal
interest, whether the case falls under paragraph 1 or paragraph 2, above, shall be 12% per annum from such
finality until its satisfaction, this interim period being deemed to be by then an equivalent to a forbearance of
49
credit. (Citations omitted)

50
As further clarified in the case of Sunga-Chan v. CA, a loan or forbearance of money, goods or credit describes a
contractual obligation whereby a lender or creditor has refrained during a given period from requiring the borrower or
51
debtor to repay the loan or debt then due and payable. Thus:

In Reformina v. Tomol, Jr., the Court held that the legal interest at 12% per annum under Central Bank (CB) Circular No.
416 shall be adjudged only in cases involving the loan or forbearance of money. And for transactions involving payment of
indemnities in the concept of damages arising from default in the performance of obligations in general and/or for money
judgment not involving a loan or forbearance of money, goods, or credit, the governing provision is Art. 2209 of the Civil
Code prescribing a yearly 6% interest. Art. 2209 pertinently provides:
"Art. 2209. If the obligation consists in the payment of a sum of money, and the debtor incurs in delay, the indemnity for
damages, there being no stipulation to the contrary, shall be the payment of the interest agreed upon, and in the absence
of stipulation, the legal interest, which is six per cent per annum."

The term "forbearance," within the context of usury law, has been described as a contractual obligation of a lender or
creditor to refrain, during a given period of time, from requiring the borrower or debtor to repay the loan or debt then due
and payable.

Eastern Shipping Lines, Inc. synthesized the rules on the imposition of interest, if proper, and the applicable rate, as
follows: The12% per annum rate under CB Circular No. 416 shall apply only to loans or forbearance of money, goods, or
credits, as well as to judgments involving such loan or forbearance of money, goods, or credit, while the 6% per annum
under Art. 2209 of the Civil Code applies "when the transaction involves the payment of indemnities in the concept of
damage arising from the breach or a delay in the performance of obligations in general," with the application of both rates
reckoned "from the time the complaint was filed until the adjudged amount is fully paid." In either instance, the reckoning
period for the commencement of the running of the legal interest shall be subject to the condition "that the courts are
52
vested with discretion, depending on the equities of each case, on the award of interest." (Citations omitted and
emphasis ours)

53
Pursuant, then, to Central Bank Circular No. 416, issued on July 29,1974, in the absence of a written stipulation, the
interest rate to be imposed in judgments involving a forbearance of credit shall be 12% per annum, up from 6% under
Article 2209 of the Civil Code. This was reiterated in Central Bank Circular No. 905, which suspended the effectivity of the
54
Usury Law from January 1, 1983. But if the judgment refers to payment of interest as damages arising from a breach or
55
delay in general, the applicable interest rate is 6% per annum, following Article 2209 of the Civil Code. Both interest
rates apply from judicial or extrajudicial demand until finality of the judgment. But from the finality of the judgment
awarding a sum of money until it is satisfied, the award shall be considered a forbearance of credit, regardless of whether
the award in fact pertained to one, and therefore during this period, the interest rate of 12% per annum for forbearance of
56
money shall apply.

But notice must be taken that in Resolution No. 796 dated May 16,2013, the Monetary Board of the Bangko Sentral ng
Pilipinas approved the revision of the interest rate to be imposed for the loan or forbearance of any money, goods or
credits and the rate allowed in judgments, in the absence of an express contract as to such rate of interest. Thus, under
BSP Circular No.799, issued on June 21, 2013 and effective on July 1, 2013, the said rate of interest is now back at six
percent (6%), viz:

BANGKO SENTRAL NG PILIPINAS

OFFICE OF THE GOVERNOR

CIRCULAR NO. 799

Series of 2013

Subject: Rate of interest in the absence of stipulation

The monetary Board, in its Resolution No. 796 dated 16 May 2013,approved the following revisions governing the rate of
interest in the absence of stipulation in loan contracts, thereby amending Section 2 of Circular No. 905, Series of 1982:

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

Section 2. In view of the above, Subsection X305.1 of the Manual of Regulations for Banks and Sections
4305Q.1, 4305S.3 and 4303P.1 of the Manual of Regulations for Non-Bank Financial Institutions are
hereby amended accordingly.

This Circular shall take effect on 1 July 2013.

FOR THE MONETARY BOARD:

DIWA C. GUINIGUNDO
Officer-In-Charge

The award of attorney’s fees is not proper.

Other than to say that the petitioner "unjustifiably failed and refused to pay the respondent," the trial court did not state in
the body of its decision the factual or legal basis for its award of attorney’s fees to the respondent, as required under
Article 2208 of the New Civil Code, for which reason we have resolved to delete the same. The rule is settled that the trial
57
court must state the factual, legal or equitable justification for its award of attorney’s fees. Indeed, the matter of attorney’s
fees cannot be stated only in the dispositive portion, but the reasons must be stated in the body of the court’s
58
decision. This failure or oversight of the trial court cannot even be supplied by the CA. As concisely explained in Frias v.
59
San Diego-Sison :
Article 2208 of the New Civil Code enumerates the instances where such may be awarded and, in all cases, it must be
reasonable, just and equitable if the same were to be granted. Attorney’s fees as part of damages are not meant to enrich
the winning party at the expense of the losing litigant. They are not awarded every time a party prevails in a suit because
of the policy that no premium should be placed on the right to litigate. The award of attorney’s fees is the exception rather
than the general rule. As such, it is necessary for the trial court to make findings of facts and law that would bring the case
within the exception and justify the grant of such award. The matter of attorney’s fees cannot be mentioned only in the
dispositive portion of the decision. They must be clearly explained and justified by the trial court in the body of its decision.
On appeal, the CA is precluded from supplementing the bases for awarding attorney’s fees when the trial court failed to
discuss in its Decision the reasons for awarding the same.1âwphi1Consequently, the award of attorney’s fees should be
60
deleted. (Citations omitted)

WHEREFORE, premises considered, the Decision dated April 30, 2008 of the Court of Appeals in CA-G.R. CV No. 83811
is AFFIRMED with MODIFICATION. Petitioner S.C. Megaworld Construction and Development Corporation is ordered to
pay respondent Engr. Luis A. Parada, represented by Engr. Leonardo A. Parada, the principal amount due of
₱816,627.00, plus interest at twelve percent (12%) per annum, reckoned from judicial demand until June 30, 2013, and
six percent (6%) per an own from July 1, 2013 until finality hereof, by way of actual and compensatory damages.
Thereafter, the principal amount due as adjusted by interest shall likewise earn interest at six percent (6%) per annum
until fully paid. The award of attorney's fees is DELETED.

SO ORDERED.

G.R. No. 191470 January 26, 2015

AUGUSTO M. AQUINO, Petitioner,

vs.
HON. ISMAEL P. CASABAR, as Presiding Judge Regional Trial Court-Guimba, Nueva Ecija, Branch 33 and MA.
ALA F. DOMINGO and MARGARITA IRENE F. DOMINGO, substituting Heirs of the deceased ANGEL T.
DOMINGO, Respondents.

DECISION

PERALTA, J.:

1
Before us is a special civil action for certiorari under Rule 65 of the Rules of Court, dated March 17, 2010, filed by Atty.
Augusto M. Aquino (petitioner) assailing the Order dated January 11, 2010 issued by respondent Presiding Judge Ismael
2
P. Casabar (public respondent), in relation to Agrarian Case No. 1217-G, for allegedly having been issued with grave
abuse of discretion amounting to lack or excess of jurisdiction.

The facts of the case, as culled from the records, are as follows:

On June 27, 2002, Atty. Angel T. Domingo (now deceased) verbally contracted petitioner to represent him in Agrarian
Case No. 1217-G on a contingency fee basis. The case was for the determination of the just compensation for the
expropriation and taking of Atty. Domingo's ricelands consisting of 60.5348 hectares, situated in Guimba, Nueva Ecija, by
the Department of Agrarian Reform (DAR), pursuant to Presidential Decree (P.D.)27. The DAR and the Land Bank of the
Philippines (Land Bank) initially valued Atty. Domingo's property at ₱484,236.27 or ₱7,999.30 per hectare, which the
latter, through petitioner-counsel, opposed in courts. Eventually, the RTC, acting as Special Agrarian Court (RTC/SAC)
issued a Decision dated April 12, 2004 fixing the just compensation for Atty. Domingo's property at ₱2,459,319.70 or
₱40,626.54 per hectare, or an increase of ₱1,975,083.43 over the initial DAR and the Land Bank valuation. Land Bank
moved for reconsideration, but was denied, thus, it filed a petition for review docketed as CA-G.R. SPNo. 85394.
However, in a Decision dated June 12, 2007, the appellate court affirmed in totothe SAC Decision dated April 12, 2004.
Land Bank moved for reconsideration anew, but was denied.

Meanwhile, on September 30, 2007, Atty. Domingo died. Petitioner filed a Manifestation dated December 11, 2007 of the
fact of Atty. Domingo's death and the substitution of the latter by his legal heirs, Ma. Ala F. Domingo and Margarita Irene
F. Domingo (private respondents).

Land Bank assailed the appellate court's decision and resolution before the Supreme Court via a petition for review on
certiorari dated December 4, 2007 docketed as G.R. No. 180108 entitled "Land Bank of the Philippines vs. Angel T.
Domingo". However, in a Resolution dated September 17, 2008, the Court denied the same for failure to sufficiently show
any reversible error in the appellate court's decision. On December 15, 2008, the Court denied with finality Land Bank's
motion for reconsideration.

3
On February 11, 2009, petitioner wrote private respondent Ma. Ala Domingo and informed her of the finality of the
RTC/SAC decision as affirmed by the Court of Appeals and the Supreme Court. He then requested her to inform the Land
Bank of the segregation of petitioner's thirty percent (30%) contingent attorney's fees out of the increase of the just
compensation for the subject property, or thirty percent (30%) of the total increase amounting to Php1,975,983.43.
Petitioner claimed never to have received a reply from private respondent.

On March 30, 2009, petitioner received a copy of the entry of judgment from this Court certifying that its Resolution dated
September 17, 2008 in G.R. No. 180108 has already become final and executory on March 3, 2009.
On July 28, 2009, petitioner received a Notice of Appearance dated July 16, 2009 filed by Atty. Antonio G. Conde,
entering his appearance as counsel of herein private respondents and replacing him as counsel in Agrarian Case No.
1217-G.

On August 14, 2009, private respondents, through their new counsel, Atty. Conde, filed a Motion for Execution dated
August 6, 2009 of the RTC/SAC Decision dated April 12, 2004.

On August 12, 2009, petitioner filed a Motion for Approval of Charging Attorney's Lien and for the Order of
4 5
Payment. Petitioner further executed an Affidavit dated August 10, 2009, attesting to the circumstances surrounding the
legal services he has rendered for the deceased Atty. Domingo and the successful prosecution of the Agrarian case from
the RTC/SAC through the appellate court and the Supreme Court.

6
On August 18, 2009, private respondents filed a Motion to Dismiss/Expunge Petitioner's Motion. Public respondent
7
Presiding Judge Casabar denied the same. Private respondents moved for reconsideration.

On January 11, 2010, public respondent Judge Casabar issued the disputed Order denying petitioner's motion for
approval of attorney's lien, the dispositive portion of which reads:

xxxx

Examining the basis of the instant motion for reconsideration, this court agrees with respondents – movants that this court
has no jurisdiction over Atty. Aquino's motion for approval of charging (Attorney's) lien having been filed after the
judgment has become final and executory. Accordingly, the motion for reconsideration is granted and the motion for
approval of (Attorney's) lien is denied and or expunged from the records of the case.

SO ORDERED.

On the same day, January 11, 2010, public respondent issued an Order directing the issuance of a Writ of Execution of
the RTC/SAC Decision dated April 12, 2004.

On January 12, 2010, the Clerk of Court of Branch 33, RTC of Guimba, Nueva Ecija, issued a Writ of Execution of the
April 12, 2004. On January 15, 2010, the Sheriff of the RTC of Guimba, Nueva Ecija issued a Notice of Garnishment.

Thus, the instant petition for certiorari via Rule 65, raising the following issues:

WHETHER OR NOT A CHARGING (ATTORNEY'S) LIEN CAN EFFECTIVELY BE FILED ONLY BEFORE JUDGMENT
IS RENDERED.

II

WHETHER OR NOT RESPONDENT PRESIDING JUDGE HAS THE JURISDICTION TO TAKE COGNIZANCE OVER
PETITIONER'S MOTION FOR APPROVAL OF CHARGING (ATTORNEY'S) LIEN FILED AFTER THE JUDGMENT HAS
BECOME FINAL AND EXECUTORY.

III

WHETHER OR NOT THE RESPONDENT PRESIDING JUDGE ACTED WITH GRAVE ABUSE OF DISCRETION IN
8
ISSUING THE CHALLENGED ORDER.

Petitioner maintains that he filed the motion for charging attorney's lien and order of payment in the very same case,
Agrarian Case No. 1217-G, as an incident thereof, wherein he was the counsel during the proceedings of the latter, and
that he is allowed to wait until the finality of the case to file the said motion.

Private respondents, on the other hand, counter that the motion was belatedly filed and that it was filed without the
payment of docket fees, thus, the court a quodid not acquire jurisdiction over the case.

RULING

In a nutshell, the issue is whether the trial court committed a reversible error in denying the motion toapprove attorney's
lien and order of payment on the ground that it lost jurisdiction over the case since judgment in the case has already
become final and executory.

We rule in favor of the petitioner.

9
In the case of Rosario, Jr. v. De Guzman, the Court clarified a similar issue and discussed the two concepts of attorney’s
fees – that is, ordinary and extraordinary. In its ordinary sense, it is the reasonable compensation paid to a lawyer by his
client for legal services rendered. In its extraordinary concept, it is awarded by the court to the successful litigant to be
 10
paid by the losing party as indemnity for damages. Although both concepts are similar in some respects, they differ from
eachother, as further explained below:

The attorney’s fees which a court may, in proper cases, award to a winning litigant is, strictly speaking, anitem of
damages. It differs from that which a client pays his counsel for the latter’s professional services. However, the two
concepts have many things in common that a treatment of the subject is necessary. The award that the court may grant to
a successful party by way of attorney’sfee is an indemnity for damages sustained by him in prosecuting or defending,
through counsel, his cause in court. It may be decreed in favor of the party, not his lawyer, in any of the instances
authorized by law. Onthe other hand, the attorney’s fee which a client pays his counsel refersto the compensation for the
latter’s services. The losing party against whom damages by way of attorney’s fees may be assessed is not bound by, nor
is his liability dependent upon, the fee arrangement of the prevailing party with his lawyer. The amount stipulated in such
fee arrangement may, however, be taken into account by the court in fixing the amount of counsel fees as an element of
damages.

The fee as an item of damages belongs to the party litigant and not to his lawyer. It forms part of his judgment recoveries
against the losing party. The client and his lawyer may, however, agree that whatever attorney’s fee as an element of
damages the court may award shall pertain to the lawyer as his compensation or as part thereof. In such a case, the court
upon proper motion may require the losing party to pay such fee directly to the lawyer of the prevailing party.

The two concepts of attorney’s fees are similar in other respects. They both require, as a prerequisite totheir grant, the
intervention of or the rendition of professional services by a lawyer. As a client may not be held liable for counsel fees in
favor of his lawyer who never rendered services, so too may a party be not held liable for attorney’s fees as damages in
favor of the winning party who enforced his rights without the assistance of counsel. Moreover, both fees are subject to
judicial control and modification. And the rules governing the determination of their reasonable amount are applicablein
11
one as in the other.

Similarly, in the instant case, the attorney’s fees being claimed by the petitioner is the compensation for professional
services rendered, and not an indemnity for damages. Petitioner is claiming payment from private respondents for the
successful outcome of the agrarian case which he represented. We see no valid reason why public respondent cannot
pass upon a proper petition to determine attorney's fees considering that it is already familiar with the nature and the
extent of petitioner's legal services. If we are to follow the rule against multiplicity of suits, then with more reason that
petitioner's motion should not be dismissed as the same is in effect incidental to the main case.

We are, likewise, unconvinced that the courta quodid not acquire jurisdiction over the motion solely due to non-payment of
docket fees. Petitioner's failure to pay the docket fees pertinent to his motion should not be considered as having divested
the court a quo's jurisdiction. We note that, in this case, there was no showing that petitioner intended to evade the
12
payment of docket fees as in fact he manifested willingness to pay the same should it be necessary.

Likewise, pursuant to the ruling in Sun Insurance Office, Ltd. (SIOL) v. Asuncion, should there be unpaid docket fees, the
same should be considered as a lien on the judgment. Thus, even on the assumption that additional docket fees are
required as a consequence of petitioner's motion, its non-payment will not result in the court’s loss of jurisdiction over the
13
case.

With regards tohow attorney’s fees for professional services can be recovered, and when an action for attorney’s fees for
14
professional services can be filed, the case of Traders Royal Bank Employees Union-Independent v. NLRC is
instructive:

x x x It is well settled that a claim for attorney’s fees may be asserted either in the very action in which the services of a
lawyer had been rendered or in a separate action.

With respect to the first situation, the remedy for recovering attorney’s fees as an incident of the main action may be
availed of only when something is due to the client. Attorney’s fees cannot be determined until after the main litigation has
been decided and the subject of the recovery is at the disposition of the court. The issue over attorney’s fees only arises
when something has been recovered from which the fee is to be paid.

While a claim for attorney’s fees may be filed before the judgment is rendered, the determination as to the propriety of the
fees or as to the amount thereof will have to be held in abeyance until the main case from which the lawyer’s claim for
attorney’s fees may arise has become final. Otherwise, the determination to be made by the courts will be premature. Of
course, a petition for attorney’s fees may be filed before the judgment in favor of the client issatisfied or the proceeds
thereof delivered to the client.

It is apparent from the foregoing discussion that a lawyer has two options as to when to file his claim for professional fees.
Hence, private respondent was well within his rights when he made his claim and waited for the finality of the judgment for
holiday pay differential, instead of filing it ahead of the award’s complete resolution. To declare that a lawyer may file a
claim for feesin the same action only before the judgment is reviewed by a higher tribunal would deprive him of his
15
aforestated options and render ineffective the foregoing pronouncements of this Court. Here, apparently petitioner filed
his claim as an incident of the main action, as in fact, his motion was for the court's approval of charging attorney's lien
and the prayer thereto was to direct the entry into the case records the attorney's fees he is claiming. Needless to say,
petitioner's motion for approval of charging attorney's lien and order of payment was not intended to be filed as a separate
action. Nevertheless, it is within petitioner's right to wait for the finality of the judgment, instead of filing it ahead of the
court's resolution, since precisely the basis of the determination of the attorney's fees is the final disposition of the case,
that is, the just compensation to be awarded tothe private respondents.
Moreover, the RTC/SAC decision became final and executory on March 3, 2009, and petitioner filed his Motion to
Determine Attorney’s Fees on August 10, 2009, or only about four (4) months from the finality of the RTC/SAC decision.
16
Considering that petitioner and Atty. Domingo’s agreement was contracted verbally, Article 1145 of the Civil Code allows
17
petitioner a period of six (6) years within which to file an action to recover professional fees for services rendered. Thus,
the disputed motion to approve the charging of attorney's lien and the order of payment was seasonably filed.

Petitioner claims that he and Atty. Domingo agreed to a contract for contingent fees equivalent to thirty percent (30%) of
the increase of the just compensation awarded, albeit verbally. However, a contract for contingent fees is an agreement in
writing by which the fees, usually a fixed percentage of what may be recovered in the action, are made to depend upon
the success in the effort to enforce or defend a supposed right. Contingent fees depend upon an express contract, without
18
which the attorney can only recover on the basis of quantum meruit. Here, considering that the contract was made
verbally and that there was no evidence presented to justify the 30% contingent fees being claimed by petitioner, the only
way to determine his right to appropriate attorney’s fees is to apply the principle of quantum meruit, to wit:

Quantum meruit– literally meaning as much as he deserves – is used as basis for determining an attorney’s professional
fees in the absence of an express agreement. The recovery of attorney’s fees on the basis of quantum meruitis a device
that prevents an unscrupulous client from running away with the fruits of the legal services of counsel without paying for it
and also avoids unjust enrichment on the part of the attorney himself. An attorney must show that he is entitled to
reasonable compensation for the effort in pursuing the client’s cause, taking into account certain factors in fixing the
amount of legal fees.

Further, Rule 20.01 of the Code of Professional Responsibility lists the guidelines for determining the proper amount of
attorney fees, to wit:

Rule 20.1 – A lawyer shall be guided by the following factors in determining his fees:

a) The time spent and the extent of the services rendered or required;

b) The novelty and difficult of the questions involved;

c) The important of the subject matter;

d) The skill demanded;

e) The probability of losing other employment as a result of acceptance of the proffered case;

f) The customary charges for similar services and the schedule of fees of the IBP chapter to which he belongs;

g) The amount involved in the controversy and the benefits resulting to the client from the service;

h) The contingency or certainty of compensation;

i) The character of the employment, whether occasional or established; and

j) The professional standing of the lawyer.

Private respondents never rebutted the fact that petitioner rendered legal services in the subject case.1âwphi1 It is
likewise undisputed that it was petitioner who successfully represented Atty. Domingo in Agrarian Case No. 12-17-G
before the Special Agrarian Court, in the Court of Appeals in CAG.R. SP No. 85394, and before this Court in G.R. No.
180108 where the case eventually attained finality. It is, therefore, through petitioner's effort for a lengthy period of seven
(7) years that the just compensation for the property owned by deceased Atty. Domingo increased. It cannot be denied
then that private respondents benefited from the said increase in the just compensation. Thus, considering petitioner's
effort and the amount of time spent in ensuring the successful disposition of the case, petitioner rightfully deserves to be
awarded reasonable attorney's fees for services rendered.

Ordinarily, We would have left it to the trial court the determination of attorney's fees based on quantum meruit, however,
following the several pronouncements of the Court that it will be just and equitable to now assess and fix the attorney's
19
fees in order that the resolution thereof would not be needlessly prolonged, this Court, which holds and exercises the
power to fix attorney's fees on quantum meruit basis in the absence of an express written agreement between the
attorney and the client, deems it fair to fix petitioner's attorney's fees at fifteen percent (15%) of the increase in the just
compensation awarded to private respondents.

The fact that the practice of law is not a business and the attorney plays a vital role in the administration of justice
underscores the need to secure him his honorarium lawfully earned as a means to preserve the decorum and
respectability of the legal profession. A lawyer is as much entitled to judicial protection against injustice, imposition or
fraud on the part of his client as the client against abuse on the part of his counsel. The duty of the court is not alone to
see that a lawyer acts in a proper and lawful manner; it is also its duty to see that a lawyer is paid his just fees. With his
capital consisting of his brains and with his skill acquired at tremendous cost not only in money but in expenditure of time
and energy, he is entitled to the protection of any judicial tribunal against any attempt on the part of his client to escape
payment of his just compensation. It would be ironic if after putting forth the best in him to secure justice for his client he
20
himself would not get his due.
WHEREFORE, the petition is GRANTED. Accordingly, the Court grants the Motion for Approval of Charging Attorney's
Lien filed by petitioner Atty. Augusto M. Aquino. Based on quantum meruit, the amount of attorney's fees is at the rate of
fifteen percent (15%) of the amount of the increase in valuation of just compensation awarded to the private respondents.

SO ORDERED.

G.R. No. 155223 April 4, 2007

BOBIE ROSE V. FRIAS, represented by her Attorney-in-fact, MARIE F. FUJITA, Petitioner,

vs.
FLORA SAN DIEGO-SISON, Respondent.

DECISION

AUSTRIA-MARTINEZ, J.:

Before us is a Petition for Review on Certiorari filed by Bobie Rose V. Frias represented by her Attorney-in-fact, Marie
1 2
Regine F. Fujita (petitioner) seeking to annul the Decision dated June 18, 2002 and the Resolution dated September 11,
2002 of the Court of Appeals (CA) in CA-G.R. CV No. 52839.

Petitioner is the owner of a house and lot located at No. 589 Batangas East, Ayala Alabang, Muntinlupa, Metro Manila,
which she acquired from Island Masters Realty and Development Corporation (IMRDC) by virtue of a Deed of Sale dated
3 4
Nov. 16, 1990. The property is covered by TCT No. 168173 of the Register of Deeds of Makati in the name of IMRDC.

On December 7, 1990, petitioner, as the FIRST PARTY, and Dra. Flora San Diego-Sison (respondent), as the SECOND
5
PARTY, entered into a Memorandum of Agreement over the property with the following terms:

NOW, THEREFORE, for and in consideration of the sum of THREE MILLION PESOS (₱3,000,000.00) receipt of which is
hereby acknowledged by the FIRST PARTY from the SECOND PARTY, the parties have agreed as follows:

1. That the SECOND PARTY has a period of Six (6) months from the date of the execution of this contract within
which to notify the FIRST PARTY of her intention to purchase the aforementioned parcel of land together within
(sic) the improvements thereon at the price of SIX MILLION FOUR HUNDRED THOUSAND PESOS
(₱6,400,000.00). Upon notice to the FIRST PARTY of the SECOND PARTY’s intention to purchase the same, the
latter has a period of another six months within which to pay the remaining balance of ₱3.4 million.

2. That prior to the six months period given to the SECOND PARTY within which to decide whether or not to
purchase the above-mentioned property, the FIRST PARTY may still offer the said property to other persons who
may be interested to buy the same provided that the amount of ₱3,000,000.00 given to the FIRST PARTY BY
THE SECOND PARTY shall be paid to the latter including interest based on prevailing compounded bank interest
plus the amount of the sale in excess of ₱7,000,000.00 should the property be sold at a price more than ₱7
million.

3. That in case the FIRST PARTY has no other buyer within the first six months from the execution of this
contract, no interest shall be charged by the SECOND PARTY on the P3 million however, in the event that on the
sixth month the SECOND PARTY would decide not to purchase the aforementioned property, the FIRST PARTY
has a period of another six months within which to pay the sum of ₱3 million pesos provided that the said amount
shall earn compounded bank interest for the last six months only. Under this circumstance, the amount of P3
million given by the SECOND PARTY shall be treated as [a] loan and the property shall be considered as the
security for the mortgage which can be enforced in accordance with law.

6
x x x x.

Petitioner received from respondent two million pesos in cash and one million pesos in a post-dated check dated February
7
28, 1990, instead of 1991, which rendered said check stale. Petitioner then gave respondent TCT No. 168173 in the
name of IMRDC and the Deed of Absolute Sale over the property between petitioner and IMRDC.

8
Respondent decided not to purchase the property and notified petitioner through a letter dated March 20, 1991, which
9
petitioner received only on June 11, 1991, reminding petitioner of their agreement that the amount of two million pesos
which petitioner received from respondent should be considered as a loan payable within six months. Petitioner
subsequently failed to pay respondent the amount of two million pesos.

10
On April 1, 1993, respondent filed with the Regional Trial Court (RTC) of Manila, a complaint for sum of money with
preliminary attachment against petitioner. The case was docketed as Civil Case No. 93-65367 and raffled to Branch 30.
Respondent alleged the foregoing facts and in addition thereto averred that petitioner tried to deprive her of the security
11
for the loan by making a false report of the loss of her owner’s copy of TCT No. 168173 to the Tagig Police Station on
12
June 3, 1991, executing an affidavit of loss and by filing a petition for the issuance of a new owner’s duplicate copy of
13
said title with the RTC of Makati, Branch 142; that the petition was granted in an Order dated August 31, 1991; that said
14
Order was subsequently set aside in an Order dated April 10, 1992 where the RTC Makati granted respondent’s petition
for relief from judgment due to the fact that respondent is in possession of the owner’s duplicate copy of TCT No. 168173,
and ordered the provincial public prosecutor to conduct an investigation of petitioner for perjury and false testimony.
Respondent prayed for the ex-parte issuance of a writ of preliminary attachment and payment of two million pesos with
interest at 36% per annum from December 7, 1991, ₱100,000.00 moral, corrective and exemplary damages and
₱200,000.00 for attorney’s fees.

In an Order dated April 6, 1993, the Executive Judge of the RTC of Manila issued a writ of preliminary attachment upon
15
the filing of a bond in the amount of two million pesos.

16
Petitioner filed an Amended Answer alleging that the Memorandum of Agreement was conceived and arranged by her
lawyer, Atty. Carmelita Lozada, who is also respondent’s lawyer; that she was asked to sign the agreement without being
given the chance to read the same; that the title to the property and the Deed of Sale between her and the IMRDC were
entrusted to Atty. Lozada for safekeeping and were never turned over to respondent as there was no consummated sale
yet; that out of the two million pesos cash paid, Atty. Lozada took the one million pesos which has not been returned, thus
petitioner had filed a civil case against her; that she was never informed of respondent’s decision not to purchase the
property within the six month period fixed in the agreement; that when she demanded the return of TCT No. 168173 and
the Deed of Sale between her and the IMRDC from Atty. Lozada, the latter gave her these documents in a brown
envelope on May 5, 1991 which her secretary placed in her attache case; that the envelope together with her other
personal things were lost when her car was forcibly opened the following day; that she sought the help of Atty. Lozada
who advised her to secure a police report, to execute an affidavit of loss and to get the services of another lawyer to file a
petition for the issuance of an owner’s duplicate copy; that the petition for the issuance of a new owner’s duplicate copy
was filed on her behalf without her knowledge and neither did she sign the petition nor testify in court as falsely claimed
for she was abroad; that she was a victim of the manipulations of Atty. Lozada and respondent as shown by the filing of
criminal charges for perjury and false testimony against her; that no interest could be due as there was no valid mortgage
over the property as the principal obligation is vitiated with fraud and deception. She prayed for the dismissal of the
complaint, counter-claim for damages and attorney’s fees.

17
Trial on the merits ensued. On January 31, 1996, the RTC issued a decision, the dispositive portion of which reads:

WHEREFORE, judgment is hereby RENDERED:

1) Ordering defendant to pay plaintiff the sum of P2 Million plus interest thereon at the rate of thirty two (32%) per
cent per annum beginning December 7, 1991 until fully paid.

2) Ordering defendant to pay plaintiff the sum of ₱70,000.00 representing premiums paid by plaintiff on the
attachment bond with legal interest thereon counted from the date of this decision until fully paid.

3) Ordering defendant to pay plaintiff the sum of ₱100,000.00 by way of moral, corrective and exemplary
damages.

18
4) Ordering defendant to pay plaintiff attorney’s fees of ₱100,000.00 plus cost of litigation.

The RTC found that petitioner was under obligation to pay respondent the amount of two million pesos with compounded
interest pursuant to their Memorandum of Agreement; that the fraudulent scheme employed by petitioner to deprive
respondent of her only security to her loaned money when petitioner executed an affidavit of loss and instituted a petition
for the issuance of an owner’s duplicate title knowing the same was in respondent’s possession, entitled respondent to
moral damages; and that petitioner’s bare denial cannot be accorded credence because her testimony and that of her
witness did not appear to be credible.

The RTC further found that petitioner admitted that she received from respondent the two million pesos in cash but the
fact that petitioner gave the one million pesos to Atty. Lozada was without respondent’s knowledge thus it is not binding
on respondent; that respondent had also proven that in 1993, she initially paid the sum of ₱30,000.00 as premium for the
issuance of the attachment bond, ₱20,000.00 for its renewal in 1994, and ₱20,000.00 for the renewal in 1995, thus
plaintiff should be reimbursed considering that she was compelled to go to court and ask for a writ of preliminary
attachment to protect her rights under the agreement.

Petitioner filed her appeal with the CA. In a Decision dated June 18, 2002, the CA affirmed the RTC decision with
modification, the dispositive portion of which reads:

WHEREFORE, premises considered, the decision appealed from is MODIFIED in the sense that the rate of interest is
19
reduced from 32% to 25% per annum, effective June 7, 1991 until fully paid.

The CA found that: petitioner gave the one million pesos to Atty. Lozada partly as her commission and partly as a loan;
respondent did not replace the mistakenly dated check of one million pesos because she had decided not to buy the
property and petitioner knew of her decision as early as April 1991; the award of moral damages was warranted since
even granting petitioner had no hand in the filing of the petition for the issuance of an owner’s copy, she executed an
affidavit of loss of TCT No. 168173 when she knew all along that said title was in respondent’s possession; petitioner’s
claim that she thought the title was lost when the brown envelope given to her by Atty. Lozada was stolen from her car
was hollow; that such deceitful conduct caused respondent serious anxiety and emotional distress.

The CA concluded that there was no basis for petitioner to say that the interest should be charged for six months only and
20
no more; that a loan always bears interest otherwise it is not a loan; that interest should commence on June 7, 1991 with
compounded bank interest prevailing at the time the two million was considered as a loan which was in June 1991; that
the bank interest rate for loans secured by a real estate mortgage in 1991 ranged from 25% to 32% per annum as
21
certified to by Prudential Bank, that in fairness to petitioner, the rate to be charged should be 25% only.

Petitioner’s motion for reconsideration was denied by the CA in a Resolution dated September 11, 2002.

Hence the instant Petition for Review on Certiorari filed by petitioner raising the following issues:

(A) WHETHER OR NOT THE COMPOUNDED BANK INTEREST SHOULD BE LIMITED TO SIX (6) MONTHS
AS CONTAINED IN THE MEMORANDUM OF AGREEMENT.

(B) WHETHER OR NOT THE RESPONDENT IS ENTITLED TO MORAL DAMAGES.

(C) WHETHER OR NOT THE GRANT OF CORRECTIVE AND EXEMPLARY DAMAGES AND ATTORNEY’S
22
FEES IS PROPER EVEN IF NOT MENTIONED IN THE TEXT OF THE DECISION.

Petitioner contends that the interest, whether at 32% per annum awarded by the trial court or at 25% per annum as
modified by the CA which should run from June 7, 1991 until fully paid, is contrary to the parties’ Memorandum of
Agreement; that the agreement provides that if respondent would decide not to purchase the property, petitioner has the
period of another six months to pay the loan with compounded bank interest for the last six months only; that the CA’s
ruling that a loan always bears interest otherwise it is not a loan is contrary to Art. 1956 of the New Civil Code which
provides that no interest shall be due unless it has been expressly stipulated in writing.

We are not persuaded.

While the CA’s conclusion, that a loan always bears interest otherwise it is not a loan, is flawed since a simple loan may
23
be gratuitous or with a stipulation to pay interest, we find no error committed by the CA in awarding a 25% interest per
annum on the two-million peso loan even beyond the second six months stipulated period.

The Memorandum of Agreement executed between the petitioner and respondent on December 7, 1990 is the law
between the parties. In resolving an issue based upon a contract, we must first examine the contract itself, especially the
24
provisions thereof which are relevant to the controversy. The general rule is that if the terms of an agreement are clear
25
and leave no doubt as to the intention of the contracting parties, the literal meaning of its stipulations shall prevail. It is
further required that the various stipulations of a contract shall be interpreted together, attributing to the doubtful ones that
26
sense which may result from all of them taken jointly.

In this case, the phrase "for the last six months only" should be taken in the context of the entire agreement. We agree
with and adopt the CA’s interpretation of the phrase in this wise:

Their agreement speaks of two (2) periods of six months each. The first six-month period was given to plaintiff-appellee
(respondent) to make up her mind whether or not to purchase defendant-appellant’s (petitioner's) property. The second
six-month period was given to defendant-appellant to pay the P2 million loan in the event that plaintiff-appellee decided
not to buy the subject property in which case interest will be charged "for the last six months only", referring to the second
six-month period. This means that no interest will be charged for the first six-month period while appellee was making up
her mind whether to buy the property, but only for the second period of six months after appellee had decided not to buy
the property. This is the meaning of the phrase "for the last six months only". Certainly, there is nothing in their agreement
that suggests that interest will be charged for six months only even if it takes defendant-appellant an eternity to pay the
27
loan.

The agreement that the amount given shall bear compounded bank interest for the last six months only, i.e., referring to
the second six-month period, does not mean that interest will no longer be charged after the second six-month period
since such stipulation was made on the logical and reasonable expectation that such amount would be paid within the
date stipulated. Considering that petitioner failed to pay the amount given which under the Memorandum of Agreement
shall be considered as a loan, the monetary interest for the last six months continued to accrue until actual payment of the
loaned amount.

The payment of regular interest constitutes the price or cost of the use of money and thus, until the principal sum due is
28
returned to the creditor, regular interest continues to accrue since the debtor continues to use such principal amount. It
has been held that for a debtor to continue in possession of the principal of the loan and to continue to use the same after
maturity of the loan without payment of the monetary interest, would constitute unjust enrichment on the part of the debtor
29
at the expense of the creditor.

Petitioner and respondent stipulated that the loaned amount shall earn compounded bank interests, and per the
certification issued by Prudential Bank, the interest rate for loans in 1991 ranged from 25% to 32% per annum. The CA
reduced the interest rate to 25% instead of the 32% awarded by the trial court which petitioner no longer
assailed.1awphi1.nét

30
In Bautista v. Pilar Development Corp., we upheld the validity of a 21% per annum interest on a ₱142,326.43 loan.
31
In Garcia v. Court of Appeals, we sustained the agreement of the parties to a 24% per annum interest on an
₱8,649,250.00 loan. Thus, the interest rate of 25% per annum awarded by the CA to a ₱2 million loan is fair and
reasonable.
Petitioner next claims that moral damages were awarded on the erroneous finding that she used a fraudulent scheme to
deprive respondent of her security for the loan; that such finding is baseless since petitioner was acquitted in the case for
perjury and false testimony filed by respondent against her.

We are not persuaded.

Article 31 of the Civil Code provides that when the civil action is based on an obligation not arising from the act or
omission complained of as a felony, such civil action may proceed independently of the criminal proceedings and
32
regardless of the result of the latter.

While petitioner was acquitted in the false testimony and perjury cases filed by respondent against her, those actions are
entirely distinct from the collection of sum of money with damages filed by respondent against petitioner.

We agree with the findings of the trial court and the CA that petitioner’s act of trying to deprive respondent of the security
of her loan by executing an affidavit of loss of the title and instituting a petition for the issuance of a new owner’s duplicate
copy of TCT No. 168173 entitles respondent to moral damages.1a\^/phi1.net Moral damages may be awarded
in culpa contractual or breach of contract cases when the defendant acted fraudulently or in bad faith. Bad faith does not
simply connote bad judgment or negligence; it imports a dishonest purpose or some moral obliquity and conscious doing
33
of wrong. It partakes of the nature of fraud.

The Memorandum of Agreement provides that in the event that respondent opts not to buy the property, the money given
by respondent to petitioner shall be treated as a loan and the property shall be considered as the security for the
mortgage. It was testified to by respondent that after they executed the agreement on December 7, 1990, petitioner gave
her the owner’s copy of the title to the property, the Deed of Sale between petitioner and IMRDC, the certificate of
34
occupancy, and the certificate of the Secretary of the IMRDC who signed the Deed of Sale. However, notwithstanding
that all those documents were in respondent’s possession, petitioner executed an affidavit of loss that the owner’s copy of
the title and the Deed of Sale were lost.

Although petitioner testified that her execution of the affidavit of loss was due to the fact that she was of the belief that
since she had demanded from Atty. Lozada the return of the title, she thought that the brown envelope with markings
which Atty. Lozada gave her on May 5, 1991 already contained the title and the Deed of Sale as those documents were in
35
the same brown envelope which she gave to Atty. Lozada prior to the transaction with respondent. Such statement
remained a bare statement. It was not proven at all since Atty. Lozada had not taken the stand to corroborate her claim. In
fact, even petitioner’s own witness, Benilda Ynfante (Ynfante), was not able to establish petitioner's claim that the title was
returned by Atty. Lozada in view of Ynfante's testimony that after the brown envelope was given to petitioner, the latter
36 37
passed it on to her and she placed it in petitioner’s attaché case and did not bother to look at the envelope.

It is clear therefrom that petitioner’s execution of the affidavit of loss became the basis of the filing of the petition with the
RTC for the issuance of new owner’s duplicate copy of TCT No. 168173. Petitioner’s actuation would have deprived
respondent of the security for her loan were it not for respondent’s timely filing of a petition for relief whereby the RTC set
aside its previous order granting the issuance of new title. Thus, the award of moral damages is in order.

38
The entitlement to moral damages having been established, the award of exemplary damages is proper. Exemplary
39
damages may be imposed upon petitioner by way of example or correction for the public good. The RTC awarded the
amount of ₱100,000.00 as moral and exemplary damages. While the award of moral and exemplary damages in an
40
aggregate amount may not be the usual way of awarding said damages, no error has been committed by CA. There is
no question that respondent is entitled to moral and exemplary damages.

Petitioner argues that the CA erred in awarding attorney’s fees because the trial court’s decision did not explain the
findings of facts and law to justify the award of attorney’s fees as the same was mentioned only in the dispositive portion
of the RTC decision.

We agree.

41
Article 2208 of the New Civil Code enumerates the instances where such may be awarded and, in all cases, it must be
42
reasonable, just and equitable if the same were to be granted. Attorney's fees as part of damages are not meant to
enrich the winning party at the expense of the losing litigant. They are not awarded every time a party prevails in a suit
43
because of the policy that no premium should be placed on the right to litigate. The award of attorney's fees is the
exception rather than the general rule. As such, it is necessary for the trial court to make findings of facts and law that
would bring the case within the exception and justify the grant of such award. The matter of attorney's fees cannot be
44
mentioned only in the dispositive portion of the decision. They must be clearly explained and justified by the trial court in
the body of its decision. On appeal, the CA is precluded from supplementing the bases for awarding attorney’s fees when
the trial court failed to discuss in its Decision the reasons for awarding the same. Consequently, the award of attorney's
fees should be deleted.

WHEREFORE, in view of all the foregoing, the Decision dated June 18, 2002 and the Resolution dated September 11,
2002 of the Court of Appeals in CA-G.R. CV No. 52839 are AFFIRMED with MODIFICATION that the award of attorney’s
fees is DELETED.

No pronouncement as to costs.
SO ORDERED.

G.R. No. 189871 August 13, 2013

DARIO NACAR, PETITIONER,

vs.
GALLERY FRAMES AND/OR FELIPE BORDEY, JR., RESPONDENTS.

DECISION

PERALTA, J.:

1
This is a petition for review on certiorari assailing the Decision dated September 23, 2008 of the Court of Appeals (CA) in
2
CA-G.R. SP No. 98591, and the Resolution dated October 9, 2009 denying petitioner’s motion for reconsideration.

The factual antecedents are undisputed.

Petitioner Dario Nacar filed a complaint for constructive dismissal before the Arbitration Branch of the National Labor
Relations Commission (NLRC) against respondents Gallery Frames (GF) and/or Felipe Bordey, Jr., docketed as NLRC
NCR Case No. 01-00519-97.

3
On October 15, 1998, the Labor Arbiter rendered a Decision in favor of petitioner and found that he was dismissed from
employment without a valid or just cause. Thus, petitioner was awarded backwages and separation pay in lieu of
reinstatement in the amount of ₱158,919.92. The dispositive portion of the decision, reads:

With the foregoing, we find and so rule that respondents failed to discharge the burden of showing that complainant was
dismissed from employment for a just or valid cause. All the more, it is clear from the records that complainant was never
afforded due process before he was terminated. As such, we are perforce constrained to grant complainant’s prayer for
the payments of separation pay in lieu of reinstatement to his former position, considering the strained relationship
between the parties, and his apparent reluctance to be reinstated, computed only up to promulgation of this decision as
follows:

SEPARATION PAY

Date Hired = August 1990

Rate = ₱198/day

Date of Decision = Aug. 18, 1998

Length of Service = 8 yrs. & 1 month

₱198.00 x 26 days x 8 months = ₱41,184.00

BACKWAGES

Date Dismissed = January 24, 1997

Rate per day = ₱196.00

Date of Decisions = Aug. 18, 1998

a) 1/24/97 to 2/5/98 = 12.36 mos.

₱196.00/day x 12.36 mos. = ₱62,986.56

b) 2/6/98 to 8/18/98 = 6.4 months

Prevailing Rate per day = ₱62,986.00

₱198.00 x 26 days x 6.4 mos. = ₱32,947.20

TOTAL = ₱95.933.76

xxxx

WHEREFORE, premises considered, judgment is hereby rendered finding respondents guilty of constructive dismissal
and are therefore, ordered:

To pay jointly and severally the complainant the amount of sixty-two thousand nine hundred eighty-six pesos and 56/100
(₱62,986.56) Pesos representing his separation pay;
To pay jointly and severally the complainant the amount of nine (sic) five thousand nine hundred thirty-three and 36/100
(₱95,933.36) representing his backwages; and

All other claims are hereby dismissed for lack of merit.

4
SO ORDERED.

5
Respondents appealed to the NLRC, but it was dismissed for lack of merit in the Resolution dated February 29, 2000.
Accordingly, the NLRC sustained the decision of the Labor Arbiter. Respondents filed a motion for reconsideration, but it
6
was denied.

Dissatisfied, respondents filed a Petition for Review on Certiorari before the CA. On August 24, 2000, the CA issued a
Resolution dismissing the petition. Respondents filed a Motion for Reconsideration, but it was likewise denied in a
7
Resolution dated May 8, 2001.

Respondents then sought relief before the Supreme Court, docketed as G.R. No. 151332. Finding no reversible error on
8
the part of the CA, this Court denied the petition in the Resolution dated April 17, 2002.

9
An Entry of Judgment was later issued certifying that the resolution became final and executory on May 27, 2002. The
case was, thereafter, referred back to the Labor Arbiter. A pre-execution conference was consequently scheduled, but
10
respondents failed to appear.

On November 5, 2002, petitioner filed a Motion for Correct Computation, praying that his backwages be computed from
the date of his dismissal on January 24, 1997 up to the finality of the Resolution of the Supreme Court on May 27,
11
2002. Upon recomputation, the Computation and Examination Unit of the NLRC arrived at an updated amount in the
12
sum of ₱471,320.31.

13
On December 2, 2002, a Writ of Execution was issued by the Labor Arbiter ordering the Sheriff to collect from
respondents the total amount of ₱471,320.31. Respondents filed a Motion to Quash Writ of Execution, arguing, among
other things, that since the Labor Arbiter awarded separation pay of ₱62,986.56 and limited backwages of ₱95,933.36, no
more recomputation is required to be made of the said awards. They claimed that after the decision becomes final and
14
executory, the same cannot be altered or amended anymore. On January 13, 2003, the Labor Arbiter issued an
15 16
Order denying the motion. Thus, an Alias Writ of Execution was issued on January 14, 2003.

17
Respondents again appealed before the NLRC, which on June 30, 2003 issued a Resolution granting the appeal in
favor of the respondents and ordered the recomputation of the judgment award.

On August 20, 2003, an Entry of Judgment was issued declaring the Resolution of the NLRC to be final and executory.
Consequently, another pre-execution conference was held, but respondents failed to appear on time. Meanwhile,
petitioner moved that an Alias Writ of Execution be issued to enforce the earlier recomputed judgment award in the sum of
18
₱471,320.31.

The records of the case were again forwarded to the Computation and Examination Unit for recomputation, where the
judgment award of petitioner was reassessed to be in the total amount of only ₱147,560.19.

Petitioner then moved that a writ of execution be issued ordering respondents to pay him the original amount as
determined by the Labor Arbiter in his Decision dated October 15, 1998, pending the final computation of his backwages
and separation pay.

On January 14, 2003, the Labor Arbiter issued an Alias Writ of Execution to satisfy the judgment award that was due to
petitioner in the amount of ₱147,560.19, which petitioner eventually received.

Petitioner then filed a Manifestation and Motion praying for the re-computation of the monetary award to include the
19
appropriate interests.

20
On May 10, 2005, the Labor Arbiter issued an Order granting the motion, but only up to the amount of ₱11,459.73. The
Labor Arbiter reasoned that it is the October 15, 1998 Decision that should be enforced considering that it was the one
that became final and executory. However, the Labor Arbiter reasoned that since the decision states that the separation
pay and backwages are computed only up to the promulgation of the said decision, it is the amount of ₱158,919.92 that
should be executed. Thus, since petitioner already received ₱147,560.19, he is only entitled to the balance of ₱11,459.73.

21 22
Petitioner then appealed before the NLRC, which appeal was denied by the NLRC in its Resolution dated September
23
27, 2006. Petitioner filed a Motion for Reconsideration, but it was likewise denied in the Resolution dated January 31,
2007.

Aggrieved, petitioner then sought recourse before the CA, docketed as CA-G.R. SP No. 98591.

24
On September 23, 2008, the CA rendered a Decision denying the petition. The CA opined that since petitioner no longer
appealed the October 15, 1998 Decision of the Labor Arbiter, which already became final and executory, a belated
correction thereof is no longer allowed. The CA stated that there is nothing left to be done except to enforce the said
judgment. Consequently, it can no longer be modified in any respect, except to correct clerical errors or mistakes.
 25
Petitioner filed a Motion for Reconsideration, but it was denied in the Resolution dated October 9, 2009.

Hence, the petition assigning the lone error:

WITH DUE RESPECT, THE HONORABLE COURT OF APPEALS SERIOUSLY ERRED, COMMITTED GRAVE ABUSE
OF DISCRETION AND DECIDED CONTRARY TO LAW IN UPHOLDING THE QUESTIONED RESOLUTIONS OF THE
NLRC WHICH, IN TURN, SUSTAINED THE MAY 10, 2005 ORDER OF LABOR ARBITER MAGAT MAKING THE
DISPOSITIVE PORTION OF THE OCTOBER 15, 1998 DECISION OF LABOR ARBITER LUSTRIA SUBSERVIENT TO
26
AN OPINION EXPRESSED IN THE BODY OF THE SAME DECISION.

Petitioner argues that notwithstanding the fact that there was a computation of backwages in the Labor Arbiter’s decision,
the same is not final until reinstatement is made or until finality of the decision, in case of an award of separation pay.
Petitioner maintains that considering that the October 15, 1998 decision of the Labor Arbiter did not become final and
executory until the April 17, 2002 Resolution of the Supreme Court in G.R. No. 151332 was entered in the Book of Entries
on May 27, 2002, the reckoning point for the computation of the backwages and separation pay should be on May 27,
2002 and not when the decision of the Labor Arbiter was rendered on October 15, 1998. Further, petitioner posits that he
is also entitled to the payment of interest from the finality of the decision until full payment by the respondents.

On their part, respondents assert that since only separation pay and limited backwages were awarded to petitioner by the
October 15, 1998 decision of the Labor Arbiter, no more recomputation is required to be made of said awards.
Respondents insist that since the decision clearly stated that the separation pay and backwages are "computed only up to
[the] promulgation of this decision," and considering that petitioner no longer appealed the decision, petitioner is only
entitled to the award as computed by the Labor Arbiter in the total amount of ₱158,919.92. Respondents added that it was
only during the execution proceedings that the petitioner questioned the award, long after the decision had become final
and executory. Respondents contend that to allow the further recomputation of the backwages to be awarded to petitioner
at this point of the proceedings would substantially vary the decision of the Labor Arbiter as it violates the rule on
immutability of judgments.

The petition is meritorious.

The instant case is similar to the case of Session Delights Ice Cream and Fast Foods v. Court of Appeals (Sixth
27
Division), wherein the issue submitted to the Court for resolution was the propriety of the computation of the awards
made, and whether this violated the principle of immutability of judgment. Like in the present case, it was a distinct feature
of the judgment of the Labor Arbiter in the above-cited case that the decision already provided for the computation of the
payable separation pay and backwages due and did not further order the computation of the monetary awards up to the
time of the finality of the judgment. Also in Session Delights, the dismissed employee failed to appeal the decision of the
labor arbiter. The Court clarified, thus:

In concrete terms, the question is whether a re-computation in the course of execution of the labor arbiter's original
computation of the awards made, pegged as of the time the decision was rendered and confirmed with modification by a
final CA decision, is legally proper. The question is posed, given that the petitioner did not immediately pay the awards
stated in the original labor arbiter's decision; it delayed payment because it continued with the litigation until final judgment
at the CA level.

A source of misunderstanding in implementing the final decision in this case proceeds from the way the original labor
arbiter framed his decision. The decision consists essentially of two parts.

The first is that part of the decision that cannot now be disputed because it has been confirmed with finality. This is the
finding of the illegality of the dismissal and the awards of separation pay in lieu of reinstatement, backwages, attorney's
fees, and legal interests.

The second part is the computation of the awards made. On its face, the computation the labor arbiter made shows that it
was time-bound as can be seen from the figures used in the computation. This part, being merely a computation of what
the first part of the decision established and declared, can, by its nature, be re-computed. This is the part, too, that the
petitioner now posits should no longer be re-computed because the computation is already in the labor arbiter's decision
that the CA had affirmed. The public and private respondents, on the other hand, posit that a re-computation is necessary
because the relief in an illegal dismissal decision goes all the way up to reinstatement if reinstatement is to be made, or
up to the finality of the decision, if separation pay is to be given in lieu reinstatement.

That the labor arbiter's decision, at the same time that it found that an illegal dismissal had taken place, also made a
computation of the award, is understandable in light of Section 3, Rule VIII of the then NLRC Rules of Procedure which
requires that a computation be made. This Section in part states:

[T]he Labor Arbiter of origin, in cases involving monetary awards and at all events, as far as practicable, shall embody in
any such decision or order the detailed and full amount awarded.

Clearly implied from this original computation is its currency up to the finality of the labor arbiter's decision. As we noted
above, this implication is apparent from the terms of the computation itself, and no question would have arisen had the
parties terminated the case and implemented the decision at that point.
However, the petitioner disagreed with the labor arbiter's findings on all counts - i.e., on the finding of illegality as well as
on all the consequent awards made. Hence, the petitioner appealed the case to the NLRC which, in turn, affirmed the
labor arbiter's decision. By law, the NLRC decision is final, reviewable only by the CA on jurisdictional grounds.

The petitioner appropriately sought to nullify the NLRC decision on jurisdictional grounds through a timely filed Rule 65
petition for certiorari. The CA decision, finding that NLRC exceeded its authority in affirming the payment of 13th month
pay and indemnity, lapsed to finality and was subsequently returned to the labor arbiter of origin for execution.

It was at this point that the present case arose. Focusing on the core illegal dismissal portion of the original labor arbiter's
decision, the implementing labor arbiter ordered the award re-computed; he apparently read the figures originally ordered
to be paid to be the computation due had the case been terminated and implemented at the labor arbiter's level. Thus, the
labor arbiter re-computed the award to include the separation pay and the backwages due up to the finality of the CA
decision that fully terminated the case on the merits. Unfortunately, the labor arbiter's approved computation went beyond
the finality of the CA decision (July 29, 2003) and included as well the payment for awards the final CA decision had
deleted - specifically, the proportionate 13th month pay and the indemnity awards. Hence, the CA issued the decision now
questioned in the present petition.

We see no error in the CA decision confirming that a re-computation is necessary as it essentially considered the labor
arbiter's original decision in accordance with its basic component parts as we discussed above. To reiterate, the first part
contains the finding of illegality and its monetary consequences; the second part is the computation of the awards or
28
monetary consequences of the illegal dismissal, computed as of the time of the labor arbiter's original decision.

Consequently, from the above disquisitions, under the terms of the decision which is sought to be executed by the
petitioner, no essential change is made by a recomputation as this step is a necessary consequence that flows from the
29
nature of the illegality of dismissal declared by the Labor Arbiter in that decision. A recomputation (or an original
computation, if no previous computation has been made) is a part of the law – specifically, Article 279 of the Labor Code
and the established jurisprudence on this provision – that is read into the decision. By the nature of an illegal dismissal
case, the reliefs continue to add up until full satisfaction, as expressed under Article 279 of the Labor Code. The
recomputation of the consequences of illegal dismissal upon execution of the decision does not constitute an alteration or
amendment of the final decision being implemented. The illegal dismissal ruling stands; only the computation of monetary
30
consequences of this dismissal is affected, and this is not a violation of the principle of immutability of final judgments.

That the amount respondents shall now pay has greatly increased is a consequence that it cannot avoid as it is the risk
that it ran when it continued to seek recourses against the Labor Arbiter's decision. Article 279 provides for the
consequences of illegal dismissal in no uncertain terms, qualified only by jurisprudence in its interpretation of when
separation pay in lieu of reinstatement is allowed. When that happens, the finality of the illegal dismissal decision
becomes the reckoning point instead of the reinstatement that the law decrees. In allowing separation pay, the final
decision effectively declares that the employment relationship ended so that separation pay and backwages are to be
31
computed up to that point.

32
Finally, anent the payment of legal interest. In the landmark case of Eastern Shipping Lines, Inc. v. Court of Appeals, the
Court laid down the guidelines regarding the manner of computing legal interest, to wit:

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

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

2. When an obligation, not constituting a loan or forbearance of money, is breached, an interest on the amount of
damages awarded may be imposed at the discretion of the court at the rate of 6% per annum. No interest,
however, shall be adjudged on unliquidated claims or damages except when or until the demand can be
established with reasonable certainty. Accordingly, where the demand is established with reasonable certainty,
the interest shall begin to run from the time the claim is made judicially or extrajudicially (Art. 1169, Civil Code) but
when such certainty cannot be so reasonably established at the time the demand is made, the interest shall begin
to run only from the date the judgment of the court is made (at which time the quantification of damages may be
deemed to have been reasonably ascertained). The actual base for the computation of legal interest shall, in any
case, be on the amount finally adjudged.

3. When the judgment of the court awarding a sum of money becomes final and executory, the rate of legal
interest, whether the case falls under paragraph 1 or paragraph 2, above, shall be 12% per annum from such
finality until its satisfaction, this interim period being deemed to be by then an equivalent to a forbearance of
33
credit.

Recently, however, the Bangko Sentral ng Pilipinas Monetary Board (BSP-MB), in its Resolution No. 796 dated May 16,
34
2013, approved the amendment of Section 2 of Circular No. 905, Series of 1982 and, accordingly, issued Circular No.
35
799, Series of 2013, effective July 1, 2013, the pertinent portion of which reads:
The Monetary Board, in its Resolution No. 796 dated 16 May 2013, approved the following revisions governing the rate of
interest in the absence of stipulation in loan contracts, thereby amending Section 2 of Circular No. 905, Series of 1982:

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

36
Section 2. In view of the above, Subsection X305.1 of the Manual of Regulations for Banks and Sections
37 38 39
4305Q.1, 4305S.3 and 4303P.1 of the Manual of Regulations for Non-Bank Financial Institutions are hereby
amended accordingly.

This Circular shall take effect on 1 July 2013.

Thus, from the foregoing, in the absence of an express stipulation as to the rate of interest that would govern the parties,
the rate of legal interest for loans or forbearance of any money, goods or credits and the rate allowed in judgments shall
40
no longer be twelve percent (12%) per annum - as reflected in the case of Eastern Shipping Lines and Subsection
X305.1 of the Manual of Regulations for Banks and Sections 4305Q.1, 4305S.3 and 4303P.1 of the Manual of
Regulations for Non-Bank Financial Institutions, before its amendment by BSP-MB Circular No. 799 - but will now be six
percent (6%) per annum effective July 1, 2013. It should be noted, nonetheless, that the new rate could only be applied
prospectively and not retroactively. Consequently, the twelve percent (12%) per annum legal interest shall apply only until
June 30, 2013. Come July 1, 2013 the new rate of six percent (6%) per annum shall be the prevailing rate of interest when
applicable.

Corollarily, in the recent case of Advocates for Truth in Lending, Inc. and Eduardo B. Olaguer v. Bangko Sentral Monetary
41
Board, this Court affirmed the authority of the BSP-MB to set interest rates and to issue and enforce Circulars when it
ruled that "the BSP-MB may prescribe the maximum rate or rates of interest for all loans or renewals thereof or the
forbearance of any money, goods or credits, including those for loans of low priority such as consumer loans, as well as
such loans made by pawnshops, finance companies and similar credit institutions. It even authorizes the BSP-MB to
prescribe different maximum rate or rates for different types of borrowings, including deposits and deposit substitutes, or
loans of financial intermediaries."

Nonetheless, with regard to those judgments that have become final and executory prior to July 1, 2013, said judgments
shall not be disturbed and shall continue to be implemented applying the rate of interest fixed therein.1awp++i1

42
To recapitulate and for future guidance, the guidelines laid down in the case of Eastern Shipping Lines are accordingly
modified to embody BSP-MB Circular No. 799, as follows:

I. When an obligation, regardless of its source, i.e., law, contracts, quasi-contracts, delicts or quasi-delicts is
breached, the contravenor can be held liable for damages. The provisions under Title XVIII on "Damages" of the
Civil Code govern in determining the measure of recoverable damages.1âwphi1

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

When the obligation is breached, and it consists in the payment of a sum of money, i.e., a loan or forbearance of money,
the interest due should be that which may have been stipulated in writing. Furthermore, the interest due shall itself earn
legal interest from the time it is judicially demanded. In the absence of stipulation, the rate of interest shall be 6% per
annum to be computed from default, i.e., from judicial or extrajudicial demand under and subject to the provisions of
Article 1169 of the Civil Code.

When an obligation, not constituting a loan or forbearance of money, is breached, an interest on the amount of damages
awarded may be imposed at the discretion of the court at the rate of 6% per annum. No interest, however, shall be
adjudged on unliquidated claims or damages, except when or until the demand can be established with reasonable
certainty. Accordingly, where the demand is established with reasonable certainty, the interest shall begin to run from the
time the claim is made judicially or extrajudicially (Art. 1169, Civil Code), but when such certainty cannot be so reasonably
established at the time the demand is made, the interest shall begin to run only from the date the judgment of the court is
made (at which time the quantification of damages may be deemed to have been reasonably ascertained). The actual
base for the computation of legal interest shall, in any case, be on the amount finally adjudged.

When the judgment of the court awarding a sum of money becomes final and executory, the rate of legal interest, whether
the case falls under paragraph 1 or paragraph 2, above, shall be 6% per annum from such finality until its satisfaction, this
interim period being deemed to be by then an equivalent to a forbearance of credit.

And, in addition to the above, judgments that have become final and executory prior to July 1, 2013, shall not be disturbed
and shall continue to be implemented applying the rate of interest fixed therein.

WHEREFORE, premises considered, the Decision dated September 23, 2008 of the Court of Appeals in CA-G.R. SP No.
98591, and the Resolution dated October 9, 2009 are REVERSED and SET ASIDE. Respondents are Ordered to Pay
petitioner:

(1) backwages computed from the time petitioner was illegally dismissed on January 24, 1997 up to May 27,
2002, when the Resolution of this Court in G.R. No. 151332 became final and executory;
 (2) separation pay computed from August 1990 up to May 27, 2002 at the rate of one month pay per year of
service; and

(3) interest of twelve percent (12%) per annum of the total monetary awards, computed from May 27, 2002 to
June 30, 2013 and six percent (6%) per annum from July 1, 2013 until their full satisfaction.

The Labor Arbiter is hereby ORDERED to make another recomputation of the total monetary benefits awarded and due to
petitioner in accordance with this Decision.

SO ORDERED.

G.R. No. 125817 January 16, 2002

ABELARDO LIM and ESMADITO GUNNABAN, petitioners,

vs.
COURT OF APPEALS and DONATO H. GONZALES, respondents.

BELLOSILLO, J.:

When a passenger jeepney covered by a certificate of public convenience is sold to another who continues to operate it
under the same certificate of public convenience under the so-called kabit system, and in the course thereof the vehicle
meets an accident through the fault of another vehicle, may the new owner sue for damages against the erring vehicle?
Otherwise stated, does the new owner have any legal personality to bring the action, or is he the real party in interest in
the suit, despite the fact that he is not the registered owner under the certificate of public convenience?

Sometime in 1982 private respondent Donato Gonzales purchased an Isuzu passenger jeepney from Gomercino Vallarta,
holder of a certificate of public convenience for the operation of public utility vehicles plying the Monumento-Bulacan
route. While private respondent Gonzales continued offering the jeepney for public transport services he did not have the
registration of the vehicle transferred in his name nor did he secure for himself a certificate of public convenience for its
operation. Thus Vallarta remained on record as its registered owner and operator.1âwphi1.nêt

On 22 July 1990, while the jeepney was running northbound along the North Diversion Road somewhere in Meycauayan,
Bulacan, it collided with a ten-wheeler-truck owned by petitioner Abelardo Lim and driven by his co-petitioner Esmadito
Gunnaban. Gunnaban owned responsibility for the accident, explaining that while he was traveling towards Manila the
truck suddenly lost its brakes. To avoid colliding with another vehicle, he swerved to the left until he reached the center
island. However, as the center island eventually came to an end, he veered farther to the left until he smashed into a
Ferroza automobile, and later, into private respondent's passenger jeepney driven by one Virgilio Gonzales. The impact
caused severe damage to both the Ferroza and the passenger jeepney and left one (1) passenger dead and many others
wounded.

Petitioner Lim shouldered the costs for hospitalization of the wounded, compensated the heirs of the deceased
passenger, and had the Ferroza restored to good condition. He also negotiated with private respondent and offered to
have the passenger jeepney repaired at his shop. Private respondent however did not accept the offer so Lim offered him
₱20,000.00, the assessment of the damage as estimated by his chief mechanic. Again, petitioner Lim's proposition was
rejected; instead, private respondent demanded a brand-new jeep or the amount of ₱236,000.00. Lim increased his bid to
₱40,000.00 but private respondent was unyielding. Under the circumstances, negotiations had to be abandoned; hence,
the filing of the complaint for damages by private respondent against petitioners.

In his answer Lim denied liability by contending that he exercised due diligence in the selection and supervision of his
employees. He further asserted that as the jeepney was registered in Vallarta’s name, it was Vallarta and not private
1
respondent who was the real party in interest. For his part, petitioner Gunnaban averred that the accident was a fortuitous
2
event which was beyond his control.

Meanwhile, the damaged passenger jeepney was left by the roadside to corrode and decay. Private respondent explained
that although he wanted to take his jeepney home he had no capability, financial or otherwise, to tow the damaged
3
vehicle.

The main point of contention between the parties related to the amount of damages due private respondent. Private
respondent Gonzales averred that per estimate made by an automobile repair shop he would have to spend ₱236,000.00
4
to restore his jeepney to its original condition. On the other hand, petitioners insisted that they could have the vehicle
5
repaired for ₱20,000.00.

On 1 October 1993 the trial court upheld private respondent's claim and awarded him ₱236,000.00 with legal interest from
22 July 1990 as compensatory damages and ₱30,000.00 as attorney's fees. In support of its decision, the trial court
ratiocinated that as vendee and current owner of the passenger jeepney private respondent stood for all intents and
purposes as the real party in interest. Even Vallarta himself supported private respondent's assertion of interest over the
jeepney for, when he was called to testify, he dispossessed himself of any claim or pretension on the property. Gunnaban
was found by the trial court to have caused the accident since he panicked in the face of an emergency which was rather
palpable from his act of directing his vehicle to a perilous streak down the fast lane of the superhighway then across the
island and ultimately to the opposite lane where it collided with the jeepney.
On the other hand, petitioner Lim's liability for Gunnaban's negligence was premised on his want of diligence in
supervising his employees. It was admitted during trial that Gunnaban doubled as mechanic of the ill-fated truck despite
6
the fact that he was neither tutored nor trained to handle such task.

Forthwith, petitioners appealed to the Court of Appeals which, on 17 July 1996, affirmed the decision of the trial court. In
upholding the decision of the court a quo the appeals court concluded that while an operator under the kabit system could
not sue without joining the registered owner of the vehicle as his principal, equity demanded that the present case be
7
made an exception. Hence this petition.

It is petitioners' contention that the Court of Appeals erred in sustaining the decision of the trial court despite their
opposition to the well-established doctrine that an operator of a vehicle continues to be its operator as long as he remains
the operator of record. According to petitioners, to recognize an operator under the kabit system as the real party in
interest and to countenance his claim for damages is utterly subversive of public policy. Petitioners further contend that
inasmuch as the passenger jeepney was purchased by private respondent for only ₱30,000.00, an award of ₱236,000.00
8
is inconceivably large and would amount to unjust enrichment.

Petitioners' attempt to illustrate that an affirmance of the appealed decision could be supportive of the
pernicious kabit system does not persuade. Their labored efforts to demonstrate how the questioned rulings of the
courts a quoare diametrically opposed to the policy of the law requiring operators of public utility vehicles to secure a
certificate of public convenience for their operation is quite unavailing.

The kabit system is an arrangement whereby a person who has been granted a certificate of public convenience allows
other persons who own motor vehicles to operate them under his license, sometimes for a fee or percentage of the
9
earnings. Although the parties to such an agreement are not outrightly penalized by law, the kabit system is invariably
recognized as being contrary to public policy and therefore void and inexistent under Art. 1409 of the Civil Code.

10
In the early case of Dizon v. Octavio the Court explained that one of the primary factors considered in the granting of a
certificate of public convenience for the business of public transportation is the financial capacity of the holder of the
license, so that liabilities arising from accidents may be duly compensated. The kabit system renders illusory such
purpose and, worse, may still be availed of by the grantee to escape civil liability caused by a negligent use of a vehicle
owned by another and operated under his license. If a registered owner is allowed to escape liability by proving who the
supposed owner of the vehicle is, it would be easy for him to transfer the subject vehicle to another who possesses no
property with which to respond financially for the damage done. Thus, for the safety of passengers and the public who
may have been wronged and deceived through the baneful kabit system, the registered owner of the vehicle is not
allowed to prove that another person has become the owner so that he may be thereby relieved of responsibility.
11
Subsequent cases affirm such basic doctrine.

It would seem then that the thrust of the law in enjoining the kabit system is not so much as to penalize the parties but to
identify the person upon whom responsibility may be fixed in case of an accident with the end view of protecting the riding
public. The policy therefore loses its force if the public at large is not deceived, much less involved.

In the present case it is at once apparent that the evil sought to be prevented in enjoining the kabit system does not
exist. First, neither of the parties to the pernicious kabit system is being held liable for damages. Second, the case arose
from the negligence of another vehicle in using the public road to whom no representation, or misrepresentation, as
regards the ownership and operation of the passenger jeepney was made and to whom no such representation, or
misrepresentation, was necessary. Thus it cannot be said that private respondent Gonzales and the registered owner of
the jeepney were in estoppel for leading the public to believe that the jeepney belonged to the registered owner. Third, the
riding public was not bothered nor inconvenienced at the very least by the illegal arrangement. On the contrary, it was
private respondent himself who had been wronged and was seeking compensation for the damage done to him. Certainly,
it would be the height of inequity to deny him his right.

In light of the foregoing, it is evident that private respondent has the right to proceed against petitioners for the damage
caused on his passenger jeepney as well as on his business. Any effort then to frustrate his claim of damages by the
ingenuity with which petitioners framed the issue should be discouraged, if not repelled.

In awarding damages for tortuous injury, it becomes the sole design of the courts to provide for adequate compensation
by putting the plaintiff in the same financial position he was in prior to the tort. It is a fundamental principle in the law on
damages that a defendant cannot be held liable in damages for more than the actual loss which he has inflicted and that a
plaintiff is entitled to no more than the just and adequate compensation for the injury suffered. His recovery is, in the
absence of circumstances giving rise to an allowance of punitive damages, limited to a fair compensation for the harm
12
done. The law will not put him in a position better than where he should be in had not the wrong happened.

In the present case, petitioners insist that as the passenger jeepney was purchased in 1982 for only ₱30,000.00 to award
damages considerably greater than this amount would be improper and unjustified. Petitioners are at best reminded that
indemnification for damages comprehends not only the value of the loss suffered but also that of the profits which the
obligee failed to obtain. In other words, indemnification for damages is not limited to damnum emergens or actual loss but
13
extends to lucrum cessans or the amount of profit lost.

Had private respondent's jeepney not met an accident it could reasonably be expected that it would have continued
earning from the business in which it was engaged. Private respondent avers that he derives an average income of
₱300.00 per day from his passenger jeepney and this earning was included in the award of damages made by the trial
court and upheld by the appeals court. The award therefore of ₱236,000.00 as compensatory damages is not beyond
reason nor speculative as it is based on a reasonable estimate of the total damage suffered by private
respondent, i.e. damage wrought upon his jeepney and the income lost from his transportation business. Petitioners for
their part did not offer any substantive evidence to refute the estimate made by the courts a quo.

However, we are constrained to depart from the conclusion of the lower courts that upon the award of compensatory
damages legal interest should be imposed beginning 22 July 1990, i.e. the date of the accident. Upon the provisions of
Art. 2213 of the Civil Code, interest "cannot be recovered upon unliquidated claims or damages, except when the demand
can be established with reasonable certainty." It is axiomatic that if the suit were for damages, unliquidated and not known
until definitely ascertained, assessed and determined by the courts after proof, interest at the rate of six percent (6%) per
annum should be from the date the judgment of the court is made (at which time the quantification of damages may be
14
deemed to be reasonably ascertained).

In this case, the matter was not a liquidated obligation as the assessment of the damage on the vehicle was heavily
debated upon by the parties with private respondent's demand for ₱236,000.00 being refuted by petitioners who argue
that they could have the vehicle repaired easily for ₱20,000.00. In fine, the amount due private respondent was not a
liquidated account that was already demandable and payable.

One last word. We have observed that private respondent left his passenger jeepney by the roadside at the mercy of the
elements. Article 2203 of the Civil Code exhorts parties suffering from loss or injury to exercise the diligence of a good
father of a family to minimize the damages resulting from the act or omission in question. One who is injured then by the
wrongful or negligent act of another should exercise reasonable care and diligence to minimize the resulting damage.
Anyway, he can recover from the wrongdoer money lost in reasonable efforts to preserve the property injured and for
15
injuries incurred in attempting to prevent damage to it.

However we sadly note that in the present case petitioners failed to offer in evidence the estimated amount of the damage
caused by private respondent's unconcern towards the damaged vehicle. It is the burden of petitioners to show
satisfactorily not only that the injured party could have mitigated his damages but also the amount thereof; failing in this
regard, the amount of damages awarded cannot be proportionately reduced.

WHEREFORE, the questioned Decision awarding private respondent Donato Gonzales ₱236,000.00 with legal interest
from 22 July 1990 as compensatory damages and ₱30,000.00 as attorney's fees is MODIFIED. Interest at the rate of six
percent (6%) per annum shall be computed from the time the judgment of the lower court is made until the finality of this
Decision. If the adjudged principal and interest remain unpaid thereafter, the interest shall be twelve percent (12%) per
annum computed from the time judgment becomes final and executory until it is fully satisfied.1âwphi1.nêt

Costs against petitioners.

SO ORDERED.