1. MEA Builders, Inc. vs. CA, Metrobank G.R.

No. 121484, January 31,2005

MEA entered into a contract with Capital

Resources Corp. (CRC), for the construction of
housing units for CRC’s residential subdv in
Multinat’l Village, Parañ. (₱39M) payable in cash
and negotiable securities. MEA, CRC and
Metrobank entered into a tripartite agreement in
which it agreed to issue the whereby stand-by LC.
It later amended the construction agreement, by
increasing the contract price to ₱45M.

Metrobank expressed its willingness to finance

the construction project up to the amount of
₱190M thru LC in a letter addressed to Home
Financing Corp (HFC). When MEA completed
construction of several housing units entitling it to
₱3M from Metrobank, it executed a new PN in
favor of Metrobank for the remaining ₱1.5M
balance out of the original ₱3M. Metrobank
advised MEA to hold off construction work until
after CRC would have sold a substantial number
of the completed units. MEA objected to the
indefinite suspension and demanded payment for
all their work accomplishments. In the meantime,
MEA defaulted on the ₱1.5 M PN so Metrobank
instituted Civil Case for the recovery of the
amount covered by PN.

RTC

The trial court decided in favor of MEA and

ordered Metrobank to pay 18.2M for the actual
fair market value of construction work already
performed by MEA including the cost of filling
materials advanced by it at the CRC Multinational
Village minus the amount of P1.5M covered by
the PN and the sum of ₱9M as actual and
consequential damages suffered by MEA.

CA

CA held that the bank should only be held

answerable for an amount of ₱6M representing
the value of the town-houses units less ₱3.2M
representing payment and less the loan of ₱1.5M
PN. CA deleted the award of ₱9M actual
compensatory damages. MEA assail the CA
decision which reduced the amount awarded to
them.

ISSUE: Is MEA Builders entitled to 9M actual

and compensatory damages despite the fact
that there is no document presented by Llave
to prove such claim?

HELD: NO

In legal contemplation, the term "damages" is the

sum of money which the law awards or imposes
as a pecuniary compensation, a recompense, or
satisfaction for an injury done or a wrong
sustained as a consequence either of a breach of
a contractual obligation or a tortious tortuous act.
Here, aside from the fact that we find neither
breach of contractual obligation nor bad faith on
the part of Metrobank when it suggested the
suspension of construction work for the protection
of the parties’ mutual interests, petitioners failed
to establish actual or compensatory damages
with a reasonable degree of certainty. The trial
court’s sole basis for the award of compensatory
damages was the testimony of petitioner Llave
who made a sweeping statement that the ₱9M
represents unrealized profits plus 3% monthly
interests. This is was not sufficient. The award of
actual or compensatory damages could not be
sustained without any tangible document any
proof to support such claim.

Regarding the award of attorney’s fees, suffice it

to state that we find no sufficient justification for
such an award. The grant of award of attorney’s
fees is the exception rather than the rule, hence,
it is necessary for the trial court to make findings
of fact and law, which would bring the case within
the exception and justify the grant of the award.

2. Sps. Custodio Vs. CA, Pacifico Mabasa G.R.

No. 116100, February 9, 1996

A Civil Case for the grant of an easement of right

of way was filed by Pacifico Mabasa against
Custodio et al. before the RTC. He was able to
acquire said property through a contract of sale.
It was surrounded by other immovables and a
Septic Tank. As an access to P. Burgos Street,
there are two possible passageways. The first
passageway is approximately one meter wide
and is about 20 meters. The second passageway
is about 3 meters in width and length. Defendant
constructed a fence. She also mentioned some
other inconveniences of having the front of her
house a pathway such as when some of the
tenants were drunk and would bang their doors
and windows.

RTC

The trial court rendered a decision in favor of the

plaintiff ordering defendants Custodios and
Santoses to give plaintiff permanent access
ingress and egress, to the public street and
ordering the plaintiff to pay defendants Custodios
and Santoses the 8K as indemnity for the
permanent use of the passageway. Plaintiff went
to the CA raising the sole issue of whether or not
the lower court erred in not awarding damages in
their favor. CA rendered its decision affirming the
judgment of the trial court with modification,
ordering petitioners to pay respondent 65k as
Actual Damages, 30k as Moral Damages, and
10k as Exemplary Damages.

ISSUE: WHETHER OR NOT RESPONDENTS

ARE ENTITLED FOR AWARD OF DAMAGES

HELD: NO

The award of damages has no substantial legal

basis. It 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. 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
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 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
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 because the plaintiff suffered
some pain and suffering.

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 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 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. At the time of the
construction of the fence, the lot was not subject
to any servitudes. Prior to the decision granting
right of way to respondents, 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 petitioners is damnum absque
injuria. The courts can give no redress for
hardship to an individual resulting from action
reasonably calculated to achieve a lawful means.
3. Borlado vs. CA, Bulan G.R. No. 114118,
August 28, 2001

3 Petitioners are the heirs of Borlado. The

original owner of the lot was Serapio,
grandfather of petitioners. Serapio sold the
lot to Bacero for 300P. After Bacero died,
his heirs sold it to spouses Bulan. Bulan
filed a complaint for ejectment case against
petitioners which the court favored them.
Instead of appealing, petitioners filed the
present case with the RTC but was
dismissed for lack of cause of action. They
assail the decision that they are to be
jointly and solidarily liable to defendants
the quantity of 100 cavans of palay every
year from 1972 until plaintiffs vacate the
premises of the land in question. The court
declare defendants as owner of the land
and entitled to possession and ordered
them to pay defendants the sum of 5K
attorney’s fees and the sum of P5k as
litigation expenses; and To pay the costs of
the suit.

ISSUE: WHETHER OR NOT trial court

and the CA erred in holding petitioners
liable to pay respondents one hundred
(100) cavans of palay every year from
1972 until they vacate the premises of
the land in question.chanrob1

HELD; YES

The trial court and the CA erred in holding

petitioners liable to pay respondents one
hundred (100) cavans of palay every year
from 1972 until they vacate the premises
of the land in question.chanrob1es virtua1
1aw 1ibrary

The one hundred cavans of palay was

awarded as a form of damages. We cannot
sustain the award. "Palay" is not legal
tender currency in the Philippines. SC
DENIES the petition and AFFIRMS the
decision of the CA with modification that
petitioners’ liability to pay respondents one
hundred (100) cavans of palay every year
from 1972 until petitioners vacate the land
in question is deleted, for lack of basis.

4. Farolan Vs. Solmac G.R. No. 83589, March

13, 1991

Solmac Marketing Corp. was the assignee,

transferee, and owner of an importation of Clojus
Recycling Plastic Products of polypropylene film.
SOLMAC prayed for the unconditional release of
the subject importation. Ramon Farolan was then
the Acting Commissioner of Customs while
Parayno was then the Acting Chief, Customs
Intelligence and Investigation Division. They were
thus sued in their official capacities as officers in
the government in a petition for mandamus filed
by SOLMAC. They were both held personally
liable for the awarded damages since their act of
detention of the goods was irregular and devoid
of legal basis, hence, not done in the regular
performance of official duty.

RTC rendered a decision ordering to release the

subject importation immediately without drilling of
holes, subject only to the normal requirements of
the customs processing for such release to be
done with utmost dispatch as time is of the
essence; and the preliminary injunction hereto
issued is hereby made permanent until actual
physical release of the merchandise and without
pronouncement as to costs.

SOLMAC appealed to the CA only insofar as to

the denial of the award of damages is concerned.
CA ordered public officers to pay solidarily and
in their private personal capacities respondent
Solmac Marketing Corp. temperate damages in
the sum of P100K, exemplary damages in the
sum of P50K, and P25K, as attorney's fees and
expenses of litigation. This challenged resolution
of the respondent court modified its decision by
reducing into halves the original awards for
exemplary damages and attorney's fees and
litigation expenses, respectively, keeping intact
the original grant of P1000K in the concept of
temperate damages.

ISSUE: WHETHER OR NOT PETITIONERS

ARE LIABLE TO PAY FOR DAMAGES.

Whether or not the petitioners acted in

good faith in not immediately
releasing the questioned importation,
or, simply, can they be held liable, in
their personal and private capacities,
for damages to the private
respondent.

HELD: NO/YES

With reference to the claim of plaintiff to

damages, actual and exemplary, and attorney's
fees, the Court finds it difficult to discredit or
disregard totally the defendants' defense of good
faith premised on the excuse that they were all
the time awaiting clarification of the Board of
Investments on the matter. There is no clear and
convincing proof showing the alleged bad faith of
the petitioners. On the contraryi, the record is
replete with evidence bolstering the petitioners'
claim of good faith. First, there was the report of
the National Institute of Science and Technology
(NIST) that, contrary to what the respondent
claimed, the subject importation was not OPP film
scraps but oriented polypropylene, a plastic
product of stronger material, whose importation to
the Phil was restricted, if not prohibited. It was on
the strength of this finding that the petitioners
withheld the release of the subject importation for
being contrary to law. Second, the petitioners
testified that, on many occasions, the Bureau of
Customs sought the advice of the BOI on whether
the subject importation might be released. Third,
petitioner Parayno also testified during the trial
that up to that time (of the trial) there was no
clear-cut policy on the part of the BOI regarding
the entry into the Phil. of oriented polypropylene
(OPP).

But even granting that the petitioners committed

a mistake in withholding the release of the
subject, whatever damage they may have caused
as a result of such an erroneous interpretation, if
any at all, is in the nature of a damnum absque
injuria. Mistakes concededly committed by public
officers are not actionable absent any clear
showing that they were motivated by malice or
gross negligence amounting to bad faith. After all,
"even under the law of public officers, the acts of
the petitioners are protected by the presumption
of good faith. Omnia praesumuntur rite
et solemniter esse acta. (All things are presumed
to be correctly and solemnly done.) It was private
respondent's burden to overcome this juris
tantum presumption.

5. Chiang Kai Shek School vs. CA, Fausta Oh,

G.R. no. 58028, April 28, 1989

Fausta Oh reported for work at the Chiang Kai

Shek School on the first week of July, 1968. She
was told she had no assignment for the next
semester. Oh was shocked. She had been
teaching in the school since 1932 for a
continuous period of almost 33 years. She
demanded separation pay, social security
benefits, salary differentials, maternity benefits
and moral and exemplary damages.

ISSUE: Whether or not Oh is entitled for

awards of damages.

HELD: YES

The Court holds, after considering the particular

circumstance of Oh's employment, that she had
become a permanent employee of the school and
entitled to security of tenure at the time of her
dismissal. Since no cause was shown and
established at an appropriate hearing, and the
notice then required by law had not been given,
such dismissal was invalid.

Hence, for the wrongful act of the petitioner, the

private respondent is entitled to moral damages.
As a proximate result of her illegal dismissal, she
suffered mental anguish, serious anxiety, wounded
feelings and even besmirched reputation as an
experienced teacher for more than three decades. We
also find that the respondent court did not err in
awarding her exemplary damages because the
petitioner acted in a wanton and oppressive manner
when it dismissed her.

The Court takes this opportunity to pay a sincere

tribute to the grade school teachers, who are always
at the forefront in the battle against illiteracy and
ignorance. If only because it is they who open the
minds of their pupils to an unexplored world awash
with the magic of letters and numbers, which is an
extraordinary feat indeed, these humble mentors
deserve all our respect and appreciation.
6. Suario vs. BPI, G.R. No. 404059 August 25
1989

Leonardo Suario filed a complaint for

separation pay, damages and attorney’s
fees against the BPI, Davao Branch alleging
that he has been a loyal employee of the
respondent bank since March, 1969, now
as Credit Investigator-Appraiser-Credit
Analyst. He requested VP for a 6-month
leave of absence without pay purposely to
take the 1976 pre-bar review in Manila.
Later, he received a verbal notice from the
new Branch Manager that the respondent’s
Head Office approved only a 30-day leave
of absence without pay. He never
suspected that his application would be
disapproved.

During his leave, he was ordered to report

back for work since his request was
allegedly disapproved and that failure to
report back for work would be a conclusive
proof that the complainant is no longer
interested to continue working and
therefore considered resigned. Later, he
received another letter attaching a xerox
copy of the application for a Clearance to
terminate on the ground of resignation/or
abandonment. He failed to file his
opposition since he was already in Manila
taking up the review and was then very
busy since the bar examination was only
two months shy. When he went to BPI, he
was verbally informed that he was already
dismissed. He filed an illegal dismissal case
in which BPI was ordered to pay him for
separation pay in the amount of P11.8k.
His claim for moral, actual, and exemplary
damages and attorney s fees are hereby
dismissed for lack of merit.

The petitioner, with himself as his own

counsel, filed this petition for review of the
decision of the National Labor Relations
Commission (NLRC) which denied his claim
for damages arising from an alleged illegal
dismissal. In addition to the separation pay
already awarded to him, the petitioner asks
for P9,995.00 actual damages,
P300,000.00 moral damages, P200,000.00
exemplary damages, and attorney’s fees to
be determined by the Court.

ISSUE: Whether or not the NLRC

committed grave abuse of discretion in
denying the petitioner’s claim for
actual, moral and exemplary damages
plus attorney’s fees in addition to his
separation pay.

HELD: NO

On the matter of NLRC jurisdiction over

claims for damages:

"ART. 217. Jurisdiction of Labor Arbiters

and the Commission. — (a) The Labor
Arbiters shall have exclusive jurisdiction to
hear and decide the following cases
involving all workers, whether agricultural
or non-agricultural:chanrob1es virtual 1aw
library

‘(3) All money claims of workers involving

non-payment or underpayment of wages,
overtime or premium compensation,
maternity or service incentive leave,
separation pay and other money claims
arising from employer-employee relation,
except claims for employee’s
compensation, social security and
medicare benefits and as otherwise
provided in Article 128 of this Code;

The contention of private respondent that

the NLRC is not clothed with authority to
entertain claims for moral and other forms
of damages is based on PD 1367 which took
effect on May 1, 1979 and which amended
Article 217 by specifically providing that
"Regional Directors shall not indorse and
Labor Arbiters shall not entertain claims for
moral or other forms of damages."cralaw
virtua1aw library

This limitation on jurisdiction did not last

long..p Evidently, the lawmaking authority
had second thoughts about depriving the
Labor Arbiters and the NLRC of the
jurisdiction to award damages in labor
cases because that set up would mean
duplicity of suits, splitting the cause of
action and possible conflicting findings and
conclusions by two tribunals on one and the
same claim. PD 1691 nullified PD 1367 and
restored to the LA and the NLRC their
jurisdiction to award all kinds of damages
in cases arising from employer-employee
relations.

LA has jurisdiction to award to the

dismissed employee not only the reliefs
specifically provided by labor laws, but also
moral and the forms of damages governed
by the Civil Code. Moral damages would be
recoverable, for example, where the
dismissal of the employee was not only
effected without authorized cause and/or
due process — for which relief is granted by
the Labor Code — but was attended by bad
faith or fraud, or constituted an act
oppressive to labor, or was done in a
manner contrary to morals, good customs
or public policy — for which the obtainable
relief is determined by ‘the Civil Code (not
the Labor Code). Stated otherwise, if the
evidence adduced by the employee before
the LA should establish that the employer
did indeed terminate the employee’s
services without just cause or without
according him due process, the LA’s
judgment shall be for the employer to
reinstate the employee and pay him his
back wages, or exceptionally, for the
employee simply to receive separation pay.
These are reliefs explicitly prescribed by
the Labor Code. But any award of moral
damages by the LA obviously cannot
be based on the Labor Code but should
be grounded on the Civil Code. Such an
award cannot be justified solely upon
the premise (otherwise sufficient for
redress under the Labor Code) that the
employer fired his employee without
just cause or due process. Additional
facts must be pleaded and proven to
warrant the grant of moral damages under
the Civil Code, these being, to repeat, that
the act of dismissal was attended by
bad faith or fraud, or was oppressive
to labor, or done in a manner contrary
to morals, good customs, or public
policy; and, of course, that social
humiliation, wounded feelings, grave
anxiety, etc., resulted therefrom.

In addressing the first issue (separation

pay etc.), the Labor Arbiter applies the
Labor Code; in addressing the second,
(moral damages) the Civil Code.

"Moral damages may be awarded to

compensate one for diverse injuries such
as mental anguish, besmirched reputation,
wounded feelings and social humiliation. It
is however not enough that such injuries
have arisen; it is essential that they
have sprung from a wrongful act or
omission of the defendant which was
the proximate cause thereof.

‘Moral damages include physical suffering,

mental anguish, fright, serious anxiety,
besmirched reputation, wounded feelings,
moral shock, social humiliation, and similar
injury. Though incapable of pecuniary
computation, moral damages may be
recovered if they are the proximate result
of the defendant’s wrongful act or
omission.’ (Civil Code, Article 2217).

In this case, there was no bad faith or fraud

on the part of the bank officials who denied
the petitioner’s request for a six months’
leave of absence without pay. There is no
evidence to show that they meant to
deceive the petitioner. The fact that the
petitioner’s request for six months’ leave of
absence was denied does not ipso facto
entitle him to damages.

7. Pantranco North Express, Inc. vs. Baesa, G.R.

No. 7905051 November 14, 1989

Spouses Baesa and their children were

aboard a passenger jeepney on their way
to a picnic at Malalam River, Isabela, to
celebrate their 5th wedding anniversary. 15
of them rode in the passenger jeepney
driven by David Ico, who was also the
registered owner. While they were
proceeding towards Malalam River, a
speeding PANTRANCO bus from Aparri, on
its regular route to Manila, encroached on
the jeepney’s lane while negotiating a
curve, and collided with it. As a result of
the accident, they died while the rest of the
passengers suffered injuries. The jeepney
was extensively damaged. After the
accident the driver of the PANTRANCO Bus
boarded a car and remained in hiding.

Maricar Baesa through her guardian filed

separate actions for damages arising from
quasi-delict against PANTRANCO/
PANTRANCO invoked the defense of due
diligence in the selection and supervision of
its driver. CFI of Pangasinan rendered a
decision against PANTRANCO awarding the
total amount 2.3M as damages, plus 10%
thereof as attorney’s fees and costs to
Maricar Baesa and the total 662K as
damages, plus 10% thereof as attorney’s
fees and costs to Fe Ico and her children.
On appeal, the cases were consolidated
and the CA, it modified the decision of the
trial court by ordering PANTRANCO to pay
1.189M as damages, plus 29K as attorney’s
fees to Maricar Baesa, and P344K plus 10K
as attorney’s fees to Fe Ico and her
children, and to pay the costs in both
cases.

Petitioner assails court’s findings because

no documentary evidence in support
thereof, such as income tax returns, pay-
rolls, pay slips or invoices obtained in the
usual course of business, were presented.
Petitioner argues that the "bare and self-
serving testimonies of the wife of the
deceased David Ico and the mother of the
deceased Marilyn Baesa have no probative
value to sustain in law the CA’s conclusion
on the respective earnings of the deceased
victims." It is petitioner’s contention that
the evidence presented by the PR does not
meet the requirements of clear and
satisfactory evidence to prove actual and
compensatory damages.

ISSUE: WHETHER OR NOT THE LACK

OF documentary evidence in support
claim of damages would not warrant
the court to award damages.

HELD: NO.

While it is true that PR should have

presented documentary evidence to
support their claim for damages for loss of
earning capacity of the deceased victims,
the absence thereof does not
necessarily bar the recovery of the
damages in question. The testimony of
Fe Ico and Francisca Bascos as to the
earning capacity of David Ico, and the
spouses Baesa, respectively, are sufficient
to establish a basis from which the court
can make a fair and reasonable estimate of
the damages for the loss of earning
capacity of the three deceased victims.
Moreover, in fixing the damages for loss of
earning capacity of a deceased victim, the
court can consider the nature of his
occupation, his educational attainment and
the state of his health at the time of death.

In the instant case, David Ico was 38 years

old at the time of his death in 1981 and was
driving his own passenger jeepney. The
spouses Baesa were both 30 yo at the time
of their death. Ceasar was a commerce
degree holder and the proprietor of the
Cauayan Press, printer of the Cauayan
Valley Newspaper and the Valley Times at
Cauayan, Isabela. Marilyn graduated as a
nurse in 1976 and at the time of her death,
was the company nurse, personnel
manager, treasurer and cashier of the
Ilagan Press. Respondent court duly
considered these factors, together with the
uncontradicted testimonies of Fe Ico and
Francisca Bascos, in fixing the amount of
damages for the loss of earning capacity of
David Ico and the spouses
Baesa.chanrobles.com:cralaw:red

However, CA committed error in fixing the

compensatory damages for the death of
Harold Jim Baesa and Marcelino Baesa. The
indemnity for the death of a person was
fixed by this Court at 30K. Maricar Baesa
should therefore be awarded 60K as
indemnity for the death of her brothers,
Harold and Marcelino or 30K for the death
of each brother.

8. Mercenas vs. Court of Appeals, G.R. No.

88052 December 14 1989

AThe M/T "Tacloban City," a barge-type oil

tanker, having unloaded its cargo of petroleum
products, left Amlan, Negros and headed towards
Bataan. M/V "Don Juan," an interisland vessel,
left Manila bound for Bacolod with 750
passengers. In the evening, the two collided at
the Talbas Strait near in the vicinity of the island
of Mindoro. When the collision occurred, the sea
was calm, the weather fair and visibility good. As
a result of this collision, the M/V "Don Juan" sank
and hundreds of its passengers perished. Among
the ill-fated passengers were the parents of
petitioners, the spouses Mecenas, whose bodies
were never found despite intensive search by
petitioners. Petitioners filed a complaint against
Negros Navigation and Capt. Roger Santisteban,
the captain of the "Don Juan" without, however,
impleading either PNOC or PNOC Shipping.
Petitioners were the 7 surviving children of
Mecenas alleging negligence of Negros
Navigation and Capt. Santisteban based on quasi
delict. Petitioners prayed for actual damages of
not less than P100K as well as moral and
exemplary damages in such amount as the Court
may deem reasonable to award to them. Another
complaint was filed in the same court by Lilia
Ciocon claiming damages against Negros
Navigation, PNOC and PNOC Shipping for the
death of her husband Manuel Ciocon, another of
the luckless passengers of the "Don Juan."
Manuel Ciocon's body, too, was never found.

The two (2) cases were consolidated and heard

jointly by the RTC ordering the defendant Negros
Navigation Co., Inc. and Capt. Roger Santisteban
jointly and severally liable to pay plaintiffs the sum
of P400k for the death of plaintiffs' parents,
Perfecto and Sofia Mecenas and to pay said
plaintiff's the sum of P15k attorney's fees; plus
costs of the suit. Each of the defendants Negros
Navigation Co Inc. and Philippine National Oil
Company/PNOC Shipping and Transportation
Company, to pay the plaintiff the sum of P100K
for the death of Manuel Ciocon, to pay said
plaintiff jointly and severally, the sum of P15Kas
and for attorney's fees, plus costs of the suit. 1

CA held defendants to pay plaintiffs by reducing

from 400k to P100K as actual and compensatory
damages and P15K as attorney's fees and the
cost of the suit.

ISSUE: Whether or not such reduction of the

damages awarded was proper.

Whether petitioners were entitled to

an award of damages other
than actual or compensatory
damages, that is, whether they were
entitled to award of moral and
exemplary damages.

HELD: No/Yes.

The action is more appropriately regarded as

grounded on contract, the contract of carriage
between the Mecenas spouses as regular
passengers who paid for their boat tickets and
Negros Navigation; the surviving children while
not themselves passengers are in effect suing the
carrier in representation of their deceased
parents. Thus, the suit filed by the widow Lilia
Ciocon was correctly treated by the trial and
appellate courts as based on contract and as well
on quasi-delict (vis-a-vis PNOC and PNOC
Shipping). In an action based upon a breach of
the contract of carriage, the carrier under our civil
law is liable for the death of passengers arising
from the negligence or willful act of the carrier's
employees although such employees may have
acted beyond the scope of their authority or even
in violation of the instructions of the carrier, which
liability may include liability for moral
damages. It follows that petitioners would be
entitled to moral damages so long as the collision
with the "Tacloban City" and the sinking of the
"Don Juan" were caused or attended by
negligence on the part of private respondents.

In respect of the petitioners' claim for exemplary

damages, it is only necessary to refer to Article
2232 of the Civil Code:

Article 2332. In contracts and

quasi-contracts, the court may
exemplary damages if the
defendant acted in a wanton,
fraudulent, reckless,
oppressive or malevolent
manner.
Thus, whether petitioners are entitled to
exemplary damages as claimed must depend
upon whether or not PR acted recklessly, that is,
with gross negligence. The trial court, after a
review of the evidence submitted during the trial,
arrived at the same conclusion that the Minister
of National Defense had reached that both the
"Tacloban City" and the "Don Juan" were at fault
in the collision. The Court is of the considered
view that the defendants are equally negligent
and are liable for damages.

The behaviour of the captain of the "Don Juan" in

tills instance-playing mahjong "before and up to
the time of collision constitutes behaviour that is
simply unacceptable on the part of the master of
a vessel to whose hands the lives and welfare of
at least seven hundred fifty (750) passengers had
been entrusted. There is also evidence that the
"Don Juan" was carrying more passengers than
she had been certified as allowed to carry.
Passengers allowed : 810 - Total Persons
Allowed : 864

It will be recalled that the trial court had rendered

a lump sum of P400,000.00 to petitioners for the
death of their parents in the "Don Juan" tragedy.
Clearly, the trial court should have included a
breakdown of the lump sum award into its
component parts: compensatory damages, moral
damages and exemplary damages.

The original award of the trial court of

P400,000.00 could well have been disaggregated
by the trial court and the Court of Appeals in the
following manner:

1. actual or compensatory damages proved in

the course of trial consisting of actual
expenses incurred by petitioners in their
search for their parents' bodies- -
P126,000.00

2. actual or compensatory damages in case of

wrongful death

(P30,000.00 x
2) -P60,000.00

(3) moral damages -P107,000.00

(4) exemplary damages -P107,000.00

Total -P400,000.00

Considering that petitioners, legitimate children of

the deceased spouses Mecenas, are seven (7) in
number and that they lost both father and mother
in one fell blow of fate, and considering the pain
and anxiety they doubtless experienced while
searching for their parents among the survivors
and the corpses recovered from the sea or
washed ashore, we believe that an additional
amount of P200K for moral damages, making a
total of P307K for moral damages would be quite
reasonable.

Exemplary damages are designed by our civil

law to permit the courts to reshape behaviour
that is socially deleterious in its consequence
by creating negative incentives or deterrents
against such behaviour. One of those
instruments is the institution of exemplary
damages; one of those ends, of special
importance in an archipelagic state like the
Philippines, is the safe and reliable carriage of
people and goods by sea. Considering the
foregoing, we believe that an additional award in
the amount of P200K as exmplary damages, is
quite modest.

REVERSED and SET ASIDE CA decision. The

award granted by the trial court is hereby
RESTORED and AUGMENTED as follows:

(a) P 126,000.00 for actual

damages;

(b) P 60,000.00 as
compensatory damages for
wrongful death;

(c) P 307,000.00 as moral

damages;

(d) P 307,000.00 as exemplary

damages making a total of P
800,000.00; and

(e) P 15,000.00 as attorney's

fees.

9. Simex International (Manila) Inc. vs. CA,

Traders Royal Bank G.R. No. 88013 March 19, 1990

Petitioner is a private corp engaged in the

exportation of food products. It buys these
products from various local suppliers and then
sells them abroad, particularly in US, Canada and
the M.E. It deposited to its account in the bank the
amount of P100K, thus increasing its balance as
of that date to P190K.1 Subsequently, it issued
several checks against its deposit but was
suprised to learn later that they had been
dishonored for insufficient funds. As a
consequence, the California Manuf. Corp. sent a
letter of demand to the petitioner, threatening
prosecution if the dishonored check issued to it
was not made good. It also withheld delivery of
the order made by the petitioner. The petitioner
complained to the bank. P100K deposit had not
been credited to it. It demanded reparation from
the bank for its "gross and wanton negligence." It
then filed a complaint in the then CFI claiming
from bank moral damages in the sum of 1M and
exemplary damages in the sum of 500K plus 25%
attorney's fees, and costs.

Observing that the plaintiff's right had been

violated, he ordered the defendant to pay nominal
damages in the amount of P20K plus P5K
attorney's fees and costs. CA affirmed. It found
that PR was guilty of negligence but agreed that
the petitioner was nevertheless not entitled to
moral damages.

The essential ingredient of

moral damages is proof of bad
faith. Indeed, there was the
omission by the bank to credit
 appellant's deposit of P100K.
But the bank rectified its
records. It credited the said
amount in favor of petitioner in
less than a month. The
dishonored checks were
eventually paid. These
circumstances negate any
imputation or insinuation of
malicious, fraudulent, wanton
and gross bad faith and
negligence on the part of the
defendant-appellant.

ISSUE: Whether the petitioner is entitled to

the said damages and, if so, in what amounts.

HELD:

The bank has not even explained why it was

committed at all. It is true that the dishonored
checks were, as the CA put it, "eventually" paid.
However, this took almost a month when,
properly, the checks should have been paid
immediately upon presentment. The initial
carelessness of the bank, aggravated by the
lack of promptitude in repairing its error,
justifies the grant of moral damages. This
rather lackadaisical attitude toward the
complaining depositor constituted the gross
negligence, if not wanton bad faith, that the
respondent court said had not been established
by the petitioner.

The fact is that the petitioner's credit line was

canceled and its orders were not acted upon
pending receipt of actual payment by the
suppliers. Its business declined. Its reputation
was tarnished. Its standing was reduced in the
business community. All this was due to the fault
of the respondent bank which was undeniably
remiss in its duty to the petitioner.

Article 2205 of the Civil Code provides that

actual or compensatory damages may be
receive"(2) for injury to the plaintiff s
business standing or commercial credit."
There is no question that the petitioner did
sustain actual injury as a result of the
dishonored checks and that the existence of
the loss having been established "absolute
certainty as to its amount is not
required." Such injury should bolster all the
more the demand of the petitioner for moral
damages and justifies the examination by this
Court of the validity and reasonableness of
the said claim.

Moral damages are not awarded to penalize the

defendant but to compensate the plaintiff for the
injuries he may have suffered.

In the case at bar, the petitioner is seeking such

damages for the prejudice sustained by it as a
result of the PR’s fault. Moral damages are not
susceptible of pecuniary estimation. Article 2216
of the Civil Code specifically provides that "no
proof of pecuniary loss is necessary in order that
moral, nominal, temperate, liquidated or
exemplary damages may be adjudicated." That is
why the determination of the amount to be
awarded (except liquidated damages) is left to the
sound discretion of the court, according to "the
circumstances of each case."

Moral damages of 1M is nothing short of

preposterous. Its business certainly is not that
big, or its name that prestigious, to sustain such
an extravagant pretense. Moreover, a
corporation is not as a rule entitled to moral
damages because, not being a natural person, it
cannot experience physical suffering or such
sentiments as wounded feelings, serious anxiety,
mental anguish and moral shock. The only
exception to this rule is where the corporation
has a good reputation that is debased,
resulting in its social humiliation. Petitioner
did suffer injury because of the PR’s negligence
that caused the dishonor of the checks issued by
it. It is an unsavory and disreputable entity that
has no good name to protect.

Award of nominal damages of P20K was not

the proper relief to which the petitioner was
entitled. Under Article 2221 of the Civil Code,
"nominal damages are adjudicated in order that a
right of the plaintiff, which has been violated or
invaded by the defendant, may be vindicated or
recognized, and not for the purpose of
indemnifying the plaintiff for any loss suffered by
him." As we have found that the petitioner has
indeed incurred loss through the fault of the
private respondent, the proper remedy is the
award to it of moral damages, which we impose,
in our discretion, in the same amount of
P20,000.00.

Now for the exemplary damages.

Art. 2229. Exemplary or

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

Art. 2232. In contracts and quasi-

contracts, the court may award
exemplary damages if the
defendant acted in a wanton,
fraudulent, reckless, oppressive,
or malevolent manner.

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. As
for business entities like the petitioner, the bank
is a trusted and active associate that can help in
the running of their affairs, not only in the form of
loans when needed but more often in the conduct
of their day-to-day transactions like the issuance
or encashment of checks. In this case, having
been informed of its error in not crediting the
deposit in question to the petitioner, the PR did
not immediately correct it but did so only 23 days
after the deposit was made. It bears repeating
that the record does not contain any satisfactory
explanation of why the error was made. Such
ineptness comes under the concept of the wanton
manner contemplated in the Civil Code that calls
for the imposition of exemplary damages.
Exemplary damages OF 50K "by way of example
or correction for the public good," in the words of
the law. It is expected that this ruling will serve as
a warning and deterrent against the repetition of
the ineptness and indefference that has been
displayed here, lest the confidence of the public
in the banking system be further impaired.

PR is ordered to pay the petitioner, in lieu of

nominal damages, moral damages in the amount
of P20K and exemplary damages in the amount
of P50K plus the original award of attorney's fees
in the amount of P5K, and costs.

10. Radio Communications vs. Rodriguez, G.R.

No. 83768, February 28, 1990

Rodriguez, as President of the World Association

of Law Students (WALS), sent two cablegrams
overseas through RCPI, a domestic corporation
engaged in the business of receiving and
transmitting messages. The cablegram were in
turn, relayed to GLOBE for transmission to their
foreign destination. The telegram to Taha advised
him of Rodriguez's pending arrival in Khartoum,
while the telegram to Merger advised her of the
scheduled WALS conference in Khartoum.
Rodriguez left the Phil and arrived in Khartoum,
Sudan at night. He was forced to sleep at the
airport. Because of the non-receipt of the
cablegram, Taha was not able to meet him.
Worse all preparations for the international
conference had to be cancelled. It turned out that
the wire sent by Rodriguez to Merger was
delivered to the address on the message but the
person who delivered it was told that the address
was no longer staying there. This fact was not
accordingly reported to Rodriguez in Metro
Manila. The undelivered cablegram was not
returned by the correspondent abroad to Globe
for disposition in the Philippines.

Rodriguez filed a complaint for compensatory

damages in the amount of P45K, moral damages
in the amount of P200K and exemplary damages
in the amount of P50Kagainst RCPI and GLOBE.
RTC decision which CA affirmed ordered RCPI
and their co-defendant jointly and severally to pay
the plaintiff, PR herein, 218K -- a) P100K as
moral damages; b) P50K as exemplary damages;
c) P43K as actual damages; and d) P20K as
attorney's fees by way of damages. The trial court
ordered to pay "Moral damages consequent to
the humiliation and embarrassment that the
plaintiff suffered under the two causes of action in
the amount of P100K are adequate.

ISSUE: 1) whether or not petitioner RCPI is

responsible for the non-delivery of the two (2)
telegrams notwithstanding the fact that RCPI
relayed said telegrams to Globe Mackay and

2) whether or not under the attendant

facts and circumstances petitioner
RCPI is liable for moral damages in
the amount of P100K; exemplary
damages in the amount of P50K;
actual damages in the amount of P43K
 and attorney's fees in the amount of
P20K.

HELD:

RCPI cannot escape liability for damages by

passing off the blame for negligence to Globe
Mackay. It has an inter-connecting agreement
with Globe Mackay. RCPI receives messages for
overseas destinations and conducts its business
to transmit foreign messages only through Globe
Mackay.

For recovery of damages, Article 2217 of the

New Civil Code applies. It is provided therein
that: "Moral damages include physical suffering,
mental anguish, fright, serious anxiety,
besmirched reputation, wounded feeling, moral
shock, social humiliation, and similar
injury. Though incapable of pecuniary
computation moral damages may be recovered if
they are the proximate result of the defendant's
wrongful act or omission."

There is no doubt that RCPI's failure to deliver the

two questioned telegrams resulted in the
suffering that respondent Rodriguez, had to
undergo. Respondent Rodriguez left Manila for
Khartoum, Sudan believing that Taha received
his telegram and would meet him at the airport.

The 100K as moral damages in favor of

Rodriguez excessive and unconscionable. Trial
courts are given discretion to determine the
amount of moral damages, CA can only modify or
change the amount awarded when they are
palpably and scandalously excessive 'so as to
indicate that it was the result of passion, prejudice
or corruption on the part of the trial court'. But in
more recent cases where the awards of moral
and exemplary damages are far too excessive
compared to the actual losses sustained by the
aggrieved party, SC ruled that they should be
reduced to more reasonable amounts.

In any case the Court held that

'moral damages are
emphatically not intended to
enrich a complainant at the
expense of a defendant. They
are awarded only to enable the
injured party to obtain means,
diversion or amusements that
will serve to alleviate the moral
suffering he has undergone,
by reason of the defendants'
culpable action.' The award of
moral damages must be
proportionate to the suffering
inflicted.

The amount of P10K as moral damages in favor

of the respondent would be reasonable
considering the facts and circumstances
surrounding the petitioner's liability.

The award of exemplary damages is not

proper considering that there is no showing that
RCPI acted in "a wanton, fraudulent, reckless,
oppressive, or malevolent manner." (Article 2232,
New Civil Code).
Respondent Rodriguez was awarded the total
amount of P43,148.00 as actual or compensatory
damages broken down as follows: (a) P10,000.00
for the preparation of the trip; (b) P20,000.00 for
plane fare; (c) P5,000.00 for respondent's stay in
transit in Pakistan; (d) P4,000.00 for hotel bills in
Khartoum; (e) P78.00 for the telegraphic toll, and
P70.00 for the cost of the cablegram sent to
Diane Merger. The trial court rejected the
expenses allegedly incurred by the respondent
for a dinner he tendered for the officers,
organizers and students at Khartoum for
insufficiency of evidence.

As for Attorney’s fees, the trial court failed to

justify the payment of attorney's by RCPI,
therefore, the award of attorney's fees as part of
its liability should be disallowed and deleted.

P100,000J damages is reduced to P10K. The

award ordering it to pay exemplary damages and
attorney's fees is DELETED.

11. Zenith Insurance Corp. vs. CA, Fernandez,

G.R. No. 85296 May 14, 1990

PR Lawrence Fernandez insured his car for "own

damage" with petitioner Zenith Insurance Corp.
The car figured in an accident and suffered actual
damages in the amount of P3,640. After allegedly
being given a run around by Zenith for 2 months,
Fernandez filed a complaint with RTC of Cebu for
sum of money and damages resulting from the
refusal of Zenith to pay the amount claimed.
Aside from actual damages and interests,
Fernandez also prayed for moral damages in the
amount of P10K , exemplary damages of P5K,
attorney's fees of P3K and litigation expenses of
P3K.

Zenith contended that it offered to pay the claim

but PR rejected. It then later filed a petition
for certiorari with the CA assailing the order of the
trial court submitting the case for decision without
petitioner's evidence but denied.

The trial court ruled in favor of PR Fernandez

which CA affirmed. Petitioner assailed the
decision arguing that there is no legal basis on
CA in awarding moral damages, exemplary
damages and attorney's fees in an amount more
than that prayed for in the complaint. It
contended that while the complaint of PR
prayed for P10K moral damages, the lower
court awarded twice the amount, or P20K
without factual or legal basis; while PR prayed
for P5K exemplary damages to 20K; and while
PR prayed for P3K attorney's fees to 5K.

Under the Insurance Code, in case of

unreasonable delay in the payment of the
proceeds of an insurance policy, the damages
that may be awarded are: 1) attorney's fees; 2)
other expenses incurred by the insured person by
reason of such unreasonable denial or
withholding of payment; 3) interest at twice the
ceiling prescribed by the Monetary Board of the
amount of the claim due the injured; and 4) the
amount of the claim.
As regards the award of moral and exemplary
damages, the rules under the Civil Code of the
Philippines shall govern.

ISSUE: WHETHER OR NOT PR IS ENTITLED

FOR EXEMPLARY DAMAGES AND MORAL
DAMAGES TWICE AS WHAT IT HAD PRAYED
FOR.

HELD: NO

"The purpose of moral damages is essentially

indemnity or reparation, not punishment or
correction. Moral damages are emphatically not
intended to enrich a complainant at the expense
of a defendant, they are awarded only to enable
the injured party to obtain means, diversions or
amusements that will serve to alleviate the moral
suffering he has undergone by reason of the
defendant's culpable action. While it is true that
no proof of pecuniary loss is necessary in order
that moral damages may be adjudicated, the
assessment of which is left to the discretion of the
court according to the circumstances of each
case (Art. 2216, New Civil Code)

It is equally true that in awarding moral damages

in case of breach of contract, there must be a
showing that the breach was wanton and
deliberately injurious or the one responsible acted
fraudently or in bad faith.

In the instant case, there was a finding that PR

was given a "run-around" for two months, which
is the basis for the award of the damages granted
under the Insurance Code for unreasonable delay
in the payment of the claim. However, the act of
petitioner of delaying payment for two months
cannot be considered as so wanton or malevolent
to justify an award of P20K as moral damages,
taking into consideration also the fact that the
actual damage on the car was only P3,460. The
reason for petitioner's failure to indemnify PR
within the two-month period was that the parties
could not come to an agreement as regards the
amount of the actual damage on the car. The
amount of P10K prayed for by private
respondent as moral damages is equitable.

On the other hand, exemplary or corrective

damages are imposed by way of example or
correction for the public good (Art. 2229, New
Civil Code of the Philippines). Exemplary
damages were not awarded as the insurance
company had not acted in wanton, oppressive or
malevolent manner. The same is true in the case
at bar.

The amount of P5K awarded as attorney's fees

is justified under the circumstances of this case
considering that there were other petitions filed
and defended by PR in connection with this case.

As regards the actual damages incurred by

private respondent, the amount of P3,640.00 had
been established before the trial court and
affirmed by the appellate court. Respondent
appellate court correctly ruled that the deductions
of P250.00 and P274.00 as deductible franchise
and 20% depreciation on parts, respectively
claimed by petitioners as agreed upon in the
contract, had no basis. Respondent court ruled:

Therefore, the award of moral damages is

reduced to P10K and the award of exemplary
damages is hereby deleted.

1) P3,640.00 as actual claim plus

interest of twice the ceiling
prescribed by the Monetary
Board computed from the time of
submission of proof of loss;

2) P10,000.00 as moral
damages;

3) P5,000.00 as attorney's fees;

4) P3,000.00 as litigation
expenses; and

5) Costs.

12. Northwest Orient Airlines vs. Court of

Appeals G.R. No. 83033 June 30, 1990

13. People vs. Ereo G.R. No. 124706 February 22,

2000

14. Philippine Hawk Corporation vs. Vivian Tan

Lee G.R. No. 166869 February 16, 2010

15. Libcap Marketing Corp. vs. Baquial G.R. No.

192011 June 30, 2014

16. Sulpicio Lines vs. Sesante G.R. No. 172682

July 27, 2016

17. Samson vs. Bank of the Philippine Islands

G.R. No. 150487 July 10, 2003

18. Tan vs. OMC Carriers Inc. G.R. No. 190521

January 12, 2011

19. Sps. Estrada vs. Philippine Bus Rabbit Lines

Inc. G.R. No. 203902 July 19, 2017

20. Tan vs. Bantegui G.R. No. 154027 October

24, 2005

21. People vs. Manero G.R. Nos. 86883-85

January 29 1993

22. GSIS vs. Labung-Deang G.R. No. 135644

September 17 2001

23. Philtranco Service Enterprises vs. Para G.R.

No. 161909 April 25 2012

24. Titan vs. Uni-Field G.R. No. 153874 March 1,

2007

25. People vs. Dadulla G.R. No. 172321 February

9, 2011