VII.

Damages

CONCEPT/KINDS OF DAMAGES (ARTICLES 2195, 2197-2198)

ARTICLE 2195. The provisions of this Title shall be respectively applicable to all obligations mentioned in article
1157.

ARTICLE 2197. Damages may be:

(1) Actual or compensatory;
(2) Moral;
(3) Nominal;
(4) Temperate or moderate;
(5) Liquidated; or
(6) Exemplary or corrective.

ARTICLE 2198. The principles of the general law on damages are hereby adopted insofar as they are not
inconsistent with this Code.

Spouses Ong v. CA
FACTS
 Petitioners Renato and Francia Ong were onboard an Inland Bus, owned and operated by Inland Trailways
under a Lease Agreement with Philtranco.
 At around 3 in the morning, the bus slowed down to avoid a stalled cargo truck. It was bumped from the
rear by another bus, owned and operated by Philtranco. Both of the petitioners sustained injuries.
 Spouses Ong thus filed an action for damages against Philtranco and Inland. In their Complaint, they
alleged:
o That they suffered injuries, preventing Francia from operating a sari-sari where she derived a daily
income of P200; and Renato from continuing his work as an overseas contract worker (pipe
welder) with a monthly salary of $690.
o Stating that they incurred P10k as medical and miscellaneous expenses, they also claimed moral
damages of P500keach, exemplary and corrective damages of P500k each, and compensatory
damages of P500k each plus 35 percent thereof as attorney's fees.
 Inland answered that, according to the Police Report, it was the driver of the Philtranco bus, who was at
fault.
 Both Inland and Philtranco moved to submit the case for decision without presenting further evidence.
 Trial court: ruled in favor of Spouses Ong, absolving Inland and ordering Philtranco to pay damages based
on quasi-delict.
o Accdg to the trial court, the proximate cause of the accident was the bumping from behind by the
Philtranco bus “based on the Police Report and the affidavits of passengers.”
o Philtranco failed to prove that it exercised due diligence in the selection and supervision of its
employees
o Award of damages:
 P10k as actual damages for medical and miscellaneous expenses
 P50k as compensatory damages for the diminution of the use of the right arm of Francia
 48,000.00 as unrealized profit or income
 P50k as moral damages
 25% of the foregoing as contingent attorney's fees
 CA: Absolved Philtranco of liability
o Philtranco's liability for damages could not be predicated upon the Police Report which had not
been formally offered in evidence. The report was merely annexed to the answer of Inland, and
Sps Ong did not adopt or offer it as evidence.
o The CA found that Sps. Ong sufficiently established a claim against Inland based on culpa
contractual, as a common carrier.
 o The liability of Inland for medical and miscellaneous expenses was reduced, as the evidence on
record showed that Sps Ong spent only P3,977.
o Francia's testimony that the use of her right arm was diminished and that she lost income was
found to be self-serving. Thus, the award for unearned income was disallowed and the amount of
moral damages was reduced to P30,000.
 Sps Ong’s arguments:
o Sps. Ong aver that there was GAOD when the amount of actual damages awarded was reduced
from P10,000 to P3,977, even if the original amount did not even include the medical expenses
that Francia continued to incur.
o Sps Ong also protest the deletion of the amount of P48,000 earlier awarded by the trial court
because of the diminution of the use of Francia's right arm, arguing that she stated during direct
examination that it could no longer perform its normal functions, and that Inland and Pantranco
impliedly admitted this matter when they failed to present controverting evidence.
o Sps Ong also protested the deletion of the award for Francia's unrealized income, they argue that
Francia's injuries and her oral testimony adequately support their claim

ISSUE
1. WON the reduction in the amounts of damages awarded was proper—YES

RATIO
On Actual Damages: To be recoverable, actual damages must be pleaded and proven in Court.
 Granting arguendo that there was an agreement to submit the case for decision based on the pleadings, this
does not necessarily imply that Sps Ong are entitled to the award of damages.
 The fundamental principle of the law on damages is that one injured by a breach of contract (in this case,
the contract of transportation) or by a wrongful or negligent act or omission shall have a fair and just
compensation, commensurate with the loss sustained as a consequence of the defendant's acts.
o Hence, actual pecuniary compensation is the general rule, except where the circumstances
warrant the allowance of other kinds of damages.
 Actual damages -- are such compensation or damages for an injury that will put the injured party in the
position in which he had been before he was injured.
o They pertain to such injuries or losses that are actually sustained and susceptible of measurement.
 Article 2199 of the Civil Code expressly mandates that "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."
o To be recoverable, actual damages must be pleaded and proven in Court.
o In no instance may the trial judge award more than those so pleaded and proven. Damages cannot
be presumed.
 The lack of basis for such award was patent in the trial court Decision:
o “Considering that they have gone for consultation to at least two (2) different doctors, this Court
may take judicial notice of the fact that miscellaneous expenses are bound to be incurred to cover
transportation and food, and therefore, finds the amount of P10,000.00 as actual damages to be
reasonable.”
 Thus, the amount of actual damages awarded was correctly reduced from P10,000 to P3,977

On Moral Damages and Diminution of Use of Francia's Arm:

In the case at bar, Francia failed to present evidence regarding the feasibility or practicability and the cost of
a restorative medical operation on her arm. Thus, there is no basis to grant her P50,000 for such expense.
 A person is entitled to the physical integrity of his or her body, and if that integrity is violated, damages are
due and assessable. However, physical injury, like loss or diminution of use of an arm or a limb, is not a
pecuniary loss. Indeed, it is not susceptible of exact monetary estimation.
 Thus, the usual practice is to award moral damages for physical injuries sustained.
 In the case at bar, it was sufficiently shown during the trial that Francia's right arm could not function in a
normal manner and that, as a result, she suffered mental anguish and anxiety. Thus, an increase in the
amount of moral damages awarded, from P30,000 to P50,000, appears to be reasonable and justified.
 Renato also suffered mental anxiety and anguish from the accident. Thus, he should be separately awarded
P30,000 as moral damages.
 In some instances, the Court awards the cost of medical procedures to restore the injured person to his or
her former condition. However, this award necessitates expert testimony on the cost of possible restorative
medical procedure.

On Unrealized Income: Although actual damages include indemnification for profits which the injured party
failed to obtain, the rule requires that said person produce the "best evidence of which his case is susceptible.
 The bare and unsubstantiated assertion of Francia that she usually earned P200 a day from her market stall
is not the best evidence to prove her claim of unrealized income for the eight-month period that her arm
was in plaster cast.
 Her testimony that it was their lessor who filed their income tax returns and obtained business licenses for
them does not justify her failure to present more credible evidence of her income.
 Furthermore, after her ten-day confinement at hospital, she could have returned to her work at the public
market despite the plaster cast on her right arm, since she claimed to have two nieces as helpers.
 Clearly, the appellate court was correct in deleting the award for unrealized income, because of Francia’s
utter failure to substantiate her claim.
 The award for Francia's unrealized income was properly deleted.

On Attorney’s Fees
 Counsel for Sps Ong deeply laments the reduction in the award of attorney's fees.
 Under the Civil Code, an award of attorney's fees is an indemnity for damages ordered by a court to be paid
by the losing party to the prevailing party, based on any of the cases authorized by law.
 It is payable not to the lawyer but to the client, unless the two have agreed that the award shall pertain to
the lawyer as additional compensation or as part thereof.
 It is well-settled that such award is addressed to sound judicial discretion and subject to judicial control. We
do not see any abuse thereof in the case at bar.

LR: Documents have to be formally offered in evidence before they can be given any probative value.
 Under the ROC, the court shall not consider any evidence which was not formally offered in evidence.
 A formal offer is necessary, since judges are required to base their findings of fact and their judgment solely
and strictly upon the evidence offered by the parties at the trial. Otherwise, the parties will be deprived of
their chance to examine the document and to object to its admissibility.
 The Police Report was neither offered by the Sps Ong nor admitted by the trial court.
 Evidence not formally offered before the trial court cannot be considered on appeal, for to consider them at
such stage will deny the other parties their right to rebut them.

WHEREFORE, the assailed Decision is AFFIRMED with the MODIFICATION that Renato and Francia Ong are
separately awarded moral damages in the amount of P30,000 and P50,000, respectively. The ten percent (10%)
attorney's fees shall be based on the total modified award.
GENERAL PRINCIPLES OF RECOVERY

Air France v. CA
FACTS
 In 1977, Narciso Morales, through his representative, purchased an airline ticket from Aspac Management
Corporation, Air France’s General Sales Agent
o The itinerary covered by the ticket included several cities, with certain segments thereof restricted
by markings of "non endorsable" and “valid on AF (meaning Air France) only”
 While in NY, Morales obtained medical certificates showing that she had an ear infection which
necessitated medical treatment, thus when he was in Copenhagen, he informed Air France’s office to
shorten his trip by deleting some of the cities in the itinerary. As a matter of procedure. Morales was
informed that AF Manila’s confirmation needed to be secured before shortening the route already paid for.
 When Morales was in Hamburg, he was informed of AF Manila's negative reply. He requested a second
time but was still denied. Morales thus was compelled to buy an entirely new set of tickets.
 Upon arrival in Manila, Morales sent a letter-complaint to Air France thru Aspac. Morales was advised to
surrender the unused flight coupons for a refund of its value, but he kept the same and, instead, filed a
complaint for breach of contract of carriage and damages.
 The CFI Judge found AF in evident bad faith for violation of the contract of carriage. Considering the
social and economic standing of Morales, who is chairman of the board of directors of a multi-million
corporation and a member of several civic and business organizations, an award of moral and exemplary
damages, in addition to the actual damages incurred, was deemed proper under the circumstances.
 On appeal the CA modified the award of damages (it was reduced).

ISSUE: WON there was a breach of contract of carriage on the part of AF, as to justify the award to Morales of
actual, moral and exemplary damages?--NO
RATIO
Before an award of damages, the claimant must satisfactorily prove during the trial the existence of the
factual basis of the damages and its causal connection to defendant's acts.
 The CA’s ruling that there was breach of contract of carriage is premised on AF’s refusal to reroute Morales
and, in effect, requiring him to purchase a new set of tickets. AF refutes this conclusion, claiming that the
original ticket was discounted and non- endorsable on certain segments.
 Considering the original restrictions on the ticket, it was not unreasonable for Air France to deny the
Morales’ request for shortening the route.
 Besides, a recurring ear infection was pleaded as reason necessitating urgent return to Manila. Assuming
arguendo a worsening pain or discomfort, Morales appears to have still proceeded to 4 other cities. And,
even if he claimed to have undergone medical examination upon arrival in Manila, no medical certificate
was presented. He failed to even remember his date of arrival in Manila.
 With a claim for a large amount of damages, the Court finds it unusual for Morales, a lawyer, to easily
forget vital information to substantiate his plea.
 Air France employees in Hamburg informed Morales that his tickets were partly stamped "non-endorsable"
and "valid on Air France only."
o Mere refusal to accede to the passenger's wishes does not necessarily translate into damages in the
absence of bad faith.
o Air France Manila acted upon the advise of ASPAC in denying private respondent's request
o To our mind, Morales has failed to show wanton, malevolent or reckless misconduct
imputable to AF in its refusal to reroute.
 At worst, the situation can be considered a case of inadvertence on the part of ASPAC in not explaining the
non-endorsable character of the ticket. Of importance, however, is the fact that Morales is a lawyer, and
the restriction box clearly indicated the non-endorsable character of the ticket.
o Omissions by ordinary passengers may be condoned but more is expected of members of the bar
who cannot feign ignorance of such limitations and restrictions.
An award of moral and exemplary damages cannot be sustained under the circumstances, but AF has to refund the
unused coupons in the Air France ticket to Morales.
Dichoso v. CA

FACTS
 The spouses Gaspar Prila and Maria Beldad owned a parcel of land. Upon the death of Maria Beldad, the
eastern half was given to their only daughter, Vivencia. When Gaspar died, his ½ portion was divided into
three: one third to Vivencia Prila, one third to Pacamara and the other one-third to Parcia.
 In 1955, Vivencia sold her 4/6 portion to petitioner Dichoso who had been in actual physical possession
thereof.
 Pacamara sold to the wife of respondent Teodolfo Ramos her 1/6 share, but the deed mentions an area in
excess of Pacamara’s share in the property.
o The excess is what Teodolfo Ramos claims in this case to have possessed since the property was
bought by his wife.
o It yielded an average harvest of 20 sacks of palay per planting which was twice a year. One-
third of the harvest went to Ramos and the remaining two-thirds was the tenant's share.
 On the other hand, petitioner Dichoso claims that the disputed land is inside his property, part of what he
acquired from Vivencia.
 Teodolfo Ramos, in the company of a constabulary soldier and two policemen, later allegedly seized the
produce of the land consisting of 50 cavans of palay from the tenant of Dichoso.
o In retaliation, petitioner Dichoso also brought a soldier and appropriated 6 cavans of the produce
 Teodolfo Ramos filed a complaint for quieting of title. The trial court later ruled in favor of Teodolfo
Ramos and against Dichoso. The CA affirmed, hence this petition.
 Errors assigned by Dichoso:
o The CA erred in finding that Teodolfo Ramos is the owner of the land in question.
o The CA erred in requiring him to deliver 40 cavans annually to Teodolfo Ramos despite its finding
that only 1/3 of the produce went to Teodolfo, 2/3 being for his tenant.
 Ramos, on the other hand, argues that his tenant will be deprived of his share if only one-
third (1/3) of the harvest will be awarded to him.

ISSUE WON the award of actual damages in favor of Teodolfo Ramos should be reduced--YES

RATIO
In as much as the share of Pacamara is limited to 1/6th of the land, she cannot legally transmit to Ramos an
area in excess thereof.
 This Court has held that in cases of conflict between areas and boundaries, it is the latter which should
prevail. What really defines a piece of ground is not the area, but the boundaries therein laid down, as
enclosing the land and indicating its limits
 In a contract of sale of land in a mass, it is well established that the specific boundaries stated in the
contract must control over any statement with respect to the area contained within its boundaries. It is not
of vital consequence that a deed or contract of sale of land should disclose the area with mathematical
accuracy.
 The deed of sale in favor of Ramos' wife explicitly described the property as being bounded "on the South
(by) heirs of Gaspar Prila and Mariano Rodriguez, limited by an irrigation ditch, measuring 200 meters; on
the West (by) heirs of Gaspar Prila, limited by a big stone, measuring 350 meters."

Actual or compensatory damages cannot be presumed, but must be duly proved, and proved with reasonable
degree of certainty.
 A court cannot rely on speculation, conjecture or guesswork as to the fact and amount of damages, but must
depend upon competent proof that they have suffered and on evidence of the actual amount thereof.
 It is undisputed that the land in question yields an average of twenty (20) sacks of palay per planting and
that it is planted to palay twice a year.
  Ramos' share of the harvest is only one-third (1/3). In view of his dispossession from 1964 and the fact that
his tenant has vacated the land that same year, he cannot allege that his tenant is entitled to his two-thirds
(2/3) share.

PREMISES CONSIDERED, the decision appealed from is hereby SET ASIDE and the area of the land awarded to
herein respondent Ramos is hereby LIMITED to 2.8119 hectares in accordance with the boundaries indicated in the
deed of sale in favor of his wife, and the award of actual damages is hereby REDUCED in proportion to the
area that may be awarded to Ramos and to his one-third (1/3) participation in the harvests, from 1964 up to
the time the land appurtenant thereto is returned to the respondent.
PAL v. Miano
FACTS
 In 1988, Miano took a PAL flight bound for Frankfurt, Germany. He had an immediate onward connecting
flight to Vienna, Austria.
 At NAIA, he checked-in one brown suitcase weighing 20kg but did not declare a higher valuation.
o He claimed that his suitcase contained money, documents, one Nikkon camera with zoom lens,
suits, sweaters, shirts, pants, shoes, and other accessories.
 When Miano arrived in Vienna, his checked-in baggage was missing. He reported the matter to the
authorities. After 3 hours of waiting, he proceeded to Czechoslovakia. It was only 11 days after that his
suitcase was delivered to him in his hotel in Czechoslovakia.
 Miano claimed that because of the delay in the delivery of his suitcase, he was forced to borrow money to
buy some clothes, to pay $200.00 for the transportation of his baggage from Vienna to Czechoslovakia, and
lost his Nikkon camera.
 Miano wrote to PAL a letter demanding P10k for his allegedly lost Nikkon camera, $200 for alleged cost of
transporting luggage, and P100k as damages.
 When Miano felt that his demand letter was left unheeded, he instituted an action for damages before the
RTC.
 PAL disclaimed any liability on the ground that there was neither a report of mishandled baggage nor a
tracer telex received from its Vienna Station. It, however, contented that if at all liable its obligation is
limited by the Warsaw Convention rate.
 In its decision, the trial court observed that PAL’s actuation was not attended by bad faith. Nevertheless, it
awarded Miano damages (moral and exemplary) and attorney's fees.

ISSUE: WON the trial court erred in awarding to Miano moral and exemplary damages, as well as, attorney’s fees--
YES

RATIO
The trial court erred in awarding moral damages to Miano.
 In breach of contract of carriage by air, moral damages are awarded only if the defendant acted fraudulently
or in bad faith. Bad faith means a breach of a known duty through some motive of interest or ill will.
 The established facts evince that PAL’s late delivery of the baggage for eleven (11) days was not motivated
by ill will or bad faith. . In fact, it immediately coordinated with its Central Baggage Services to trace
Miano’s suitcase and succeeded in finding it.
 PAL’s records disclosed that Manila, the originating station, did not receive any tracer telex.
o Tracer Telex: an action of any station that the airlines operate when a passenger complains or
does not received his baggage upon his arrival.
o Upon inquiry from their Frankfurt Station, it was discovered that the interline tag of Miano’s
baggage was accidentally taken off. It was customary for destination stations to hold a tagless
baggage until properly identified. The tracer telex, which contained information on the baggage, is
matched with the tagless luggage for identification. Without the tracer telex, the color and the type
of baggage are used as basis for the matching. Thus, the delay.
 The trial court made an unequivocal conclusion that PAL did not act in bad faith or with malice

Bad faith must be substantiated by evidence. The award of moral and exemplary damages to Miano must be
deleted.
 Bad faith under the law cannot be presumed; it must be established by clear and convincing evidence.
 Again, the unbroken jurisprudence is that in breach of contract cases where the defendant is not shown to
have acted fraudulently or in bad faith, liability for damages is limited to the natural and probable
consequences of the breach of the obligation which the parties had foreseen or could reasonably have
foreseen.
o The damages, however, will not include liability for moral damages
 We can neither sustain the award of exemplary damages. The prerequisite for the award of exemplary
damages in cases of contract or quasi-contract is that the defendant acted in wanton, fraudulent, reckless,
 oppressive, or malevolent manner. The undisputed facts do not so warrant the characterization of the action
of PAL.

The award of attorney's fees must also be disallowed for lack of legal leg to stand on.
 The fact that Miano was compelled to litigate and incur expenses to protect and enforce his claim did not
justify the award of attorney's fees.
 The general rule is that attorney's fees cannot be recovered as part of damages because of the policy that no
premium should be placed on the right to litigate.

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

IN VIEW WHEREOF, the assailed Decision of July 29, 1992 is MODIFIED deleting the award of moral and
exemplary damages and attorney's fees. No costs.
DBP v. CA
FACTS
 Lydia Cuba is a grantee of a Fishpond Lease Agreement from the Government. Cuba obtained loans from
DBP. As security, Cuba executed 2 deeds of assignments of her leasehold rights.
 Cuba failed to pay her loan. Without foreclosure proceedings, whether judicial or extra-judicial, defendant
DBP appropriated the leasehold Rights of Cuba over the fishpond in question. DBP then executed a Deed
of Conditional Sale of the Leasehold Rights in favor of Cuba over the same fishpond in question.
o DBP later accepted Cuba’s offer to repurchase.
o Cuba failed to pay the amortizations stipulated in the Deed of Conditional Sale
 DBP later sent a Notice of Rescission of Deed of Conditional Sale. DBP thereafter took possession of the
Leasehold Rights of the fishpond. DBP later advertised the public bidding to dispose of the property.
 DBP thereafter executed a Deed of Conditional Sale in favor of Agripina Caperal.
 Cuba filed a complaint against DBP and Agripina Caperal.
o The trial court ruled in favor of Cuba and held that DBP's taking possession and ownership of the
property without foreclosure was plainly violative of Article 2088 of the CC.
o As to damages, the trial court found "ample evidence on record" that in 1984 the representatives of
DBP ejected CUBA and her caretakers not only from the fishpond area but also from the adjoining
big house. Later, Cuba’s house was destroyed and several tools used for the fishpond operation
were missing. The missing items were valued at about P550,000.
o The trial court also found that when Cuba and her men were ejected by DBP for the first time in
1979, CUBA had stocked the fishpond with 250,000 pieces of bangus fish, all of which died
because the DBP representatives prevented CUBA's men from feeding the fish. CUBA was found
to have suffered a loss of P517,500.
o It then set the aggregate of the actual damages sustained by CUBA at P1,067,500.
o The trial court further found that DBP was guilty of gross bad faith in falsely representing to the
Bureau of Fisheries that it had foreclosed its mortgage on CUBA's leasehold rights
o By reason of her unlawful ejectment by DBP, CUBA "suffered moral shock, degradation, social
humiliation, and serious anxieties for which she became sick and had to be hospitalized" the trial
court found her entitled to moral and exemplary damages.
 The CA held that CUBA was not entitled to loss of profits for lack of evidence, but agreed with the trial
court as to the actual damages of P1,067,500. It, however, deleted the amount of exemplary damages and
reduced the award of moral damages from P100,000 to P50,000 and attorney's fees, from P100.00 to
P50,000.

ISSUE: WON the trial court erred in awarding actual or compensatory damages--YES

RATIO
The SC agrees with Cuba that the assignment of leasehold rights was a mortgage contract.
 It is undisputed that Cuba obtained from DBP three separate loans totalling P335,000, each of which was
covered by a promissory note. In all of these notes, there was a provision that: "In the event of foreclosure
of the mortgage securing this notes, I/We further bind myself/ourselves, jointly and severally, to pay the
deficiency, if any."
 Simultaneous with the execution of the notes was the execution of "Assignments of Leasehold Rights"
where Cuba assigned her leasehold rights and interest on a 44-hectare fishpond, together with the
improvements thereon.
 The SC already previously held that an assignment to guarantee an obligation is in effect a mortgage.

DBP, however, exceeded the authority vested by condition no. 12 of the deed of assignment.
 Condition No. 12 provided for the appointment of DBP as attorney-in-fact with authority, among other
things, to sell or otherwise dispose of the said real rights, in case of default by CUBA, and to apply the
proceeds to the payment of the loan.
 As admitted by DBP it had “without foreclosure proceedings, whether judicial or extrajudicial,
appropriated the leasehold rights of Lydia Cuba over the fishpond in question."
  DBP had appropriated and taken ownership of CUBA's leasehold rights merely on the strength of the deed
of assignment. DBP cannot take refuge in condition no. 12 of the deed of assignment to justify its act of
appropriating the leasehold rights. Condition no. 12 did not provide that CUBA's default would operate to
vest in DBP ownership of the said rights.
 Besides an assignment to guarantee an obligation, as in the present case, is virtually a mortgage and not an
absolute conveyance of title which confers ownership on the assignee
 DBP's act of appropriating CUBA's leasehold rights was violative of Article 2088 of the Civil Code, which
forbids a creditor from appropriating, or disposing of, the thing given as security for the payment of a debt.

Instead of taking ownership of the questioned real rights upon default by Cuba, DBP should have foreclosed
the mortgage, as has been stipulated in condition no. 22 of the deed of assignment.
 But, as admitted by DBP, there was no such foreclosure. Yet in its letter to the Minister of Agriculture and
Natural Resources, DBP declared that it “had foreclosed the mortgage and enforced the assignment of
leasehold rights for failure of the Cuba sps to pay their loan.”
 In view of the false representation of DBP that it had already foreclosed the mortgage, the Bureau of
Fisheries canceled CUBA's original lease permit, approved the deed of conditional sale, and issued a new
permit in favor of CUBA.
 The sale of property given as security for the payment of a debt should be set aside if there was no prior
foreclosure proceeding.

Actual or compensatory damages cannot be presumed, but must be proved with reasonable degree of
certainty. The award of actual damages should, therefore, be struck down for lack of sufficient basis.
 Article 2199: Except as provided by law or by stipulation, one is entitled to an adequate compensation only
for such pecuniary loss suffered by him as he has duly proved. Such compensation is referred to as actual or
compensatory damages.
 Actual or compensatory damages cannot be presumed, but must be proved with reasonable degree of
certainty.
 A court cannot rely on speculations, conjectures, or guesswork as to the fact and amount of damages, but
must depend upon competent proof that they have been suffered by the injured party and on the best
obtainable evidence of the actual amount thereof.
 It must point out specific facts which could afford a basis for measuring whatever compensatory or actual
damages are borne.
 In the present case, the trial court awarded in favor of Cuba:
o P1,067,500 as actual damages consisting of P550,000 which represented the value of the alleged
lost articles of Cuba and the P517,500 which represented the value of the 230,000 pieces of
bangus allegedly stocked in 1979 when DBP first ejected CUBA from the fishpond and the
adjoining house.
o This award was affirmed by the Court of Appeals.
 We find that the alleged loss of personal belongings and equipment was not proved by clear evidence.
o Other than the testimony of Cuba and her caretaker, there was no proof as to the existence of those
items before DBP took over the fishpond in question.
o As pointed out by DBP, there was no "inventory of the alleged lost items before the loss which is
normal in a project which sometimes, if not most often, is left to the care of other persons."
Neither was a single receipt or record of acquisition presented.
o Curiously, in her complaint dated 17 May 1985, Cuba included "losses of property" as among the
damages resulting from DBP's take-over of the fishpond. Yet, it was only in September 1985 when
her son and a caretaker went to the fishpond and the adjoining house that she came to know of the
alleged loss of several articles.
o Such claim for "losses of property," having been made before knowledge of the alleged actual
loss, was therefore speculative. The alleged loss could have been a mere afterthought or subterfuge
to justify her claim for actual damages.
 With regard to the award of P517,000 representing the value of the alleged 230,000 pieces of bangus
which died when DBP took possession of the fishpond, this was also not called for.
o Such loss was not duly proved; besides, the claim therefor was delayed unreasonably.
o From 1979 until after the filing of her complaint in court in May 1985, CUBA did not bring to the
attention of DBP the alleged loss.
o Cuba even wrote a letter to DBP seven months after DBP took possession of the fishpond. But she
never raised the death of the 230,000 pcs of Bangus.
Damages which Cuba is entitled to
 In view however, of DBP's act of appropriating CUBA's leasehold rights which was contrary to law and
public policy, as well as its false representation to the then Ministry of Agriculture and Natural Resources
that it had "foreclosed the mortgage," an award of moral damages in the amount of P50,000 is in order
conformably with Article 2219(10), in relation to Article 21 of the Civil Code.
 Exemplary or corrective damages in the amount of P25,000 should likewise be awarded by way of
example or correction for the public good.
 There being an award of exemplary damages, attorney's fees are also recoverable.
ACTUAL DAMAGES (ARTICLES 2199-2203; 2207, 2209)
ARTICLE 2199. Except as provided by law or by stipulation, one is entitled to an adequate compensation only for
such pecuniary loss suffered by him as he has duly proved. Such compensation is referred to as actual or
compensatory damages.
ARTICLE 2200. Indemnification for damages shall comprehend not only the value of the loss suffered, but also that
of the profits which the obligee failed to obtain.
ARTICLE 2201. In contracts and quasi-contracts, the damages for which the obligor who acted in good faith is
liable shall be those that are the natural and probable consequences of the breach of the obligation, and which the
parties have foreseen or could have reasonably foreseen at the time the obligation was constituted.
In case of fraud, bad faith, malice or wanton attitude, the obligor shall be responsible for all damages which may be
reasonably attributed to the non-performance of the obligation.
ARTICLE 2202. In crimes and quasi-delicts, the defendant shall be liable for all damages which are the natural and
probable consequences of the act or omission complained of. It is not necessary that such damages have been
foreseen or could have reasonably been foreseen by the defendant.
ARTICLE 2203. The party suffering loss or injury must exercise the diligence of a good father of a family to
minimize the damages resulting from the act or omission in question.
ARTICLE 2207. If the plaintiff’s property has been insured, and he has received indemnity from the insurance
company for the injury or loss arising out of the wrong or breach of contract complained of, the insurance company
shall be subrogated to the rights of the insured against the wrongdoer or the person who has violated the contract. If
the amount paid by the insurance company does not fully cover the injury or loss, the aggrieved party shall be
entitled to recover the deficiency from the person causing the loss or injury.
ARTICLE 2209. If the obligation consists in the payment of a sum of money, and the debtor incurs in delay, the
indemnity for damages, there being no stipulation to the contrary, shall be the payment of the interest agreed upon,
and in the absence of stipulation, the legal interest, which is six per cent per annum.

1. damnum emergens/lucrum cessans

2. disability
3. indemnity for death
4. interest
5. Attorney’s Fees (ARTICLE 2208)

ARTICLE 2208. In the absence of stipulation, attorney’s fees and expenses of litigation, other than judicial costs,
cannot be recovered, except:
(1) When exemplary damages are awarded;
(2) When the defendant’s act or omission has compelled the plaintiff to litigate with third persons or to incur
expenses to protect his interest;
(3) In criminal cases of malicious prosecution against the plaintiff;
(4) In case of a clearly unfounded civil action or proceeding against the plaintiff;
(5) Where the defendant acted in gross and evident bad faith in refusing to satisfy the plaintiff’s plainly valid, just
and demandable claim;
(6) In actions for legal support;
(7) In actions for the recovery of wages of household helpers, laborers and skilled workers;
(8) In actions for indemnity under workmen’s compensation and employer’s liability laws;
(9) In a separate civil action to recover civil liability arising from a crime;
(10) When at least double judicial costs are awarded;
(11) In any other case where the court deems it just and equitable that attorney’s fees and expenses of litigation
should be recovered.
In all cases, the attorney’s fees and expenses of litigation must be reasonable.
PNOC Shipping v. CA
FACTS
 In 1977, the M/V Maria, owned by private respondent Maria Efigenia Fishing Corporation (Fishing Corp),
was navigating the waters in Batangas when it collided with another vessel, Petroparcel, owned by Luzon
Stevedoring Corporation (LSC).
 It was later found by the Philippine Coast Giard that Petroparcel was at fault. Based on this finsing and
after unsuccessful demands from LSC, the Fishing Corp sued the LSC and the Petroparcel captain.
o The Fishing Corp prayed for an award of P692k allegedly representing the value of the fishing
nets, boat equipment and cargoes of M/V Maria.
o The complaint would later be amended to include that the actual value of the M/V Maria was at
P600k.
 Meanwhile, during the pendency of the case, petitioner PNOC Shipping sought to be substituted in place of
LSC as it had already acquired ownership of the Petroparcel.
 The trial court rendered a decision in favor of the Fishing Corp and ordered PNOC to pay:
o “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”
o In arriving at the above disposition, the lower court cited the evidence presented by the Fishing
Corp consisting of the testimony of its general manager and sole witness, Del Rosario.
o The basis for the award of 6m in actual damages was based on 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 vessel.
 PNOC argues that the price quotations submitted were excessive. The CA would later affirm in toto the
award granted by the trial court.
o The CA ruled: “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, material or incompetent.”
 Hence, this petition by PNOC.

ISSUE: WON the CA erred in affirming the trial court’s award of 6m in actual damages--YES

RATIO
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
available.
 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.
 In actions based on torts or quasi-delicts, actual damages include all the natural and probable consequences
of the act or omission complained of.
 There are two kinds of actual or compensatory damages:
o one is the loss of what a person already possesses (daño emergente);
o and the other is the failure to receive as a benefit that which would have pertained to him (lucro
cesante).
 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 available.
o 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.
 In other words, damages cannot be presumed and courts, in making an award must 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 the Fishing Corp’s general manager
and certain pieces of documentary evidence. Del Rosario's claim that the Fishing Corp incurred losses in the
total amount of P6,438,048 00 should be admitted with extreme caution.
  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 offered by the Fishing Corp 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.
o Clearly ignoring PNOC’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 Fishing Corp did not present any other witnesses especially those whose signatures appear in the price
quotations that became the bases of the award.
o 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.
o 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.
 For this reason, Del Rosario's claim that the Fishing Corp incurred losses in the total amount of P6,438,048
should be admitted with extreme caution considering that, because it was a bare assertion, it should be
supported by independent evidence.
 Moreover, since he was the owner, any testimony he would give with regard to the value of the lost vessel
and its cargo, should be viewed in the light of his self-interest therein.
 The SC agrees with the CA ruling that Del Rosario’s testimony as to the equipment installed and the
cargoes loaded on the vessel should be given credence considering his familiarity thereto. However, the SC
do not subscribe to the conclusion that his valuation of such equipment, cargo and the vessel itself
should be accepted as gospel truth.

The price quotations presented as exhibits partake of the nature of hearsay evidence considering that the
persons who issued them were not presented as witnesses. Hearsay evidence, whether objected to or not, has
no probative value. Damages may not be awarded on the basis of hearsay evidence.
 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
the evidence falls within the exceptions to the hearsay evidence rule.
o This case doesn’t fall under any of the exceptions.
 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.
o But the SC said that it’s not a commercial list because it doesn’t fall under “other published
compilation” as provided in the provision.
o 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. These are simply letters responding to the queries of Del
Rosario.
 To be sure, letters and telegrams are admissible in evidence but these are, however, subject to the general
principles of evidence and to various rules relating to documentary evidence.
o 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.

Nonetheless, the non-admissibility of said exhibits does not mean that it totally deprives the Fishing Corp of
any redress for the loss of its vessel.
 In the absence of competent proof on the actual damage suffered, private respondent is 'entitled to nominal
damages.
 Nominal damages are awarded in every obligation arising from law, contracts, quasi-contracts, acts or
omissions punished by law, and quasi- delicts, or in every case where property right has been invaded
 Under Article 2223 of the Civil Code, "(t)he adjudication of nominal damages shall preclude further contest
upon the right involved and all accessory questions, as between the parties to the suit, or their respective
heirs and assigns."
  The amount to be awarded as nominal damages shall be equal or at least commensurate to the injury
sustained by the Fishing Corp considering the concept and purpose of such damages
 Applied:
o In this case, it was found that PNOC’s vessel was at fault and the fishing corp’s claim amounted to
P692k representing the fishing nets, boat equipment and cargoes that sunk with the M/V Maria. In
his amended complaint, the fishing corp alleged that the vessel had an actual value of P600k.
o 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 action

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

BSP-Circular-No.-799
Francisco v. Co

FACTS
 FIRST CASE: A complaint for accion publiciana was filed by respondents Roque Co and Mariano Co
against the Heirs of Baetiong involving 2 parcels of land.
o This was settled when the parties entered into a Compromise Agreement. The heirs were
acknowledged as the owners of the subject parties.
o But it was agreed that the heirs would lease to respondents a portion of the properties which was
“approximately 3 hectares.”
o 5 years after the execution of the compromise agreement and contract of lease, the heirs filed a
motion wherein they alleged that respondents were actually occupying a larger portion of their
land than that agreed upon. This was granted
 SECOND CASE: The respondents challenged the motion before the CA.
o The CA reversed the RTC and declared that the judgment by compromise was already terminated
and executed.
o The CA also held that the area occupied by respondents was the same property agreed upon for
lease by the parties in the Compromise Agreement.
o Further, the heirs were already precluded by laches since they remained silent for almost 5 years.
 THIRD CASE: Francisco, one of the heirs, filed a complaint for forcible entry against respondents before
the MeTC. She alleged that she was the owner of a lot which respondents entered and fences.
o Respondents alleged that the property was covered by the lease.
o The MeTC and RTC ruled in favor of Francisco. She was declared owner of the lot.
o The CA, however, reversed the decisions and held that the complaint for forcible entry was barred
by res judicata. The property was found to be part of the lease.
o The CA also concluded that due to malicious prosecution, Franciso was liable for moral
damages of P30,000.00, exemplary damages of P20,000.00, and attorney's fees of P20,000.00.

ISSUE: WON the CA erred in awarding moral and exemplary damages, as well as attorney’s fees--YES

RATIO
LR: The complaint filed by Franciso is barred by res judicata.
 The earlier CA decision sustained respondents' right to occupy only a segregate portion of the land
particularly that which they had already been occupying at the time the Contract of Lease was executed.
 Had Francisco been able to establish before the trial court that Lot No. 2-F-4 is outside that portion already
occupied by respondents when the lease contract was executed, her complaint may have been sustained, but
she failed to do this.

The SC reverses the CA when it awarded moral and exemplary damages, as well as attorney's fees to
respondents.
 In ruling that petitioner was in bad faith in filing the instant suit, the appellate court predicated this
conclusion on the observation that "respondent was well-aware that the issue involved in this case has
already been settled by the courts. Due to this, the lessees understandably suffered mental anguish and
serious anxiety, thereby entitling them to moral damages."
 Nothing in the record establishes any right to moral damages by respondents.
o The Court will not uphold awards of moral damages based on haphazard conjectures on the
awardee's resultant mental state.
o The SC does not agree with the appellate court that bad faith on the part of Francisco had been
established in this case.
o Bad faith does not simply connote bad judgment or negligence, but it imports a dishonest purpose
or some moral obliquity and conscious doing of a wrong.
o It should be established by clear and convincing evidence since the law always presumes good
faith.
o It does not appear that the Court of Appeals has conducted the mandated careful examination of
evidence that would sustain the award of moral damages.
  Neither should exemplary damages avail under the circumstances.
o The plaintiff must show that he is entitled to moral, temperate or compensatory damages before
the court may consider the question of whether exemplary damages should be awarded.
o If the court has no proof or evidence upon which the claim for moral damages could be based,
such indemnity could not be outrightly awarded. The same holds true with respect to the award of
exemplary damages where it must be shown that the party acted in a wanton, oppressive or
malevolent manner.
o Furthermore, this specie of damages is allowed only in addition to moral damages such that no
exemplary damages can be awarded unless the claimant first establishes his clear right to
moral damages.
 Contrary to the pronouncement of the Court of Appeals, the mere fact that the respondents were constrained
to litigate in order to protect and assert their rights does not ipso facto entitle them to attorney's fees.
o What Article 2208 (2) of the Civil Code provides, in order that attorney's fees may be awarded, is
that "the defendant's act or omission has compelled the plaintiff to litigate with third persons or to
incur expenses to protect his interest"
o The general rule is that attorney's fees cannot be recovered as part of damages because of the
public policy that no premium should be placed on the right to litigate. The award of
attorney's fees must be deleted where the award of moral and exemplary damages are
eliminated.

WHEREFORE, the PETITION is GRANTED in PART. The Decision of the Court of Appeals dated 17 August 2000
is AFFIRMED with the MODIFICATION that the award of moral, exemplary damages and attorney's fees are
DELETED. No costs.
Marikina Autoline v. People

FACTS
 Erlinda V. Valdellon is the owner of a two-door commercial apartment. While Marikina Auto Line
Transport Corporation (MALTC) is the owner-operator of a passenger bus. Suelto, its employee, was
assigned as the regular driver of the bus
 Suelto, while driving the bus, suddenly swerved to the right and struck the terrace of the commercial
apartment. Upon Valdellon's request, the court ordered Sergio Pontiveros, the Senior Building Inspection
Officer of the City Engineer's Office, to inspect the damaged terrace.
 Valdellon commissioned Engr. Jesus R. Regal, Jr. to estimate the cost of repairs which the Engr pegged at
P171k.
 Valdellon filed a criminal complaint for reckless imprudence resulting in damage to property against
Suelto. Valdellon also filed a separate civil complaint against Suelto and the bus company for damages:
o She prayed for the sum of P171k constituting the expenses for the repair of the damaged
apartment, and P20k as compensatory and exemplary damages.
o During trial, Valdellon, the Inspection Officer, and the Engr all testified.
 The trial court found Suelto guilty and ordered MALTC and Suelto to pay, jointly and severally:
o P150k to Valdellon as reasonable compensation for her damages apartment and P20k as
compensatory and exemplary damages.
 The CA affirmed the decision but reduced the award of actual damages to P100k.
 MALTC and Suelto argue that Valdellon was only able to prove the amound of P35k as actual damages,
hence the award of P100k is without factual basis.

ISSUE: WON the award of damages by both the RTC and CA were without factual basis--YES

RATIO
LR: Suelto recklessly swerved the bus to the right.
 MALTC and Suelto failed to prove that Suelto acted on an emergency caused by the sudden intrusion of a
passenger jeepney into the lane of the bus he was driving.
 Under the CC "unless there is proof to the contrary, it is presumed that a person driving a motor vehicle has
been negligent, if at the time of mishap, he was violating any traffic regulation."
o By his own admission, Suelto violated the Land Transportation and Traffic Code when he
suddenly swerved the bus to the right, thereby causing damage to the property of Valdellon.

The SC agrees with MALTC and Suelto that Valdellon failed to prove that the damages to the terrace caused
by the incident amounted to P100,000.00.
 The only evidence adduced to prove actual damages claimed by Valdelon were the summary computation
of damage made by Engr. Jesus R. Regal, Jr. amounting to P171,088.46 and the receipt issued by the BB
Construction and Steel Fabricator to Valdellon for P35,000.00 representing cost for carpentry works,
masonry, welding, and electrical works.
 The trial court did not state any factual basis for its award of P150k as actual damages. Neither did the CA
explain how it arrived at the amount of P100,000.00
 Under Article 2199 of the New Civil Code, actual damages include all the natural and probable
consequences of the act or omission complained of, classified as:
o one for the loss of what a person already possesses (daño emergente)
o and the other, for the failure to receive, as a benefit, that which would have pertained to him (lucro
cesante).
 The claimant must prove the actual amount of loss with a reasonable degree of certainty premised
upon competent proof and on the best evidence obtainable.
o Actual damages are designed to repair the wrong that has been done, to compensate for the injury
inflicted.
o The burden of proof is on the party who would be defeated if no evidence would be presented on
either side. The burden is to establish one's case by a preponderance of evidence.
 o In other words, damages cannot be presumed and courts, in making an award, must point out
specific facts that could afford a basis for measuring whatever compensatory or actual damages
are borne.
 Where goods are destroyed by the wrongful act of defendant, the plaintiff is entitled to their value at the
time of the destruction, that is, normally, the sum of money which he would have to pay in the market for
identical or essentially similar goods, plus in a proper case, damages for the loss of the use during the
period before replacement.
 While claimants' bare testimonial assertions in support of their claims for damages should not be discarded
altogether, however, the same should be admitted with extreme caution, taking into account their self-
interest. (similar to PNOC ruling)
 Valedellon adduced evidence that, in their view, the cost of the damage to the terrace would amount
to P55,000.00. Accordingly, she is entitled to P55,000.00 actual damages.

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

FACTS
 Petitioner Magbanua works as a housemaid in the residence of Junsay. Magbanua was charged as
Magbanua v. Junsay.
 The RTC later acquitted Magbanua. It was found that she was maltreated by the investigating officers in an
attempt to force her to confess her participation in the robbery.
 Magbanua (together with her father) filed a complaint for damages arising from malicious prosecution
against Junsay, her employer, and other members of the police force.
o It was alleged that because of the false, malicious, and illegal actuations in filing the criminal case
for robbery, Magbanua suffered untold pain, shame, humiliation, worry, and mental anguish,
which if assessed in monetary terms will not be less than P200,000.00.
o They sought moral and exemplary damages, including attorney's fees and litigation expenses, as
well as loss of earnings and expense.
 The RTC dismissed Magbanua’s complaint since the elements of malice and lack of probable cause was
absent. It denied Magbanua’s prayer for damages.
 The CA affirmed the decision. It was ruled that Junsay merely reported the matter to the police authorities,
while the police officers were merely performing their duties as investigating police officers.

ISSUE: WON Magbanua and her father are entitled to damages for malicious prosecution--NO

RATIO
The filing of a criminal case for Robbery against Magbanua did not constitute malicious prosecution.
 Four elements that must be shown to concur to recover damages for malicious prosecution.
o The prosecution did occur, and the defendant was himself the prosecutor or that he instigated its
commencement;
o The criminal action finally ended with an acquittal
o In bringing the action, the prosecutor acted without probable cause
o The prosecution was impelled by legal malice
 The gravamen of malicious prosecution is not the filing of a complaint based on the wrong provision of
law, but the deliberate initiation of an action with the knowledge that the charges were false and
groundless
 Here, the first and second elements are present. Magbanua was prosecuted and later acquitted.
 Third element absent: The filing of the criminal case for robbery was not without probable cause.
o The investigation report, which prompted the filing of the Information for Robbery against
Magbanua showed that she admitted to receiving instruction from her co-accused to leave the
barrel belt of the kitchen door unlocked, so her co-accused can gain entry to the house.
o Moreover, she admitted that after her co-accused had taken the pieces of jewelry, they gave her a
necklace which she kept in a shoulder bag.
o During the investigation, she was shown the said necklace, and she positively identified the same
to be the necklace her co-accused had given her.
o Thus, based on her admission there was reason for the respondents to believe that the suit was not
unfounded, and that the crime was committed..
 Fourth element absent: No malice
o There is necessity of proof that the suit was so patently malicious as to warrant the award of
damages under Articles 19 to 21, or that the suit was grounded on malice or bad faith.
o Moreover, it is a doctrine well-entrenched in jurisprudence that the mere act of submitting a
case to the authorities for prosecution does not make one liable for malicious prosecution, for
the law would not have meant to impose a penalty on the right to litigate

Thus, the SC affirms the findings of the RTC and CA that there was no proof of a sinister design on the part
of the Junsay and the officers to vex or humiliate Magbanua by instituting the criminal case against her and
her co-accused.
  Junsay who was robbed of her valuable belongings can only be expected to bring the matter to the
authorities
o There can be no evil motive that should be attributed to one, who, as victim of a crime
institutes the necessary legal proceedings.
 As to the officers, their commencement of the action against Magbanua was pursuant to their duties as
police officers.
o Even then, mistakes committed by a public officer are not actionable absent any clear showing that
they were motivated by malice or gross negligence amounting to bad faith, which was not
established in the case at bar.

WHEREFORE, the Appeal is DENIED. The Decision, dated 26 January 1998, of the Court of Appeals in CA-G.R.
CV No. 51750, which affirmed in toto the Decision, dated 25 July 1995, of the RTC, Branch 51, Bacolod City, in
Civil Case No. 4361, is AFFIRMED. Costs against petitioners.
Nacar v. Gallery Frames *

FACTS
 Dario Nacar filed a complaint for constructive dismissal before the Arbitration Branch of the NLRC against
respondents Gallery Frames (GF) and/or Felipe Bordey, Jr.
 First Computation. Labor Arbiter rendered a Decision in favor of Nacar and found that he was dismissed
from employment without a valid or just cause. Thus, Nacar was awarded backwages from his dismissal
on January 24, 1997, until the promulgation of this LA decision on October 15, 1998, and separation
pay in lieu of reinstatement amounting to P158,919.92.
 GF and Bordey appealed to the NLRC, but the NLRC sustained the LA’s decision. CA also sustained the
NLRC.
 They then sought relief before the SC who also denied their petition. 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 GF and Bordey failed to appear.
 Thereafter, Nacar filed a Motion for Correct Computation, praying that his backwages be computed from
the date of his dismissal on January 24, 1997, until the finality of the SC Resolution on May 27, 2002.
 Second Recomputation. Upon recomputation, the Computation and Examination Unit of the NLRC arrived
at an updated amount in the sum of P471,320.31. A Writ of Execution was then issued by the LA ordering
the Sheriff to collect such amounts from GF and Bordey.
 GF and Bordey filed a Motion to Quash Writ of Execution, arguing, among other things, that since the LA
already awarded separation pay and backwages, no more recomputation is required to be made of the said
awards. They claimed that after the decision becomes final and executory, the same cannot be altered or
amended anymore. → LA denied their MTQ, and an Alias Writ of Execution was issued.
 Upon appeal, the NLRC granted the appeal in favor of GF and Bordey and ordered the recomputation of
the judgment award.
 Therafter, 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, Nacar moved that an Alias Writ of Execution be issued to enforce the earlier recomputed
judgment award in the sum of P471,320.31.
 Third Recomputation Again, the records of the case were forwarded to the Computation and Examination
Unit for recomputation where the judgment award was reassessed to be in the total amount of only
P147,560.19.
 Nacar then moved that a writ of execution be issued ordering respondents to pay him the original amount as
determined by the LA (P471,320.31) pending the final computation of his backwages and separation pay.
 Therafter, the LA issued an Alias Writ of Execution to satisfy the judgment award that was due to Nacar in
the amount of P147,560.19, which Nacar eventually received.
 Nacar then filed a Manifestation and Motion praying for the re-computation of the monetary award to
include the appropriate interests. But the LA only granted P11,459.73 since it was the FIRST
COMPUTATION (P158,919.92) that became final and executory, and since Nacar already received
P147,560.19, only P11,459.73 remained.
 On appeal, NLRC and CA denied Nacar’s petition.
 Hence, this petition.
 Basically, Nacar wants the P471,320.31 in the second recomputation, while GF and Border wants
the P158,919.92 originally awarded before recomputation.

ISSUE: W/N the lower courts awarded the proper amount of backwages due to Nacar – NO. IT SHOULD BE
FROM WHEN THE SC DECISION BECAME FINAL PLUS INTEREST. IT IS RECOMPUTED AGAIN.

RATIO
Please read the WHEREFORE portion.

By the nature of an illegal dismissal case, the reliefs continue to add up until full satisfaction. This is not an
alteration or amendment of a final decision and is not a violation of the immutability of judgments.
  Under the terms of the Decision which is sought to be executed by Nacar, no essential change is made by a
recomputation as this step is a necessary consequence that flows from the 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.
 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 consequences of this dismissal is
affected, and this is not a violation of the principle of immutability of final judgments.

That the amount that GF and Bordey 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.
 Remember that GF and Bordey appealed the original LA decision and computation to the NLRC, CA, and
SC, and thus led to a recomputation of the backwages and separation pay.
 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 computed up to that point.
 As to the payment of legal interest, it is 6% per annum.

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 1 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.
a. (NOTE: July 1, 2013 is when BSP-MB Circular No. 799 was effected changing the legal rates).

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.

[VERBATIM] Guidelines for award of interest in actual or compensatory damages.

1. 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.
2. 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:
a. 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.
b. 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.
c. 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.
People v. Jugueta

FACTS

ISSUE

RATIO
City Trust v. Villanueva

FACTS
 Isagani Villanueva had a savings and current account with City Trust Bank. He deposited money in his
savings account. Realizing that he had run out of blank checks, Villanueva requested a new checkbook
from one of the BANK's customer service representatives.
o He then filled up a checkbook requisition slip with the obligatory particulars, except for his
current account number which he could not remember.
 Later on, the check Villanueva issued in favor of a third-party was dishonored due to insufficiency of funds
and disparity in the signature. This was because the account number assigned to his new checkbook was the
account number of another depositor also named "Isagani Villanueva" but with a different middle initial.
 Villanueva later demanded from the bank the amount indemnification and damages. Left unheeded,
Vilanueva later filed a complaint for damages based on breach of contract and/or quasi-delict for supplying
the wrong account number.
o Villanueva prayed for P240k as actual damages consisting of loss profits, P2m as moral damages,
and P500k for exemplary damages, attorney's fees, litigation expenses and costs of the suit.
 The trial court ruled against Villanueva and found that his negligence (failure to remember his acc number
and failure to verify the acc number in the new checks) was the proximate cause of his losses. The trial
court also found that Villanueva was not able to prove his claims for damages.
 The CA, however, ruled in favor of Villanueva and held that the bank’s negligence was the proximate
cause. Despite finding that the Bank’s negligence was not attended with malice and bad faith, it nonetheless
awarded:
o (1) moral damages amounting to P100k; (2) attorney’s fees amounting to P50k.
o The CA rejected Villanueva’s claim for compensatory damages

ISSUE:
1. W/N VILLANUEVA is entitled to actual or compensatory damages in the form of loss of profits? NO
2. W/N he is entitled to moral damages and attorney’s fees? NO

RATIO
The issue of whether Villanueva suffered actual or compensatory damages in the form of loss of profits is
factual. Both the CA and the trial court have ascertained that Villanueva was unable to prove his demand for
compensatory damages arising from loss.
 The factual determinations of the lower courts are conclusive and binding upon appellate courts and hence
should not be disturbed.
 His evidence thereon was found inadequate, uncorroborated, speculative, hearsay and not the best evidence.
 Basic is the jurisprudential principle that in determining actual damages, the court cannot rely on mere
assertions, speculations, conjectures or guesswork but must depend on competent proof and on the best
obtainable evidence of the actual amount of the loss Actual damages cannot be presumed but must be
duly proved with reasonable certainty

Villanueva also failed to support his claim for moral damages. In short, none of the circumstances mentioned
in Article 2219 of the Civil Code exists to sanction the award for moral damages.
 Moral damages include physical suffering, mental anguish, fright, serious anxiety, besmirched reputation,
wounded feelings, moral shock, social humiliation, and similar injury.
 Although incapable of pecuniary computation, moral damages may be recovered if they are the proximate
result of the defendant's wrongful act or omission.
 Thus, case law establishes the requisites for the award of moral damages:
1. there must be an injury, whether physical, mental or psychological, clearly sustained by the
claimant;
2. there must be a culpable act or omission factually established;
 3. the wrongful act or omission of the defendant is the proximate cause of the injury sustained by the
claimant; and
4. the award of damages is predicated on any of the cases stated in Article 2219 of the Civil Code
 Villanueva’s injury arose from the dishonor of his well-funded check. But did this result in “intolerable
physical inconvenience and discomfort, extreme humiliation, indignities” as alleged by Villanueva?  NO
o While Villanueva might have suffered some form of inconvenience and discomfort as a result of
the dishonor of his check. However, the same could not have been so grave or intolerable as he
attempts to portray.
 City Trust was able to remedy the situation and issue a manager's check in favor of Kingly Commodities
(the third party) before the deadline. The bank also explained to Kingly the situation. Thus, the alleged
embarrassment or inconvenience caused to Villanueva as a result of the incident was timely and adequately
contained, corrected, mitigated, if not entirely eradicated.

The award of attorney's fees should likewise be deleted.

 The general rule is that attorney's fees cannot be recovered as part of damages because of the policy that no
premium should be placed on the right to litigate.
 They are not to be awarded every time a party wins a suit. The power of the court to award attorney's fees
under Article 2208 of the Civil Code demands factual, legal and equitable justification.
 Even when a claimant is compelled to litigate with third persons or to incur expenses to protect his rights,
still attorney's fees may not be awarded where there is no sufficient showing of bad faith in the parties'
persistence of a case other than an erroneous conviction of the righteousness of his cause

So there’s actually no need to determine whether it was the bank’s or villanueva’s negligence which was the PC
since Villanueva did not sustain any compensable injury. If any damage had been suffered at all, it could be
equivalent to damnum absque injuria.

WHEREFORE, the decision of the Court of Appeals in CA-G.R. CV No. 40931 is hereby REVISED, and the
judgment of the Regional Trial Court of Makati City, Branch 63, in Civil Case No. 14749 dismissing the complaint
and the counterclaim is hereby REINSTATED.
Spouses Ong v. CA

FACTS
 Petitioners Renato and Francia Ong were onboard an Inland Bus, owned and operated by Inland Trailways
under a Lease Agreement with Philtranco.
 At around 3 in the morning, the bus slowed down to avoid a stalled cargo truck. It was bumped from the
rear by another bus, owned and operated by Philtranco. Both of the petitioners sustained injuries.
 Spouses Ong thus filed an action for damages against Philtranco and Inland. In their Complaint, they
alleged:
o That they suffered injuries, preventing Francia from operating a sari-sari where she derived a daily
income of P200; and Renato from continuing his work as an overseas contract worker (pipe
welder) with a monthly salary of $690.
o Stating that they incurred P10k as medical and miscellaneous expenses, they also claimed moral
damages of P500keach, exemplary and corrective damages of P500k each, and compensatory
damages of P500k each plus 35 percent thereof as attorney's fees.
 Inland answered that, according to the Police Report, it was the driver of the Philtranco bus, who was at
fault.
 Both Inland and Philtranco moved to submit the case for decision without presenting further evidence.
 Trial court: ruled in favor of Spouses Ong, absolving Inland and ordering Philtranco to pay damages based
on quasi-delict.
o Accdg to the trial court, the proximate cause of the accident was the bumping from behind by the
Philtranco bus “based on the Police Report and the affidavits of passengers.”
o Philtranco failed to prove that it exercised due diligence in the selection and supervision of its
employees
o Award of damages:
 P10k as actual damages for medical and miscellaneous expenses
 P50k as compensatory damages for the diminution of the use of the right arm of Francia
 48,000.00 as unrealized profit or income
 P50k as moral damages
 25% of the foregoing as contingent attorney's fees
 CA: Absolved Philtranco of liability
o Philtranco's liability for damages could not be predicated upon the Police Report which had not
been formally offered in evidence. The report was merely annexed to the answer of Inland, and
Sps Ong did not adopt or offer it as evidence.
o The CA found that Sps. Ong sufficiently established a claim against Inland based on culpa
contractual, as a common carrier.
o The liability of Inland for medical and miscellaneous expenses was reduced, as the evidence on
record showed that Sps Ong spent only P3,977.
o Francia's testimony that the use of her right arm was diminished and that she lost income was
found to be self-serving. Thus, the award for unearned income was disallowed and the amount of
moral damages was reduced to P30,000.
 Sps Ong’s arguments:
o Sps. Ong aver that there was GAOD when the amount of actual damages awarded was reduced
from P10,000 to P3,977, even if the original amount did not even include the medical expenses
that Francia continued to incur.
o Sps Ong also protest the deletion of the amount of P48,000 earlier awarded by the trial court
because of the diminution of the use of Francia's right arm, arguing that she stated during direct
examination that it could no longer perform its normal functions, and that Inland and Pantranco
impliedly admitted this matter when they failed to present controverting evidence.
o Sps Ong also protested the deletion of the award for Francia's unrealized income, they argue that
Francia's injuries and her oral testimony adequately support their claim

ISSUE
2. WON the reduction in the amounts of damages awarded was proper—YES
RATIO
On Actual Damages: To be recoverable, actual damages must be pleaded and proven in Court.
 Granting arguendo that there was an agreement to submit the case for decision based on the pleadings, this
does not necessarily imply that Sps Ong are entitled to the award of damages.
 The fundamental principle of the law on damages is that one injured by a breach of contract (in this case,
the contract of transportation) or by a wrongful or negligent act or omission shall have a fair and just
compensation, commensurate with the loss sustained as a consequence of the defendant's acts.
o Hence, actual pecuniary compensation is the general rule, except where the circumstances
warrant the allowance of other kinds of damages.
 Actual damages -- are such compensation or damages for an injury that will put the injured party in the
position in which he had been before he was injured.
o They pertain to such injuries or losses that are actually sustained and susceptible of measurement.
 Article 2199 of the Civil Code expressly mandates that "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."
o To be recoverable, actual damages must be pleaded and proven in Court.
o In no instance may the trial judge award more than those so pleaded and proven. Damages cannot
be presumed.
 The lack of basis for such award was patent in the trial court Decision:
o “Considering that they have gone for consultation to at least two (2) different doctors, this Court
may take judicial notice of the fact that miscellaneous expenses are bound to be incurred to cover
transportation and food, and therefore, finds the amount of P10,000.00 as actual damages to be
reasonable.”
 Thus, the amount of actual damages awarded was correctly reduced from P10,000 to P3,977

On Moral Damages and Diminution of Use of Francia's Arm:

In the case at bar, Francia failed to present evidence regarding the feasibility or practicability and the cost of
a restorative medical operation on her arm. Thus, there is no basis to grant her P50,000 for such expense.
 A person is entitled to the physical integrity of his or her body, and if that integrity is violated, damages are
due and assessable. However, physical injury, like loss or diminution of use of an arm or a limb, is not a
pecuniary loss. Indeed, it is not susceptible of exact monetary estimation.
 Thus, the usual practice is to award moral damages for physical injuries sustained.
 In the case at bar, it was sufficiently shown during the trial that Francia's right arm could not function in a
normal manner and that, as a result, she suffered mental anguish and anxiety. Thus, an increase in the
amount of moral damages awarded, from P30,000 to P50,000, appears to be reasonable and justified.
Renato also suffered mental anxiety and anguish from the accident. Thus, he should be separately awarded
P30,000 as moral damages.
 In some instances, the Court awards the cost of medical procedures to restore the injured person to his or
her former condition. However, this award necessitates expert testimony on the cost of possible restorative
medical procedure.

On Unrealized Income: Although actual damages include indemnification for profits which the injured party
failed to obtain, the rule requires that said person produce the "best evidence of which his case is susceptible.
 The bare and unsubstantiated assertion of Francia that she usually earned P200 a day from her market stall
is not the best evidence to prove her claim of unrealized income for the eight-month period that her arm
was in plaster cast.
 Her testimony that it was their lessor who filed their income tax returns and obtained business licenses for
them does not justify her failure to present more credible evidence of her income.
 Furthermore, after her ten-day confinement at hospital, she could have returned to her work at the public
market despite the plaster cast on her right arm, since she claimed to have two nieces as helpers.
 Clearly, the appellate court was correct in deleting the award for unrealized income, because of Francia’s
utter failure to substantiate her claim.
 The award for Francia's unrealized income was properly deleted.
On Attorney’s Fees
 Counsel for Sps Ong deeply laments the reduction in the award of attorney's fees.
 Under the Civil Code, an award of attorney's fees is an indemnity for damages ordered by a court to be paid
by the losing party to the prevailing party, based on any of the cases authorized by law.
 It is payable not to the lawyer but to the client, unless the two have agreed that the award shall pertain to
the lawyer as additional compensation or as part thereof.
 It is well-settled that such award is addressed to sound judicial discretion and subject to judicial control. We
do not see any abuse thereof in the case at bar.

LR: Documents have to be formally offered in evidence before they can be given any probative value.
 Under the ROC, the court shall not consider any evidence which was not formally offered in evidence.
 A formal offer is necessary, since judges are required to base their findings of fact and their judgment solely
and strictly upon the evidence offered by the parties at the trial. Otherwise, the parties will be deprived of
their chance to examine the document and to object to its admissibility.
 The Police Report was neither offered by the Sps Ong nor admitted by the trial court.
 Evidence not formally offered before the trial court cannot be considered on appeal, for to consider them at
such stage will deny the other parties their right to rebut them.

WHEREFORE, the assailed Decision is AFFIRMED with the MODIFICATION that Renato and Francia Ong are
separately awarded moral damages in the amount of P30,000 and P50,000, respectively. The ten percent (10%)
attorney's fees shall be based on the total modified award.
Ramos v. CA

FACTS

ISSUE

RATIO
Industrial Insurance v. Bondad
FACTS
 The present Petition finds its roots in an incident which involved three vehicles: a Galant Sigma car driven
by Grace Morales, a packed passenger jeepney originally driven by Ligorio Bondad, and a DM Transit Bus
driven by Eduardo Mendoza.
 Industrial Insurance Company (nagbayad ng damages kay Morales) filed a complaint for damages against
the drivers Eduardo and Ligorio, and their employers (DM Transit and Pablo Bondad).
 The trial court exculpated the Bondads (jeep) and ordered Industrial Insurance to pay them actual, moral
and exemplary damages, as well as attorney's fees.
 CA affirmed, ruling that Industrial did not have a cause of action against the Bondads. It was found that the
proximate cause of the damage to Morales’ car was the negligence of the driver of the DM Transit bus. The
insurance company did not verify the facts before impleading the Bondads in this action for damages.

ISSUE: WON the lower courts erred in awarding moral and exemplary damages, as well as attorney's fees—NO,
Industrial acted in BF.

RATIO
The SC will no longer pass upon factual issues.
 Questions regarding the cause of the accident and the persons responsible for it are factual issues which we
cannot pass upon

The award of attorney's fees and other litigation expenses was proper. The records show that Industrial’s suit
against the Bondads was manifestly unjustified.
 In justifying the award of attorney's fees and other litigation expenses, the CA held that the Bondads were
compelled to litigate an unfounded suit because of Industrial’s negligence and lack of prudence in not
verifying the facts before filing this action. The SC agrees.
 Attorney's fees may be awarded by a court if one who claims it is compelled to litigate with third persons or
to incur expenses to protect one's interests by reason of an unjustified act or omission on the part of the
party from whom it is sought.
 The contact between the vehicles of Bondads (jeep) and of Morales was completely due to the impact of
the onrushing bus. They were not the cause of the accident, their vehicle was on the shoulder of the road
because of a flat tire (wala naman daw sila magagawa to avoid the accident nakatigil sila e).
 More significantly, Industrial knew that the Bondads were not the cause of the accident. This is
evident from its failure to even make a prior formal demand on them before initiating the suit.
 Industrial, in impleading the Bondads, acted in wanton disregard of facts (ang linaw daw kasi na wala
naman sila participation sa nangyari).

The award of moral damages was also proper.

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

The award of exemplary damages was also proper.

 Industrial’s conduct needlessly dragged innocent bystanders into an unfounded litigation
 Indeed, exemplary damages are imposed by way of example or correction for the public good, in addition
to moral, temperate, liquidated or compensatory damages.

The facts of this case clearly show that Industrial was motivated by bad faith in impleading the Bondads. Indeed, a
person's right to litigate, as a rule, should not be penalized. This right, however, must be exercised in good
faith.

WHEREFORE, the Petition is hereby DENIED and the assailed Decision AFFIRMED. Double costs against
petitioner. LLpr
Pestaño v. Sps. Sumayang
FACTS

 Sumayang was riding a motorcycle along the national highway with a friend. As they came upon a
junction, they were hit by a passenger bus driven by Pestano and owned by Metro Cebu. Pestano tried to
overtake the motorcycle. Both Sumayang and his friend died.
 Criminal charges were filed against Pestano. But the heirs of Sumayang also filed this civil action for
damages against Pestano, Metro Cebu, and the company’s insurer.
 Testimonies of the witnesses presented by the heirs show that Sumayang signalled with his left arm to
indicate that he was taking the left road but it was suddenly hit by an overspeeding bus.
 Metro Bus argued that they gave regular lectures to drivers and conductors and that the bus was inspected
before leaving that day.
 The RTC and CA found Pestano negligent in driving the passenger bus. Metro Cebu was also found
directly liable under Art 2180. The CA found that Metro Cebu allowed the bus to be driven despite a
defective speedometer
o RTC’s award: (1)P30k for death indemnity (2) P829k for loss of earning capacity (3) P36k for
necessary interment expenses.
o The CA raised the RTC’s award of P30,000.00 damages representing indemnity for death to
P50,000.00.
o The CA used as basis for the loss of earning capacity, the life expectancy of the Sumayang.

ISSUE: WON the CA erred in increasing the life indemnity and in computing the loss of earning capacity--NO

RATIO
LR: The vehicular collision was caused by Pestaño's negligence when he attempted to overtake the motorcycle.
 This fact was already determined by both the RTC and the CA. The SC reiterates the finding that
Sumayang raised his left arm to signal that he was turning left, but that they were thrown off the motorcycle
after it was bumped by the overspeeding bus.
 As a professional driver operating a public transport bus, Pestano should have anticipated that
overtaking at a junction was a perilous maneuver and should thus have exercised extreme caution.

LR: Under Articles 2180 and 2176 of the Civil Code, owners and managers are responsible for damages caused by
their employees.
 When an injury is caused by the negligence of a servant or an employee, the master or employer is
presumed to be negligent either in the selection or in the supervision of that employee.
 This presumption may be overcome only by satisfactorily showing that the employer exercised the care and
the diligence of a good father of a family in the selection and the supervision of its employee.
 The CA said that allowing Pestaño to ply his route with a defective speedometer showed laxity on the part
of Metro Cebu in the operation of its business and in the supervision of its employees.
 The negligence alluded to here is in its supervision over its driver, not in that which directly caused
the accident.
o The fact that Pestaño was able to use a bus with a faulty speedometer shows that Metro Cebu was
remiss in the supervision of its employees and in the proper care of its vehicles

The CA’s increase of the award for life indemnity was proper.
 Pestrano and Metro Cebu aver that the CA erred in increasing the award for life indemnity from P30,000 to
P50,000, without specifying any aggravating circumstance to justify the increment as provided in the Civil
Code. But the SC says this is untenable.
 The indemnity for death caused by a quasi-delict used to be pegged at P3,000, based on Article 2206 of the
Civil Code. However, the amount has been gradually increased through the years because of the
declining value of our currency. At present, prevailing jurisprudence fixes the amount at P50,000.
The CA correctly computed the loss of earning capacity based on the life expectancy of the deceased.
 As to the Loss of earning capacity, Pestrano and Metro Cebu argue that the CA used the wrong basis for its
computation of earning capacity.
o They claim that the CA used as basis for the loss of earning capacity, the life expectancy of the
deceased instead of that of the heirs which was shorter.
 The Court has consistently computed the loss of earning capacity based on the life expectancy of the
deceased, and not on that of the heir.
 The award for loss of earning capacity is based on two factors:
1. the number of years on which the computation of damages is based and
 The first factor refers to the life expectancy, which takes into consideration the nature of
the victim's work, lifestyle, age and state of health prior to the accident.
2. the rate at which the loss sustained by the heirs is fixed.
 The second refers to the victim's earning capacity minus the necessary living expenses
 Stated otherwise, the amount recoverable is that portion of the earnings of the deceased
which the beneficiary would have received — the net earnings of the deceased.

WHEREFORE, the Petition is DENIED and the assailed Decision and Resolution AFFIRMED. Cost against
petitioners.
Lambert v. Heirs of Castillon
FACTS
 Ray Castillon visited the house of his brother and borrowed his motorcycle. He then invited his friend,
Sergio to roam around Iligan City. Ray drove the motorcycle with Sergio as the backrider
 At around past 10:00 p.m., after eating dinner and having a bottle of beer, they were traversing a highway
when they got into an accident with a Tamaraw Jeepney owned by Nelen Lambert and driven by Reynaldo
Gamot.
 When the driver of the tamaraw jeepney was approaching the side road, he slightly veered to the right. Ray,
who was following closely behind, instinctively veered to the left but it was also the moment when the
jeepney driver sharply turned to the left towards the side road. So both of them were moving to the left. The
motorcycle sliced into the side of the jeepney throwing Ray forward so that his forehead hit the angle bar
on the left front door of the jeepney. Ray died as a result.
 Respondents, the heirs of Ray Castillon, thus filed an action for damages against Lambert (owner of the
Tamaraw Jeepney).
 The trial court ruled in favor of the heirs but reduced Lambert’s liability by 20% in view of the contributory
negligence of Ray.
o Lambert was ordered to pay P633k representing loss of support, death indemnity, funeral and
related expenses, moral damages and attorney's fees.
 The CA affirmed.
o Testimonies revealed that the jeepney driver did not stop even for a second, or less before making
the left turn. He did not keep a lookout for vehicles or persons following him before proceeding to
turn left. He failed to take into account the possibility that others may be following him. He did
not employ the necessary precaution to see to it that the road was clear

ISSUE:
 WON the CA erred in computing the net earnings—YES
 WON the CA erred in awarding damages—No, but the SC reduced the damages by 50%

RATIO
LR: Clearly, the abrupt and sudden left turn by the jeepney driver, without first establishing his right of way, was the
proximate cause of the mishap which claimed the life of Ray and injured Sergio.
 The cause of the collision is traceable to the negligent act of the jeepney driver. Without that left turn
executed with no precaution, the mishap in all probability would not have happened.
 Lambert misunderstood the ruling in Raynera v. Hiceta:
o That case also involved a motorcycle crashing into the left rear portion of another vehicle, and we
declared therein that drivers of vehicles "who bump the rear of another vehicle" are presumed to
be "the cause of the accident, unless contradicted by other evidence"
o But in that case, the death of the victim was solely attributable to his own negligence in bumping
the rear of the trailer truck which was traveling ahead of him at 20 to 30 kilometers per hour.
Raynera, being the driver of the rear vehicle, had full control of the situation.
o The trailer truck therein did not make a sudden left turn as in the case at bar

LR: Ray is likewise guilty of contributory negligence as defined under Article 2179. The SC finds it equitable to
increase the ratio of apportionment of damages on account of the victim's negligence.
 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.
 The determination of the mitigation of the defendant's liability varies depending on the circumstances of
each case.
 In the case at bar, it was established that Ray, at the time of the mishap: (1) was driving the motorcycle at a
high speed; (2) was tailgating the Tamaraw jeepney; (3) has imbibed one or two bottles of beer; and (4) was
not wearing a protective helmet.
  These circumstances, although not constituting the proximate cause of his demise and injury to Sergio,
contributed to the same result.
 Hence, pursuant to Rakes v. AG & P, the heirs of Ray Castillon shall recover damages only up to 50% of
the award. In other words, 50% of the damage shall be borne by the heirs; the remaining 50% shall be paid
by Lambert.

The SC agrees with Lambert’s argument that the trial court erred in the computation of the net earnings.
 In considering the earning capacity of the victim as an element of damages, the following factors are
considered in determining the compensable amount of lost earnings:
o the number of years for which the victim would otherwise have lived; and
o 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])
 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.
o The net earning is ordinarily computed at fifty percent (50%) of the gross earnings.
o Thus, the formula used by this Court in computing loss of earning capacity is: Net Earning
Capacity = [2/3 x (80 - age at time of death) x (gross annual income - reasonable and
necessary living expenses)].
 It was established that Ray was 35 at the time of his death and was earning a gross annual income of
P31,876.00 as a driver at the Mindanao State University.
 In arriving at the net earnings, the trial court deducted from the gross annual income the annual living
expenses in the amount of P9,672.00, broken down as follows: P20.00 a day for travel or P520.00 per
month; P60.00 a month for cigarettes; P26.00 for drinks; and other personal expenses like clothing,
toiletries, etc. estimated at P200.00 per month. The amount of P9,672.00, however, appears unrealistic,
and constitutes only 30.34% of the gross earnings. It even includes expenses for cigarettes which by
no means can be classified as a necessary expense. Using the cited formula with the net earnings
computed at 50% of the gross earnings, a detailed computation is as follows:

The SC sustains the awards of P33,215.00 as funeral and burial expenses being supported with receipts;
P50,000.00 as death indemnity; and P50,000.00 as moral damages. However, the award of P20,000.00 as
attorney's fees must be deleted for lack of basis.
 The indemnity for death caused by aquasi-delict used to be pegged at P3,000.00, based on Article 2206 of
the Civil Code, However, the amount has been gradually increased through the years. At present, prevailing
jurisprudence fixes the amount at P50,000.00.
 While it is true that there can be no exact or uniform rule for measuring the value of human life and the
measure of damages cannot be arrived at by a precise mathematical calculation, we hold that the trial
court's award of moral damages of P50,000.00 for the death of Ray Castillon is in accord with the
prevailing jurisprudence.
  With respect to attorney's fees, it is well settled that the same should not be awarded in the absence of
stipulation except under the instances enumerated in Article 2208 of the Civil Code.
o The trial court did not indicate the basis for its award.
o Furthermore, the reason for the award of attorney's fees must be stated in the text of the court's
decision, otherwise, if it is stated only in the dispositive portion of the decision, the same must be
disallowed on appeal.

WHEREFORE, in view of the foregoing, the petition is DENIED. The assailed decision of the Court of Appeals is
AFFIRMED with the MODIFICATION that the net earnings is computed at 50% of the gross annual income to
conform with the prevailing jurisprudence, and the FURTHER MODIFICATION that petitioner NELEN
LAMBERT is ordered to pay the heirs of Ray Castillon only 50% of the damages herein awarded, except attorney's
fees which is DELETED for lack of basis.