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ANGELITA F. AGO, respondents.
Expos is a radio documentary program hosted by Carmelo Mel Rima and Hermogenes Jun legre!
Expos is aired e"ery morning o"er #$RC%M &hich is o&ned by 'ilipinas (roadcasting )et&or*+ ,nc!
-'(),.! Rima and legre exposed "arious alleged complaints /rom students+ teachers and parents against
go Medical and Educational Center%(icol Christian College o/ Medicine -MEC. and its
administrators! Claiming that the broadcasts &ere de/amatory+ MEC and ngelita go+ as #ean o/
MECs College o/ Medicine+ /iled a complaint /or damages against '(),+ Rima and legre! 0he
complaint /urther alleged that MEC is a reputable learning institution! 1ith the supposed exposs+ '(),+
Rima and legre transmitted malicious imputations+ and as such+ destroyed plainti//s -MEC and go.
reputation! MEC and go included '(), as de/endant /or allegedly /ailing to exercise due diligence in
the selection and super"ision o/ its employees+ particularly Rima and legre! '(),+ Rima and legre+
through tty! Ro2il 3o2ares+ /iled an ns&er alleging that the broadcasts against MEC &ere /air and true!
'(),+ Rima and legre claimed that they &ere plainly impelled by a sense o/ public duty to report the
goings%on in MEC+ 4&hich is5 an institution imbued &ith public interest!
0he trial court rendered a #ecision /inding '(), and legre liable /or libel except Rima! 0he trial court
held that the broadcasts are libelous per se! 0he trial court /ound that '(), /ailed to exercise diligence in
the selection and super"ision o/ its employees! ,n absol"ing Rima /rom the charge+ the trial court ruled that
Rimas only participation &as &hen he agreed &ith legres expos! 0he trial court /ound Rimas statement
&ithin the bounds o/ /reedom o/ speech+ expression+ and o/ the press! (oth parties+ namely+ '(),+ Rima
and legre+ on one hand+ and MEC and go+ on the other+ appealed the decision to the Court o/ ppeals!
0he Court o/ ppeals a//irmed the trial courts 6udgment &ith modi/ication! 0he appellate court made Rima
solidarily liable &ith '(), and legre! 0he appellate court denied gos claim /or damages and attorneys
/ees because the broadcasts &ere directed against MEC+ and not against her! '(),+ Rima and legre /iled
a motion /or reconsideration &hich the Court o/ ppeals denied in its Resolution!
1HE0HER MEC ,7 E)0,03E# 08 M8R3 #M9E7!
A j!"d"#a$ %&!'(n "' )&n&!a$$* n(+ &n+"+$&d +( ,(!a$ da,a)&' -&#a'&, n$".& a na+!a$ %&!'(n, "+
#ann(+ &/%&!"&n#& %0*'"#a$ '11&!"n) (! '#0 '&n+",&n+' a' 2(nd&d 1&&$"n)', '&!"(' an/"&+*, ,&n+a$
an)"'0 (! ,(!a$ '0(#.. 0he Court o/ ppeals cites Mambulao Lumber Co. v. PNB, et al! to 6usti/y the
a&ard o/ moral damages! Ho&e"er+ the Courts statement in Mambulao that a corporation may ha"e a
good reputation &hich+ i/ besmirched+ may also be a ground /or the a&ard o/ moral damages is an obiter
dictum! N&3&!+0&$&'', AMEC4' #$a", 1(! ,(!a$ da,a)&' 1a$$' nd&! "+&, 5 (1 A!+"#$& 6678 (1 +0& C"3"$
C(d&. T0"' %!(3"'"(n &/%!&''$* a+0(!"9&' +0& !&#(3&!* (1 ,(!a$ da,a)&' "n #a'&' (1 $"-&$, '$and&! (!
an* (+0&! 1(!, (1 d&1a,a+"(n. A!+"#$& 6678(5) d(&' n(+ :a$"1* 20&+0&! +0& %$a"n+"11 "' a na+!a$ (!
j!"d"#a$ %&!'(n. T0&!&1(!&, a j!"d"#a$ %&!'(n '#0 a' a #(!%(!a+"(n #an 3a$"d$* #(,%$a"n 1(! $"-&$ (!
an* (+0&! 1(!, (1 d&1a,a+"(n and #$a", 1(! ,(!a$ da,a)&'.
M(!&(3&!, 20&!& +0& -!(ad#a'+ "' $"-&$(' per se, +0& $a2 ",%$"&' da,a)&'. ,n such a case+ e"idence o/
an honest mista*e or the &ant o/ character or reputation o/ the party libeled goes only in mitigation o/
damages! )either in such a case is the plainti// re:uired to introduce e"idence o/ actual damages as a
condition precedent to the reco"ery o/ some damages! In +0"' #a'&, +0& -!(ad#a'+' a!& $"-&$(' per se.
T0', AMEC "' &n+"+$&d +( ,(!a$ da,a)&'. H(2&3&!, 2& 1"nd +0& a2a!d (1 P;<<,<<< ,(!a$ da,a)&'
n!&a'(na-$&. T0& !&#(!d '0(2' +0a+ &3&n +0()0 +0& -!(ad#a'+' 2&!& $"-&$(' per se, AMEC 0a' n(+
'11&!&d an* '-'+an+"a$ (! ,a+&!"a$ da,a)& +( "+' !&%+a+"(n. T0&!&1(!&, 2& !&d#& +0& a2a!d (1
,(!a$ da,a)&' 1!(, P;<<,<<< +( P7=<,<<<.
FACTS: ,n ;<<=+ (7%C() and >i"a executed a 'ilm Exhibition greement &hereby >i"a ga"e (7%
C() an exclusi"e right to exhibit some >i"a /ilms! >i"a+ through de/endant #el Rosario+ o//ered (7%
C()+ through its "ice%president Charo 7antos%Concio+ a list o/ three-?. /ilm pac*ages -?@ title. /rom &hich
(7%C() may exercise its right o/ /irst re/usal under the a/ore%said agreement! (7%C()+ ho&e"er
through Mrs! Concio+ did not accept said list! ,n ;<<A+ de/endant #el Rosario and (7%C() general
manager+ Eugenio 3ope2 ,,,+ met to discuss the pac*age proposal o/ >i"a! Mr! 3ope2 testi/ied that he and
Mr! #el Rosario allegedly agreed that (7%CR) &as granted exclusi"e /ilm rights to /ourteen -;B. /ilms
/or a total consideration o/ C?@ millionD that he allegedly put this agreement as to the price and number o/
/ilms in a Enap*inFF and signed it and ga"e it to Mr! #el Rosario! 8n the other hand+ #el Rosario denied
ha"ing made any agreement &ith 3ope2 and insisted that &hat he and 3ope2 discussed at the lunch
meeting &as >i"aFs /ilm pac*age o//er o/ ;=B /ilms -GA originals and GA re%runs. /or a total price o/ C@=
million! /ter the re6ection o/ (7%C() and /ollo&ing se"eral negotiations and meetings de/endant #el
Rosario and >i"aFs Cresident 0eresita Cru2+ in consideration o/ C@= million+ signed a letter o/ agreement
ngranting R(7 the exclusi"e right to air ;=B >i"a%produced andHor ac:uired /ilms including the /ourteen
-;B. /ilms sub6ect o/ the present case!
(7%C() /iled be/ore the R0C a complaint /or speci/ic per/ormance &ith a prayer /or a &rit o/
preliminary in6unction andHor temporary restraining order against pri"ate respondents R(7+ >i"a
Croduction+ and >icente #el Rosario! 0herea/ter+ R0C rendered a decision in /a"or o/ R(7 and >,> and
against (7%C()! (7%C() appealed to the Court o/ ppeals ! C agreed &ith the R0C that the contract
bet&een (7%C() and >,> had not been per/ected+ absent the appro"al by the >,> (oard o/ #irectors
o/ &hate"er #el Rosario+ itFs agent+ might ha"e agreed &ith 3ope2 ,,,! ccordingly+ respondent court
sustained the a&ard o/ actual damages+ moral damages+ exemplary damages and attorneys /ees!
18) the Court o/ ppeals gra"ely erred in 1R#,)9 M8R3 )# EIEMC3RJ #M9E7 ,)
'>8R 8' CR,>0E RE7C8)#E)0 R(7!
0he a&ard o/ moral damages cannot be granted in /a"or o/ a corporation because+ being an arti/icial person
and ha"ing existence only in legal contemplation+ it has no /eelings+ no emotions+ no senses+ ,t cannot+
there/ore+ experience physical su//ering and mental anguish+ &hich call be experienced only by one ha"ing
a ner"ous system! 0he statement in People v! Manero and Mambulao Lumber Co! v! PNB that a
corporation may reco"er moral damages i/ it Ehas a good reputation that is debased+ resulting in social
humiliationE is an obiter dictum! 8n this score alone the a&ard /or damages must be set aside+ since R(7 is
a corporation!
,t may be reiterated that the claim o/ R(7 against (7%C() is not based on contract+ :uasi%contract+ delict+
or :uasi%delict+ Hence+ the claims /or moral and exemplary damages can only be based on rticles ;<+ A=+
and A; o/ the Ci"il Code!
C. MAGLASANG, a' H&"!' (1 D&#&a'&d SPOUSES RA?MUNDO I. CR?STAL and
7pouses Raymundo and #esamparados Crystal obtained a C?==+===!== loan in behal/ o/ the Cebu
Contractors Consortium Co! -CCCC. /rom the (C,%(utuan! 0he loan &as secured by a chattel mortgage!
0he spouses executed in /a"or o/ (C,%(utuan a Continuing 7uretyship &here they bound themsel"es as
surety o/ CCCC! 0herea/ter+ Raymundo Crystal executed a promissory note /or the amount o/ C?==+===!==+
also in /a"or o/ (C,%(utuan! CCCC rene&ed a pre"ious loan+ this time /rom (C,%Cebu City! ,t appears that
be/ore the original loan could be granted (C,%Cebu City re:uired CCCC to put up a security! Ho&e"er+
CCCC had no real property to o//er as security /or the loanD hence+ the spouses executed a real estate
mortgage o"er their o&n real property! CCCC /ailed to pay its loans to both (C,%(utuan and (C,%Cebu City
&hen they became due! CCCC+ as &ell as the spouses+ /ailed to pay their obligations despite demands!
0hus+ (C, resorted to the /oreclosure o/ the chattel mortgage and the real estate mortgage! (C, /iled a
complaint /or sum o/ money against CCCC and the spouses be/ore the R0C (utuan+ see*ing to reco"er the
de/iciency o/ the loan o/ CCCC and the spouses &ith (C,%(utuan! 0he trial court ruled in /a"or o/ (C,!
Cursuant to the decision+ (C, instituted extra6udicial /oreclosure o/ the spouses mortgaged property!
0he trial court dismissed the spouses complaint and ordered them to pay moral and exemplary damages
and attorneys /ees to (C,! ,t ruled that since the spouses agreed to bind themsel"es 6ointly and se"erally+
they are solidarily liable /or the loansD hence+ (C, can "alidly /oreclose the t&o real estate mortgages! 0he
spouses appealed the decision o/ the trial court to the Court o/ ppeals+ but their appeal &as dismissed! 0he
spouses mo"ed /or the reconsideration o/ the decision+ but the Court o/ ppeals also denied their motion
/or reconsideration!
ISSUE: &on the Court o/ ppeals erred in a&arding moral damages to (C,+ &hich is a corporation+ as &ell
as exemplary damages+ attorneys /ees and expenses o/ litigation!
1e do not agree! Moral damages are meant to compensate the claimant /or any physical su//ering+ mental
anguish+ /right+ serious anxiety+ besmirched reputation+ &ounded /eelings+ moral shoc*+ social humiliation
and similar in6uries un6ustly caused! 7uch damages+ to be reco"erable+ must be the proximate result o/ a
&rong/ul act or omission the /actual basis /or &hich is satis/actorily established by the aggrie"ed party!
0here being no &rong/ul or un6ust act on the part o/ (C, in demanding payment /rom them and in see*ing
the /oreclosure o/ the chattel and real estate mortgages+ there is no la&/ul basis /or a&ard o/ damages in
/a"or o/ the spouses! )either is (C, entitled to moral damages! 6uridical person is generally not entitled to
moral damages because+ unli*e a natural person+ it cannot experience physical su//ering or such sentiments
as &ounded /eelings+ serious anxiety+ mental anguish or moral shoc*! 0he Court o/ ppeals /ound (C, as
Ebeing /amous and ha"ing gained its /amiliarity and respect not only in the Chilippines but also in the
&hole &orld because o/ its good &ill and good reputation must protect and de/end the same against any
un&arranted suit such as the case at bench!E ,n holding that (C, is entitled to moral damages+ the Court o/
ppeals relied on the case o/ People v. Manero+ &herein the Court ruled that E4i5t is only &hen a 6uridical
person has a good reputation that is debased+ resulting in social humiliation+ that moral damages may be
1e do not agree &ith the Court o/ ppeals! statement similar to that made by the Court in Manero can be
/ound in the case o/ Mambulao Lumber Co. v. PNB, et al.+ thusK
x x x 8b"iously+ an arti/icial person li*e herein appellant corporation cannot experience physical
su//erings+ mental anguish+ /right+ serious anxiety+ &ounded /eelings+ moral shoc* or social humiliation
&hich are basis o/ moral damages! corporation may ha"e good reputation &hich+ i/ besmirched may
also be a ground /or the a&ard o/ moral damages! x x x -Emphasis supplied.
)e"ertheless+ in the more recent cases o/ ABS-CBN Corp. v. Court of Appeals, et al.+ and Filipinas
Broadcastin Net!or", #nc. v. Ao Medical and $ducational Center-Bicol C%ristian Collee of Medicine
&AM$C-BCCM'+ the Court held that the statements in Manero and Mambulao &ere mere obiter dicta+
implying that the a&ard o/ moral damages to corporations is not a hard and /ast rule! ,ndeed+ &hile the
Court may allo& the grant o/ moral damages to corporations+ it is not automatically grantedD there must still
be proo/ o/ the existence o/ the /actual basis o/ the damage and its causal relation to the de/endants acts!
0his is so because moral damages+ though incapable o/ pecuniary estimation+ are in the category o/ an
a&ard designed to compensate the claimant /or actual in(ur) su//ered and not to impose a penalty on the
0he spouses complaint against (C, pro"ed to be un/ounded+ but it does not automatically entitle (C, to
moral damages! lthough the institution o/ a clearly un/ounded ci"il suit can at times be a legal
6usti/ication /or an a&ard o/ attorneyFs /ees+ such /iling+ ho&e"er+ has almost in"ariably been held not to be
a ground /or an a&ard o/ moral damages! 0he rationale /or the rule is that the la& could not ha"e meant to
impose a penalty on the right to litigate! 8ther&ise+ moral damages must e"ery time be a&arded in /a"or o/
the pre"ailing de/endant against an unsuccess/ul plainti//! (C, may ha"e been incon"enienced by the suit+
but &e do not see ho& it could ha"e possibly su//ered besmirched reputation on account o/ the single suit
alone! Hence+ the a&ard o/ moral damages should be deleted!
INC., respondents!
FACTS: Respondent 0!E!!M! Electronics Corporation -0EC. is &holly o&ned by respondent 0echnology
Electronics ssembly and Management Caci/ic Corporation -0CC.! 8n the other hand+ petitioner Manila
Electric Company -Meralco. is a utility company supplying electricity in the Metro Manila area! Cetitioner
and )7 Electronics -Chilippines.+ ,nc!+ the predecessor%in%interest o/ respondent 0EC+ &ere parties to t&o
separate contracts denominated as greements /or the 7ale o/ Electric Energy! Lnder the a/oresaid
agreements+ petitioner undertoo* to supply 0ECFs building *no&n as #yna Cra/t ,nternational Manila
-#C,M. &ith electric po&er! nother contract &as entered into /or the supply o/ electric po&er to 0ECFs
)7 (uilding! 0EC+ under its /ormer name )ational 7emi%Conductors -Chils!. entered into a Contract o/
3ease &ith respondent Lltra Electronics ,ndustries+ ,nc! -Lltra. /or the use o/ the /ormerFs #C,M building
/or a period o/ /i"e years or until 7eptember ;<<;! team o/ petitionerFs inspectors conducted a surprise
inspection o/ the electric meters installed at the #C,M building! 0he t&o meters co"ered by account
numbers =<?B;%;?AA%;@ and =<?B;%;M;A%;?+ &ere /ound to be allegedly tampered &ith and did not register
the actual po&er consumption in the building! Cetitioner in/ormed 0EC o/ the results o/ the inspection and
demanded /rom the latter the payment o/ CN+=B=+B=;!=; representing its unregistered consumption! 'or
/ailure o/ 0EC to pay the di//erential billing+ petitioner disconnected the electricity supply to the #C,M
0EC demanded /rom petitioner the reconnection o/ electrical ser"ice+ claiming that it had nothing to do
&ith the alleged tampering but the latter re/used to heed the demand! Hence+ 0EC /iled a complaint be/ore
the Energy Regulatory (oard -ER(. praying that electric po&er be restored to the #C,M building! 0he
ER( immediately ordered the reconnection o/ the ser"ice but petitioner complied &ith it a/ter 0EC paid
C;+===+===!==+ under protest! Cetitioner conducted another inspection+ this time+ in 0ECFs )7 (uilding! 0he
inspection allegedly re"ealed that the electric meters &ere not registering the correct po&er consumption!
Cetitioner+ thus+ sent a letter demanding payment o/ CAM=+M;?!NA representing the di//erential billing!
Cetitioner+ thus+ sent 0EC another letter demanding payment o/ the a/oresaid amount+ &ith a &arning that
the electric ser"ice &ould be disconnected in case o/ continued re/usal to pay the di//erential billing! 0o
a"ert the impending disconnection o/ electrical ser"ice+ 0EC paid the abo"e amount+ under protest! 0EC
and 0CC /iled a complaint /or damages against petitioner and Lltra be/ore the R0C o/ Casig! 0he trial court
rendered a #ecision in /a"or o/ respondents 0EC and 0CC+ and against respondent Lltra and petitioner!
Lltra and petitioner appealed to the C &hich a//irmed the R0C decision!
,77LEK &on 0he Court o/ ppeals erred ,n declaring that respondents 0EC and 0CC are entitled to the
damages &hich it a&arded!
s to the alleged tampering o/ the electric meter in 0ECFs )7 building+ su//ice it to state that the allegation
&as not pro"en+ considering that the meters therein &ere enclosed in a metal cabinet the metal seal o/
&hich &as unbro*en+ &ith petitioner ha"ing sole access to the said meters! ,n "ie& o/ the negati"e /inding
on the alleged tampering o/ electric meters on 0ECFs #C,M and )7 buildings+ petitionerFs claim o/
di//erential billing &as correctly denied by the trial and appellate courts! 1ith greater reason+ there/ore+
could petitioner not exercise the right o/ immediate disconnection!
s to the damages a&arded by the C+ &e deem it proper to modi/y the same! ctual damages are
compensation /or an in6ury that &ill put the in6ured party in the position &here it &as be/ore the in6ury!
0hey pertain to such in6uries or losses that are actually sustained and susceptible o/ measurement! Except as
pro"ided by la& or by stipulation+ a party is entitled to ade:uate compensation only /or such pecuniary loss
as is duly pro"en! (asic is the rule that to reco"er actual damages+ not only must the amount o/ loss be
capable o/ proo/D it must also be actually pro"en &ith a reasonable degree o/ certainty+ premised upon
competent proo/ or the best e"idence obtainable!
s to the payment o/ exemplary damages and attorneyFs /ees+ &e /ind no cogent reason to disturb the same!
Exemplary damages are imposed by &ay o/ example or correction /or the public good in addition to moral+
temperate+ li:uidated+ or compensatory damages! ,n this case+ to ser"e as an example O that be/ore a
disconnection o/ electrical supply can be e//ected by a public utility+ the re:uisites o/ la& must be complied
&ith O &e a//irm the a&ard o/ CA==+===!== as exemplary damages! 1ith the a&ard o/ exemplary damages+
the a&ard o/ attorneyFs /ees is li*e&ise proper+ pursuant to rticle AA=M o/ the Ci"il Code! ,t is ob"ious that
0EC needed the ser"ices o/ a la&yer to argue its cause through three le"els o/ the 6udicial hierarchy! 0hus+
the a&ard o/ CA==+===!== is in order!
1e+ ho&e"er+ deem it proper to delete the a&ard o/ moral damages! 0ECFs claim &as premised allegedly on
the damage to its good&ill and reputation! s a rule+ a corporation is not entitled to moral damages because+
not being a natural person+ it cannot experience physical su//ering or sentiments li*e &ounded /eelings+
serious anxiety+ mental anguish and moral shoc*! 0he only exception to this rule is &hen the corporation
has a reputation that is debased+ resulting in its humiliation in the business realm! (ut in such a case+ it is
imperati"e /or the claimant to present proo/ to 6usti/y the a&ard! ,t is essential to pro"e the existence o/ the
/actual basis o/ the damage and its causal relation to petitionerFs acts! ,n the present case+ the records are
bere/t o/ any e"idence that the name or reputation o/ 0ECH0CC has been debased as a result o/ petitionerFs
acts! (esides+ the trial court simply a&arded moral damages in the dispositi"e portion o/ its decision
&ithout stating the basis thereo/!
INC., respondents!
FAC*S: ,n ;<G<+ the rticles o/ ,ncorporation o/ respondent Jamiatul Chilippine%l ,slamia+ ,nc! &ere /iled
&ith the 7EC and &ere appro"ed in ;<@A! 0he corporation had an authori2ed capital stoc* o/ CA==+===!==
di"ided into A=+=== shares at a par "alue o/ C;=!== each! 8/ the authori2ed capital stoc*+ M+=GM shares
&orth CM=+GM=!== &ere subscribed and /ully paid /or! Herein petitioner #atu 0agoranao (enito subscribed
to B@= shares &orth CB+@==!==! 0he respondent corporation /iled a certi/icate o/ increase o/ its capital stoc*
/rom CA==+===!== to C;+===+===!==! Cetitioner #atu 0agoranao /iled &ith respondent 7EC a petition
alleging that the additional issue -&orth C;;=+<M=!==. o/ pre"iously subscribed shares o/ the corporation
&as made in "iolation o/ his pre%empti"e right to said additional issue and that the increase in the
authori2ed capital stoc* o/ the corporation /rom CA==+===!== to C;+===+===!== &as illegal considering that
the stoc*holders o/ record &ere not noti/ied o/ the meeting &herein the proposed increase &as in the
agenda! ,n their ans&er+ respondents denied the material allegations o/ the petition and+ by &ay o/ special
de/ense+ claimed that petitioner has no cause o/ action and that the stoc* certi/icates co"ering the shares
alleged to ha"e been sold to petitioner &ere only gi"en to him as collateral /or the loan o/ #omocao lonto
and Mo*i%in lonto! 0he commission ruled that the issuance by the corporation o/ its unissued shares &as
"alidly made and &as not sub6ect to the pre%empti"e rights o/ stoc*holders+ including the petitioner+ hereinD
and 0hat there is no su//icient legal basis to set aside the certi/icate issued by this Commission authori2ing
the increase in capital stoc* o/ respondent corporation /rom CA==+===!== to Cl+===+===!==!
i77LEK &on the contention o/ petitioner is tenable!
HE3#K this Commission is inclined to belie"e that there &as a stoc*holdersF meeting on )o"ember AG+
;<NG &hich appro"ed the increase! 0he petitioner had not su//iciently o"ercome the e"idence o/
respondents that such meeting &as in /act held! 1hat petitioner success/ully pro"ed+ ho&e"er+ &as the /act
that he &as not noti/ied o/ said meeting and that he ne"er attended the same as he &as out o/ the country at
the time! 0he documentary e"idence o/ petitioner conclusi"ely pro"ed that he &as attending the Mecca
pilgrimage &hen the meeting &as held on )o"ember AG+ ;<NG!
nother thing that petitioner &as able to dispro"e &as the allegation in the certi/icate o/ increase that all
stoc*holders &ho did not subscribe to the increase o/ capital stoc* ha"e &ai"ed their pre%empti"e right to
do so! s /ar as the petitioner is concerned+ he had not &ai"ed his pre%empti"e right to subscribe as he
could not ha"e done so /or the reason that he &as not present at the meeting and had not executed a &ai"er+
thereo/! )ot ha"ing &ai"ed such right and /or reasons o/ e:uity+ he may still be allo&ed to subscribe to the
increased capital stoc* proportionate to his present shareholdings!E