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31. G.R. No.

117103 January 21, 1999

Spouses RENATO S. ONG and FRANCIA N. ONG, petitioners,



On February 9, 1987, petitioners boarded as paying passengers Bus-No. 101 with late No. EVB-508 ("Inland bus," for convenience),
which was owned and operated by Inland Trailways under a Lease Agreement with Philtranco. It was driven by Calvin Coronel. Around
3:50 in the morning of said date, when the Inland bus slowed down to avoid a stalled cargo truck in Tiaong, Quezon, it was bumped
from the rear by another bus, owned and operated by Philtranco and driven by Apolinar Miralles. Francia sustained wounds and
fractures in both of her legs and her right arm, while Renato suffered injuries on his left chest, right knee, right arm and left eye. They
were brought to the San Pablo City District Hospital for treatment and were confined there from February 9 to 18, 1987.


Whether or not public respondent committed grave abuse of discretion in completely reversing the decision of the Regional Trial Court,
ordering Philtranco to indemnify petitioners and in lieu thereof, order[ing] Inland to pay petitioners for their damages.


the petitioners' allegations in their Complaint did not establish a cause of action against Philtranco. They similarly failed to make any
reference to said Police Report during the presentation of their case. This is precisely why Respondent Philtranco opted not to present
further evidence. A document or an article is valueless unless it is formally offered in evidence, and the opposing counsel is given an
opportunity to object to it and to cross-examine any witness called to present or identify it. 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.

There is no agreement to submit the case based on the pleading, as contended by the petitioners. The parties had no such intention,
nor did said Order evince such an agreement.

32. October 8, 1998

Lessons Applicable: Kinds of Damages (Torts and Damages)

Laws Applicable:


September 21, 1977 early morning: M/V Maria Efigenia XV, owned by Maria Efigenia Fishing Corporation on its way to Navotas,
Metro Manila collided with the vessel Petroparcel owned by the Luzon Stevedoring Corporation (LSC)
Board of Marine Inquiry, Philippine Coast Guard Commandant Simeon N. Alejandro found Petroparcel to be at fault
Maria Efigenia sued the LSC and the Petroparcel captain, Edgardo Doruelo praying for an award of P692,680.00 representing the
value of the fishing nets, boat equipment and cargoes of M/V Maria Efigenia XV with interest at the legal rate plus 25% as
attorneys fees and later on amended to add the lost value of the hull less the P200K insurance and unrealized profits and lost
business opportunities
During the pendency of the case, PNOC Shipping and Transport Corporation sought to be substituted in place of LSC as it
acquired Petroparcel
Lower Court: against PNOC ordering it to pay P6,438,048 value of the fishing boat with interest plus P50K attorney's fees and cost
of suit
CA: affirmed in toto

ISSUE: W/N the damage was adequately proven

HELD: YES. affirming with modification actual damages of P6,438,048.00 for lack of evidentiary bases therefor. P2M nominal
damages instead.

in connection with evidence which may appear to be of doubtful relevancy or incompetency or admissibility, it is the safest policy to
be liberal, not rejecting them on doubtful or technical grounds, but admitting them unless plainly irrelevant, immaterial or
incompetent, for the reason that their rejection places them beyond the consideration of the court.
If they are thereafter found relevant or competent, can easily be remedied by completely discarding or ignoring them
two kinds of actual or compensatory damages:
loss of what a person already possesses (dao emergente)
failure to receive as a benefit that which would have pertained to him
in the case of profit-earning chattels, what has to be assessed is the value of the chattel to its owner as a going concern at the time
and place of the loss, and this means, at least in the case of ships, that regard must be had to existing and pending engagements
If the market value of the ship reflects the fact that it is in any case virtually certain of profitable employment, then nothing can be
added to that value in respect of charters actually lost, for to do so would be pro tanto to compensate the plaintiff twice over.
if the ship is valued without reference to its actual future engagements and only in the light of its profit-earning potentiality, then it
may be necessary to add to the value thus assessed the anticipated profit on a charter or other engagement which it was unable to
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
proven through sole testimony of general manager without objection from LSC
Admissibility of evidence refers to the question of whether or not the circumstance (or evidence) is to considered at all. On the other
hand, the probative value of evidence refers to the question of whether or not it proves an issue
Hearsay evidence whether objected to or not has no probative value.
In the absence of competent proof on the actual damage suffered, private respondent is `entitled to nominal damages which, as the
law says, is adjudicated in order that a right of the plaintiff, which has been violated or invaded by defendant, may be vindicated
and recognized, and not for the purpose of indemnifying the plaintiff for any loss suffered
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.
damages in name only and not in fact
amount to be awarded as nominal damages shall be equal or at least commensurate to the injury sustained by private respondent
considering the concept and purpose of such damages
Ordinarily, the receipt of insurance payments should diminish the total value of the vessel quoted by private respondent in his
complaint considering that such payment is causally related to the loss for which it claimed compensation.
Its failure to pay the docket fee corresponding to its increased claim for damages under the amended complaint should not be
considered as having curtailed the lower courts jurisdiction since the unpaid docket fee should be considered as a lien on the

33. March 24, 1914

Lessons Applicable: Actual or Compensatory Damage (Torts and Damages)

Laws Applicable: article 1902,1106,1107 of the Civil Code (old laws)

Lucio Algarra filed a civil action for personal injuries received from a car collision due to the negligence of Sixto Sandejas causing
him to be hospitalized for 10 days, four of five days of which he could not leave his bed.
After being discharged, he still continued to receive medical treatment and that he had done no work since he was not yet entirely
recovered. He also spent to pay the doctor P8 and medicine P2, the expense totalling to P110
Algarra sells the products of a distillery and earns 10% commission which averages to P50/month. He had around 20 regular
customers which took him 4 years to build who order in small quantities and require regular and frequent deliveries. Since his
accident, his wife tried to keep up with the business but only 4 regular customers remained.
Lower court: refused to allow him anything for his injury on the ground that the doctrine of Marcelo vs. Velasco is opposed to such
allowance and Viada which does not pertain to personal injuries
ISSUE: W/N there is actual or compensatory damage despite absence of malicious intent (since negligence)? How is the damage

HELD: YES. judgment of the lower court is set aside, and the plaintiff is awarded the following damages; P10 for medical expenses;
P100 for the 2 months of his enforced absence from his business; and P250 for the damage done to his business in the way of loss of
profits = P360
article 1902 of the Civil Code, which reads as follows: "A person who, by act or omission, causes damage to another where there is
fault or negligence shall be obliged to repair the damage so done.
1106. Indemnity for losses and damages includes not only the amount of the loss which may have been suffered, but also that of
the profit which the creditor may have failed to realize, reserving the provisions contained in the following articles.
1107. The losses and damages for which a debtor in good faith is liable, are those foreseen or which may have been foreseen, at
the time of constituting the obligation, and which may be a necessary consequence of its nonfulfillment.
In case of fraud, the debtor shall be liable for all those which clearly may originate from the nonfulfillment of the obligation - not in
present case

GR: in order that an act omission may be the proximate cause of an injury, the injury must be the natural and probable
consequence of the act or omission and such as might have been foreseen by an ordinarily responsible and prudent man, in the
light of the attendant circumstances, as likely to result therefrom . .
in an action such as that under consideration, in order to establish his right to a recovery, must establish by competent evidence:
(1) Damages to the plaintiff.

(2) Negligence by act or omission of which defendant personally, or some person for whose acts it must respond, was guilty.

(3) The connection of cause and effect between the negligence and the damages.
"actual damages"
purpose of the law in awarding actual damages is to repair the wrong that has been done, to compensate for the injury inflicted,
and not to impose a penalty
not dependent on nor graded by the intent with which the wrongful act is done.
shall be construed to include all damages that the plaintiff may he has suffered in respect to his property, business, trade,
profession, or occupation, and no other damages whatever."
proceed from a sense of natural justice
indemnity comprises, not only the value of loss suffered, but also that of the prospective profit that was not realized, and the
obligation of the debtor in good faith is limited to such losses and damages as were foreseen or might have been foreseen at the
time the obligation was incurred and which are a necessary consequence of his failure of fulfillment
The abstract rules for determining negligence and the measure of damages are, however, rules of natural justice rather than man-
made law, and are applicable under any enlightened system of jurisprudence.
As to the damages resulting from the actual incapacity of the plaintiff to attend to his business there is no question. They are, of
course, to be allowed on the basis of his earning capacity, which in this case, is P50 per month.
evidence of damages "must rest upon satisfactory proof of the existence in reality of the damages alleged to have been suffered."
But, while certainty is an essential element of an award of damages, it need not be a mathematical certainty.
When it is shown that a plaintiff's business is a going concern with a fairly steady average profit on the investment, it may be
assumed that had the interruption to the business through defendant's wrongful act not occurred, it would have continued
producing this average income "so long as is usual with things of that nature.
When in addition to the previous average income of the business it is further shown what the reduced receipts of the business are
immediately after the cause of the interruption has been removed, there can be no manner of doubt that a loss of profits has
resulted from the wrongful act of the defendant.
In the present case, we not only have the value of plaintiff's business to him just prior to the accident, but we also have its value to
him after the accident
The value of such a business depends mainly on the ordinary profits derived from it. Such value cannot be ascertained without
showing what the usual profits are; nor are the ordinary profits incident to such a business contingent or speculative, in the sense
that excludes profits from consideration as an element of damages. What they would have been, in the ordinary course of the
business, for a period during which it was interrupted, may be shown with reasonable certainty. What effect extraordinary
circumstances would have had upon the business might be contingent and conjectural, and any profits anticipated from such cause
would be obnoxious to the objection that they are merely speculative; but a history of the business, for a reasonable time prior to a
period of interruption, would enable the jury to determine how much would be done under ordinary circumstances, and in the usual
course, during the given period; and the usual rate of profit being shown, of course the aggregate becomes only a matter of
Plaintiff having had four years' experience in selling goods on commission, it must be presumed that he will be able to rebuild his
business to its former proportions; so that at some time in the future his commissions will equal those he was receiving when the
accident occurred. Aided by his experience, he should be able to rebuild this business to its former proportions in much less time
than it took to establish it as it stood just prior to the accident. One year should be sufficient time in which to do this. The profits
which plaintiff will receive from the business in the course of its reconstruction will gradually increase. The injury to plaintiff's
business begins where these profits leave off, and, as a corollary, there is where defendant's liability begins. Upon this basis, we fix
the damages to plaintiff's business at P250.

34. August 1, 1918

Lessons Applicable: Mitigation of Liability (Torts and Damages)

Laws Applicable: Article 1106, Article 1107 and Article 1581 of the Civil Code

January, 1916: Tan Chuco owner of casco No. 1033 rented it to Vivencio Cerrano for P70/month payable at the end of each month.
No duration was stipulated.
May, 1916: Tan notified Cerrano that it was necessary to repair it at Malabon. Cerrano was interested to rent it after the repair but
Tan told him that it was already for P80/month.
A week before the end of the repair, Tan sold it to Siy Cong Bieng & Co.
Siy Cong Bieng & Co. induced Santos to refuse to take orders from the new owners
Siy Cong Bieng & Co. were obliged to bring an action of replevin against Santos for the recovery of the possession of their casco
The sheriff took possession of the casco under a writ of replevin, but redelivered it to Santos upon a delivery bond and his wife as
After the casco had been in possession of Santos for some three months, the replevin suit held that casco was the property of
Siy Cong Bieng & Co. at the time of the suit was commenced, and that the "illegal detention" of the casco by Santos had caused
damages of P457.98 to Siy Cong Bieng & Co.
Cerrano paid the judgment in favor of Siy Cong Bieng & Co. and the attorney's fees of Santos which shows that Santos was only a
nominal defendant in the replevin suit,which was entirely controlled by Cerrano.
CFI: casco was rented 10 months at the rate of P60, P457.98 for damages and P500 for attorney's fees

ISSUE: W/N the contract of rent is broken by Tan Chuco's act as proximate cause making him liable to Cerrano for damages

HELD: NO. RTC: reversed P50 damage and his costs in the CFI

article 1581 of the Civil Code provides that when no definite agreement has been made regarding its duration, the lease of a house
is deemed to have been made from day to day, from month to month, or from year to year, according to whether a daily, monthly,
or yearly rent is to be paid.
reasonable presumption that one who agrees to pay a monthly rent intends that his tenancy is to endure for a like period, subject to
indefinite tacit renewals at the end of each month as long as the arrangement is agreeable to both parties
Article 1106 of the Civil Code establishes the rule that prospective profits may be recovered as damages
Article 1107 of the same Code provides that the damages recoverable for the breach of obligations not originating in fraud (dolo)
are those which were or might have been foreseen at the time the contract was entered into.
it is unquestionable that defendant must be deemed to have foreseen at the time he made contract that in the event of his failure
perform it, the plaintiff would be damaged by the loss of the profit he might reasonably have expected to derive from its use
GR: plaintiff may recover compensation for any gain which he can make it appear with reasonable certainty the defendant's
wrongful act prevented him from acquiring
plaintiff would have earned a net profit of P50 from the use of the casco in the month during which he was entitled to its possession
damages resulting from avoidable consequences of the breach of a contract or other legal duty are not recoverable
It is the duty of one injured by the unlawful act of another to take such measures as prudent men usually take under such
circumstances to reduce the damages as much as possible.
burden of proof rests upon the defendant to show that the plaintiff might have reduced the damages - none in this case
The contract of lease or hiring does not create a right in rem in favor of the lessee, except in the case of a recorded lease of real
Santos' attempt to retain possession of it against the lawful owners by whom he had been placed in charge of it, was unlawful
if Cerrano is unable to recover from Santos the money paid by him will not justify us in imposing the burden of repaying this money
to him
damages suffered by reason of his voluntary assumption of the liability incurred by Santos by reason of his unlawful attempt to
withhold possession of the casco from its owners, by whom he was put in charge of it, are not attributable to Cerrano and he is not
responsible for them -NOT proximate cause (proximate cause is Cerrano's own imprudence)

35. G.R. No. L-9973 November 6, 1914

W. E. HICKS, plaintiff-appellant,
MANILA HOTEL COMPANY, defendant-appellee.


on the 9th of November 1912, plaintiff and defendant entered into a written contract by which the defendant ceded to the plaintiff the
exclusive right to serve its patrons with five-passenger automobiles for a period of one year from the date thereof, with certain rights
with respect to a renewal of the contract for a second year. Plaintiff entered on the performance of his duties under the contract and
successfully discharged them during the first year. When about half of the first year had expired, and about June, 1913, the defendant
company, disregarding, as plaintiff claims, the terms of its agreement with him, invited proposals from various garages for its five-
passenger automobile privilege for the ensuing year, that is, from November, 1913, to November, 1914, the time covered by the
second year of plaintiff's contract. Under these proposals various garages competed for the privilege, including that of George E.
Brown, and, after certain negotiations with the latter, his offer was accepted by the defendant company and a written contract made
with him for the exclusive right to the privilege during the year beginning November 9, 1913. This contract with Brown was executed
some months prior to the termination of the first year of plaintiff's contract.


whether the plaintiff, even though he had that right, did, by his acts and conduct, waive that right and thereby exempt the defendant
from the liability, if any, which it incurred by its eviction of plaintiff and the refusal to permit him to enjoy the privilege for the second


Counsel for the defendant company contended that the clause quoted gave the appellant no right to renew the contract sued upon for
the second year. They assert that it did nothing more than give to plaintiff the right to compete with others in obtaining defendant's five-
passenger automobile privilege for the said second year, with preference to him to be engaged over his competitors in case his offer
was equally profitable to the defendant hotel. They further contend that the competition into which he was thus thrust did not relate
exclusively to the contract in which the clause is found or to the terms and conditions of that contract; but that it referred to any contract
which the defendant hotel offered to make or could make with any person, whatever its terms and conditions might be.


G.R. No. L-14335 January 28, 1920

MANUEL DE GUIA, plaintiff-appellant,


The accident which gave rise to the litigation occurred on September 4, 1915, near the end of the street-car line in Caloocan, Rizal, a
northern suburb of the city of Manila. It appears that, at about 8 o'clock p.m., of the date mentioned, the plaintiff Manuel de Guia, a
physician residing in Caloocan, boarded a car at the end of the line with the intention of coming to the city. At about 30 meters from the
starting point the car entered a switch, the plaintiff remaining on the back platform holding the handle of the right-hand door. Upon
coming out of the switch, the small wheels of the rear truck left the track, ran for a short distance along the macadam filling, which was
flush with the rails, and struck a concrete post at the left of the tract. The post was shattered; and as the car stopped the plaintiff was
thrown against the door with some violence, receiving bruises and possibly certain internal injuries, the extent of which is a subject of




This brings us to consider the amount which may be awarded to the plaintiff as damages. Upon this point the trial judge found that, as a
result of the physical and nervous derangement resulting from the accident, Dr. De Guia was unable properly to attend to his
professional labors for three months and suspended his practice for that period. It was also proved by the testimony of the plaintiff that
his customary income, as a physician, was about P300 per month. The trial judge accordingly allowed P900, as damages for loss of
professional earnings. This allowance is attacked upon appeal by the defendant as excessive both as to the period and rate of
allowance. Upon examining the evidence we fell disinclined to disturb this part of the judgment, though it must be conceded that the
estimate of the trial judge on this point was liberal enough to the plaintiff.

37. G.R. No. 91852 August 15, 1995

and others (named in the Annex "A" of the Original Complaint); RAMON NOLAN, in his personal and official capacity as

RAMON A. GONZALES, intervenor-petitioner.


On 15 February 1966, Talisay-Silay Milling Co., Inc. ("TSMC") and Talisay-Silay Industrial Cooperative Association, Inc. ("TSICA")
instituted an action for damages (Civil Case No. 9133) against defendants Asociacion de Agricultores de Talisay-Silay, Inc. ("AATSI"),
First Farmers Milling Co., Inc. ("FFMCI"), Dominador Agravante and other individual sugar planters and Ramon Nolan in his personal
and official capacity as administrator of the Sugar Quota Administration. On 9 March 1967, an amended and supplemental complaint
formally included as defendants the Philippine National Bank ("PNB") and the National Investment Development Corporation ("NIDC").


whether the Court of Appeals erred in reducing the amount of damages awarded by the trial court to TSMC and TSICA from P15.4
million to P1 million;


In reducing the amount of damages awarded by the court a quo to petitioners TSMC and TSICA from roughly P15.4 million to only P1
million, the Court of Appeals, citing Malayan Insurance Co., Inc. v. Manila Port Services reasoned that the reduction was dictated by
the failure of TSMC and TSICA to comply with Section 5, Rule 10 of the Rules of Court, i.e., TSMC and TSICA's failure to amend their
complaint to conform to the evidence presented during trial which showed that TSMC and TSICA suffered damages amounting to more
than P1 million by virtue of the illegal transfer of export sugar quota from TSMC to FFMCI.

G.R. No. 125817 January 16, 2002




On 22 July 1990, while the jeepney was running northbound along the North Diversion Road somewhere in Meycauayan, Bulacan, it
collided with a ten-wheeler-truck owned by petitioner Abelardo Lim and driven by his co-petitioner Esmadito Gunnaban. Gunnaban
owned responsibility for the accident, explaining that while he was traveling towards Manila the truck suddenly lost its brakes. To avoid
colliding with another vehicle, he swerved to the left until he reached the center island. However, as the center island eventually came
to an end, he veered farther to the left until he smashed into a Ferroza automobile, and later, into private respondent's passenger
jeepney driven by one Virgilio Gonzales. The impact caused severe damage to both the Ferroza and the passenger jeepney and left
one (1) passenger dead and many others wounded.




It is petitioners' contention that the Court of Appeals erred in sustaining the decision of the trial court despite their opposition to the well-
established doctrine that an operator of a vehicle continues to be its operator as long as he remains the operator of record. According
to petitioners, to recognize an operator under the kabit system as the real party in interest and to countenance his claim for damages is
utterly subversive of public policy. Petitioners further contend that inasmuch as the passenger jeepney was purchased by private
respondent for only P30,000.00, an award of P236,000.00 is inconceivably large and would amount to unjust enrichment.



Petitioner, Present:

CORONA, C.J., Chairperson,



Respondent. July 26, 2010


TMX engaged the services of AWIA for the construction of its watch assembly plant located in the EPZA run Mactan Export Processing Zone
in Cebu (composed of twin modules and another separately designed module). Their Agreement dated December 29, 1978 provided that AWIA
would provide basic and detailed architectural designs, plans, and specifications, as well as structural, mechanical, and electrical engineering services.
Specifically, one of AWIAs duties was construction administration, i.e., to guard TMX from defects and deficiencies during the construction
phase by determining the progress and quality of the work of the general contractor, P.G. Dakay Construction Company (P.G. Dakay). This is to
ensure that this contractor works in accordance with the directed specifications.

Construction began in 1979 and was completed in 1980. After five years, however, TMX noticed numerous cracks and beam deflections (vertical
shifting) along the roof girders and beams in columns B, C, F, and G of the twin modules. TMX, opining that the problem may have been due to
design errors, informed AWIA of the situation.

In its report dated April 24, 1985, AWIA, thru its project manager Anthony R. Stoner, maintained that its structural roof design of the building
correct and that the building was not in danger of collapsing.


whether AWIA properly discharged its duty as construction administrator


As can be inferred from the contract, TMX could solely and absolutely rely on the assessments and recommendations of AWIA. Under the
aforementioned provisions, AWIA was tasked to guard TMX against construction problems and to ensure the quality of P.G. Dakays performance. It
also had the authority to approve or reject the contractors work, and it could issue certificates of payments for the progress billings of the contractor
only if it found the latters job as covered by each of the billings satisfactory. Thus, it is irrelevant whether TMX has its own engineering staff to evaluate
the reports about the construction work. Taking together Sections 1.1.14 and 1.1.21, AWIA is not liable for the contractors construction errors on the
following conditions: a) that it promptly and adequately informs TMX of whatever defects and deficiencies in the construction are and b) that it
determines how these problems could be repaired. AWIA should not release a final certification of payment in favor of the contractor unless these had
been done.




- versus - Present:


Piagapo, Lanao del Sur; LEONARDO-DE CASTRO,


Piagapo, Lanao del Sur; DEL CASTILLO, and

Appellants, VILLARAMA, JR., JJ.

BAGINDA PALAO (at large)

Alias Abdul Wahid Sultan, Promulgated:

Accused. 01/25/12


Around noontime on February 1, 1996, Baudelio Batoon, Richard Batoon, Juanito Gepayo and a certain
Nito were working on vehicles inside Baudelio Batoons auto repair shop situated along the highway in Tubod,
Baraas, Iligan City.

Baginda Palao then entered the shop accompanied by appellants Renandang Mamaruncas and Pendatum
Ampuan. Baginda Palao wore desert camouflage fatigues; while his two (2) companions wore Philippine Army
tropical green fatigues. Baginda Palao showed Baudelio Batoon an arrest warrant and told the latter he was serving it
against Batoon.

The arrival of Baginda Palaos group prompted Juanito Gepayo and Richard Batoon to stop their work and
observe what was happening.

Baudelio Batoon told Baginda Palao to just wait awhile, as they would settle the matter after he [Batoon]
[finishes] tuning-up an engine he had been working on.

Baginda Palao reacted by slapping the victims stomach and pointing a .45 caliber pistol at him. Baudelio
Batoon then tried to grab Palaos gun, causing the two of them to grapple for the same. As these two wrestled for
control of the gun, Renandang Mamaruncas, who was behind Baudelio Batoon, shot from behind Batoons right thigh
with a .38 cal. homemade gun. Pendatum Ampuan, who was also standing behind Baudelio Batoon, followed up by
shooting Batoons left arm pit with a .45 cal. [homemade] pistol. Baudelio Batoon fell to the ground and Baginda
Palao finished [him off] with a single .45 cal. shot to the back. Juanito Gepayo and Richard Batoon saw the entire
scene, stunned and unable to do anything. From their vantage points three (3) to four (4) meters away, these
witnesses had a clear and unobstructed view of the entire incident.




The Court modifies the award of civil indemnity in the amount of P50,000.00. In line with prevailing jurisprudence, said award is
increased to P75,000.00. Anent the award of moral damages, the CA correctly imposed the amount of P50,000.00. These awards are
mandatory without need of allegation and proof other than the death of the victim, owing to the fact of the commission of murder or

Anent the award of actual damages, the victims widow testified that the family spent a total of P66,904.00 relative to the wake and
burial of the victim. However, the claim for said amount is supported merely by a list of expenses personally prepared by the widow
instead of official receipts. To be entitled to an award of actual damages, it is necessary to prove the actual amount of loss with a
reasonable degree of certainty, premised upon competent proof and on the best evidence obtainable x x x. A list of expenses cannot
replace receipts when the latter should have been issued as a matter of course in business transactions. Thus the Court deletes the
lower courts award of actual damages. Nonetheless, since entitlement of the same is shown under the facts of the case, temperate
damages in the amount of P25,000.00 should be awarded in lieu of actual damages to the heirs of the victim pursuant to Article 2224 of
the Civil Code which provides that temperate damages may be recovered when the court finds that pecuniary loss has been suffered
but its amount cannot, from the nature of the case, be proved with certainty.

The CA correctly deleted the indemnity for loss of earning capacity awarded by the trial court. Such indemnity cannot be awarded in the
absence of documentary evidence except where the victim was either self-employed or a daily wage worker earning less than the
minimum wage under current labor laws.

As testified to by the widow, Florenda Batoon, the victim was earning a monthly income of P20,000.00 and P90,000.00 as an auto
repair shop and a six-wheeler truck operator, respectively. The trial court made a conservative estimate of P500.00 a day as the net
income from the truck alone after making reasonable deductions from its operation. Thus, ranged against the daily minimum wage then
prevailing in Region X which is P137.00 per day pursuant to Wage Order No. RX-03, this case undoubtedly does not fall under the
exceptions where indemnity for loss of earning capacity can be given despite the lack of documentary evidence.

The Court sustains the award of exemplary damages in view of the proven qualifying circumstance of treachery. The CA however
awarded exemplary damages to the heirs of the victim in the amount of P25,000.00. To conform with prevailing jurisprudence, the
Court increases this amount to P30,000.00.


G.R. No. 122477 June 30, 2000

THE PEOPLE OF THE PHILIPPINES, plaintiff-appellee,

EDISON ARELLANO, accused-appellant.


Roberto Morales, an auto mechanic at the Victory Rice Mill, testified that on July 25, 1993, at around 7:00 p.m., he was at a sari-
sari store beside said rice mill at Cabatuan, Isabela. He was there drinking beer with Gaudencio Pagon, Romeo Tindenilla, rice mill
security guard Arellano, Antonio Cordova, Rudy and the victim Andres Ventura. An hour later, the storeowner named Riza requested
Andres to gather the empty bottles of beer. Romeo resented the act of Andres of getting the bottles in front of him, thus, a verbal tussle
ensued. This heightened into a fistfight between Andres and Romeo. Because of the punches received from Andres, Romeo fell.
Suddenly, Arellano approached Andres and stabbed the latter on the right side with a pointed double-bladed instrument. Andres then
attempted to chase Arellano but failed as the latter was able to escape into the compound of the Victory Rice Mill. Andres sat down,
held his side and shouted for help. Seeing Andres serious wound, he (Morales) and the others brought him to the Bucag Hospital. It
was there that Andres died an hour later.




As regards the monetary award, the trial court failed to explain the basis of its award of P100,000.00 as civil indemnity. While
the heirs of the victim did not expressly claim an amount representing the deceaseds loss of earning capacity nor present
evidence thereon, such failure does not necessarily prevent recovery of damages considering that there is sufficient basis on
record upon which the court may determine a reasonable and fair estimate of such damages. In accordance with Article 2206
of the Civil Code, an award of compensatory damages representing Alfredos loss of earning capacity is due the heirs of the



- versus - CORONA, C.J.,*

CARPIO, J., Chairperson,
ABAD, and
CALAGUAS, June 8, 2011


At about 3:00 in the early morning of May 7, 2002, while she and the victim Abad Sulpacio were sleeping inside the
house of the Estrella family in Barangay Carmen, Rosales, Pangasinan several persons entered to rob the place; Inside
the house, she saw and recognized the accused Lando Calaguas and Dick Taedo, and heard the latter uttering
somebody will die; Bringing her outside the house, Lando pushed her into the Revo where she saw inside Abad Sulpacio
who was blindfolded and with his hands tied; Inside the Revo, she recognized the accused Dick Taedo, Lando Calaguas,
Marvin Lim, Roberto Taedo, Alberto Anticamara and Fred; The Revo then proceeded towards the fishpond owned by the
Estrellas in Sitio Rosalia, Brgy. San Bartolome, Rosales, Pangasinan; The last time that she saw Abad Sulpacio was
when he was dragged out from the vehicle by Lando, Fred, Marvin and Al upon reaching Sitio Rosalia. At that, time Dick
Taedo stayed with her in the vehicle; Thereafter, when Fred returned to the vehicle, she heard him uttered (sic): Make a
decision now. Abad has already four (4) bullets in his body, and the one left is for this girl.




Anent moral damages, the same are mandatory in cases of murder, without need of allegation and proof other than the death of the
victim. However, consistent with recent jurisprudence on heinous crimes where the imposable penalty is death but reduced to reclusion
perpetua pursuant to R.A. No. 9346, the award of moral damages should be increased from P50,000.00 to P75,000.00.

The award of exemplary damages is in order, because of the presence of the aggravating circumstances of treachery and evident
premeditation in the commission of the crime. The Court awards the amount of P30,000.00, as exemplary damages, in line with current
jurisprudence on the matter.

Actual damages is also warranted. Modesta Abad, the spouse of victim Sulpacio, incurred expenses in the amount of P57,122.30,
which was duly supported by receipts.

In addition, AAA is entitled to moral damages pursuant to Article 2219 of the Civil Code, without the necessity of additional pleadings or
proof other than the fact of rape. Moral damages is granted in recognition of the victim's injury necessarily resulting from the odious
crime of rape. Such award is separate and distinct from the civil indemnity. However, the amount of P100,000.00 awarded as moral
damages is reduced to P75,000.00, in line with current jurisprudence.
Along that line, appellant Al's liability for moral damages is limited only to the amount of P50,000.00. Pursuant to Article 2219 of the
Civil Code, moral damages may be recovered in cases of illegal detention. This is predicated on AAA's having suffered serious anxiety
and fright when she was detained for almost one (1) month.


G.R. No. L-11037 December 29, 1960

EDGARDO CARIAGA, ET AL., plaintiffs-appellants,

LAGUNA TAYABAS BUS COMPANY, defendant-appellant.
MANILA RAILROAD COMPANY, defendant-appellee.


At about 1:00 p.m. on June 18, 1952, Bus No. 133 of the Laguna Tayabas Bus
Co. hereinafter referred to as the LTB driven by Alfredo Moncada, left its station at Azcarraga St., Manila, for Lilio, Laguna, with
Edgardo Cariaga, a fourth-year medical student of the University of Santo Tomas, as one of its passengers. At about 3:00 p.m., as the
bus reached that part of the poblacion of Bay, Laguna, where the national highway crossed a railroad track, it bumped against the
engine of a train then passing by with such terrific force that the first six wheels of the latter were derailed, the engine and the front part
of the body of the bus was wrecked, the driver of the bus died instantly, while many of its passengers, Edgardo among them, were
severely injured. Edgardo was first confined at the San Pablo City Hospital from 5:00 p.m., June 18, 1952, to 8:25 a.m., June 20 of the
same year when he was taken to the De los Santos Clinic, Quezon City. He left that clinic on October 14 to be transferred to the
University of Santo Tomas Hospital where he stayed up to November 15. On this last date he was taken back to the De los Santos
Clinic where he stayed until January 15, 1953. He was unconscious during the first 35 days after the accident; at the De los Santos
Clinic Dr. Gustilo removed the fractured bones which lacerated the right frontal lobe of his brain and at the University of Santo Tomas
Hospital Dr. Gustilo performed another operation to cover a big hole on the right frontal part of the head with a tantalum plate.




The claim made by said spouses for actual and compensatory damages is likewise without merits. As held by the trial court, in so far as
the LTB is concerned, the present action is based upon a breach of contract of carriage to which said spouses were not a party, and
neither can they premise their claim upon the negligence or quasi-delict of the LTB for the simple reason that they were not themselves
injured as a result of the collision between the LTB bus and train owned by the Manila Railroad Company.


Villa Rey Transit v. CA

On March 17, 1960, Policronio Quintos, Jr. was riding the petitioners bus, when the said bus frontally hit the rear side of a bullcart filled
with hay. The protruding end of the bamboo pole at the rear of the cart penetrated the windshield of the bus and landed at Policronios
face. He died of traumatic shock due to cerebral injuries. Private respondents are sisters and surviving heirs of the deceased. They
brought this action against Villa Rey Transit for breach of contract of carriage. The trial court found that the death was caused by the
negligence of the bus driver, for whom petitioner was liable under the contract of carriage with the deceased.
(1) The number of years to be used as basis of computation
(2) The rate at which the losses sustained by respondents should be fixed

(1) The determination of the indemnity to be awarded to the heirs of a deceased person has no fixed basis. Much is left to the
discretion of the court considering the moral and material damages involved, and so it has been said that "(t)here can be no exact or
uniform rule for measuring the value of a human life and the measure of damages cannot be arrived at by precise mathematical
calculation, but the amount recoverable depends on the particular facts and circumstances of each case. The life expectancy of the
deceased or of the beneficiary, whichever is shorter, is an important factor.' Other factors that are usually considered are: (1) pecuniary
loss to plaintiff or beneficiary; (2) loss of support; (3) loss of service; (4) loss of society; (5) mental suffering of beneficiaries; and (6)
medical and funeral expenses."

Thus, life expectancy is, not only relevant, but, also, an importantelement in fixing the amount recoverable by private respondents
herein. Although it is not the sole element determinative of said amount, no cogent reason has been given to warrant its disregard and
the adoption, in the case at bar, of a purely arbitrary standard, such as a four-year rule. In short, the Court of Appeals has not erred in
basing the computation of petitioner's liability upon the life expectancy of Policronio Quintos, Jr.

(2) With respect to the rate at which the damages shall be computed, petitioner impugns the decision appealed from upon the ground
that the damages awarded therein will have to be paid now, whereas most of those sought to be indemnified will be sufferedyears later.
This argument is basically true, and this is, perhaps, one of the reasons why the Alcantara case points out the absence of a "fixed
basis" for the ascertainment of the damages recoverable in litigations like the one at bar. Just the same, the force of the said argument
of petitioner herein is offset by the fact that, although payment of the award in the case at bar will have to take place upon the finality of
the decision therein, the liability of petitioner herein had been fixed at the rate only of P2,184.00 a year, which is the annual salary of
Policronio Quintos, Jr. at the time of his death, as a young "training assistant" in the Bacnotan Cement Industries, Inc. In other words,
unlike the Alcantara case, on which petitioner relies, the lower courts did not consider, in the present case, Policronio's potentiality and
capacity to increase his future income. Indeed, upon the conclusion of his training period, he was supposed to have a better job and be
promoted from time to time, and, hence, to earn more, if not considering the growing importance of trade, commerce and industry and
the concomitant rise in the income level of officers and employees therein much more.

Damages consist, not of the full amount of his earnings, but of the support, they received or would have received from him had he not
died in consequence of the negligence of petitioner's agent. In fixing the amount of that support, We must reckon with the "necessary
expenses of his own living", which should be deducted from his earnings. Only net earnings, not gross earning, are to be considered
that is, the total of the earnings less expenses necessary in the creation of such earnings or income and less living and other incidental
All things considered, We are of the opinion that it is fair and reasonable to fix the deductible living and other expenses of the deceased
at the sum of P1,184.00 a year, or about P100.00 a month, and that, consequently, the loss sustained by his sisters may be roughly
estimated at P1,000.00 a year or P33,333.33 for the 33-1/3 years of his life expectancy. To this sum of P33,333.33, the following
should be added: (a) P12,000.00, pursuant to Arts. 104 and 107 of the Revised Penal Code, in relation to Article 2206 of our Civil
Code, as construed and applied by this Court; (b) P1,727.95, actually spent by private respondents for medical and burial expenses;
and (c) attorney's fee, which was fixed by the trial court, at P500.00, but which, in view of the appeal taken by petitioner herein, first to
the Court of Appeals and later to this Supreme Court, should be increased to P2,500.00. In other words, the amount adjudged in the
decision appealed from should be reduced to the aggregate sum of P49,561.28, with interest thereon, at the legal rate, from December
29, 1961, date of the promulgation of the decision of the trial court.


G.R. No. 186312 June 29, 2010


SUN HOLIDAYS, INC., Respondent.


Spouses Dante and Leonora Cruz (petitioners) lodged a Complaint on January 25, 20011 against Sun Holidays, Inc. (respondent) with
the Regional Trial Court (RTC) of Pasig City for damages arising from the death of their son Ruelito C. Cruz (Ruelito) who perished with
his wife on September 11, 2000 on board the boat M/B Coco Beach III that capsized en route to Batangas from Puerto Galera, Oriental
Mindoro where the couple had stayed at Coco Beach Island Resort (Resort) owned and operated by respondent.

The stay of the newly wed Ruelito and his wife at the Resort from September 9 to 11, 2000 was by virtue of a tour package-contract
with respondent that included transportation to and from the Resort and the point of departure in Batangas.
On September 11, 2000, as it was still windy, Matute and 25 other Resort guests including petitioners son and his wife trekked to the
other side of the Coco Beach mountain that was sheltered from the wind where they boarded M/B Coco Beach III, which was to ferry
them to Batangas.

Shortly after the boat sailed, it started to rain. As it moved farther away from Puerto Galera and into the open seas, the rain and wind
got stronger, causing the boat to tilt from side to side and the captain to step forward to the front, leaving the wheel to one of the crew

The waves got more unwieldy. After getting hit by two big waves which came one after the other, M/B Coco Beach III capsized putting
all passengers underwater.

The passengers, who had put on their life jackets, struggled to get out of the boat. Upon seeing the captain, Matute and the other
passengers who reached the surface asked him what they could do to save the people who were still trapped under the boat. The
captain replied "Iligtas niyo na lang ang sarili niyo" (Just save yourselves).

Help came after about 45 minutes when two boats owned by Asia Divers in Sabang, Puerto Galera passed by the capsized M/B Coco
Beach III. Boarded on those two boats were 22 persons, consisting of 18 passengers and four crew members, who were brought to
Pisa Island. Eight passengers, including petitioners son and his wife, died during the incident.

At the time of Ruelitos death, he was 28 years old and employed as a contractual worker for Mitsui Engineering & Shipbuilding Arabia,
Ltd. in Saudi Arabia, with a basic monthly salary of $900.




Since respondent failed to prove that it exercised the extraordinary diligence required of common carriers, it is presumed to have acted
recklessly, thus warranting the award too of exemplary damages, which are granted in contractual obligations if the defendant acted in
a wanton, fraudulent, reckless, oppressive or malevolent manner.

Under the circumstances, it is reasonable to award petitioners the amount of P100,000 as moral damages and P100,000 as exemplary

Pursuant to Article 2208 of the Civil Code, attorney's fees may also be awarded where exemplary damages are awarded. The Court
finds that 10% of the total amount adjudged against respondent is reasonable for the purpose.


G.R. No. L-63135 June 24, 1983




While driving a passenger bus in Bacolod City, private respondent Geronimo Dalmacio ran over Juana Sonza Vda. de Darrocha (a
USVA pensioner) who died instantly, survived by her only child, Gloria Darrocha de Caliston, the herein petitioner.



The pension of the decedent being a sure income that was cut short by her death for which Dalmacio was responsible, the surviving
heir of the former is entitled to the award of P 10,000.00 which is just equivalent to the pension the decedent would have received for
one year if she did not die.

On the other hand, the P5,000.00 paid to the herein petitioner by the insurer of the passenger bus which figured in the accident may be
deemed to have come from the bus owner who procured the insurance. Since the civil liability (ex-delicto) of the latter for the death
caused by his driver is subsidiary and, at bottom, arises from the same culpa, the insurance proceeds should be credited in favor of the
errant driver.


[G. R. No. 141089. August 1, 2002]


The eyewitness account of plaintiffs witness, Maria Zenaida Baylon, tends to show that in the afternoon of December 24, 1986, she,
her daughter Maria Zenia and the victim, Florentina Sabalburo, were on their way to Baclaran to buy foodstuffs for their Noche Buena.
For some time, they stood on the island at the intersection of St. Andrews Street and Domestic Road, [Pasay City] waiting for the traffic
light to change so they could cross to the other side of St. Andrews Street where they intended to take a ride for Baclaran. When the
traffic light turned red and the vehicles along St. Andrews Street had stopped, the three of them stepped off the island. Just as they
started to cross the street, she (Baylon) saw an MMTC bus coming from their right (Tramo) which was moving at a fast speed. The next
moment, the left front portion of the bus hit the victim on the right side of her head. The impact was of such force that the victims right
ear was slashed off and she thereupon fell on the cement and became unconscious. The victim was brought by the bus driver,
Apolinario Ajoc and the bus conductress to the San Juan de Dios Hospital where she was given medical attention. Florentina
Sabalburo never regained consciousness and it was on January 3, 1987 that she succumbed to her injuries.




Petitioner MMTC next contends that the Court of Appeals erred in finding it solidarily liable for damages with its driver/employee,
Ajoc, pursuant to the relevant paragraphs of Article 2180 of the Civil Code. It argues that the act of Ajoc in bringing the victim to a
hospital reflects MMTCs diligence in the selection and supervision of its drivers, particularly with regard to safety measures. Hence,
having exercised the diligence of a good father of a family in the selection and supervision of its employees to prevent damage, MMTC
should not be held vicariously liable.
It should be stressed, however, that whenever an employees negligence causes damage or injury to another, there instantly
arises a presumption juris tantum that there was negligence on the part of the employer, either in the selection of the employee (culpa
in eligiendo) or the supervision over him after the selection (culpa in vigilando). Hence, to escape solidary liability for a quasi-
delict committed by his employee, an employer must rebut the presumption by presenting convincing proof that in the selection and
supervision of his employee, he has exercised the care and diligence of a good father of a family. In the present case, petitioner MMTC
failed to rebut the presumption of negligence on its part.
The claim that Ajocs act of bringing the victim to the nearest medical facility shows adequate supervision by MMTC over its
employees deserves but scant consideration.For one, the act was after the fact of negligence on Ajocs part. For another, the evidence
on record shows that Ajocs act was neither voluntary nor spontaneous; he had to be prevailed upon by the victims companions to
render assistance to his victim. Moreover, the evidence to show that MMTC had exercised due diligence in the selection and
supervision of its employees consisted merely of the pertinent guidelines for the screening and selection of its drivers, as well as
periodic seminars on road safety. As found by the trial court, and affirmed by the appellate court, petitioner MMTC failed to show that
its driver, Ajoc, had actually undergone such screening or had attended said seminars. As previously held, [t]he mere formulation of
various company policies on safety without showing that they were being complied with is not sufficient to exempt (an employer) from
liability arising from negligence of its employees. It is incumbent upon petitioner to show that in recruiting and employing the erring
driver the recruitment procedures and company policies on efficiency and safety were followed. In this case, MMTC has made no
satisfactory showing that it had paid more than lip service to its guidelines and policies in hiring and supervision. Its failure to do so
cannot but warrant the proper sanctions from this Court, considering that MMTC is a government-owned public utility organized for the
public welfare. Having failed to rebut the presumption of negligence on its part, MMTC is primarily and directly liable for the damages
caused by its employee, the erring driver, Ajoc, pursuant to Article 2180 of the Civil Code, which provides as follows:

ART. 2180. The obligation imposed by Article 2176 is demandable not only for ones own acts or omissions-, but also for those of
persons for whom one is responsible.

The father and, in case of his death or incapacity, the mother, are responsible for the damages caused by the minor children who live in
their company.

Guardians are liable for damages caused by the minors or incapacitated persons who are under their authority and live in their

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

Employers shall be liable for the damages caused by their employees and household helpers acting within the scope of their assigned
tasks, even though the former are not engaged in any business or industry.

The State is responsible in like manner when it acts through a special agent; but not when the damage has been caused by the official
to whom the task done properly pertains, in which case what is provided in Article 2176 shall be applicable.

Lastly, teachers or heads of establishments of arts and trades shall be liable for damages caused by their pupils and students or
apprentices, so long as they remain in their custody.

The responsibility treated of in this article shall cease when the persons herein mentioned prove that they observed all the diligence of
a good father of a family to prevent damage.

The owners of public utilities fall within the scope of this article. As earlier stated, MMTC is a public utility, organized and owned
by the government for public transport service. Hence, its liability to private respondents, for the negligent and reckless acts of its
driver, Ajoc, under Article 2180 of the Civil Code is both manifest and clear.






- versus -

G.R. No. 148974


CARPIO, J., Chairperson,

ABAD, and


July 2, 2010


On August 4, 1995, at about 3:00 p.m., an Isuzu private tanker with plate no. PCH 612, owned by and registered in the name of
petitioner OMC Carriers, Inc. and then being driven by its employee Jerry P. Aalucas (Aalucas), was cruising along Quirino
Highway towards the general direction of Lagro, Quezon City. At BarangayPasong Putik, Novaliches, Quezon City, the aforesaid
private tanker hit a private vehicle, an Isuzu Gemini with plate no. NDF 372, which was making a left turn towards a nearby Caltex
gasoline station. The impact heavily damaged the right side portion of the latter motor and mortally injured its 18-year-old driver,
Reggie T. Nabua, who was later pronounced dead on arrival at the Fairview Polymedic Hospital.[5]




It is thus clear that the employer of a negligent employee is liable for the damages caused by the latter. When an injury is caused by
the negligence of an employee, there instantly arises a presumption of the law that there was negligence on the part of the employer,
either in the selection of his employee or in the supervision over him after such selection. However, the presumption may be overcome
by a clear showing on the part of the employer that he has exercised the care and diligence of a good father of a family in the selection
and supervision of his employee. In other words, the burden of proof is on the employer. Thus, petitioners must prove two things: first,
that they had exercised due diligence in the selection of petitioner Aalucas, and second, that after hiring Aalucas, petitioners had
exercised due diligence in supervising him.


Civil Law Common Carrier Private School Transport are Common Carriers
Torts and Damages Heirs of a high school student may be awarded damages for loss income
In June 1996, Nicolas and Teresita Zarate contracted Teodoro and Nanette Perea to transport their (Zarates) son, Aaron Zarate, to
and from school. The Pereas were owners of a van being used for private school transport.
At about 6:45am of August 22, 1996, the driver of the said private van, Clemente Alfaro, while the children were on board including
Aaron, decided to take a short cut in order to avoid traffic. The usual short cut was a railroad crossing of the Philippine National
Railway (PNR).
Alfaro saw that the barandilla (the pole used to block vehicles crossing the railway) was up which means it was okay to cross. He then
tried to overtake a bus. However, there was in fact an oncoming train but Alfaro no longer saw the train as his view was already
blocked by the bus he was trying to overtake. The bus was able to cross unscathed but the vans rear end was hit. During the collision,
Aaron, was thrown off the van. His body hit the railroad tracks and his head was severed. He was only 15 years old.
It turns out that Alfaro was not able to hear the train honking from 50 meters away before the collision because the vans stereo was
playing loudly.
The Zarates sued PNR and the Pereas (Alfaro became at-large). Their cause of action against PNR was based on quasi-delict. Their
cause of action against the Pereas was based on breach of contract of common carriage.
In their defense, the Pereas invoked that as private carriers they were not negligent in selecting Alfaro as their driver as they made
sure that he had a drivers license and that he was not involved in any accident prior to his being hired. In short, they observed the
diligence of a good father in selecting their employee.
PNR also disclaimed liability as they insist that the railroad crossing they placed there was not meant for railroad crossing (really, thats
their defense!).
The RTC ruled in favor of the Zarates. The Court of Appeals affirmed the RTC. In the decision of the RTC and the CA, they awarded
damages in favor of the Zarates for the loss of earning capacity of their dead son.
The Pereas appealed. They argued that the award was improper as Aaron was merely a high school student, hence, the award of
such damages was merely speculative. They cited the case of People vs Teehankee where the Supreme Court did not award damages
for the loss of earning capacity despite the fact that the victim there was enrolled in a pilot school.
ISSUES: Whether or not the defense of due diligence of a good father by the Pereas is untenable. Whether or not the award of
damages for loss of income is proper.
HELD: Yes, in both issues.
Defense of Due Diligence of a Good Father
This defense is not tenable in this case. The Pereas are common carriers. They are not merely private carriers. (Prior to this case, the
status of private transport for school services or school buses is not well settled as to whether or not they are private or common
carriers but they were generally regarded as private carriers). Private transport for schools are common carriers. The Pereas, as
the operators of a school bus service were: (a) engaged in transporting passengers generally as a business, not just as a casual
occupation; (b) undertaking to carry passengers over established roads by the method by which the business was conducted; and (c)
transporting students for a fee. Despite catering to a limited clientle, the Pereas operated as a common carrier because they held
themselves out as a ready transportation indiscriminately to the students of a particular school living within or near where they operated
the service and for a fee.
Being a common carrier, what is required of the Pereas is not mere diligence of a good father. What is specifically required from them
by law is extraordinary diligence a fact which they failed to prove in court. Verily, their obligation as common carriers did not cease
upon their exercise of diligently choosing Alfaro as their employee.
(It is recommended that you read the full text, the Supreme Court made an elaborate and extensive definition of common and private
carriers as well as their distinctions.)
Award of Damages for Aarons loss of earning capacity despite he being a high school student at the time of his death
The award is proper. Aaron was enrolled in a reputable school (Don Bosco). He was of normal health and was an able-bodied person.
Further, the basis of the computation of his earning capacity was not on what he would have become. It was based on the current
minimum wage. The minimum wage was validly used because with his circumstances at the time of his death, it is most certain that
had he lived, he would at least be a minimum wage earner by the time he starts working. This is not being speculative at all.
The Teehankee case was different because in that case, the reason why no damages were awarded for loss of earning capacity was
that the defendants there were already assuming that the victim would indeed become a pilot hence, that made the assumption
speculative. But in the case of Aaron, there was no speculation as to what he might be but whatever hell become, it is certain that he
will at the least be earning minimum wage.

[G.R. No. 159636. November 25, 2004]


The facts as testified by respondent Rosalito Gammad show that on March 14, 1996, his wife Marie Grace Pagulayan-Gammad, was
on board an air-conditioned Victory Liner bus bound for Tuguegarao, Cagayan from Manila. At about 3:00 a.m., the bus while running
at a high speed fell on a ravine somewhere in Barangay Baliling, Sta. Fe, Nueva Vizcaya, which resulted in the death of Marie Grace
and physical injuries to other passengers.


whether the award of damages was proper.


Anent the award of moral damages, the same cannot be lumped with exemplary damages because they are based on different
jural foundations. These damages are different in nature and require separate determination. In culpa contractual or breach of contract,
moral damages may be recovered when the defendant acted in bad faith or was guilty of gross negligence (amounting to bad faith) or
in wanton disregard of contractual obligations and, as in this case, when the act of breach of contract itself constitutes the tort that
results in physical injuries. By special rule in Article 1764 in relation to Article 2206 of the Civil Code, moral damages may also be
awarded in case the death of a passenger results from a breach of carriage. On the other hand, exemplary damages, which are
awarded by way of example or correction for the public good may be recovered in contractual obligations if the defendant acted in
wanton, fraudulent, reckless, oppressive, or malevolent manner.
Respondents in the instant case should be awarded moral damages to compensate for the grief caused by the death of the
deceased resulting from the petitioners breach of contract of carriage. Furthermore, the petitioner failed to prove that it exercised the
extraordinary diligence required for common carriers, it is presumed to have acted recklessly. Thus, the award of exemplary damages
is proper. Under the circumstances, we find it reasonable to award respondents the amount of P100,000.00 as moral damages and
P100,000.00 as exemplary damages. These amounts are not excessive.

G.R. No. L-43814 April 16, 1982




On December 21, 1962, National Power Corporation (hereinafter referred to as NPC) issued an invitation for bids for the clearing of the
reservoir area of approximately 2,300 hectares of the Angat River Hydroelectric Project at Norzagaray, Bulacan. Wilmag Iron Mines,
Inc. (hereinafter referred to as WILMAG), among others, submitted its bid dated February 1, 1963 in the amount of P 345,000.00, which
bid NPC accepted in a letter dated February 26, 1963. On April 4, 1963, NPC represented by its General Manager, and WILMAG,
represented by its President, Jose C. Fajardo, entered into a contract for the clearing project which contract incorporated as integral
parts, by reference, (1) the Invitation for Bids dated December 21, 1962; (2) the Plans and Specifications which included the
Instructions to Bidders (Part 1), the General Provisions (Part 11), the Special Provisions, (Part III) and the Technical Provisions (Part
IV) (3) all drawings, maps and plans attached to the said contract or on file in the NPC office; (4) Addendum No. 1 dated January 14,
1963 and Addendum No. 2 dated January 23, 1963 to the Plans and Specifications; (5) WILMAG's bid dated February 1, 1963; (6)
NPC's letter of acceptance dated February 26, 1963; and (7) WILMAG's P200,000.00 performance bond. The contract provided for
the complete clearing of the reservoir area of approximately 2,300 hectares at the unit price of P150.00 per hectare within 720 days
from the date of its signing by WILMAG, subject to any extension that may be granted by NPC. The contract also provided that "As part
of the compensation for undertaking the specified work, ownership of the timber, bamboo, rattan, firewood, and other products which
have commercial value shall rest solely with the contractor and he may dispose of the same in any manner."
On May 13, 1963, WILMAG, with the assistance of NPC, secured from the Bureau of Forestry, upon payment of the required forestry
bond, special timber license No. 1-65 dated April 1, 1963 authorizing it to cut and remove ONE HUNDRED EIGHTY FIVE THOUSAND
ONE HUNDRED NINETY-NINE (185,199.00) cubic meters of timber" from the reservoir area. On April 11, 1964, the Acting Secretary
of Agriculture and Natural Resources cancelled WILMAG's special timber license due to complaints regarding the said WILMAG's
illegal logging outside the area staked out for clearing. As a consequence, WILMAG discontinued its clearing operations. however,
WILMAG appealed the said cancellation to Malacaang and on June 10, 1964, the Acting Presidential Executive Secretary restored
WILMAG's special timber license, subject to certain conditions.

In February 1965, NPC required WILMAG to desist from further felling of trees due to complaints of renewed illegal logging in the
reservoir area and subsequently created the Committee on Illegal Logging to investigate unauthorized logging operations in the




Damages must be shown by actual proof with a reasonable degree of certainty and cannot be based on speculation and conjecture.
Here, so many factors militate against the appellate and trial court's finding that the cleared area yielded a treasure trove of commercial
timber valued at P15,497 million

The appellate court's conclusion that when the Bureau of Forestry issued a timber license to WILMAG to cut 185,199.00 cubic meters
of timber from the area, the license "must have been issued" by said bureau based on the existence of such amount of timber is pure
conjecture. No positive proof of the existence of such amount of timber was ever presented. It is a matter of judicial notice and public
knowledge that in the issuance of timber licenses, it is the applicant (WILMAG in this case) who states for his own purposes the volume
of timber for which he/it desires a license and pays the corresponding fees therefor. But such license is not proof that there exists
indeed such magnitude of commercial timber in the logging area covered by the application and license.



Petitioners, Present:
Ynares-Santiago, J. (Chairperson),
- versus - Austria-Martinez,
Nachura, and
Reyes, JJ.
Respondent. Promulgated:

February 19, 2008


On December 10, 2002, Javilgas filed a Complaint for illegal dismissal, underpayment of 13th month pay, separation pay and
non-remittance of SSS contributions against petitioners Padilla Machine Shop, Rodolfo Padilla and Leonardo Padilla.

Javilgas alleged that in January 1998, he was hired by Padilla Machine Shop, located at Commonwealth Avenue, Quezon
City. His work consisted of reconditioning machines and was paid a monthly salary of P6,480.00. In July 1998, his salary was
increased to P7,200.00; and in January 1999, his salary was again increased to P8,400.00 until his dismissal in April 2002. Petitioners
made regular deductions for his SSS contributions, but sometime in 2002, he found out that his employer was not remitting the
contributions to the SSS; as a result, he was not able to avail of the benefits thereof when his wife gave birth. When he complained
about the failure of his employer to remit his SSS contributions, the latter transferred him to the Novaliches branch office.

Javilgas further alleged that in April 2002, Rodolfo Padilla called him by telephone and told him to stop working, but without
giving any reason therefor. He stopped reporting for work and sued petitioners for illegal dismissal, with a prayer for the payment of
backwages, pro rated 13th month pay, separation pay, and moral and exemplary damages.

On the other hand, petitioner Rodolfo Padilla (Rodolfo), proprietor of Padilla Machine Shop, alleged that in 1999, SSS and
Medicare contributions were deducted from Javilgas salary and remitted to the SSS; that in 2000, they (petitioners) submitted a report
to the SSS that Javilgas had voluntarily left and abandoned his work, and transferred to another shop, Raymond Machine Shop,
located within the same vicinity as Padilla Machine Shop; that some months after, Javilgas returned and pleaded to be re-employed
with them; that Rodolfo Padilla took Javilgas back to work, but their customers were not satisfied with the quality of his work; hence
Javilgas was assigned to the Novaliches branch; that Javilgas incurred numerous absences in the Novaliches branch; that Javilgas had
opened his own machine shop and even pirated the clients of petitioners; and finally, Javilgas again voluntarily left Padilla Machine
Shop without prior notice.




there is no merit in petitioners claim that attorneys fees may not be awarded to the respondent since his case was being
handled pro bono by the U.P. Office of Legal Aid, which provides free legal assistance to indigent litigants. In this jurisdiction, there are
two concepts of attorneys fees. In the ordinary sense, attorneys fees represent the reasonable compensation paid to a lawyer by his
client for the legal services he has rendered to the latter. On the other hand, in its extraordinary concept, attorneys fees may be
awarded by the court as indemnity for damages to be paid by the losing party to the prevailing party, and not counsel. In its
extraordinary sense, attorneys fees as part of damages is awarded only in the instances specified in Article 2208 of the Civil
Code, among which are the following which obtain in the instant case:

(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;


(11) In any other case where the court deems it just and equitable that attorney's fees and expenses of
litigation should be recovered.

G.R. No. 194785 July 11, 2012

VIRGILIO S. DAVID, Petitioner,


Petitioner Virgilio S. David (David) was the owner or proprietor of VSD Electric Sales, a company engaged in the business of supplying
electrical hardware including transformers for rural electric cooperatives like respondent Misamis Occidental II Electric Cooperative, Inc.
(MOELCI), with principal office located in Ozamis City.

To solve its problem of power shortage affecting some areas within its coverage, MOELCI expressed its intention to purchase a 10
MVA power transformer from David. For this reason, its General Manager, Engr. Reynaldo Rada (Engr. Rada), went to meet David in
the latters office in Quezon City. David agreed to supply the power transformer provided that MOELCI would secure a board resolution
because the item would still have to be imported.

On June 8, 1992, Engr. Rada and Director Jose Jimenez (Jimenez), who was in-charge of procurement, returned to Manila and
presented to David the requested board resolution which authorized the purchase of one 10 MVA power transformer. In turn, David
presented his proposal for the acquisition of said transformer. This proposal was the same proposal that he would usually give to his

After the reading of the proposal and the discussion of terms, David instructed his then secretary and bookkeeper, Ellen M. Wong, to
type the names of Engr. Rada and Jimenez at the end of the proposal. Both signed the document under the word "conforme." The
board resolution was thereafter attached to the proposal.

As stated in the proposal, the subject transformer, together with the basic accessories, was valued at P5,200,000.00. It was also
stipulated therein that 50% of the purchase price should be paid as downpayment and the remaining balance to be paid upon delivery.
Freight handling, insurance, customs duties, and incidental expenses were for the account of the buyer.

The Board Resolution, on the other hand, stated that the purchase of the said transformer was to be financed through a loan from the
National Electrification Administration (NEA). As there was no immediate action on the loan application, Engr. Rada returned to Manila
in early December 1992 and requested David to deliver the transformer to them even without the required downpayment. David
granted the request provided that MOELCI would pay interest at 24% per annum. Engr. Rada acquiesced to the condition. On
December 17, 1992, the goods were shipped to Ozamiz City via William Lines. In the Bill of Lading, a sales invoice was included which
stated the agreed interest rate of 24% per annum.

When nothing was heard from MOELCI for sometime after the shipment, Emanuel Medina (Medina), Davids Marketing Manager, went
to Ozamiz City to check on the shipment. Medina was able to confer with Engr. Rada who told him that the loan was not yet released
and asked if it was possible to withdraw the shipped items. Medina agreed.

When no payment was made after several months, Medina was constrained to send a demand letter, dated September 15, 1993,
which MOELCI duly received. Engr. Rada replied in writing that the goods were still in the warehouse of William Lines again reiterating
that the loan had not been approved by NEA. This prompted Medina to head back to Ozamiz City where he found out that the goods
had already been released to MOELCI evidenced by the shipping companys copy of the Bill of Lading which was stamped "Released,"
and with the notation that the arrastre charges in the amount of P5,095.60 had been paid. This was supported by a receipt of payment
with the corresponding cargo delivery receipt issued by the Integrated Port Services of Ozamiz, Inc.

Subsequently, demand letters were sent to MOELCI demanding the payment of the whole amount plus the balance of previous
purchases of other electrical hardware. Aside from the formal demand letters, David added that several statements of accounts were
regularly sent through the mails by the company and these were never disputed by MOELCI.




On the issue as to whether or not there was a perfected contract of sale, this Court is required to delve into the evidence of the case. In
a petition for review on certiorari under Rule 45 of the Rules of Court, the issues to be threshed out are generally questions of law only,
and not of fact.
Time and again, this Court has stressed that its jurisdiction in a petition for review on certiorari under Rule 45 of the Rules of Court is
limited to reviewing only errors of law, not of fact, unless the findings of fact complained of are devoid of support by the evidence on
record, or the assailed judgment is based on the misapprehension of facts. The trial court, having heard the witnesses and observed
their demeanor and manner of testifying, is in a better position to decide the question of their credibility. Hence, the findings of the trial
court must be accorded the highest respect, even finality, by this Court.

In sum, since there was a meeting of the minds, there was consent on the part of David to transfer ownership of the power transformer
to MOELCI in exchange for the price, thereby complying with the first element. Thus, the said document cannot just be considered a
contract to sell but rather a perfected contract of sale.


G.R. No. 86250 February 26, 1990

HON. LUIS R. REYES, in his capacity as presiding judge of Branch 22 of the Regional Trial Court of Cavite, Branch 22, and/or
Multiple Sala, Imus, Cavite, and EPHRAIM J. SERQUINA, respondents.


On August 26, 1987, the private respondent, Ephraim Serquina, petitioned the respondent court for the probate of the last will and
testament of Carmelita Farlin. His petition was docketed as Sp. Proc. No. 127-87 of the respondent court, entitled "In Re Testate Estate
of Carmelita S. Farlin, Ephraim J. Serquina, Petitioner." He also petitioned the court in his capacity as counsel for the heirs, the herein
petitioners, and as executor under the will.




We have held that a lawyer of an administrator or executor may not charge the estate for his fees, but rather, his client. Mutatis
mutandis, where the administrator is himself the counsel for the heirs, it is the latter who must pay therefor.

In that connection, attorney's fees are in the nature of actual damages, which must be duly proved. They are also subject to certain
standards, to wit: (1) they must be reasonable, that is to say, they must have a bearing on the importance of the subject matter in
controversy; (2) the extent of the services rendered; and (3) the professional standing of the lawyer. In all cases, they must be
addressed in a full-blown trial and not on the bare word of the parties. And always, they are subject to the moderating hand of the




PUNO, C.J., Chairperson,

- v e r s u s - CORONA,
Respondent. Promulgated:

February 16, 2007


This case, however, is but part of a larger controversy over the lawful ownership of seven parcels of land in the V. Mapa area
of Sta. Mesa, Manila (the V. Mapa properties) that arose out of a series of events that began in 1969.
Sometime in 1969, the V. Mapa properties, then owned by Felipe and Enrique Monserrat, Jr., were mortgaged to the
Development Bank of the Philippines (DBP) as part of the security for the P5.2 million loan of Manila Yellow Taxicab Co., Inc. (MYTC)
and Monserrat Enterprises Co. MYTC, for its part, mortgaged four parcels of land located in Quiapo, Manila.

On March 31, 1975, however, Felipes undivided interest in the V. Mapa properties was levied upon in execution of a money
judgment rendered by the Regional Trial Court (RTC) of Manila in Filoil Marketing Corporation v. MYTC, Felipe Monserrat, and
Rosario Vda. De Monserrat (the Manila case). DBP challenged the levy through a third-party claim asserting that the
V. Mapa properties were mortgaged to it and were, for that reason, exempt from levy or attachment. The RTC quashed it.
On June 18, 1981, MYTC and the Monserrats got DBP to accept a dacion en pago arrangement whereby MYTC conveyed to
the bank the four mortgaged Quiapo properties as full settlement of their loan obligation. But despite this agreement, DBP did not
release the V. Mapa properties from the mortgage.

On May 21, 1982, Felipe, acting for himself and as Enriques attorney-in-fact, sold the V. Mapa properties to respondent
NCBA. Part of the agreement was that Felipe and Enrique would secure the release of the titles to the properties free of all liens and
encumbrances including DBPs mortgage lien and Filoils levy on or before July 31, 1982. But the Monserrats failed to comply with this
undertaking. Thus, on February 3, 1983, NCBA caused the annotation of an affidavit of adverse claim on the TCTs covering the
V. Mapa properties.


whether petitioner Petron Corporation (Petron) should be held liable to pay attorneys fees and exemplary damages to respondent
National College of Business and Arts (NCBA).


the RTC held Petron liable to NCBA for attorneys fees under Article 2208(5), which allows such an award where the defendant
acted in gross and evident bad faith in refusing to satisfy the plaintiffs plainly valid, just, and demandable claim. However, the only
justification given for this verdict was that Petron had no reason to claim the V. Mapa properties because, in the RTCs opinion, the levy
and sale thereof were void. This was sorely inadequate and it was erroneous for the CA to have upheld that ruling built on such a flimsy
With respect to the award of exemplary damages, the rule in this jurisdiction is that the plaintiff must show that he is entitled to
moral, temperate or compensatory damages before the court may even consider the question of whether exemplary damages should
be awarded. In other words, no exemplary damages may be awarded without the plaintiffs right to moral, temperate, liquidated or
compensatory damages having first been established. Therefore, in view of our ruling that Petron cannot be made liable to NCBA for
compensatory damages (i.e., attorneys fees), Petron cannot be held liable for exemplary damages either.


[G.R. No. L-21569. February 28, 1966.]

Estate of the Deceased MR. and MRS. FLORENCIO P. BUAN, represented by BIENVENIDO P. BUAN and A. NATIVIDAD
PARAS, co-administrators, doing business under the name and style of PHILIPPINE RABBIT BUS LINES, Petitioners, v.


"In the night of December 14, 1954, Priscillo Camaganacan, a pay passenger bound for Grace Park, Caloocan, Rizal, took at San
Fernando, Pampanga, Philippine Rabbit Bus No. 79 belonging to the Estate of Mr. & Mrs. Florencio P. Buan, of which defendants are
the administrators. In Malolos, Bulacan, the bus tried to overtake a La Mallorca bus. The two buses ran a race. As it overtook the La
Mallorca bus in Guiguinto, Bulacan, and while driven at a fast clip, the Philippine Rabbit bus ran smack into a Delbros trailer travelling
in the opposite direction.

"In consequence, Priscillo Camaganacan suffered a fracture of the right wrist, a crushing injury on the second finger of the left hand,
and a lacerated wound on the right leg. Brought to the Malolos Provincial Hospital, he was on the next day December 15, 1954
transferred to the National Orthopedic Hospital in Mandaluyong. Discharged on January 22, 1955, he received further treatment until
April 15, 1955. His hospital expenses were paid by the defendants.

"On July 22, 1955, Priscillo Camaganacan started suit for damages. The judgment below ordered defendants to pay plaintiff P2,630.00
as actual damages, plus P2,000.00 as attorneys fees, or a total of P4,680.00, and the costs. Defendants appealed."




"ART. 2208 In the absence of stipulation, attorneys fees and expenses of litigation, other than judicial costs can not be recovered,
except: . . ." (Italics supplied).

the general rule being still that it is not sound public policy to make a penalty on the right to litigate (Tan Ti v. Alveor, 26 Phil. 568); nor
should counsel fees be awarded every time a party wins a lawsuit (Jimenez v. Bucoy, supra.)

It is true that, in No. 11 of Article 2208, recovery of counsel fees is allowed "where the court deems it just and equitable that attorneys
fees and expenses of litigation should be recovered", but even in such cases the conclusion must be borne out by findings of facts and
law. What is just and equitable in a given case is not a mere matter of feeling but of demonstration. This is specially true since the last
part of Article 2208 expressly adds that the "attorneys fees and expenses of litigation must be reasonable." In the present case, for the
award of P2,680.00 in actual damages the appealed decision awards no less than P2,000.00 in counsel fees, which is hardly
reasonable. Hence, the exercise of judicial discretion in the award of attorneys fees under Article 2208 (11) of the Civil Code demands
a factual, legal, or equitable justification upon the basis of which the court exercises, its discretion. Without such justification, the award
is a conclusion without a premise, its basis being improperly left to speculation and conjecture.


G.R. No. 97412 July 12, 1994




This is an action against defendants shipping company, arrastre operator and broker-forwarder for damages sustained by a shipment
while in defendants' custody, filed by the insurer-subrogee who paid the consignee the value of such losses/damages.

the losses/damages were sustained while in the respective and/or successive custody and possession of defendants carrier (Eastern),
arrastre operator (Metro Port) and broker (Allied Brokerage).

As a consequence of the losses sustained, plaintiff was compelled to pay the consignee P19,032.95 under the aforestated marine
insurance policy, so that it became subrogated to all the rights of action of said consignee against defendants.

DECISION OF LOWER COURTS: * trial court: ordered payment of damages, jointly and severally * CA: affirmed trial court.


(a) whether or not a claim for damage sustained on a shipment of goods can be a solidary, or joint and several, liability of the common
carrier, the arrastre operator and the customs broker;

YES, it is solidary. Since it is the duty of the ARRASTRE to take good care of the goods that are in its custody and to deliver them in
good condition to the consignee, such responsibility also devolves upon the CARRIER. Both the ARRASTRE and the CARRIER are
therefore charged with the obligation to deliver the goods in good condition to the consignee.

The common carrier's duty to observe the requisite diligence in the shipment of goods lasts from the time the articles are surrendered
to or unconditionally placed in the possession of, and received by, the carrier for transportation until delivered to, or until the lapse of a
reasonable time for their acceptance by, the person entitled to receive them (Arts. 1736-1738, Civil Code; Ganzon vs. Court of
Appeals, 161 SCRA 646; Kui Bai vs. Dollar Steamship Lines, 52 Phil. 863). When the goods shipped either are lost or arrive in
damaged condition, a presumption arises against the carrier of its failure to observe that diligence, and there need not be an express
finding of negligence to hold it liable.

(b) whether the payment of legal interest on an award for loss or damage is to be computed from the time the complaint is filed or from
the date the decision appealed from is rendered; and


I. When an obligation, regardless of its source, i.e., law, contracts, quasi-contracts, delicts or quasi-delicts is breached, the contravenor
can be held liable for damages. The provisions under Title XVIII on "Damages" of the Civil Code govern in determining the measure of
recoverable damages.

II. With regard particularly to an award of interest in the concept of actual and compensatory damages, the rate of interest, as well as
the accrual thereof, is imposed, as follows:

1. When the obligation is breached, and it consists in the payment of a sum of money, i.e., a loan or forbearance of money, the interest
due should be that which may have been stipulated in writing. Furthermore, the interest due shall itself earn legal interest from the time
it is judicially demanded. In the absence of stipulation, the rate of interest shall be 12% per annum to be computed from default, i.e.,
from judicial or extrajudicial demand under and subject to the provisions of Article 1169 of the Civil Code.
2. When an obligation, not constituting a loan or forbearance of money, is breached, an interest on the amount of damages awarded
may be imposed at the discretion of the court at the rate of 6% per annum. No interest, however, shall be adjudged on unliquidated
claims or damages except when or until the demand can be established with reasonable certainty. Accordingly, where the demand is
established with reasonable certainty, the interest shall begin to run from the time the claim is made judicially or extrajudicially (Art.
1169, Civil Code) but when such certainty cannot be so reasonably established at the time the demand is made, the interest shall begin
to run only from the date the judgment of the court is made (at which time the quantification of damages may be deemed to have been
reasonably ascertained). The actual base for the computation of legal interest shall, in any case, be on the amount finally adjudged.

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

(c) whether the applicable rate of interest, referred to above, is twelve percent (12%) or six percent (6%).

SIX PERCENT (6%) on the amount due computed from the decision, dated 03 February 1988, of the court a quo (Court of Appeals)
AND A TWELVE PERCENT (12%) interest, in lieu of SIX PERCENT (6%), shall be imposed on such amount upon finality of the
Supreme Court decision until the payment thereof.

RATIO: when the judgment awarding a sum of money becomes final and executory, the monetary award shall earn interest at 12% per
annum from the date of such finality until its satisfaction, regardless of whether the case involves a loan or forbearance of money. The
reason is that this interim period is deemed to be by then equivalent to a forbearance of credit.

NOTES: the Central Bank Circular imposing the 12% interest per annum applies only to loans or forbearance of money, goods or
credits, as well as to judgments involving such loan or forbearance of money, goods or credits, and that the 6% interest under the Civil
Code governs when the transaction involves the payment of indemnities in the concept of damage arising from the breach or a delay in
the performance of obligations in general. Observe, too, that in these cases, a common time frame in the computation of the 6%
interest per annum has been applied, i.e., from the time the complaint is filed until the adjudged amount is fully paid.


Dario Nacar filed a labor case against Gallery Frames and its owner Felipe Bordey, Jr. Nacar alleged that he was dismissed without
cause by Gallery Frames on January 24, 1997. On October 15, 1998, the Labor Arbiter (LA) found Gallery Frames guilty of illegal
dismissal hence the Arbiter awarded Nacar P158,919.92 in damages consisting of backwages and separation pay.
Gallery Frames appealed all the way to the Supreme Court (SC). The Supreme Court affirmed the decision of the Labor Arbiter and the
decision became final on May 27, 2002.
After the finality of the SC decision, Nacar filed a motion before the LA for recomputation as he alleged that his backwages should be
computed from the time of his illegal dismissal (January 24, 1997) until the finality of the SC decision (May 27, 2002) with interest. The
LA denied the motion as he ruled that the reckoning point of the computation should only be from the time Nacar was illegally
dismissed (January 24, 1997) until the decision of the LA (October 15, 1998). The LA reasoned that the said date should be the
reckoning point because Nacar did not appeal hence as to him, that decision became final and executory.
ISSUE: Whether or not the Labor Arbiter is correct.
HELD: No. There are two parts of a decision when it comes to illegal dismissal cases (referring to cases where the dismissed
employee wins, or loses but wins on appeal). The first part is the ruling that the employee was illegally dismissed. This is immediately
final even if the employer appeals but will be reversed if employer wins on appeal. The second part is the ruling on the award of
backwages and/or separation pay. For backwages, it will be computed from the date of illegal dismissal until the date of the decision of
the Labor Arbiter. But if the employer appeals, then the end date shall be extended until the day when the appellate courts decision
shall become final. Hence, as a consequence, the liability of the employer, if he loses on appeal, will increase this is just but a risk
that the employer cannot avoid when it continued to seek recourses against the Labor Arbiters decision. This is also in accordance
with Article 279 of the Labor Code.
Anent the issue of award of interest in the form of actual or compensatory damages, the Supreme Court ruled that the old case
of Eastern Shipping Lines vs CA is already modified by the promulgation of the Bangko Sentral ng Pilipinas Monetary Board Resolution
No. 796 which lowered the legal rate of interest from 12% to 6%. Specifically, the rules on interest are now as follows:
1. Monetary Obligations ex. Loans:
a. If stipulated in writing:
a.1. shall run from date of judicial demand (filing of the case)
a.2. rate of interest shall be that amount stipulated
b. If not stipulated in writing
b.1. shall run from date of default (either failure to pay upon extra-judicial demand or upon judicial demand whichever is appropriate
and subject to the provisions of Article 1169 of the Civil Code)
b.2. rate of interest shall be 6% per annum
2. Non-Monetary Obligations (such as the case at bar)
a. If already liquidated, rate of interest shall be 6% per annum, demandable from date of judicial or extra-judicial demand (Art. 1169,
Civil Code)
b. If unliquidated, no interest
Except: When later on established with certainty. Interest shall still be 6% per annum demandable from the date of judgment because
such on such date, it is already deemed that the amount of damages is already ascertained.
3. Compounded Interest
This is applicable to both monetary and non-monetary obligations
6% per annum computed against award of damages (interest) granted by the court. To be computed from the date when the courts
decision becomes final and executory until the award is fully satisfied by the losing party.
4. The 6% per annum rate of legal interest shall be applied prospectively:
Final and executory judgments awarding damages prior to July 1, 2013 shall apply the 12% rate;
Final and executory judgments awarding damages on or after July 1, 2013 shall apply the 12% rate for unpaid obligations until June
30, 2013; unpaid obligations with respect to said judgments on or after July 1, 2013 shall still incur the 6% rate.