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1. October 19, 2011. G.R. No. 188072.

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EMERITA M. DE GUZMAN, petitioner, vs.ANTONIO M. TUMOLVA, respondent.

Construction Industry Arbitration Commission; Appeals; Factual findings of construction arbitrators


are final and conclusive and not reviewable by this Court on appeal.There is no doubt that De Guzman
incurred damages as a result of the collapse of the perimeter fence. The Contractor is clearly guilty of
negligence and, therefore, liable for the damages caused. x x x As the Court finds no compelling reason to
deviate from this factual finding by the CIAC, as affirmed by the CA. It is settled that findings of fact of
quasi-judicial bodies, which have acquired expertise because their jurisdiction is confined to specific
matters, are generally accorded not only respect, but also finality, especially when affirmed by the CA. In
particular, factual findings of construction arbitrators are final and conclusive and not reviewable by this
Court on appeal.
Civil Law; Damages; Actual Damages; In determining actual damages, one cannot rely on mere
assertions, speculations, conjectures or guesswork, but must depend on competent proof and on the best
evidence obtainable regarding specific facts that could afford some basis for measuring compensatory or
actual damages.CIACs award of actual damages, however, is indeed not proper under the
circumstances as there is no concrete evidence to support the plea. In determining actual damages, one
cannot rely on mere assertions, speculations, conjectures or guesswork, but must depend on competent
proof and on the best evidence obtainable regarding specific facts that could afford some basis for
measuring compensatory or actual damages.
Same; Same; Temperate Damages; Temperate damages may be allowed in cases where from the
nature of the case, definite proof of pecuniary loss cannot be adduced, although the court is convinced
that the aggrieved party suffered some pecuniary loss.Nevertheless, De Guzman is indeed entitled to
temperate damages as provided under Article 2224 of the Civil Code for the loss she suffered. When
pecuniary loss has been suffered but the amount cannot, from the nature of the case, be proven with
certainty, temperate damages may be recovered. Temperate damages may be allowed in cases where
from the nature of the case, definite proof of pecuniary loss cannot be
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* THIRD DIVISION.

726adduced, although the court is convinced that the aggrieved party suffered some pecuniary loss.
Undoubtedly, De Guzman suffered pecuniary loss brought about by the collapse of the perimeter fence
by reason of the Contractors negligence and failure to comply with the specifications. As she failed to
prove the exact amount of damage with certainty as required by law, the CA was correct in awarding
temperate damages, in lieu of actual damages.
Same; Same; Moral Damages; The award of moral damages must be anchored on a clear showing
that she actually experienced mental anguish, besmirched reputation, sleepless nights, wounded feelings,
or similar injury.The award of moral damages must be anchored on a clear showing that she actually
experienced mental anguish, besmirched reputation, sleepless nights, wounded feelings, or similar injury.
There could not have been a better witness to this experience than De Guzman herself. Her testimony,
however, did not provide specific details of the suffering she allegedly went through after the fence
collapsed while she was miles away in the United States. As the CA aptly observed, the testimony of the
OWNER as to her worry for the safety of the children in the orphanage is insufficient to establish
entitlement thereto. Since an award of moral damages is predicated on a categorical showing by the
claimant that she actually experienced emotional and mental sufferings, it must be disallowed absent any
evidence thereon.

PETITION for review on certiorari of the decision and resolution of the Court of Appeals.
The facts are stated in the opinion of the Court.
Nino Delvin E. Embuscado for petitioner.
Nimfa E. Silvestre-Pineda for respondent.

MENDOZA,J.:
This is a petition for review on certiorari under Rule 45 of the Revised Rules of Court assailing the
February 24, 2009 Decision1 of the Court of Appeals (CA) and its May 26, 2009 Resolution2 in CA-G.R.
_______________
1 Rollo, pp. 39-46. Penned by Associate Justice Estela M. Perlas-Bernabe (now a member of this Court),
with Associate Justice Mario L. Guaria III and Associate Justice Marlene Gonzales-Sison, concurring.
2 Id., at p. 49.

727SP. No. 104945 entitled Antonio M. Tumolva v. Emerita M. De Guzman.


The Facts
On September 6, 2004, petitioner Emerita M. De Guzman (De Guzman), represented by her attorneys-
in-fact, Lourdes Rivera and Dhonna Chan, and respondent Antonio Tumolva, doing business under the
name and style A.M. Tumolva Engineering Works (the Contractor), entered into a Construction
Agreement3 (Agreement) for the construction of an orphanage consisting of an administration building,
directors/guests house, dining and service building, childrens dormitory, male staff house, and covered
walkways in Brgy. Pulong Bunga, Purok 4, Silang, Cavite, for a contract price of P15,982,150.39.
Incorporated in the Agreement was the plan and specifications of the perimeter fence. The Contractor,
however, made deviations from the agreed plan4 with respect to the perimeter fence of the orphanage.
On September 6, 2005, after the completion of the project, De Guzman issued a Certificate of
Acceptance. For his part, the Contractor issued a quitclaim acknowledging the termination of the contract
and the full compliance therewith by De Guzman.
In November 2006, during typhoon Milenyo, a portion of the perimeter fence collapsed and other
portions tilted. In her Letter dated December 5, 2006, De Guzman, through counsel, demanded the repair
of the fence in accordance with the plan. In response, the Contractor claimed that the destruction of the
fence was an act of God and expressed willingness to discuss the matter to avoid unnecessary litigation.
De Guzman, however, reiterated her demand for the restoration of the wall without additional cost on
her part, or in the alternative, for the Contractor to make an offer of a certain amount by way of
compensation for the damages she sustained. Her demand was not heeded.
_______________
3 Id., at pp. 50-59.
4 Annex E of Petition, id., at p. 68.

728
On February 14, 2008, De Guzman filed a Request for Arbitration5 of the dispute before the
Construction Industry Arbitration Commission (CIAC). She alleged that the Contractor deliberately
defrauded her in the construction of the perimeter fence by under sizing the required column rebars
from 12mm. based on the plan to only 10mm., the required concrete hollow blocks from #6 to #5, and
the distance between columns from 3.0m to 4.3m.6Further, the Contractor neither anchored the lenten
beams to the columns nor placed drains or weepholes along the lower walls. She prayed for an award of
actual, moral and exemplary damages, as well as attorneys fees and expenses of litigation, and for the
inspection and technical assessment of the construction project and the rectification of any defect.
In his Answer with Counterclaim, the Contractor denied liability for the damaged fence claiming,
among others, that its destruction was an act of God. He admitted making deviations from the plan, but
pointed out that the same were made with the knowledge and consent of De Guzman through her
representatives, Architect Quin Baterna and Project Engineer Rodello Santos (Engineer Santos), who were
present during the construction of the fence. He further argued that pursuant to the Agreement, the claim
for damages was already barred by the 12-month period from the issuance of the Certificate of
Acceptance of the project within which to file the claim. He, thus, prayed for the dismissal of the action
and interposed a counterclaim for actual and compensatory damages for the additional work/change
orders made on the project in the amount of P2,046,500.00, attorneys fees and litigation expenses.
After due proceedings, the CIAC issued the Award dated July 17, 2008 in favor of De Guzman, the
dispositive portion of which reads:
WHEREFORE, judgment is hereby rendered and AWARD is made on the monetary claims of
Claimant EMERITA M. DE GUZMAN, directing Respondent Contractor ANTONIO M. TUMOLVA, to pay
her the following amounts:
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5 Annex D of Petition, id., at pp. 61-66.
6 Id.

729
P187,509.00 as actual damages for reconstructing the collapsed and damaged perimeter fence.
Interest is awarded on the foregoing amount at the legal rate of 6% per annum computed from the
date of this Award. After finality thereof, interest at the rate of 12% per annum shall be paid thereon until
full payment of the awarded amount shall have been made, this interim period being deemed to be at
that time already a forbearance of credit (Eastern Shipping Lines, Inc. v. Court of Appeals (243 SCRA 78
[1994])
P100,000.00 as moral damages.
P100,000.00 as exemplary damages.
P50,000.00 for attorneys fees and expenses of litigation.
P437,509.00 TOTAL AMOUNT DUE THE CLAIMANT
The CIAC staff is hereby directed to make the necessary computation of how much has been paid by
Claimant as its proportionate share of the arbitration costs totaling P110,910.44, which computed
amount shall be reimbursed by Respondent to the Claimant.
SO ORDERED.7

Aggrieved, the Contractor filed before the CA a Petition for Review with prayer for the issuance of a
temporary restraining order, challenging the CIACs award of damages in favor of De Guzman.
On February 24, 2009, the CA modified the Award rendered by CIAC. The dispositive portion of the
decision states:
WHEREFORE, the instant petition is partly GRANTED. The assailed Award dated July 17, 2008
rendered by the CIAC in CIAC Case No. 03-2008 is hereby MODIFIED, deleting the award of actual, moral
and exemplary damages, but awarding temperate damages in the amount of P100,000.00 for
reconstructing the collapsed and damaged perimeter fence. The rest of the Award stands.
SO ORDERED.8

The CA held that although the Contractor deviated from the plan, CIACs award of actual damages was
not proper inasmuch as De
_______________
7 Annex K of Petition, id., at pp. 164-165.
8 Annex A of Petition, id., at p. 46.

730Guzman failed to establish its extent with reasonable certainty. The CA, however, found it appropriate
to award temperate damages considering that De Guzman suffered pecuniary loss as a result of the
collapse of the perimeter fence due to the Contractors negligence and violation of his undertakings in the
Agreement. It further ruled that there was no basis for awarding moral damages reasoning out that De
Guzmans worry for the safety of the children in the orphanage was insufficient to justify the award.
Likewise, it could not sustain the award of exemplary damages as there was no showing that the
Contractor acted in wanton, reckless, fraudulent, oppressive, or malevolent manner.
De Guzman filed a motion for reconsideration of the said decision, but it was denied for lack of merit
by the CA in its Resolution dated May 26, 2009.
Hence, De Guzman interposed the present petition before this Court anchored on the following
GROUNDS
(I)
THE COURT OF APPEALS ERRED IN RULING THAT THE EVIDENCE ON RECORD FAILED TO SUFFICIENTLY
ESTABLISH THE AMOUNT OF ACTUAL DAMAGES THAT PETITIONER DE GUZMAN CAN RECOVER FROM
THE RESPONDENT.
(II)
THE COURT OF APPEALS ERRED IN RULING THAT PETITIONER DE GUZMAN IS NOT ENTITLED TO AWARDS
OF MORAL AND EXEMPLARY DAMAGES.9

De Guzman argues inter alia that the Contractor is liable for the actual damages that she suffered from
the collapse of the perimeter fence. He failed to put weep holes on the collapsed portion of the said fence,
which could have relieved the pressure from the wet soil of the adjoining higher ground.
_______________
9 Rollo, pp. 25 and 29.

731
De Guzman adds that the computation of the cost of rebuilding the collapsed portion of the perimeter
fence by Engineer Santos constituted substantial evidence warranting an award of actual damages. His
affidavit served as his direct testimony in the case even if he did not appear during the hearing. Having
been notarized, it must be admissible in evidence without further proof of authenticity.
Further, De Guzman questions the CAs deletion of the award for moral and exemplary damages. She
insists that her anxiety and suffering over the safety of the children in the orphanage entitled her to an
award of moral damages. It is likewise her position that the Contractors wanton acts of deliberately
cheating the benefactors of the orphanage by making deviations on the approved plan through the use
of construction materials of inferior quality warranted the imposition of exemplary damages against the
Contractor.
The Courts ruling
There is no doubt that De Guzman incurred damages as a result of the collapse of the perimeter fence.
The Contractor is clearly guilty of negligence and, therefore, liable for the damages caused. As correctly
found by the CA:
Nonetheless, the Court sustains the CIACs conclusion that the CONTRACTOR was negligent in failing
to place weepholes on the collapsed portion of the perimeter fence. Fault or negligence of the obligor
consists in his failure to exercise due care and prudence in the performance of the obligation as the nature
of the obligation so demands, taking into account the particulars of each case. It should be emphasized
that even if not provided for in the plan, the CONTRACTOR himself admitted the necessity of putting
weepholes and claimed to have actually placed them in view of the higher ground elevation of the
adjacent lot vis--vis the level ground of the construction site. Since he was the one who levelled the
ground and was, thus, aware that the lowest portion of the adjoining land was nearest the perimeter
fence, he should have ensured that sufficient weepholes were placed because water would naturally flow
towards the fence.
However, the CONTRACTOR failed to refute Mr. Ramos claim that the collapsed portion of the
perimeter fence lacked weepholes. Records also show that the omission of such weepholes and/or their
being plastered over resulted from his failure to exercise the requisite degree of supervision over the
732work, which is the same reason he was unable to discover the deviations from the plan until the fence
collapsed. Hence, the CONTRACTOR cannot be relieved from liability therefor.10

The Court finds no compelling reason to deviate from this factual finding by the CIAC, as affirmed by
the CA. It is settled that findings of fact of quasi-judicial bodies, which have acquired expertise because
their jurisdiction is confined to specific matters, are generally accorded not only respect, but also finality,
especially when affirmed by the CA. In particular, factual findings of construction arbitrators are final and
conclusive and not reviewable by this Court on appeal.11
CIACs award of actual damages, however, is indeed not proper under the circumstances as there is
no concrete evidence to support the plea. In determining actual damages, one cannot rely on mere
assertions, speculations, conjectures or guesswork, but must depend on competent proof and on the best
evidence obtainable regarding specific facts that could afford some basis for measuring compensatory or
actual damages.12 Article 2199 of the New Civil Code defines actual or compensatory damages as follows:
Except as provided by law or by stipulation, one is entitled to an adequate compensation only for such
pecuniary loss suffered by him as he has 2199. Art. duly proved. Such compensation is referred to as
actual or compensatory damages.

Unfortunately, De Guzman failed to adduce evidence to satisfactorily prove the amount of actual
damage incurred. Contrary to her assertion, the handwritten calculation of reconstruction costs made
_______________
10 Id., at p. 44.
11 Shinryo (Philippines) Company, Inc. v. RRN Incorporated, G.R. No. 172525, October 20, 2010, 634
SCRA 123, 130, citing IBEX International, Inc. v. Government Service Insurance System, G.R. No. 162095,
October 12, 2009, 603 SCRA 306.
12 Soriano v. Marcelo, G.R. No. 163178, January 30, 2009, 577 SCRA 312, 320, citing Ilao-Oreta v.
Ronquillo, G.R. No. 172406, October 11, 2007, 535 SCRA 633-642; MCC Industrial Sales Corporation v.
Ssangyong Corporation, G. R. No. 170633, October 17, 2007, 536 SCRA 408, 468.

733by Engineer Santos and attached to his affidavit cannot be given any probative value because he never
took the witness stand to affirm the veracity of his allegations in his affidavit and be cross-examined on
them. In this regard, it is well to quote the ruling of the Court in the case of Tating v. Marcella,13 to wit:
There is no issue on the admissibility of the subject sworn statement. However, the admissibility of
evidence should not be equated with weight of evidence. The admissibility of evidence depends on its
relevance and competence while the weight of evidence pertains to evidence already admitted and its
tendency to convince and persuade. Thus, a particular item of evidence may be admissible, but its
evidentiary weight depends on judicial evaluation within the guidelines provided by the rules of evidence.
It is settled that affidavits are classified as hearsay evidence since they are not generally prepared by the
affiant but by another who uses his own language in writing the affiants statements, which may thus be
either omitted or misunderstood by the one writing them. Moreover, the adverse party is deprived of the
opportunity to cross-examine the affiant. For this reason, affidavits are generally rejected for being
hearsay, unless the affiants themselves are placed on the witness stand to testify thereon.

Neither is there any evidence presented to substantiate Engineer Santos computation of the
reconstruction costs. For such computation to be considered, there must be some other relevant evidence
to corroborate the same.14 Thus, the CA was correct in disregarding the affidavit of Engineer Santos for
being hearsay and in not giving probative weight to it. There being no tangible document or concrete
evidence to support the award of actual damages, the same cannot be sustained.
Nevertheless, De Guzman is indeed entitled to temperate damages as provided under Article 2224 of
the Civil Code for the loss she suffered. When pecuniary loss has been suffered but the amount cannot,
from the nature of the case, be proven with certainty, temperate damages may be recovered. Temperate
damages may be allowed in cases where from the nature of the case, definite proof of pecuniary
_______________
13 G.R. No. 155208, March 27, 2007, 519 SCRA 79.
14 Philippine Long Distance Telephone Company, Inc. v. Tiamson, 511 Phil. 384; 474 SCRA 761 (2005).

734loss cannot be adduced, although the court is convinced that the aggrieved party suffered some
pecuniary loss.15 Undoubtedly, De Guzman suffered pecuniary loss brought about by the collapse of the
perimeter fence by reason of the Contractors negligence and failure to comply with the specifications. As
she failed to prove the exact amount of damage with certainty as required by law, the CA was correct in
awarding temperate damages, in lieu of actual damages. However, after weighing carefully the attendant
circumstances and taking into account the cost of rebuilding the damaged portions of the perimeter fence,
the amount of P100,000.00 awarded to De Guzman should be increased. This Court, in recognition of the
pecuniary loss suffered, finds the award of P150,000.00 by way of temperate damages as reasonable and
just under the premises.
As to the CIACs award of P100,000.00 as moral damages, this Court is one with the CA that De Guzman
is not entitled to such an award. The record is bereft of any proof that she actually suffered moral damages
as contemplated in Article 2217 of the Code, which provides:
Moral damages include physical suffering, mental anguish, fright, serious anxiety, besmirched
reputation, wounded feelings, moral shock, social humiliation, and similar injury. Though incapable of
pecuniary computation, moral damages may be recovered if they are the proximate result of the
defendants wrongful act or omission. 2217. Art.

Certainly, the award of moral damages must be anchored on a clear showing that she actually
experienced mental anguish, besmirched reputation, sleepless nights, wounded feelings, or similar injury.
There could not have been a better witness to this experience than De Guzman herself.16 Her testimony,
however, did not provide specific details of the suffering she allegedly went through after the
_______________
15 Seguritan v. People of the Philippines, G.R. No. 172896, April 9, 2010, 618 SCRA 406, 420,
citing Canada v. All Commodities Marketing Corp., G.R. No. 146141, October 17, 2008, 569 SCRA 321, 329.
16 Philippine Savings Bank v. Sps. Maalac, Jr., 496 Phil. 671; 457 SCRA 203 (2005), citing Mahinay v.
Atty. Velasquez, Jr., 464 Phil. 146; 419 SCRA 118 (2004).

735fence collapsed while she was miles away in the United States. As the CA aptly observed, the
testimony of the OWNER as to her worry for the safety of the children in the orphanage is insufficient to
establish entitlement thereto.17 Since an award of moral damages is predicated on a categorical showing
by the claimant that she actually experienced emotional and mental sufferings, it must be disallowed
absent any evidence thereon.18
Moreover, under the aforequoted provision, moral damages cannot be recovered as the perimeter
fence collapsed in the midst of the strong typhoon Milenyo. It was not clearly established that the
destruction was the proximate result of the Contractors act of making deviation from the plan. As
correctly concluded by the CA, viz.:
However, while it cannot be denied that the Contractor deviated from the plan, there was no clear
showing whether the same caused or contributed to the collapse/tilting of the subject perimeter fence.
No competent evidence was presented to establish such fact. As the CIAC itself acknowledged, (t)here is
no way by which to accurately resolve this issue by the evidence submitted by the parties. The statement
of Edwin B. Ramos, Engineering Aide at the Office of the Municipal Engineer of Silang, Cavite, who
conducted an ocular inspection of the collapsed perimeter fence, that the observed deviations from the
plan affected the strength of the fence and made it weaker, such that its chance of withstanding the
pressure of water from the other side thereof was greatly diminished or affected was merely an
expression of opinion. As he himself admitted, he is not qualified to render an expert opinion.19

Further, De Guzman was not able to show that her situation fell within any of the cases enumerated
in Article 221920 of the Civil Code upon which to base her demand for the award of moral damages.
_______________
17 Rollo, p. 45.
18 Metropolitan Bank and Trust Co. v. Perez, G.R. No. 181842, February 5, 2010, 611 SCRA 740, 746,
citing Bank of Commerce v. Sps. San Pablo, G.R. No. 167848, April 27, 2007, 522 SCRA 713, 715.
19 Rollo, p. 44.
20 Moral damages may be recovered in the following and analogous cases: 2219. Art.
A criminal offense resulting in physical injuries; (1)

736
Neither does the breach of contract committed by the Contractor, not being fraudulent or made in
bad faith, warrant the grant of moral damages under Article 2220 which provides that:
Willful injury to property may be a legal ground for awarding moral damages if the court should find
that, under the circumstances, such damages are justly due. The same rule applies to breaches of contract
where the defendant acted fraudulently or in bad faith. 2220. Art.

De Guzman cannot be awarded exemplary damages either, in the absence of any evidence showing
that the Contractor acted in a wanton, fraudulent, reckless, oppressive, or malevolent manner as provided
in Article 2232 of the Civil Code. The ruling in the case of Nakpil and Sons v. Court of Appeals,21 relied upon
by De Guzman, where it was emphasized that the wanton negligence in effecting the plans, designs,
specifications, and construction of a building is equivalent to bad faith in the performance of the assigned
task, finds no application in the case at bench. As already pointed out, there is negligence on the part of
Contractor, but it is neither wanton, fraudulent, reckless, oppressive, nor malevolent.
The award of exemplary damages cannot be made merely on the allegation of De Guzman that the
Contractors deviations from the plans and specifications without her written consent was deplorable and
_______________
Quasi-delicts causing physical injuries; (2)
Seduction, abduction, rape, or other lascivious acts; (3)
Adultery or concubinage; (4)
Illegal or arbitrary detention or arrest; (5)
Illegal search; (6)
Libel, slander or any other form of defamation; (7)
Malicious prosecution; (8)
Acts mentioned in Article 309; (9)
Acts and actions referred to in Articles 21, 26, 27, 28, 29, 30, 32, 34, and 35. (10)
The parents of the female seduced, abducted, raped, or abused, referred to in No. 3 of this article,
may also recover moral damages.
The spouse, descendants, ascendants, and brothers and sisters may bring the action mentioned in No.
9 of this article, in the order named.
21 243 Phil. 489; 160 SCRA 334 (1988).
737condemnable. The Court regards the deviations as excusable due to the unavailability of the approved
construction materials. Besides, these were made known to De Guzmans project manager who was
present all the time during the construction. Indeed, no deliberate intent on the part of the Contractor to
defraud the orphanages benefactors was ever shown, much less proved. As may be gleaned from his
testimony:
xxx
What can you say to the claim that the column rebars were reduced in size from 12mm to 10mm?
2.2.0 :
That is untrue. A :
Why did you say that it was untrue? 2.2.1 :
Because the column rebars that we used is 12mm and not 10mm contrary to the claim of the
claimant. The column rebars that claimant and his engineers claimed to have been undersized
[were] those already subjected to stretching. Due to the lateral load on the perimeter fence
coming from the water that accumulated thereon, the strength of the column bars was
subjected to such kind of force beyond its capacity thereby resulting them to yield or
mapatid. As a result of such stretching, the column rebars were deformed thereby causing
it [to] change its width but the length was extended. You can compare it to a candy like tira-
tira which if you stretch it becomes longer but its width is reduced. The other column rebars
on the perimeter fence which [were] not subjected to stretching will prove what I am stating.
A:
Also, in the said request for arbitration, it was claimed that the required hollow blocks (CHB) was
reduced also from #6 to #5, how would you explain this? 2.2.2 :
It is true but such deviation was known to them in view of the fact that there was no available CHB
#6 in Silang, Cavite and so to save on the travel cost in bringing materials from Manila to the
site, it was agreed that such CHB #5 shall be used instead. A :
What was the effect of such deviation in using CHB #5 instead of CHB #6? 2.2.3 :
No effect, madam. A :
Why did you state so, Mr. Witness? 2.2.4 : 738
Because the entire area of the land which is being secured by the perimeter fence was fully covered
with the fence which is made of CHB. This simply implies that even though we used a much
lesser size of CHB, but we increased the compressive strength of the mortar and filler used in
the premises. This has really no effect because we cover the entire place with fence. A :
It was also claimed that the distance between columns was deviated from 3.0 m. to 4.0 m, will you
please explain this matter. 2.2.5:
The computation of the distance between the columns of the perimeter fence as appearing on the
plan was 3.0 m inside to inside. However, the computation made by the engineer of the
claimant as alleged in their Request for Arbitration was 4.0 m. outside to outside which should
be 3.6 m. outside to outside as correct distance. A :
It now appears from your statement that there was a deviation as between the 3.0 m. inside to
inside computation in the plan and the actual 3.6 m. outside to outside computation made by
the engineers of the claimant. My question Mr. Witness is, what would be the effect of such
deviation on the columns? 2.2.6 :
It is true that there was such a deviation on the distance of the column but it will have no effect
because still the factor of safety was well provided for. Even the existing law on building
construction supports this matter. I even sought Engineer Rommel Amante on the matter and
his report supports my allegation. A :
Was such deviation approved by the claimant or the representatives of the claimant? 2.2.7:
Yes because during all the time the construction of the perimeter fence was done, the project
manager of the claimant was present and observing the works. Further, they have executed
a Certificate of Final Acceptance of the project. A :22
xxx

As regards the award of attorneys fees, the Court upholds De Guzmans entitlement to reasonable
attorneys fees, although it recognizes that it is a sound policy not to set a premium on the right to
_______________
22 Rollo, pp. 125-126.

739litigate.23 It must be recalled that De Guzmans repeated demands for the repair of the fence or
the payment of damages by way of compensation, were not heeded by the Contractor. The latters unjust
refusal to satisfy De Guzmans valid, just and demandable claim constrained her to litigate and incur
expenses to protect her interest. Article 2208 of the Civil Code, thus, provides:
In the absence of stipulation, attorneys fees and expenses of litigation, other than judicial costs,
cannot be recovered, except: 2208. Art.
xxx
When the defendants act or omission has compelled the plaintiff to litigate with third persons or to
incur expenses to protect his interest; (2)
xxx

Finally, the dismissal of the Contractors counterclaim is sustained for lack of merit. In his
Comment24 and Memorandum,25 the Contractor pleaded that damages should have been awarded to
him. This deserves scant consideration. A perusal of the record reveals that the matter as regards the
return of what he had donated by reason of De Guzmans ingratitude was not among the issues raised in
this petition. Thus, the same cannot be taken cognizance by the Court.
WHEREFORE, the petition is DENIED. The Decision of the Court of Appeals dated February 24, 2009
and its Resolution dated May 26, 2009 are AFFIRMED with the MODIFICATION that the award of
P100,000.00 as temperate damages is increased to P150,000.00. The award shall earn interest at the rate
of 12% per annum reckoned from the finality of this judgment until fully paid.
_______________
23 Northwest Airlines, Inc. v. Chiong, G.R. No. 155550, January 31, 2008, 543 SCRA 308, 327, citing BPI
Family Savings Bank v. Franco, G.R. No. 123498, November 23, 2007, 538 SCRA 184, 205.
24 Rollo, pp. 289-323.
25 Id., at pp. 340-374.

740
SO ORDERED.
Velasco, Jr. (Chairperson), Peralta, Bersamin**and Reyes,*** JJ., concur.

Petition denied, judgment and resolution affirmed with modification.

Note.An award of moral damages, in breaches of contract, is in order upon a showing that the
defendant acted fraudulently or in bad faith. (Northwest Airlines, Inc. vs. Chiong, 543 SCRA 308 [2008])

2. G.R. No. 133803. September 16, 2005.*


BIENVENIDO M. CASIO, JR., petitioner, vs. THE COURT OF APPEALS and OCTAGON REALTY
DEVELOPMENT CORPORATION, respondents.
Actions; Obligations and Contracts; Appeals; Factual findings of the Court of Appeals when
affirmatory of those of the trial court, are binding upon the Supreme Court.There can be denying of
petitioners breach of his contractual obligation, more so when, as here, the two courts below were one
in holding so. This brings to mind the settled rule of jurisprudence that factual findings of the Court of
Appeals, particularly when affirmatory of those of the trial court, are binding upon this Court. Unless the
evidence on record clearly do not support such findings or that the same were arrived at based on a patent
misunderstanding of facts, situations which do not obtain in this case, this Court is not at liberty to disturb
what has been found below and supplant them with its own. This is, as it should be. For, in petitions for
review on certiorari as a mode of appeal under Rule 45, only questions of law may be raised. This Court is
not the proper venue to consider factual issues as it is not a trier of facts.
Same; Same; Rescission; In the sense that the obligation of one is dependent upon the other, the right
to rescind is implied such that absent any provision providing for a right to rescind, the parties may
nevertheless rescind the contract should the other obligor fail to comply with its obligations.With the
reality that petitioner has failed to comply with his prestations under his contract with respondent,

_______________
*
THIRD DIVISION.
58
58 SUPREME COURT REPORTS ANNOTATED
Casio, Jr. vs. Court of Appeals
the latter is vested by law with the right to rescind the parties agreement, conformably with Article
1191 of the Civil Code, which partly reads: Art. 1191. The power to rescind obligations is implied in
reciprocal ones, in case one of the obligors should not comply with what is incumbent upon him. The
injured party may choose between the fulfillment and the rescission of the obligation, with the payment
of damages in either case. He may also seek rescission even after he has chosen fulfillment, if the latter
should become impossible. xxx xxx xxx Explicit it is from the foregoing that in reciprocal obligations, or
those which arise from the same cause, and in which each party is a debtor and a creditor of the other, in
the sense that the obligation of one is dependent upon the obligation of the other, the right to rescind is
implied such that absent any provision providing for a right to rescind, the parties may nevertheless
rescind the contract should the other obligor fail to comply with its obligations.
Same; Same; Same; The general rule is that rescission of a contract will not be permitted for a slight
or casual breach; A partys failure to make complete delivery and installation way beyond the time
stipulated despite the other partys demands, is doubtless a substantial and fundamental breach.It must
be stressed, though, that the right to rescind a contract for non-performance of its stipulations is not
absolute. The general rule is that rescission of a contract will not be permitted for a slight or casual breach,
but only for such substantial and fundamental violations as would defeat the very object of the parties in
making the agreement. Here, contrary to petitioners asseveration, the breach he committed cannot, by
any measure, be considered as slight or casual. For sure, petitioners failure to make complete delivery
and installation way beyond the time stipulated despite respondents demands, is doubtless a substantial
and fundamental breach, more so when viewed in the light of the large amount of money respondent had
to pay another contractor to complete petitioners unfinished work.
Same; Same; Same; The law definitely does not require that the contracting party who believes itself
injured must first file suit and wait for a judgment before taking extrajudicial steps to protect its own
interest.We thus rule and so hold that respondent acted well within its rights in unilaterally terminating
its contract with petitioner and in entering into a new one with a third person in order to minimize its
losses, without prior need of resorting to judicial action. As we once said in University of the Philippines v.
De los Angeles, 35
59
VOL. 470, SEPTEMBER 16, 2005 59
Casio, Jr. vs. Court of Appeals
SCRA 102 (1970) involving the question of whether the injured party may consider the contract as
rescinded even before any judicial pronouncement has been made to that effect: x x x the party who
deems the contract violated may consider it resolved or rescinded, and act accordingly, without previous
court action, but it proceeds at its own risk. For it is only the final judgment of the corresponding court
that will conclusively and finally settle whether the action taken was or was not correct in law. But the law
definitely does not require that the contracting party who believes itself injured must first file suit and
wait for a judgment before taking extrajudicial steps to protect its interest. Otherwise, the party injured
by the others breach will have to passively sit and watch its damages accumulate during the pendency of
the suit until the final judgment of rescission is rendered when the law itself requires that he should
exercise due diligence to minimize its own damages x x x.
Same; Same; Same; Damages; There are two kinds of actual or compensatory damagesone is the
loss of what a person already possesses and the other is the failure to receive as a benefit that which would
have pertained to him.Under Articles 2199 and 2200 of the Civil Code, actual or compensatory damages
are those awarded in satisfaction of or in recompense for loss or injury sustained. They proceed from a
sense of natural justice and are designed to repair the wrong that has been done. Citing Producers Bank
of the Philippines vs. CA, 365 SCRA 326 (2002) this Court, in the subsequent case of Terminal Facilities and
Services Corporation vs. Philippine Ports Authority, 378 SCRA 82 (2002), ruled: There are two kinds of
actual or compensatory damages: one is the loss of what a person already possesses, and the other is the
failure to receive as a benefit that which would have pertained to him x x x. In the latter instance, the
familiar rule is that damages consisting of unrealized profits, frequently referred as ganacias
frustradas or lucrum cessans, are not to be granted on the basis of mere speculation, conjecture, or
surmise, but rather by reference to some reasonably definite standard such as market value, established
experience, or direct inference from known circumstances.
Same; Same; Same; Same; Absolute certainty is not necessary to establish the amount of ganacias
frustradas or lucrum cessanswhen the existence of loss is established, absolute certainty as to its
amount is not required.Absolute certainty, however, is not necessary to establish the amount
of ganacias frustradas or lu-
60
60 SUPREME COURT REPORTS ANNOTATED
Casio, Jr. vs. Court of Appeals
crum cessans. As we have said in Producers Bank of the Philippines: When the existence of a loss is
established, absolute certainty as to its amount is not required. The benefit to be derived from a contract
which one of the parties has absolutely failed to perform is of necessity to some extent, a matter of
speculation, but the injured party is not to be denied for this reason alone. He must produce the best
evidence of which his case is susceptible and if that evidence warrants the inference that he has been
damaged by the loss of profits which he might with reasonable certainty have anticipated but for the
defendants wrongful act, he is entitled to recover.

PETITION for review on certiorari of the decision and resolution of the Court of Appeals.

The facts are stated in the opinion of the Court.


George L. Howard for petitioner.
Santiago, Cruz & Sarte Law Offices for respondent.

GARCIA, J.:
Via this petition for review on certiorari under Rule 45 of the 1997 Rules of Court, petitioner Bienvenido
M. Casio, Jr. seeks the annulment and setting aside of the following issuances of the Court of Appeals
(CA) in CA-G.R. CV No. 47702, to wit:

1. 1.Decision dated January 21, 1997,1affirming an earlier decision of the Regional Trial Court at
Pasig which upheld private respondents rescission of its contract with petitioner; and
2. 2.Resolution dated May 20, 1998,2 denying petitioners motion for reconsideration.

_______________
1
Penned by Associate Justice Gloria C. Paras (now ret.) with Associate Justices Conrado M. Vasquez
and Romeo J. Callejo, Sr. (now a member of this Court), concurring; Rollo, pp. 42-51.
2
Penned by then, now Supreme Court Justice Romeo J. Callejo, Sr. and concurred in by Associate
Justices Ruben T. Reyes and Conrado M. Vasquez, Jr.; Rollo, p. 53.
61
VOL. 470, SEPTEMBER 16, 2005 61
Casio, Jr. vs. Court of Appeals
On October 2, 1991 in the Regional Trial Court at Pasig City, respondent Octagon Realty Development
Corporation, a corporation duly organized and existing under Philippine laws, filed a complaint for
rescission of contract with damages against petitioner Bienvenido M. Casio, Jr., owner and proprietor of
the Casio Wood Parquet and Sanding Services, relative to the parties agreement for the supply and
installation by petitioner of narra wood parquet ordered by respondent.
As recited by the Court of Appeals in the decision under review, the parties principal pleadings in the
Regional Trial Court disclose the following:
In its complaint, [respondent] alleges that on December 22, 1989, it entered into a contract with
[petitioner] for the supply and installation by the latter of narra wood parquet (kiln dried) to the Manila
Luxury Condominium Project, of which [respondent] is the developer, covering a total area of 60,973 sq.
ft. for a total price of P1,158,487.00; that the contract stipulated that full delivery by [petitioner] of labor
and materials was in May 1990; that in accordance with the terms of payment in the contract,
[respondent] paid to [petitioner] the amount P463,394.50, representing 40% of the total contract price;
that after delivering only 26,727.02 sq. ft. of wood parquet materials, [petitioner] incurred in delay in the
delivery of the remainder of 34,245.98 sq. ft.; that [petitioner] misrepresented to [respondent] that he is
qualified to do the work contracted when in truth and in fact he was not and, furthermore, he lacked the
necessary funds to execute the work as he was totally dependent on the funds advanced to him by
[respondent]; that due to [petitioners] unlawful and malicious refusal to comply with its obligations,
[respondent] incurred actual damages in the amount of P912,452.39 representing estimated loss on the
new price, unliquidated damages and cost of money; that in order to minimize losses, the [respondent]
contracted the services of Hilvano Quality Parquet and Sanding Services to complete the [petitioners]
unfinished work, [respondent] thereby agreeing to pay the latter P1,198,609.30.
The [respondent] in its complaint prays for rescission of contract, actual damages of P912,452.39,
reimbursement in the amount of P1,198,609.30, moral damages of P200,000.00, and attorneys fees
62
62 SUPREME COURT REPORTS ANNOTATED
Casio, Jr. vs. Court of Appeals
of P50,000.00 plus a fee of P1,000.00 per appearance and other expenses of the suit.
In his answer to the complaint, the [petitioner] admits the execution of the December 22, 1989
contract with the [respondent], the terms thereof relating to total price and scope of work, as well as the
payment by the [respondent] of the 40% downpayment. He, however, avers that the manner of payment,
period of delivery and completion of work and/or full delivery of labor and materials were modified; that
the delivery and completion of the work could not be done upon the request and/or representations by
the [respondent] because he failed to make available and/or to prepare the area in a suitable manner for
the work contracted, preventing the [petitioner] from complying with the delivery schedule under the
contract; that [petitioner] delivered the required materials and performed the work despite these
constraints; that the [petitioner] delivered a total of 29,209.82 sq. ft. of wood parquet; that the
[respondent] failed to provide for a safe and secure area for the materials and work in process or worked
performed, thus exposing them to the elements and destroying the materials and/or work; that the
[respondent] failed to pay the [petitioners] second and third billings for deliveries and work performed
in the sum of P105,425.68, which amount the [petitioner] demanded from the [respondent] with the
warning of suspension of deliveries or rescission for contract for non-payment; that the [petitioner] was
fully qualified and had the experience of at least nine years to perform the work; and that it was the
[respondent], after failing to prepare the area suitable for the delivery and installation of the wood
parquet, [respondent] x x x who advised or issued orders to the [petitioner] to suspend the delivery and
installation of the wood parquet, which created a storage problem for the [petitioner].
Set up by the [petitioner] as special and affirmative defenses, are that the filing of the case is
premature; that the [respondent] has no cause of action; that the obligation has been
waived/extinguished; that the [respondents] failure to accept deliveries compelled the [petitioner] to
store the materials in his warehouse/s and to use valuable space in his premises, which he could have
utilized for the storage of materials for other customers, and also prevented him from accepting new
orders from other customer causing him actual and potential losses of income; that the [respondents]
extrajudicial rescission of contract is void since there is no breach or violation thereof by the [petitioner];
and that it was [respondent] which vio-
63
VOL. 470, SEPTEMBER 16, 2005 63
Casio, Jr. vs. Court of Appeals
lated the terms/conditions of the contract, entitling [petitioner] to have the same judicially rescinded.
The [petitioner] pleaded counterclaims of rescission of contract and payment by the [respondent] of
P597,392.90 with legal interest from the filing of the complaint until fully paid or, in the alternative
payment of the cost of the billings in the sum of P105,425.68 plus legal interest; actual and compensatory
damages of P600,000.00 and P30,000.00, respectively; moral damages of P100,000.00, attorneys fees of
P40,000.00; and litigation expenses and costs of the suit.3 (Words in bracket ours).
In a decision dated June 2, 1994, the trial court, upon a finding that petitioner is the one who breached
the parties agreement, rendered judgment for respondent, to wit:
WHEREFORE, based on the foregoing, this Court finds and so holds that the rescission of contract effected
by [respondent] is valid, and [petitioner]t is thereby ordered to pay the [respondent] the following:

1. 1.P2,111,061.69 by way of actual and compensatory damages; and,


2. 2.P50,000.00, as attorneys fees.

No pronouncement as to cost.
SO ORDERED.4
Explains the trial court in its decision:
x x x [T]he contract clearly and categorically stipulates that full delivery by [petitioner] of labor and
materials was to be in May 1990. However, as of January 30, 1991, no deliveries have been made by
[petitioner] necessitating the sending by [respondent] of a demand letter
x x x. Thereafter, while [petitioner] started mobilization, the workers assigned were insufficient
resulting in the very slow progress of the works for which reason Engr. Alcain sent a letter to [petitioner]
instructing [petitioner] to make full-blast delivery of the

_______________
3
CA Decision; Rollo, pp. 42-44.
4
Ibid., at p. 46.
64
64 SUPREME COURT REPORTS ANNOTATED
Casio, Jr. vs. Court of Appeals
materials. This, incidentally, effectively negates [petitioners] contention that [respondent] had requested
for the suspension of deliveries.
xxx xxx xxx
Finally, it was established that out of the total 60,973 sq. ft. of wood parquet, [petitioner] was able to
deliver only 26,727.02 sq. ft. In this connection [petitioner] denied this and insisted that he was actually
able to deliver 29,109.82 sq. ft. Whichever of the two figures is correct, the fact remains that [petitioner]
was unable to deliver the full quantity contracted by [respondent]. For purposes of the record, however,
this Court believes the figure given by [respondent], which is supported by [petitioners] own statements
of account where the total amount of deliveries jibes with [respondents] alleged figure.
On the basis of the foregoing findings, this Court hereby finds that [respondent] has established its
right to rescind the contract dated December 22, 1989, on the strength of Art. 1191 of the Civil Code.
In this case, [respondent], after [petitioners] breach of his contractual obligations, considered the
contract as rescinded and proceeded to contract with Hilvano Quality Parquet & Sanding Services, in order
to minimize losses in view of the delay in the completion schedule of its condominium project.5 (Words in
bracket ours).
On petitioners appeal to the Court of Appeals in CA-G.R. CV No. 47702, the appellate court, in the herein
assailed Decision6 dated January 21, 1997, affirmed that of the trial court but modified the same by
reducing the amount of damages awarded, thus:
WHEREFORE, the decision appealed from is AFFIRMED with the MODIFICATION that the [petitioner] be
made to pay the [respondent] as actual and compensatory damages, the amount of P1,662,003.80, with
interest thereon at the legal rate from the finality of this judgment until fully paid. SO ORDERED. (Words
in bracket ours).

_______________
5
Ibid., at pp. 45-46.
6
Ibid., at pp. 50-51.
65
VOL. 470, SEPTEMBER 16, 2005 65
Casio, Jr. vs. Court of Appeals
In time, petitioner and respondent filed their respective Motion for Reconsideration and Motion for
Partial Reconsideration. In its Resolution dated May 20, 1998,7 the appellate court denied petitioners
motion for lack of merit but found that of respondent as well-grounded. Accordingly, and noting that the
amount of P97,699.67 x x x had already been factored in, in the computation of the amount of
P912,452.39, under the decision of the court a quo, the Court of Appeals amended its original Decision
by affirming in toto the decision of the trial court, as follows:
WHEREFORE, [petitioners] appeal is dismissed. The Decision appealed from is AFFIRMED IN TOTO. With
costs against the [petitioner]. SO ORDERED. (Words in bracket ours).
Undaunted, petitioner is now with us via the present recourse on his submissions that:

1. A.THE SUBJECT DECISION DECLARING THE RESCISSION OF THE QUESTIONED CONTRACT BY


PRIVATE RESPONDENT AS VALID AND HOLDING THE PETITIONER LIABLE FOR BREACH OF
CONTRACT IS CONTRARY TO OR IN VIOLATION OF ART. 1191, NEW CIVIL CODE;
2. B.THE AWARD TO PRIVATE RESPONDENT OF ACTUAL AND COMPENSATORY DAMAGES OF
P1,662,003.80 WITH LEGAL INTEREST WAS NOT LEGALLY JUSTIFIED, OR PROVEN WITH
REASONABLE DEGREE OF CERTAINTY; and
3. C.THE SAME WAS ISSUED WITH GRAVE ABUSE OF DISCRETION AMOUNTING TO LACK OF OR IN
EXCESS OF JURISDICTION, AND/OR CONTRARY TO THE FACTS, EVIDENCE, JURISPRUDENCE AND
LAW.8

The petition lacks merit.


It is undisputed that under their contract, petitioner and respondent had respective obligations, i.e.,
the former to sup-

_______________
7
CA Resolution; Rollo, p. 53.
8
Petition; Rollo, p. 16.
66
66 SUPREME COURT REPORTS ANNOTATED
Casio, Jr. vs. Court of Appeals
ply and deliver the contracted volume of narra wood parquet materials and install the same at
respondents condominium project by May, 1990, and the latter, to pay for said materials in accordance
with the terms of payment set out under the parties agreement. But while respondent was able to fulfill
that which is incumbent upon it by making a downpayment representing 40% of the agreed price upon
the signing of the contract and even paid the first billing of petitioner,9 the latter failed to comply with his
contractual commitment. For, after delivering only less than one-half of the contracted materials,
petitioner failed, by the end of the agreed period, to deliver and install the remainder despite demands
for him to do so. Doubtless, it is petitioner who breached the contract.
Petitioner asserts that while he was ready to comply with his obligation to deliver and install the
remaining wood parquet, yet respondent was not ready to accept deliveries due to the unsuitability of
the work premises for the installation of the materials. Petitioners contention flies in the light of the
following observations of the appellate court, to which we are in full accord:
x x x no sufficient proof was presented by the [petitioner] to substantiate his allegation. On the other
hand, the [respondent] was able to prove by substantial evidence that as of May, 1990, the time when
the [petitioner] was supposed to make complete delivery there was already available in the condominium
building any space from the basement to the fourteenth floor, and the [petitioner] could have chosen
from any of those. (Words in bracket ours).
Indeed, there can be denying of petitioners breach of his contractual obligation, more so when, as here,
the two courts below were one in holding so. This brings to mind the settled rule of jurisprudence that
factual findings of the Court of Appeals, particularly when affirmatory of those of the trial court, are
binding upon this Court.10 Unless the evidence on

_______________
9
CA Decision, supra at p. 50.
10
Salvador vs. Court of Appeals, 426 SCRA 433, 443 (2004).
67
VOL. 470, SEPTEMBER 16, 2005 67
Casio, Jr. vs. Court of Appeals
record clearly do not support such findings or that the same were arrived at based on a patent
misunderstanding of facts,11 situations which do not obtain in this case, this Court is not at liberty to
disturb what has been found below and supplant them with its own.
This is, as it should be. For, in petitions for review on certiorari as a mode of appeal under Rule 45,
only questions of law12 may be raised. This Court is not the proper venue to consider factual issues as it is
not a trier of facts.13
With the reality that petitioner has failed to comply with his prestations under his contract with
respondent, the latter is vested by law with the right to rescind the parties agreement, conformably with
Article 1191 of the Civil Code, which partly reads:
Art. 1191. The power to rescind obligations is implied in reciprocal ones, in case one of the obligors should
not comply with what is incumbent upon him.
The injured party may choose between the fulfillment and the rescission of the obligation, with the
payment of damages in either case. He may also seek rescission even after he has chosen fulfillment, if
the latter should become impossible.
xxx xxx xxx
Explicit it is from the foregoing that in reciprocal obligations, or those which arise from the same cause,
and in which each party is a debtor and a creditor of the other, in the sense that the obligation of one is
dependent upon the obligation of the other,14 the right to rescind is implied such that absent any
provision providing for a right to rescind, the parties may

_______________
11
Montecillo vs. Reynes and Spouses Abucay, 385 SCRA 244, 255-256 (2002).
12
Ibid., at p. 253.
13
Ibid.
14
Ong vs. Court of Appeals, 310 SCRA 1, 9 (1999).
68
68 SUPREME COURT REPORTS ANNOTATED
Casio, Jr. vs. Court of Appeals
nevertheless rescind the contract should the other obligor fail to comply with its obligations.15
It must be stressed, though, that the right to rescind a contract for non-performance of its stipulations
is not absolute. The general rule is that rescission of a contract will not be permitted for a slight or casual
breach, but only for such substantial and fundamental violations as would defeat the very object of the
parties in making the agreement.16
Here, contrary to petitioners asseveration, the breach he committed cannot, by any measure, be
considered as slight or casual. For sure, petitioners failure to make complete delivery and installation
way beyond the time stipulated despite respondents demands, is doubtless a substantial and
fundamental breach, more so when viewed in the light of the large amount of money respondent had to
pay another contractor to complete petitioners unfinished work. Again, to quote from the challenged
decision of the appellate court:
The [petitioner] also asserts that the breach was merely casual that does not warrant a rescission. While
apparently, the [petitioner] agreed to complete delivery and installation of the narra wood parquet to the
[respondents] condominium project by May, 1990, yet on three occasions the [respondents] counsel
sent letters demanding compliance with the [petitioners] obligation. At that time, only 26,727.02 sq. ft.
of parquet out of a total of 60,973 sq. ft., or less than one half of the contracted volume, had been
delivered. Hence, the [respondent] was finally forced to contract the services of another company and
had to pay the sum of P1,198,609.30 for the completion of the unfinished work. The large cost of
completion of the [petitioners] unfinished work can only evidence the gravity of the [petitioners] failure
to comply with the terms of the contract.17 (Words in bracket ours).

_______________
15
Multinational Village Homeowners Association, Inc. vs. Ara Security & Surveillance Agency, Inc., 441
SCRA 126, 135 (2004).
16
Barredo vs. Leao, 431 SCRA 106, 115 (2004).
17
CA Decision; supra, p. 49.
69
VOL. 470, SEPTEMBER 16, 2005 69
Casio, Jr. vs. Court of Appeals
Likewise, contrary to petitioners claim, it cannot be said that he had no inkling whatsoever of
respondents recourse to rescission. True, the act of a party in treating a contract as cancelled or resolved
on account of infractions by the other party must be made known to the other.18 In this case, however,
petitioner cannot feign ignorance of respondents intention to rescind, fully aware, as he was, of his non-
compliance with what was incumbent upon him, not to mention the several letters19 respondent sent to
him demanding compliance with his obligation.
In fine, we thus rule and so hold that respondent acted well within its rights in unilaterally terminating
its contract with petitioner and in entering into a new one with a third person in order to minimize its
losses, without prior need of resorting to judicial action. As we once said in University of the Philippines v.
De los Angeles,20involving the question of whether the injured party may consider the contract as
rescinded even before any judicial pronouncement has been made to that effect:
x x x the party who deems the contract violated may consider it resolved or rescinded, and act accordingly,
without previous court action, but it proceeds at its own risk. For it is only the final judgment of the
corresponding court that will conclusively and finally settle whether the action taken was or was not
correct in law. But the law definitely does not require that the contracting party who believes itself injured
must first file suit and wait for a judgment before taking extrajudicial steps to protect its interest.
Otherwise, the party injured by the others breach will have to passively sit and watch its damages
accumulate during the pendency of the suit until the final judgment of rescission is rendered when the
law itself requires that he should exercise due diligence to minimize its own damages x x x.

_______________
18
Jacinto vs. Kaparaz, 209 SCRA 246, 258 citing University of the Philippines vs. De los Angeles, 35 SCRA
102, 107 (1970).
19
CA Decision, supra at p. 45.
20
Supra, pp. 107-108.
70
70 SUPREME COURT REPORTS ANNOTATED
Casio, Jr. vs. Court of Appeals
We see no conflict between this ruling and the previous jurisprudence of this Court invoked by respondent
declaring that judicial action is necessary for the resolution of a reciprocal obligation; (Ocejo, Perez & Co.
v. International Banking Corp., 37 Phil. 631; Republic v. Hospital de San Juan de Dios, et al., 84 Phil. 820)
since in every case where the extrajudicial resolution is contested only the final award of the court of
competent jurisdiction can conclusively settle whether the resolution was proper or not. It is in this sense
that judicial action will be necessary, as without it, the extrajudicial resolution will remain contestable and
subject to judicial invalidation, unless attack thereon should become barred by acquiescence, estoppel or
prescription.
This brings us to the propriety of the award for actual or compensatory damages, attorneys fees and
litigation expenses.
Under Articles 2199 and 2200 of the Civil Code,21actual or compensatory damages are those awarded
in satisfaction of or in recompense for loss or injury sustained. They proceed from a sense of natural justice
and are designed to repair the wrong that has been done.
Citing Producers Bank of the Philippines vs. CA,22this Court, in the subsequent case of Terminal
Facilities and Services Corporation vs Philippine Ports Authority23 ruled:
There are two kinds of actual or compensatory damages: one is the loss of what a person already
possesses, and the other is the failure to receive as a benefit that which would have pertained to him x x
x. In the latter instance, the familiar rule is that damages

_______________
21
Art. 2199. Except as provided by law or by stipulation, one is entitled to an adequate compensation
only for such pecuniary loss suffered by him as he has duly proved. Art. 2200. Indemnification for damages
shall comprehend not only the value of the loss suffered but also that of the profits which the oblige failed
to obtain.
22
365 SCRA 326, 337 (2002).
23
378 SCRA 82, 114 (2002).
71
VOL. 470, SEPTEMBER 16, 2005 71
Casio, Jr. vs. Court of Appeals
consisting of unrealized profits, frequently referred as ganacias frustradas or lucrum cessans, are not
to be granted on the basis of mere speculation, conjecture, or surmise, but rather by reference to some
reasonably definite standard such as market value, established experience, or direct inference from
known circumstances.
Absolute certainty, however, is not necessary to establish the amount of ganacias frustradas or lucrum
cessans. As we have said in Producers Bank of the Philippines, supra:
When the existence of a loss is established, absolute certainty as to its amount is not required. The benefit
to be derived from a contract which one of the parties has absolutely failed to perform is of necessity to
some extent, a matter of speculation, but the injured party is not to be denied for this reason alone. He
must produce the best evidence of which his case is susceptible and if that evidence warrants the
inference that he has been damaged by the loss of profits which he might with reasonable certainty have
anticipated but for the defendants wrongful act, he is entitled to recover.
Gauged by the aforequoted test, the evidence adduced by respondent is sufficient enough to substantiate
its claim for actual or compensatory damages in the amount of P2,111,061. 69. As found by the trial court
and affirmed by the Court of Appeals:
Clearly, [respondent] must be indemnified for the following damages it sustained by reason of
[petitioners] breach of contract. Finding [respondents] claim justified, this court awards the following:
P912,452.39, representing [respondents] estimated losses on new price, unliquidated damages and cost
of money, as substantiated by Exhibit Q; and P1,198,609.30, representing the cost incurred by
[respondent] in engaging the services of Hilvano Quality Parquet and Sanding Services for the completion
of the work unfinished by [petitioner] (Exhibit C-4, par. 24) x x x.24 (Words in bracket ours).

_______________
24
Rollo, pp. 33 & 116.
72
72 SUPREME COURT REPORTS ANNOTATED
Casio, Jr. vs. Court of Appeals
Finally, on the matter of attorneys fees, respondents entitlement thereto is beyond cavil, what with the
fact that respondent was compelled to litigate and incurred expenses relative thereto by reason of
petitioners breach of his contractual obligations.
WHEREFORE, the instant petition is DENIED and the assailed Decision and Resolution of the appellate
court AFFIRMED.
Costs against petitioner.
SO ORDERED.
Panganiban (Chairman), Sandoval-Gutierrez, Corona and Carpio-Morales, JJ., concur.
Petition denied, assailed decision and resolution affirmed.
Notes.In an action for annulment or rescission of a contract of sale, the same should be considered
as one which is not capable of pecuniary estimation and docket fee charged should be a flat rate of
P400.00, and the subject matter of the contract should not be used as basis. (De Leon vs. Court of
Appeals, 287 SCRA 94 [1998])
Where the judgment of the trial court in favor of a creditor was rendered as early as 1985, there is a
presumption that the 1988 sale of judgment debtors property, in this case the right of redemption, is
fraudulent under Article 1387 of the Civil Code. (China Banking Corporation vs. Court of Appeals, 327 SCRA
378 [2000])

3. G.R. No. 123498. November 23, 2007.*


BPI FAMILY BANK, petitioner, vs. AMADO FRANCO and COURT OF APPEALS, respondents.
Civil Law; Property; The movable property mentioned in Article 559 of the Civil Code pertains to a
specific or determinate thinga determinate or specific thing is one that is individualized and can be
identified or distinguished from others of the same kind.BPI-FBs argument is unsound. To begin with,
the movable property mentioned in Article 559 of the Civil Code pertains to a specific or determinate
thing. A determinate or specific thing is one that is individualized and can be identified or distinguished
from others of the same kind.

_______________
*
THIRD DIVISION.
185
VOL. 538, NOVEMBER 23, 2007 185
BPI Family Bank vs. Franco
Same; Same; In this case, the deposit in Francos accounts consists of money which, albeit
characterized as a movable, is generic and fungible.In this case, the deposit in Francos accounts consists
of money which, albeit characterized as a movable, is generic and fungible. The quality of being fungible
depends upon the possibility of the property, because of its nature or the will of the parties, being
substituted by others of the same kind, not having a distinct individuality.
Mercantile Law; Banking Laws; Money as a Medium of Exchange; Money, which had passed through
various transactions in the general course of banking business, even if of traceable origin, bears no
earmarks of peculiar ownership.It bears emphasizing that money bears no earmarks of peculiar
ownership, and this characteristic is all the more manifest in the instant case which involves money in a
banking transaction gone awry. Its primary function is to pass from hand to hand as a medium of
exchange, without other evidence of its title. Money, which had passed through various transactions in
the general course of banking business, even if of traceable origin, bears no earmarks of peculiar
ownership.
Same; Same; Nature of a Bank; As a business affected with public interest and because of the nature
of its functions, the bank is under obligation to treat the accounts of its depositors with meticulous care,
always having in mind the fiduciary nature of the relation-ship.In every case, the depositor expects the
bank to treat his account with the utmost fidelity, whether such account consists only of a few hundred
pesos or of millions. The bank must record every single transaction accurately, down to the last centavo,
and as promptly as possible. This has to be done if the account is to reflect at any given time the amount
of money the depositor can dispose of as he sees fit, confident that the bank will deliver it as and to
whomever directs. A blunder on the part of the bank, such as the dishonor of the check without good
reason, can cause the depositor not a little embarrassment if not also financial loss and perhaps even civil
and criminal litigation. The point is that as a business affected with public interest and because of the
nature of its functions, the bank is under obligation to treat the accounts of its depositors with meticulous
care, always having in mind the fiduciary nature of their relationship. x x x.
186
186 SUPREME COURT REPORTS ANNOTATED
BPI Family Bank vs. Franco
Remedial Law; Civil Procedure; Amendment to Conform to Evidence; When issues not raised by the
pleadings are tried with the express or implied consent of the parties, they shall be treated in all respects
as if they had been raised in the pleadingssuch amendment of the pleadings as may be necessary to
cause them to conform to the evidence and to raise these issues may be made upon motion of any party
at anytime, even after judgment, but failure to amend does not affect the result of the trial of these
issues.Section 5. Amendment to conform to or authorize presentation of evidence.When issues not
raised by the pleadings are tried with the express or implied consent of the parties, they shall be treated
in all respects as if they had been raised in the pleadings. Such amendment of the pleadings as may be
necessary to cause them to conform to the evidence and to raise these issues may be made upon motion
of any party at any time, even after judgment; but failure to amend does not affect the result of the trial
of these issues. If evidence is objected to at the trial on the ground that it is now within the issues made
by the pleadings, the court may allow the pleadings to be amended and shall do so with liberality if the
presentation of the merits of the action and the ends of substantial justice will be subserved thereby. The
court may grant a continuance to enable the amendment to be made.
Service of Court Papers; It should be noted that the strict requirement on the service of papers upon
the parties affected is designed to comply with the elementary requisite of due process.In this argument,
we perceive BPI-FBs clever but transparent ploy to circumvent Section 4, Rule 13 of the Rules of Court. It
should be noted that the strict requirement on service of court papers upon the parties affected is
designed to comply with the elementary requisites of due process. Franco was entitled, as a matter of
right, to notice, if the requirements of due process are to be observed. Yet, he received a copy of the
Notice of Garnishment only on September 27, 1989, several days after the two checks he issued were
dishonored by BPI-FB on September 20 and 21, 1989. Verily, it was premature for BPI-FB to freeze Francos
accounts without even awaiting service of the Makati RTCs Notice of Garnishment on Franco.
Civil Law; Damages; Moral Damages; In the absence of fraud or bad faith, moral damages cannot be
awarded; and that the adverse result of an action does not per se make the action wrongful, or the party
liable for it. One may err, but error alone is not a ground for
187
VOL. 538, NOVEMBER 23, 2007 187
BPI Family Bank vs. Franco
granting such damages.We have had occasion to hold that in the absence of fraud or bad faith,
moral damages cannot be awarded; and that the adverse result of an action does not per se make the
action wrongful, or the party liable for it. One may err, but error alone is not a ground for granting such
damages.
Same; Exemplary Damages; As there is no basis for the award of moral damages, neither can
exemplary damages be granted.We also deny the claim for exemplary damages. Franco should show
that he is entitled to moral, temperate, or compensatory damages before the court may even consider
the question of whether exemplary damages should be awarded to him. As there is no basis for the award
of moral damages, neither can exemplary damages be granted.

PETITION for review on certiorari of a decision of the Court of Appeals.

The facts are stated in the opinion of the Court.


Ramirez, Bargas, Benedicto & Associates for petitioner.
Lawrence P. Villanueva for private respondent.

NACHURA, J.:

Banks are exhorted to treat the accounts of their depositors with meticulous care and utmost fidelity. We
reiterate this exhortation in the case at bench.
Before us is a Petition for Review on Certiorariseeking the reversal of the Court of Appeals (CA)
Decision1 in CA-G.R. CV No. 43424 which affirmed with modification the judgment2 of the Regional Trial
Court, Branch 55, Manila (Manila RTC), in Civil Case No. 90-53295.

_______________
1
Penned by Associate Justice Eugenio S. Labitoria, with Associate Justices Cancio C. Garcia (retired
Associate Justice of the Supreme Court) and Portia Alino-Hormachuelos, concurring; Rollo, pp. 40-55.
2
CA Rollo, pp. 70-79.
188
188 SUPREME COURT REPORTS ANNOTATED
BPI Family Bank vs. Franco
This case has its genesis in an ostensible fraud perpetrated on the petitioner BPI Family Bank (BPI-FB)
allegedly by respondent Amado Franco (Franco) in conspiracy with other individuals,3 some of whom
opened and maintained separate accounts with BPI-FB, San Francisco del Monte (SFDM) branch, in a
series of transactions.
On August 15, 1989, Tevesteco Arrastre-Stevedoring Co., Inc. (Tevesteco) opened a savings and
current account with BPI-FB. Soon thereafter, or on August 25, 1989, First Metro Investment Corporation
(FMIC) also opened a time deposit account with the same branch of BPI-FB with a deposit of
P100,000,000.00, to mature one year thence.
Subsequently, on August 31, 1989, Franco opened three accounts, namely, a current,4 savings,5 and
time deposit,6 with BPI-FB. The current and savings accounts were respectively funded with an initial
deposit of P500,000.00 each, while the time deposit account had P1,000,000.00 with a maturity date of
August 31, 1990. The total amount of P2,000,000.00 used to open these accounts is traceable to a check
issued by Te-vesteco allegedly in consideration of Francos introduction of Eladio Teves,7 who was looking
for a conduit bank to facilitate Tevestecos business transactions, to Jaime Sebastian, who was then BPI-
FB SFDMs Branch Manager. In turn, the funding for the P2,000,000.00 check was part of the
P80,000,000.00 debited by BPI-FB from FMICs time deposit account and credited to Tevestecos current
account pursuant to an Authority to Debit purportedly signed by FMICs officers.

_______________
3
Antonio T. Ong, Manuel Bienvenida, Jr., Milagros Nayve, Jaime Sebastian, Ador de Asis, and Eladio
Teves. Rollo, pp. 160-207. RTC, Quezon City, Branch 85, Decision in Crim. Case No. Q91-22386.
4
Account No. 840-107483-7.
5
Account No. 1668238-1.
6
Account No. 08523412.
7
President of Tevesteco.
189
VOL. 538, NOVEMBER 23, 2007 189
BPI Family Bank vs. Franco
It appears, however, that the signatures of FMICs officers on the Authority to Debit were forged.8 On
September 4, 1989, Antonio Ong,9 upon being shown the Authority to Debit, personally declared his
signature therein to be a forgery. Unfortunately, Tevesteco had already effected several withdrawals from
its current account (to which had been credited the P80,000,000.00 covered by the forged Authority to
Debit) amounting to P37,455,410.54, including the P2,000,000.00 paid to Franco.
On September 8, 1989, impelled by the need to protect its interests in light of FMICs forgery claim,
BPI-FB, thru its Senior Vice-President, Severino Coronacion, instructed Jesus Arangorin10 to debit Francos
savings and current accounts for the amounts remaining therein.11 However, Francos time deposit
account could not be debited due to the capacity limitations of BPI-FBs computer.12
In the meantime, two checks13 drawn by Franco against his BPI-FB current account were dishonored
upon presentment for payment, and stamped with a notation account under garnishment. Apparently,
Francos current account was garnished by virtue of an Order of Attachment issued by the Regional Trial
Court of Makati (Makati RTC) in Civil Case No. 89-4996 (Makati Case), which had been filed by BPI-FB
against Franco et al.,14 to recover the P37,455,410.54 representing Tevestecos total withdrawals from its
account.

_______________
8
BPI-FBs Memorandum, Rollo, pp. 104-105.
9
Executive Vice-President of FMIC.
10
The new BPI-FB SFDM branch manager who replaced Jaime Sebastian.
11
BPI-FBs Memorandum, Rollo, p. 105.
12
Id.
13
Respectively dated September 11 and 18, 1989. The first check dated August 31, 1989 Franco issued
in the amount of P50,000.00 was honored by BPI-FB.
14
Supra note 3. The names of other defendants in Crim. Case No. 091-22386.
190
190 SUPREME COURT REPORTS ANNOTATED
BPI Family Bank vs. Franco
Notably, the dishonored checks were issued by Franco and presented for payment at BPI-FB prior to
Francos receipt of notice that his accounts were under garnishment.15 In fact, at the time the Notice of
Garnishment dated September 27, 1989 was served on BPI-FB, Franco had yet to be impleaded in the
Makati case where the writ of attachment was issued.
It was only on May 15, 1990, through the service of a copy of the Second Amended Complaint in Civil
Case No. 89-4996, that Franco was impleaded in the Makati case.16 Immediately, upon receipt of such
copy, Franco filed a Motion to Discharge Attachment which the Makati RTC granted on May 16, 1990. The
Order Lifting the Order of Attachment was served on BPI-FB on even date, with Franco demanding the
release to him of the funds in his savings and current accounts. Jesus Arangorin, BPI-FBs new manager,
could not forthwith comply with the demand as the funds, as previously stated, had already been debited
because of FMICs forgery claim. As such, BPI-FBs computer at the SFDM Branch indicated that the current
account record was not on file.
With respect to Francos savings account, it appears that Franco agreed to an arrangement, as a favor
to Sebastian, whereby P400,000.00 from his savings account was temporarily transferred to Domingo
Quiaoits savings account, subject to its immediate return upon issuance of a certificate of deposit which
Quiaoit needed in connection with his visa application at the Taiwan Embassy. As part of the arrangement,
Sebastian retained custody of Quiaoits savings account passbook to ensure that no withdrawal would be
effected therefrom, and to preserve Francos deposits.
On May 17, 1990, Franco pre-terminated his time deposit account. BPI-FB deducted the amount of
P63,189.00 from the

_______________
15
Franco received the Notice of Garnishment on September 27, 1989, but the 2 checks he had issued
were presented for payment at BPI-FB on September 20 & 21, 1989, respectively.
16
Francos Memorandum, Rollo, p. 137.
191
VOL. 538, NOVEMBER 23, 2007 191
BPI Family Bank vs. Franco
remaining balance of the time deposit account representing advance interest paid to him.
These transactions spawned a number of cases, some of which we had already resolved.
FMIC filed a complaint against BPI-FB for the recovery of the amount of P80,000,000.00 debited from
its account.17 The case eventually reached this Court, and in BPI Family Savings Bank, Inc. v. First Metro
Investment Corporation,18 we upheld the finding of the courts below that BPI-FB failed to exercise the
degree of diligence required by the nature of its obligation to treat the accounts of its depositors with
meticulous care. Thus, BPI-FB was found liable to FMIC for the debited amount in its time deposit. It was
ordered to pay P65,332,321.99 plus interest at 17% per annum from August 29, 1989 until fully restored.
In turn, the 17% shall itself earn interest at 12% from October 4, 1989 until fully paid.
In a related case, Edgardo Buenaventura, Myrna Lizardo and Yolanda Tica (Buenaventura, et
al.),19recipients of a P500,000.00 check proceeding from the P80,000,000.00 mistakenly credited to
Tevesteco, likewise filed suit. Buenaven-tura et al., as in the case of Franco, were also prevented from
effecting withdrawals20 from their current account with BPI-FB, Bonifacio Market, Edsa, Caloocan City
Branch. Likewise, when the case was elevated to this Court docketed as BPI Family Bank v.
Buenaventura,21 we ruled that BPI-FB had no right to freeze Buenaventura, et al.s accounts and adjudged
BPI-FB liable therefor, in addition to damages.

_______________
17
Docketed as Civil Case No. 89-5280 and entitled First Metro Investment Corporation v. BPI Family
Bank.
18
G.R. No. 132390, May 21, 2004, 429 SCRA 30.
19
Officers of the International Baptist Church and International Baptist Academy in Malabon, Metro
Manila.
20
The checks issued by Buenaventura, et al. were dishonored upon presentment for payment.
21
G.R. No. 148196, September 30, 2005, 471 SCRA 431.
192
192 SUPREME COURT REPORTS ANNOTATED
BPI Family Bank vs. Franco
Meanwhile, BPI-FB filed separate civil and criminal cases against those believed to be the perpetrators of
the multimillion peso scam.22 In the criminal case, Franco, along with the other accused, except for Manuel
Bienvenida who was still at large, were acquitted of the crime of Estafa as defined and penalized under
Article 351, par. 2(a) of the Revised Penal Code.23 However, the civil case24 remains under litigation and
the respective rights and liabilities of the parties have yet to be adjudicated.
Consequently, in light of BPI-FBs refusal to heed Francos demands to unfreeze his accounts and
release his deposits therein, the latter filed on June 4, 1990 with the Manila RTC the subject suit. In his
complaint, Franco prayed for the fol-lowing reliefs: (1) the interest on the remaining balance25 of his
current account which was eventually released to him on October 31, 1991; (2) the balance26 on his
savings account, plus interest thereon; (3) the advance interest27 paid to him which had been deducted
when he pre-terminated his time deposit account; and (4) the payment of actual, moral and exemplary
damages, as well as attorneys fees.
BPI-FB traversed this complaint, insisting that it was correct in freezing the accounts of Franco and
refusing to release his deposits, claiming that it had a better right to the amounts which consisted of part
of the money allegedly fraudulently withdrawn from it by Tevesteco and ending up

_______________
22
Supra note 3.
23
Rollo, pp. 160-208.
24
The Makati Case for recovery of the P37,455,410.54 representing Tevestecos total withdrawals
wherein Franco was belatedly impleaded, and a Writ of Garnishment was issued on Francos accounts.
25
P450,000.00.
26
The reflected amount of P98,973.23 plus P400,000.00 representing what was transferred to
Quiaoits account under their arrangement.
27
P63,189.00.
193
VOL. 538, NOVEMBER 23, 2007 193
BPI Family Bank vs. Franco
in Francos accounts. BPI-FB asseverated that the claimed consideration of P2,000,000.00 for the
introduction facilitated by Franco between George Daantos and Eladio Teves, on the one hand, and Jaime
Sebastian, on the other, spoke volumes of Francos participation in the fraudulent transaction.
On August 4, 1993, the Manila RTC rendered judgment, the dispositive portion of which reads as
follows:
WHEREFORE, in view of all the foregoing, judgment is hereby rendered in favor of [Franco] and against
[BPI-FB], ordering the latter to pay to the former the following sums:
1. 1.P76,500.00 representing the legal rate of interest on the amount of P450,000.00 from May 18,
1990 to October 31, 1991;
2. 2.P498,973.23 representing the balance on [Francos] savings account as of May 18, 1990,
together with the interest thereon in accordance with the banks guidelines on the payment
therefor;
3. 3.P30,000.00 by way of attorneys fees; and
4. 4.P10,000.00 as nominal damages.

The counterclaim of the defendant is DISMISSED for lack of factual and legal anchor. Costs against [BPI-
FB].
SO ORDERED.28
Unsatisfied with the decision, both parties filed their respective appeals before the CA. Franco confined
his appeal to the Manila RTCs denial of his claim for moral and exemplary damages, and the diminutive
award of attorneys fees. In affirming with modification the lower courts decision, the appellate court
decreed, to wit:
WHEREFORE, foregoing considered, the appealed decision is hereby AFFIRMED with modification
ordering [BPI-FB] to pay [Franco] P63,189.00 representing the interest deducted from the time deposit of
plaintiff-appellant. P200,000.00 as moral damages and P100,000.00 as exemplary damages, deleting the
award of

_______________
28
CA Rollo, p. 79.
194
194 SUPREME COURT REPORTS ANNOTATED
BPI Family Bank vs. Franco
nominal damages (in view of the award of moral and exemplary damages) and increasing the award of
attorneys fees from P30,000.00 to P75,000.00.
Cost against [BPI-FB].
SO ORDERED.29
In this recourse, BPI-FB ascribes error to the CA when it ruled that: (1) Franco had a better right to the
deposits in the subject accounts which are part of the proceeds of a forged Authority to Debit; (2) Franco
is entitled to interest on his current account; (3) Franco can recover the P400,000.00 deposit in Quiaoits
savings account; (4) the dishonor of Francos checks was not legally in order; (5) BPI-FB is liable for interest
on Francos time deposit, and for moral and exemplary damages; and (6) BPI-FBs counter-claim has no
factual and legal anchor.
The petition is partly meritorious.
We are in full accord with the common ruling of the lower courts that BPI-FB cannot unilaterally freeze
Francos accounts and preclude him from withdrawing his deposits. However, contrary to the appellate
courts ruling, we hold that Franco is not entitled to unearned interest on the time deposit as well as to
moral and exemplary damages.
First. On the issue of who has a better right to the deposits in Francos accounts, BPI-FB urges us that
the legal consequence of FMICs forgery claim is that the money transferred by BPI-FB to Tevesteco is its
own, and considering that it was able to recover possession of the same when the money was redeposited
by Franco, it had the right to set up its ownership thereon and freeze Francos accounts.
BPI-FB contends that its position is not unlike that of an owner of personal property who regains
possession after it is stolen, and to illustrate this point, BPI-FB gives the following example: where Xs
television set is stolen by Y who thereaf-
_______________
29
Rollo, p. 54.
195
VOL. 538, NOVEMBER 23, 2007 195
BPI Family Bank vs. Franco
ter sells it to Z, and where Z unwittingly entrusts possession of the TV set to X, the latter would have the
right to keep possession of the property and preclude Z from recovering possession thereof. To bolster its
position, BPI-FB cites Article 559 of the Civil Code, which provides:
Article 559. The possession of movable property acquired in good faith is equivalent to a title.
Nevertheless, one who has lost any movable or has been unlawfully deprived thereof, may recover it from
the person in possession of the same.
If the possessor of a movable lost or of which the owner has been unlawfully deprived, has acquired it
in good faith at a public sale, the owner cannot obtain its return without reimbursing the price paid
therefor.
BPI-FBs argument is unsound. To begin with, the movable property mentioned in Article 559 of the Civil
Code pertains to a specific or determinate thing.30 A determinate or specific thing is one that is
individualized and can be identified or distinguished from others of the same kind.31
In this case, the deposit in Francos accounts consists of money which, albeit characterized as a
movable, is generic and fungible.32 The quality of being fungible depends upon the possibility of the
property, because of its nature or the will of the parties, being substituted by others of the same kind, not
having a distinct individuality.33
Significantly, while Article 559 permits an owner who has lost or has been unlawfully deprived of a
movable to recover

_______________
30
See Article 1460, paragraph 1 of the Civil Code. A thing is determinate when it is particularly
designated or physically segregated from all others of the same class.
31
Tolentino, Civil Code of the Philippines Commentaries and Jurisprudence, Vol. IV, 1985, p. 90.
32
See Article 418 of the Civil Code, taken from Article 337 of the Old Civil Code which used the words
fungible or non-fungible.
33
Tolentino, Civil Code of the Philippines Commentaries and Jurisprudence, Vol. II, 1983, p. 26.
196
196 SUPREME COURT REPORTS ANNOTATED
BPI Family Bank vs. Franco
the exact same thing from the current possessor, BPI-FB simply claims ownership of the equivalent
amount of money, i.e., the value thereof, which it had mistakenly debited from FMICs account and
credited to Tevestecos, and subsequently traced to Francos account. In fact, this is what BPI-FB did in
filing the Makati Case against Franco, et al. It staked its claim on the money itself which passed from one
account to another, commencing with the forged Authority to Debit.
It bears emphasizing that money bears no earmarks of peculiar ownership,34 and this characteristic is
all the more manifest in the instant case which involves money in a banking transaction gone awry. Its
primary function is to pass from hand to hand as a medium of exchange, without other evidence of its
title.35 Money, which had passed through various transactions in the general course of banking business,
even if of traceable origin, is no exception.
Thus, inasmuch as what is involved is not a specific or determinate personal property, BPI-FBs
illustrative example, ostensibly based on Article 559, is inapplicable to the instant case.
There is no doubt that BPI-FB owns the deposited monies in the accounts of Franco, but not as a legal
consequence of its unauthorized transfer of FMICs deposits to Tevestecos account. BPI-FB conveniently
forgets that the deposit of money in banks is governed by the Civil Code provisions on simple loan or
mutuum.36 As there is a debtor-creditor relationship between a bank and its depositor, BPI-FB ultimately
acquired ownership of Francos deposits, but such ownership is coupled with a corresponding obligation
to pay him an equal amount

_______________
34
United States v. Sotelo, 28 Phil. 147, 158 (1914).
35
Id.
36
Article 1980 of the Civil Code: Fixed, savings, and current deposits of money in banks and similar
institutions shall be governed by the provisions concerning loan. See Article 1933 of the Civil Code.
197
VOL. 538, NOVEMBER 23, 2007 197
BPI Family Bank vs. Franco
on demand.37 Although BPI-FB owns the deposits in Francos accounts, it cannot prevent him from
demanding payment of BPI-FBs obligation by drawing checks against his current account, or asking for
the release of the funds in his savings account. Thus, when Franco issued checks drawn against his current
account, he had every right as creditor to expect that those checks would be honored by BPI-FB as debtor.
More importantly, BPI-FB does not have a unilateral right to freeze the accounts of Franco based on
its mere suspicion that the funds therein were proceeds of the multi-million peso scam Franco was
allegedly involved in. To grant BPI-FB, or any bank for that matter, the right to take whatever action it
pleases on deposits which it supposes are derived from shady transactions, would open the floodgates of
public distrust in the banking industry.
Our pronouncement in Simex International (Manila), Inc. v. Court of Appeals 38 continues to resonate,
thus:
The banking system is an indispensable institution in the modern world and plays a vital role in the
economic life of every civilized nation. Whether as mere passive entities for the safekeeping and saving
of money or as active instruments of business and commerce, banks have become an ubiquitous presence
among the people, who have come to regard them with respect and even gratitude and, most of all,
confidence. Thus, even the humble wage-earner has not hesitated to entrust his lifes savings to the bank
of his choice, knowing that they will be safe in its custody and will even earn some interest for him. The
ordinary person, with equal faith, usually maintains a modest checking account for security and
convenience in the settling of his monthly bills and the payment of ordinary expenses. x x x.

_______________
37
Article 1953 of the Civil Code: A person who receives a loan of money or any other fungible thing
acquires the ownership thereof, and is bound to pay the creditor an equal amount of the same kind and
quality.
38
G.R. No. 88013, March 19, 1990, 183 SCRA 360, 366-367.
198
198 SUPREME COURT REPORTS ANNOTATED
BPI Family Bank vs. Franco
In every case, the depositor expects the bank to treat his account with the utmost fidelity, whether such
account consists only of a few hundred pesos or of millions. The bank must record every single transaction
accurately, down to the last centavo, and as promptly as possible. This has to be done if the account is to
reflect at any given time the amount of money the depositor can dispose of as he sees fit, confident that
the bank will deliver it as and to whomever directs. A blunder on the part of the bank, such as the dishonor
of the check without good reason, can cause the depositor not a little embarrassment if not also financial
loss and perhaps even civil and criminal litigation.
The point is that as a business affected with public interest and because of the nature of its functions,
the bank is under obligation to treat the accounts of its depositors with meticulous care, always having in
mind the fiduciary nature of their relationship. x x x.
Ineluctably, BPI-FB, as the trustee in the fiduciary relationship, is duty bound to know the signatures of its
customers. Having failed to detect the forgery in the Authority to Debit and in the process inadvertently
facilitate the FMIC-Tevesteco transfer, BPI-FB cannot now shift liability thereon to Franco and the other
payees of checks issued by Tevesteco, or prevent withdrawals from their respective accounts without the
appropriate court writ or a favorable final judgment.
Further, it boggles the mind why BPI-FB, even without delving into the authenticity of the signature in
the Authority to Debit, effected the transfer of P80,000,000.00 from FMICs to Tevestecos account, when
FMICs account was a time deposit and it had already paid advance interest to FMIC. Considering that
there is as yet no indubitable evidence establishing Francos participation in the forgery, he remains an
innocent party. As between him and BPI-FB, the latter, which made possible the present predicament,
must bear the resulting loss or inconvenience.
Second. With respect to its liability for interest on Francos current account, BPI-FB argues that its
noncompliance with the Makati RTCs Order Lifting the Order of
199
VOL. 538, NOVEMBER 23, 2007 199
BPI Family Bank vs. Franco
Attachment and the legal consequences thereof, is a matter that ought to be taken up in that court.
The argument is tenuous. We agree with the succinct hold-ing of the appellate court in this respect.
The Manila RTCs order to pay interests on Francos current account arose from BPI-FBs unjustified refusal
to comply with its obligation to pay Franco pursuant to their contract of mutuum. In other words, from
the time BPI-FB refused Francos demand for the release of the deposits in his current account,
specifically, from May 17, 1990, interest at the rate of 12% began to accrue thereon.39
Undeniably, the Makati RTC is vested with the authority to determine the legal consequences of BPI-
FBs noncompliance with the Order Lifting the Order of Attachment. However, such authority does not
preclude the Manila RTC from ruling on BPI-FBs liability to Franco for payment of interest based on its
continued and unjustified refusal to perform a contractual obligation upon demand. After all, this was the
core issue raised by Franco in his complaint before the Manila RTC.
Third. As to the award to Franco of the deposits in Quiaoits account, we find no reason to depart from
the factual findings of both the Manila RTC and the CA.
Noteworthy is the fact that Quiaoit himself testified that the deposits in his account are actually owned
by Franco who simply accommodated Jaime Sebastians request to temporarily transfer P400,000.00 from
Francos savings account to Quiaoits account.40 His testimony cannot be characterized as hearsay as the
records reveal that he had personal knowledge of the arrangement made between Franco, Sebastian and
himself.41

_______________
39
See Eastern Shipping Lines, Inc. v. Court of Appeals, G.R. No. 97412, July 12, 1994, 234 SCRA 78, 95.
40
TSN, July 30, 1991, p. 5.
41
Id., at pp. 5-11.
200
200 SUPREME COURT REPORTS ANNOTATED
BPI Family Bank vs. Franco
BPI-FB makes capital of Francos belated allegation relative to this particular arrangement. It insists that
the transaction with Quiaoit was not specifically alleged in Francos complaint before the Manila RTC.
However, it appears that BPI-FB had impliedly consented to the trial of this issue given its extensive cross-
examination of Quiaoit.
Section 5, Rule 10 of the Rules of Court provides:
Section 5. Amendment to conform to or authorize presentation of evidence.When issues not raised by
the pleadings are tried with the express or implied consent of the parties, they shall be treated in all
respects as if they had been raised in the pleadings. Such amendment of the pleadings as may be
necessary to cause them to conform to the evidence and to raise these issues may be made upon motion
of any party at any time, even after judgment; but failure to amend does not affect the result of the
trial of these issues. If evidence is objected to at the trial on the ground that it is now within the issues
made by the pleadings, the court may allow the pleadings to be amended and shall do so with liberality if
the presentation of the merits of the action and the ends of substantial justice will be sub-served thereby.
The court may grant a continuance to enable the amendment to be made. (Emphasis supplied)
In all, BPI-FBs argument that this case is not the right forum for Franco to recover the P400,000.00 begs
the issue. To reiterate, Quiaoit, testifying during the trial, unequivocally disclaimed ownership of the funds
in his account, and pointed to Franco as the actual owner thereof. Clearly, Francos action for the recovery
of his deposits appropriately covers the deposits in Quiaoits account.
Fourth. Notwithstanding all the foregoing, BPI-FB continues to insist that the dishonor of Francos
checks respectively dated September 11 and 18, 1989 was legally in order in view of the Makati RTCs
supplemental writ of attachment issued on September 14, 1989. It posits that as the party that applied
for the writ of attachment before the Makati RTC, it
201
VOL. 538, NOVEMBER 23, 2007 201
BPI Family Bank vs. Franco
need not be served with the Notice of Garnishment before it could place Francos accounts under
garnishment.
The argument is specious. In this argument, we perceive BPI-FBs clever but transparent ploy to
circumvent Section 4,42 Rule 13 of the Rules of Court. It should be noted that the strict requirement on
service of court papers upon the parties affected is designed to comply with the elementary requisites of
due process. Franco was entitled, as a matter of right, to notice, if the requirements of due process are to
be observed. Yet, he received a copy of the Notice of Garnishment only on September 27, 1989, several
days after the two checks he issued were dishonored by BPI-FB on September 20 and 21, 1989. Verily, it
was premature for BPI-FB to freeze Francos accounts without even awaiting service of the Makati RTCs
Notice of Garnishment on Franco.
Additionally, it should be remembered that the enforcement of a writ of attachment cannot be made
without including in the main suit the owner of the property attached by virtue thereof. Section 5, Rule
13 of the Rules of Court specifically provides that no levy or attachment pursuant to the writ issued x x x
shall be enforced unless it is preceded, or contemporaneously accompanied, by service of summons,
together with a copy of the complaint, the application for attachment, on the defendant within the
Philippines.
Franco was impleaded as party-defendant only on May 15, 1990. The Makati RTC had yet to acquire
jurisdiction over the person of Franco when BPI-FB garnished his accounts.43 Effectively, therefore, the
Makati RTC had no authority yet to bind the deposits of Franco through the writ of attachment,
_______________
42
SEC. 4. Papers required to be filed and served.Every judgment, resolution, order, pleading
subsequent to the complaint, written motion, notice, appearance, demand, offer of judgment or similar
papers shall be filed with the court, and served upon the parties affected.
43
See Sievert v. Court of Appeals, G.R. No. L-84034, December 22, 1988, 168 SCRA 692, 696.
202
202 SUPREME COURT REPORTS ANNOTATED
BPI Family Bank vs. Franco
and consequently, there was no legal basis for BPI-FB to dishonor the checks issued by Franco.
Fifth. Anent the CAs finding that BPI-FB was in bad faith and as such liable for the advance interest it
deducted from Francos time deposit account, and for moral as well as exemplary damages, we find it
proper to reinstate the ruling of the trial court, and allow only the recovery of nominal damages in the
amount of P10,000.00. However, we retain the CAs award of P75,000.00 as attorneys fees.
In granting Francos prayer for interest on his time deposit account and for moral and exemplary
damages, the CA attributed bad faith to BPI-FB because it (1) completely disregarded its obligation to
Franco; (2) misleadingly claimed that Francos deposits were under garnishment; (3) misrepresented that
Francos current account was not on file; and (4) refused to return the P400,000.00 despite the fact that
the ostensible owner, Quiaoit, wanted the amount returned to Franco.
In this regard, we are guided by Article 2201 of the Civil Code which provides:
Article 2201. In contracts and quasi-contracts, the damages for which the obligor who acted in good faith
is liable shall be those that are the natural and probable consequences of the breach of the obligation,
and which the parties have foreseen or could have reasonable foreseen at the time the obligation was
constituted.
In case of fraud, bad faith, malice or wanton attitude, the obligor shall be responsible for all damages
which may be reasonably attributed to the non-performance of the obligation. (Emphasis supplied.)
We find, as the trial court did, that BPI-FB acted out of the impetus of self-protection and not out of
malevolence or ill will. BPI-FB was not in the corrupt state of mind contemplated in Article 2201 and should
not be held liable for all damages now being imputed to it for its breach of obligation.
203
VOL. 538, NOVEMBER 23, 2007 203
BPI Family Bank vs. Franco
For the same reason, it is not liable for the unearned interest on the time deposit.
Bad faith does not simply connote bad judgment or negligence; it imports a dishonest purpose or some
moral obliquity and conscious doing of wrong; it partakes of the nature of fraud.44 We have held that it is
a breach of a known duty through some motive of interest or ill will.45 In the instant case, we cannot
attribute to BPI-FB fraud or even a motive of self-enrichment. As the trial court found, there was no denial
whatsoever by BPI-FB of the existence of the accounts. The computer-generated document which
indicated that the current account was not on file resulted from the prior debit by BPI-FB of the deposits.
The remedy of freezing the account, or the garnishment, or even the outright refusal to honor any
transaction thereon was resorted to solely for the purpose of holding on to the funds as a security for its
intended court action,46 and with no other goal but to ensure the integrity of the accounts.
We have had occasion to hold that in the absence of fraud or bad faith,47 moral damages cannot be
awarded; and that the adverse result of an action does not per se make the action wrongful, or the party
liable for it. One may err, but error alone is not a ground for granting such damages.48
An award of moral damages contemplates the existence of the following requisites: (1) there must be
an injury clearly sustained by the claimant, whether physical, mental or psy-
_______________
44
Board of Liquidators v. Heirs of Maximo Kalaw, et al., 127 Phil. 399, 421; 20 SCRA 987, 1007 (1967).
45
Lopez, et al. v. Pan American World Airways, 123 Phil. 256, 264-265; 16 SCRA 431, 438 (1966).
46
CA Rollo, p. 74.
47
Suario v. Bank of the Philippine Islands, G.R. No. 50459, August 25, 1989, 176 SCRA 688, 696;
citing Guita v. Court of Appeals, 139 SCRA 576, 580 (1985).
48
Bank of the Philippine Islands v. Casa Montessori Internationale, G.R. No. 149454, May 28, 2004, 430
SCRA 261, 293-294.
204
204 SUPREME COURT REPORTS ANNOTATED
BPI Family Bank vs. Franco
chological; (2) there must be a culpable act or omission factually established; (3) the wrongful act or
omission of the defendant is the proximate cause of the injury sustained by the claimant; and (4) the
award for damages is predicated on any of the cases stated in Article 2219 of the Civil Code.49
Franco could not point to, or identify any particular circumstance in Article 2219 of the Civil
Code,50 upon which to base his claim for moral damages.
Thus, not having acted in bad faith, BPI-FB cannot be held liable for moral damages under Article 2220
of the Civil Code for breach of contract.51

_______________
49
United Coconut Planters Bank v. Ramos, 461 Phil. 277, 298; 415 SCRA 596, 612 (2003); citing Cathay
Pacific Airways, Ltd. v. Spouses Vazquez, 447 Phil. 306; 399 SCRA 207 (2003).
50
Art. 2219. Moral damages may be recovered in the follow-ing and analogous cases:

1. (1)A criminal offense resulting in physical injuries;


2. (2)Quasi-delicts causing physical injuries;
3. (3)Seduction, abduction, rape, or other lascivious acts;
4. (4)Adultery or concubinage;
5. (5)Illegal or arbitrary detention or arrest;
6. (6)Illegal search;
7. (7)Libel, slander or any other form of defamation;
8. (8)Malicious prosecution;
9. (9)Acts mentioned in Article 309;
10. (10)Acts and actions referred to in Articles 21, 26, 27, 28, 29, 30, 32, 34, and 35.

The parents of the female seduced, abducted, raped, or abused, referred to in No. 3 of this article,
may also recover moral damages.
The spouse, descendants, ascendants, and brother and sisters may bring the action mentioned in No.
9 of this article, in the order named.
51
Art. 2220. Willful injury to property may be a legal ground for awarding moral damages if the court
should find that, under the circumstances, such damages are justly due. The same rule applies to breaches
of contract where the defendant acted fraudulently or in bad faith.
205
VOL. 538, NOVEMBER 23, 2007 205
BPI Family Bank vs. Franco
We also deny the claim for exemplary damages. Franco should show that he is entitled to moral,
temperate, or compensatory damages before the court may even consider the question of whether
exemplary damages should be awarded to him.52 As there is no basis for the award of moral damages,
neither can exemplary damages be granted.
While it is a sound policy not to set a premium on the right to litigate,53 we, however, find that Franco
is entitled to reasonable attorneys fees for having been compelled to go to court in order to assert his
right. Thus, we affirm the CAs grant of P75,000.00 as attorneys fees.
Attorneys fees may be awarded when a party is compelled to litigate or incur expenses to protect his
interest,54 or when the court deems it just and equitable.55 In the case at bench, BPI-FB refused to
unfreeze the deposits of Franco despite the Makati RTCs Order Lifting the Order of Attachment and
Quiaoits unwavering assertion that the P400,000.00 was part of Francos savings account. This refusal
constrained Franco to incur expenses and litigate for almost two (2) decades in order to protect his
interests and recover his deposits. There-

_______________
52
Article 2234 of the Civil Code.
Art. 2234. While the amount of the exemplary damages need not be proved, the plaintiff must show that
he is entitled to moral, temperate or compensatory damages before the court may consider the question
of whether or not exemplary damages should be awarded. In case liquidated damages have been agreed
upon, although no proof of loss is necessary in order that such liquidated damages may be recovered,
nevertheless, before the court may consider the question of granting exemplary in addition to the
liquidated damages, the plaintiff must show that he would be entitled to moral, temperate or
compensatory damages were it not for the stipulation for liquidated damages.
53
Bank of the Philippine Islands v. Casa Montessori Internationale, supra note 48, at p. 296.
54
CIVIL CODE, Art. 2208, par. (2).
55
CIVIL CODE, Art. 2208, par. (11).
206
206 SUPREME COURT REPORTS ANNOTATED
BPI Family Bank vs. Franco
fore, this Court deems it just and equitable to grant Franco P75,000.00 as attorneys fees. The award is
reasonable in view of the complexity of the issues and the time it has taken for this case to be resolved.56
Sixth. As for the dismissal of BPI-FBs counter-claim, we uphold the Manila RTCs ruling, as affirmed by
the CA, that BPI-FB is not entitled to recover P3,800,000.00 as actual damages. BPI-FBs alleged loss of
profit as a result of Francos suit is, as already pointed out, of its own making. Accordingly, the denial of
its counter-claim is in order.
WHEREFORE, the petition is PARTIALLY GRANTED. The Court of Appeals Decision dated November 29,
1995 is AFFIRMED with the MODIFICATION that the award of unearned interest on the time deposit and
of moral and exemplary damages is DELETED.
No pronouncement as to costs.
SO ORDERED.
Ynares-Santiago (Chairperson), Austria-Martinez, Chico-Nazario and Reyes, JJ., concur.
Petition partially granted, judgment affirmed with modification.
Note.The business of a bank is one affected with public interest, for which reason the bank should
guard against loss due to negligence or bad faith. (United Coconut Planters Bank vs. Ramos, 415 SCRA
596 [2003])
4. [No. L-13851. July 27, 1960]
DEOGRACIAS F. MALONZO, petitioner, vs.GREGORIA T. GALANG and FRANCISCO GALANG, respondents.

1. 1.ATTORNEYS-AT-LAW; ATTORNEY'S FEES RECOVERABLE IN CLEARLY UNFOUNDED SUITS; ARTICLE


2208, PAR. (4) CIVIL CODE.Article 2208, Par. (4) of the Civil Code authorizes the recovery of
attorney's fees "in case of a clearly unfounded civil action or proceeding against the plaintiff,"
and in view of the finding of the trial court and the Court of Appeals that petitioner's action
against respondents is clearly unfounded, the award of attorney's fees in the instant case is
correct and proper.

1. 2.ID.; ID.; APPLICABILITY OF ARTICLE 2208 TO DEFENDANTS; COUNTERCLAIM OR ATTORNEY'S


FEES.The provision of Article 2208, par. 4, of the Civil Code applies equally in favor of a
defendant with a counterclaim for attorney's fees, considering that a counterclaim is a complaint
by the defendant against the original plaintiff.

1. 3.DAMAGES; ACTUAL OR COMPENSATORY DAMAGES MUST BE PROVED; ARTICLE 2199; CIVIL


CODE.Actual or compensatory damages cannot be presumed, but must be duly proved (Art.
2199). Hence, where neither the trial court nor the Court of Appeals has pointed out any specific
facts which afford a basis for measuring whatever compensatory or actual damages over and
above attorney's fees and costs that respondents had suffered, an award of compensatory
damages should not be allowed.

1. 4.ID.; MORAL DAMAGES; CLEARLY UNFOUNDED SUIT NOT AMONG GROUNDS FOR MORAL
DAMAGES.Although Art. 2219 also provides that moral damages may be awarded in
"analogous cases" to those enumerated therein, the Code could not have intended

17
VOL. 109, JULY 27, 1960 17
Malonzo vs. Galang

1. "a clearly unfounded civil action or proceeding" to be one of those analogous cases wherein moral
damages may be recovered or it would have been expressly mentioned! in Art. 2219 as it was in
Art. 2208, or else Art 2208 would have been incorporated by reference in Art. 2219.

1. 5.ID.; ID.; EXISTENCE OF FACTUAL BASIS MUST BE SATISFACTORILY PROVED; MORAL DAMAGES
DESIGNED TO COMPENSATE ACTUAL INJURY AND NOT TO IMPOSE PENALTY ON WRONGDOER.
While no proof of pecuniary loss is necessary in order that moral damages may be awarded, the
amount of indemnity being left to the discretion of the court (Art. 2216), it is, nevertheless,
essential that the claimant satisfactorily prove the existence of the factual basis of the damage
(Art 2217) and its causal relation to defendant's acts. This is so because moral damages, though
incapable of pecuniary estimation, are in -the category of an award designed to compensate the
claimant for actual injury suffered and not to impose a penalty on the wrongdoer
(Algarra vs. Sandejas, 27 Phil., 284.)

PETITION for review by certiorari of a decision of the Court of Appeals.


The facts are stated in the opinion of the Court.
Felixberto V. Castillo for petitioner.
F. M. Ejercito for respondents.

REYES, J. B. L., J.:

On October 5, 1946, Gregoria T. Galang, wife of Francisco G. Galang, received from Deogracias T. Malonzo
a loan of P5,000.00 under a check which Gregoria cashed at the drawee bank National City Bank of New
York, Manila.
Subsequently, on April 17, 1947, the Rehabilitation Finance Corporation loaned to Francisco G. Galang
a check in the sum of P14,968.00 drawn against the Philippine National Bank, Galang endorsed the check
to Deogracias F. Malonzo, who cashed it on April 25, 1947. Out of the proceeds of the check, P10,000.00
was applied to the payment of the share and participation of Francisco Galang in a fishing venture with
Malonzo. The balance of
18
18 PHILIPPINE REPORTS ANNOTATED
Malonzo vs. Galang
P4,968.00, together with P32.00 delivered in cash to Malonzo, paid off, according to Galang, the loan of
P5,000.00 extended by the former to Galang's wife on October 5, 1946. However, Malonzo alleged that
he returned said amount of P4,968.00 to Galang, partly in cash (P1,000.00) and partly in a check for
P3,968.00 dated May 19, 1947, made payable to Gregoria T. Galang and drawn against the Philippine Trust
Co.
Claiming that the P5,000.00 loan obtained from him by Gregoria T. Galang on October 5, 1946, had
remained unpaid, Malonzo sued the Galang spouses on August 27, 1955 for the payment thereof, plus
interests and attorney's fees (C.C. No. 27303, CFI of Manila).
The trial court refused to believe Malonzo's version that the loan in question had not yet been paid:
held that the same had already been liquidated as claimed by the defendant spouses; and found that the
check for P3,968 delivered by Malonzo to Gregorio T. Galang on May 19, 1947 had nothing to do with said
loan and was in payment of another loan which she extended to Malonzo just a few days before the check
was issued. The lower court also found that the complaint was clearly unfounded, dismissed the same,
and sentenced Malonzo to pay the Galang spouses under their counterclaim P500.00 compensatory and
moral damages, and P1,000.00 attorney's fees.
On appeal to the Court of Appeals by Malonzo, the judgment of the court a quo was affirmed in
toto.From this decision, Malonzo appealed to this Court, urging that there was no legal basis for the award
to respondents of compensatory and moral damages, and of attorney's fees.
As to attorney's fees, the award is correct and proper, in view of the finding of the trial court and of
the Court of Appeals that petitioner's action against respondents is clearly unfounded, since Article 2208,
par. (4), of the New Civil Code authorizes the recovery of attorney's fees "in case of a clearly unfounded
civil action or proceeding
19
VOL. 109, JULY 27, 1960 19
Malonzo vs. Galang
against the plaintiff". This provision applies equally in favor of a defendant under a counterclaim for
attorney's fees (as in this case), considering that a counterclaim is a complaint by the defendant against
the original plaintiff (Pongos vs. Hidalgo Enterprises, Inc., et. al., 84 Phil., 499; 47 Off. Gaz., [2] 733),
wherein the defendant is the plaintiff and the original plaintiff the defendant.
In regard to other items of compensatory damages supposedly suffered by respondents (i. e., in
addition to attorney's fees and costs that are also included in the concept of actual or compensatory
damages): assuming that they are recoverable in this case under the theory that petitioner's having filed
a clearly unfounded suit against respondents constitutes a tort against the latter that makes the former
"liable for all damages which are the natural and probable consequences of the act or omission
complained of" (Art. 2202, New Code), these damages can not, however, be presumed, but must be duly
proved (Art. 2199). Neither the trial court nor the Court of Appeals has pointed out any specific facts which
afford a basis for measuring whatever compensatory or actual damages over and above attorney's fees
and costs that respondents had suffered. Upon the other hand, the award of compensatory damages to
respondents was merged by the trial court in a round sum (P500.00) that also included moral damages,
showing that this amount was not what respondents had proved to have suffered, but simply what the
court believed to be reasonably due to them for having been made to defend what the two courts found
to be a clearly unfounded suit. For this reason, we do not think the award of compensatory damages to
respondents should be allowed.
Finally, with respect to moral damages, we are inclined to agree with petitioner that these damages
are not recoverable herein, notwithstanding the finding of the trial court and the Court of Appeals that
his complaint against respondents was clearly unfounded or unreasonable. It
20
20 PHILIPPINE REPORTS ANNOTATED
Malonzo vs. Galang
will be observed that unlike compensatory or actual damages which are generally recoverable in tort cases
as long as there is satisfactory proof thereof (Art. 2202), the Code has chosen to enumerate the cases in
which moral damages may be recovered (Art. 2219). A like enumeration is made in regard to the recovery
of attorney's fees as an item of damage (Art. 2208). But the two enumerations differ in the case of a clearly
unfounded suit, which is expressly mentioned in Art. 2208 (par. 4), as justifying for award of attorney's
fees, but is not included in the enumeration of Art. 2219 in respect to moral damages. It is true that Art.
2219 also provides that moral damages may be awarded in "analogous cases" to those enumerated, but
we do not think the Code intended "a clearly unfounded civil action or proceedings" to be one of these
analogous cases wherein moral damages may be recovered, or it would have expressly mentioned it in
Art. 2219, as it did in Art. 2208; or else incorporated Art. 2208 by reference in Art. 2219. Besides, Art. 2219
specifically mentions "quasi-delicts causing physical injuries", as an. instance when moral damages may
be allowed, thereby implying that all other quasi-delicts not resulting in physical injuries are excluded
(Strebel vs. Figueras, 96 Phil., 321), excepting, of course, the special torts referred to in Art. 309 (par. 9,
Art. 2219) and in Arts. 21, 26, 27, 28, 29, 30, 32, 34 and 35 on the chapter on human relations (par. 10,
Art. 2219).
Furthermore, while no proof of pecuniary loss is necessary in order that moral damages may be
awarded, the amount of indemnity being left to the discretion of the court (Art. 2216), it is, nevertheless,
essential that the claimant satisfactorily prove the existence of the factual basis of the damage (Art. 2217)
and its causal relation to defendant's acts. This is so because moral damages, though incapable of
pecuniary estimation, are in the category of an award designed to compensate the claimant for actual
injury suffered and not to impose a penalty on the
21
VOL. 109, JULY 27, 1960 21
Aquino vs. Delizo
wrongdoer (Algara vs. Sandejas, 27 Phil., 284). The trial court and the Court of Appeals both seem to be
of the opinion that the mere fact that respondent were sued without any legal foundation entitled them
to an award of moral damages, hence they made no definite finding as to what the supposed moral
damages suffered consist of. Such a conclusion would make of moral damages a penalty, which they are
not, rather than a compensation for actual injury suffered, which they are intended to be. Moral damages,
in other words, are not corrective or exemplary damages.
The foregoing discussion makes it unnecessary to further dwell on the other points raised by the
appeal.
Wherefore, the decision appealed from is modified in the sense that the award of compensatory and
moral damages to respondents is eliminated, but is affirmed in all other respects. No costs.
Padilla, Montemayor, Bautista Angelo, Labrador, Concepcin, Barrera, and Gutierrez David,
JJ., concur.
Decision modified.

5. No. L-25913. February 28, 1969.


HEIRS OF RAYMUNDO CASTRO, petitioners, vs.APOLONIO BUSTOS, respondent.
Criminal procedure; Damages; Recovery may be made in either criminal or civil proceedings.The
items of damages in cases of death caused by a crime are recoverable either claim is made in the criminal
proceedings itself or in a separate civil action. In the instant case, recovery of such damages is being sought
in the criminal proceedings, but even if it were claimed otherwise, the indemnity and damages would be
the same, for generally, the items of damages are identical in both procedures, except with respect to
attorneys fees and expenses of litigation which can be awarded only when a separate civil action is
instituted.
Same; Same; Penal laws govern civil obligations arising from death due to crime.When the
commission of a crime results in death, the civil obligations arising therefrom are governed by the penal
laws, x x x subject to the provisions of Art. 2177, and of the pertinent provisions of Chapter XVIII of this
Book (Book IV) regulating damages. (Art. 1161, Civil Code)
Same; Same; Criminal liability includes civil liability.Every person criminally liable for a felony is
also civilly liable. (Art. 100, Revised Penal Code) This civil liability, in case the felony involves death,
includes indemnification for consequential damages (Art. 104, id.) and said consequential damages in turn
include x x x those suffered by his family or by a third person by reason of the crime. (Art. 107, id.)
Same; Same; Amount referred to in Article 2206 of the Revised Penal Code was increased to
P12,000.The amount of P3,000 referred to in Article 2206 has already been increased by the Supreme
Court, first, to P6,000 in People vs. Amansec, 80 Phil. 426, and lately to P12,000 in the case of
People vs. Pantoja, L-18793, Oct. 11, 1968, and it must be stressed that this amount, as well as the amount
of moral damages, may be adjudicated even without proof of pecuniary loss, the assessment of the moral
damages being left to the discretion of the court, according to the circumstances of each case. (Art.
2216)
Same; Same; Appeal in criminal cases; Record on appeal is not required for appeal relating to the civil
aspect of criminal case.When there is no separate civil action and the claim for civil indemnity is joined
with the criminal case, no record on appeal, whether printed, typewritten or mimeographed, is necessary,
except perhaps when formal pleadings raising complicated questions are filed in connection therewith,
and still, this would be
328
328 SUPREME COURT REPORTS ANNOTATED
Heirs of Raymundo Castro vs. Bustos
purely optional on the appellant because anyway the whole original record of the case is elevated in
appeals in criminal cases. It is already settled that appeals relating to the civil aspects of a criminal case
should follow the procedure for appeal required by the rules of criminal procedure.

CAPISTRANO, J., concurring:


Criminal procedure; Damages; Fiscal; Duty of fiscal to demand payment.In the criminal action for
death by crime, as murder, homicide, and homicide through reckless imprudence, it is the duty of the
Fiscal, unless the heirs reserve their right to file a separate civil action, to demand payment, for the benefit
of the heirs of the deceased, of the damages ordained in Articles 2206 and 2230 of the Civil Code.
Same; Same; Same; Fiscal must allege items of damages.Unless the heirs reserve their right to file
a separate civil action, the Fiscal should also allege in the information all the items of damages recoverable
for the benefit of the heirs of the deceased.
Same; Same; Private prosecutor; Attorneys fees; Heirs may demand attorneys fees if represented
by private prosecutors.Where a private prosecutor, hired by the heirs of the deceased, intervenes in the
criminal action, as in the case at bar, the heirs may also demand and recover reasonable attorneys fees
and expenses of litigation.
Same; Same; Heirs entitled to civil indemnity.The heirs entitled to the civil indemnity are the
intestate heirs of the deceased in the order of intestate succession. The Fiscal should therefore give in the
information the names and personal circumstances of the heirs entitled to the civil indemnity in
accordance with the law of intestate succession so that the trial court may make the award in their names.
Same; Same; Award of damages should be made individually.The award of moral damages to the
surviving spouse, legitimate and illegitimate descendants, and ascendants of the deceased, should be
made to each of them individually and in varying amounts depending upon proof of mental anguish and
the depth or intensity of the same.
APPEAL AL f rom an amended decision of the Court of Appeals.
The facts are stated in the opinion of the Court.
Sotto, Consengco & Dizon for petitioners.
Sipin, Abarcar & Baluyot for respondent.
329
VOL. 27, FEBRUARY 28, 1969
Heirs of Raymundo Castro vs. Bustos

BARREDO, J.:

Appeal from the Court of Appeals.


Respondent Apolonio Bustos was charged in the Court of First Instance of Pampanga on October 26,
1962 with the crime of murder for the killing of Raymundo Castro, whose heirs are now the petitioners.
The trial court f ound Bustos guilty only of homicide and, crediting him with two mitigating circumstances,
namely, passion or obfuscation and voluntary surrender, sentenced him to an indeterminate prison term
of 2 years, 4 months and 1 day of prision correccional, as minimum, to 8 years and 1 day of prision
mayor, .as maximum, and to indemnify the petitioners, who were represented in the case by a private
prosecutor, in the sum of six thousand pesos (P6,000) without prejudice to whatever the accused
(respondent) is entitled from the Government Service Insurance System (GSIS) for his services of around
twenty-six (26) years as a public school teacher, prior to October 20, 1962." Both respondent and
petitioners appealed to the Court of Appeals, respondent asking that appellate court acquit him and
petitioners praying, on the other hand, that respondent be convicted of murder, that the portion
regarding what said respondent will receive from the GSIS be deleted and that he be ordered to pay
petitioners the aggregate sum of P50,764.00 as indemnity and actual, moral, temperate and exemplary
damages. For the purposes of their appeal, petitioners even filed unnecessarily a printed record on
appeal. On October 18, 1965, the Court of Appeals rendered judgment modifying that of the trial court
insofar as it concerned (1) the amount of damages to be awarded petitioners thus:
x x x Aside from the P6,000 indemnity awarded by the trial court, which we uphold, we feel justified, in
the exercise of our discretion, to award to the heirs of the deceased moral damages in the amount of
P6,000 plus P13,380.00 to compensate for the loss of earning of the decedent at the annual salary of
P2,676.00 x x x.
and (2) the mitigating circumstance of obfuscation, ap-
330
330 SUPREME COURT REPORTS ANNOTATED
Heirs of Raymundo Castro vs. Bustos
preciated as such by the trial court, which was changed to vindication of a grave offense, but affirming
it in all other respects. Upon motion, however, of respondent for the reconsideration of said decision,
reiterating his plea for acquittal, or, in the alternative, praying for the elimination of the award of moral
and compensatory damages, the Court of Appeals promulgated on November 13, 1965, an amended
decision, the pertinent portions of which are;
The arguments interposed by the appellant in his Motion for reconsideration to support the complete
reversal of the judgment appealed from, have been considered and passed upon in our decision, and we
see no reason to alter the same in so far as the appellants guilt of the crime is concerned. On the other
hand, we agree with the appellant that in the interest of justice and equity and in view of the presence of
two mitigating circumstances, without any aggravating one to offset them, the award of moral and
compensatory damages should be eliminated.
WHEREFORE, the decision promulgated October 18, 1965, is hereby amended by eliminating
therefrom the award of P6,000.00 representing moral damages, and of P13,380.00 representing the
decedents loss of earnings.
From this amended decision, only petitioners have appealed to Us. The prayer in their petition for
certiorari asks for nothing more than that the amended decision of the Court of Appeals be revoked and
reversed, and its original decision be affirmed in toto insofar as the award of indemnity and damages is
concerned. Since We f ind the grounds of the appeal meritorious, We grant fully the prayer in the petition.
This case affords this Court as appropriate an opportunity, as any other, to restate, in a more
comprehensive way, the law regarding the items of damages that are recoverable in cases of death caused
by a crime, whether the claim therefor is made in the criminal proceedings itself or in a separate civil
action. In the instant case. recovery of such damages is being sought in the criminal proceedings, but even
if it were claimed otherwise, the indemnity and damages would be the same, for generally, the items of
damages are identical in both procedures, except with respect to attorneys fees and expenses of
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Heirs of Raymundo Castro vs. Bustos
litigation which can be awarded only when a separate civil action is instituted. (Art. 2208, Civil Code) With
the clarifications We are making herein, at least the writer of this opinion expects that litigations regarding
the aspects of the law herein passed upon may be minimized.
As a start, it is to be noted that in the matter of damages, the original decision of the Court of Appeals,
while correct in making a particularization in the award of indemnity and damages, nonetheless, still failed
to comply strictly with the constitutional requirement that all decisions of courts of record must state
both the facts and the law on which they are based. (Sec. 12, Art. VIII, Constitution) In said original
decision, the Court of Appeals held:
Coming now to the damages asked by the heirs of the deceased: Aside from the P6,000.00 indemnity
awarded by the trial court which we uphold, we feel justified, in the exercise of our discretion, to award
to the heirs of the deceased moral damages in the amount of P6,000 plus P13,380.00 to compensate for
the loss of earning of the decedent at the annual salary of P2,676.00 (Exh. V; p. 42 t.s.n. Vergara).
WHEREFORE, the appealed judgment is modified as above indicated in so far as it concerns the
amount of indemnity and damages to be awarded to the heirs of the deceased, and the mitigating
circumstance of vindication of a grave offense which takes the place of the circumstance of obfuscation
appreciated by the trial court; and affirmed in all other respects. Costs against the appellant.
As can be seen, no legal or factual basis is stated therein for the award of indemnity and damages to
petitioners; worse, the impression is given that the said award is purely a matter of discretion on the part
of the court. Clearly, this is not in accordance with the law. Indeed, it must have been this failure to refer
to the pertinent legal provisions which induced the appellate court, at the mere invocation by respondent
of Art. 2204 of the Civil Code, to commit the error of readily eliminating in the amended decision the items
on moral damages and compensation for loss of earning of the decedent which its original decision had
correctly contained. Having held that it had discretion in the premises, the court easily yielded to the
argument that simply because it had credited the re-
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332 SUPREME COURT REPORTS ANNOTATED
Heirs of Raymundo Castro vs. Bustos
spondent with two mitigating circumstances, it was already justified in eliminating the items of damages
already adverted to, presumably having in mind said Art. 2204 which provides that:
In crimes, the damages to be adjudicated may be respectively increased or lessened according to the
aggravating or mitigating circumstances.
Of course, this was clear error, inasmuch as construed literally or otherwise, the quoted provision does
not warrant a complete deletion of said items of damages. In any event, the court evidently failed to take
into account that several other provisions can come into play considering the circumstances in this case.
When the commission of a crime results in death, the civil obligations arising therefrom are governed
by the penal laws, x x x subject to the provisions of Art. 2177, and of the pertinent provisions of Chapter
2, Preliminary Title on Human Relations, and of Title XVIII of this Book (Book IV) regulating damages. (Art.
1161, Civil Code)
Thus, every person criminally liable for a felony is also civilly liable. (Art. 100, Revised Penal Code).
This civil liability, in case the felony involves death, includes indemnification for consequential damages
(Art. 104, id.) and said consequential damages in turn include x x x those suf fered by his f amily or by a
third person by reason of the crime. (Art. 107, id.) Since these provisions are subject, however, as above
indicated, to certain provisions of the Civil Code, We will now turn to said provisions.
The general rule in the Civil Code is that:
In crimes and quasi-delicts, the defendant shall be liable for all damages which are the natural and
probable consequences of the act or omission complained of. It is not necessary that such damages have
been foreseen or could have reasonably been foreseen by the defendant. (Art. 2202)
When, however, the crime committed involves death, there is Art. 2206 which provides thus:
The amount of damages for death caused by a crime or quasi-delict shall be at least three thousand
pesos, even though there may have been mitigating circumstances. In addition:
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Heirs of Raymundo Castro vs. Bustos

1. (1)The defendant shall be liable for the loss of the earning capacity of the deceased, and the
indemnity shall be paid to the heirs of the latter; such indemnity shall in every case be assessed
and awarded by the court, unless the deceased on account of permanent physical disability not
caused by the defendant, had no earning capacity at the time of his death;
2. (2)If the deceased was obliged to give support according to the provisions of article 291, the
recipient who is not an heir called to the decedents inheritance by law of testate or intestate
succession, may demand support from the person causing the death, for a period not exceeding
five years, the exact duration to be fixed by the court;
3. (3)The spouse, legitimate and illegitimate descendants and ascendants of the deceased may
demand moral damages for mental anguish by reason of the death of the deceased.

The amount of P3,000 referred to in the above article has already been increased by this Court first, to
P6,000.00 in People v. Amansec, 80 Phil. 426, and lately to P12,000.00 in the case of People v. Pantoja,
G.R. No. L-18793, promulgated October 11, 1968, and it must be stressed that this amount, as well as the
amount of moral damages, may be adjudicated even without proof of pecuniary loss, the assessment of
the moral damages being left to the discretion of the court, according to the circumstances of each case.
(Art. 2216)
Exemplary damages may also be imposed as a part of this civil liability when the crime has been
committed with one or more aggravating circumstances, such damages being separate and distinct from
fines and shall be paid to the offended party, (Art. 2230). Exemplary damages cannot however be
recovered as a matter of right; the court will decide whether or not they should be given. (Art. 2233)
In any event, save as expressly provided in connection with the indemnity for the sole fact of death
(1st par., Art. 2206) and in cases wherein exemplary damages are awarded precisely because of the
attendance of aggravating circumstances, (Art. 2230) x x x damages to be adjudicated may be
respectively increased or lessened according to the aggravating or mitigating circumstances, (Art. 2204)
but the party suffering the loss or injury must exercise the diligence of a good father of a family
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334 SUPREME COURT REPORTS ANNOTATED
Heirs of Raymundo Castro vs. Bustos
to minimize the damages resulting from the act or omission in question. (Art. 2203) Interest as a part of
the damages, may, in a proper case, be adjudicated in the discretion of the Court. (Art. 2211) As to
attorneys fees and expenses of litigation, the same may be recovered only when exemplary damages
have been granted (Art. 2208, par. 1) or, as We have already stated, when there is a separate civil action.
Stated differently, when death occurs as a result of a crime, the heirs of the deceased are entitled to
the following items of damages:

1. 1.As indemnity for the death of the victim of the offenseP12,000.00, without the need of any
evidence or proof of damages, and even though there may have been mitigating circumstances
attending the commission of the offense.
2. 2.As indemnity for loss of earning capacity of the deceasedan amount to be fixed by the court
according to the circumstances of the deceased related to his actual income at the time of death
and his probable life expectancy, the said indemnity to be assessed and awarded by the court as
a matter of duty, unless the deceased had no earning capacity at said time on account of
permanent disability not caused by the accused. If the deceased was obliged to give support,
under Art. 291, Civil Code, the recipient who is not an heir, may demand support from the accused
for not more than five years, the exact duration to be fixed by the court.
3. 3.As moral damages for mental anguish,an amount to be f ixed by the court. This may be
recovered even by the illegitimate descendants and ascendants of the deceased.
4. 4.As -exemplary damages, when the crime is attended by one or more aggravating
circumstances,an amount to be fixed in the discretion of the court, the same to be considered
separate from fines.
5. 5.As attorneys fees and expenses of litigation,the actual amount thereof, (but only when a
separate civil action to recover civil liability has been filed or when exemplary damages are
awarded).
6. 6.Interests in the proper cases.
7. 7.It must be emphasized that the indemnities for loss of earning capacity of the deceased and for
moral damages are recoverable separately from and in addition to the fixed sum of P12,000.00
corresponding to the indemnity

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Heirs of Raymundo Castro vs. Bustos

1. for the sole fact of death, and that these damages may, however, be respectively increased or
lessened according to the mitigating or aggravating circumstances, except items 1 and 4 above,
for obvious reasons.

In the light of the foregoing discussion, it is clear that the Court of Appeals erred in eliminating in its
amended decision, the items of moral damages and compensation f or loss of earning capacity of the
deceased. Indeed, as to the award of moral damages in case of death, this Court has already held
in Mercado v. Lira, etc., G.R. Nos. L1332829, September 29, 1961, that once the heirs of the deceased
claim moral damages and are able to prove they are entitled thereto, it becomes the duty of the court to
make the award. We held:
Art. 2206 states f urther that ln addition to the amount of at least P3,000.00 to be awarded for the
death of a passenger, the spouse, legitimate and illegitimate descendants and ascendants of the deceased
may demand moral damages as a consequence of the death of their deceased kin, which simply means
that once the above-mentioned heirs of the deceased claim compensation for moral damages and are
able to prove that they are entitled to such award, it becomes the duty of the court to award moral
damages to the claimant in an amount commensurate with the mental anguish suffered by them.
This doctrine was reiterated in Maranan v. Perez, G.R. No. L-22272, June 26, 1967:
In connection with the award of damages, the court a quogranted only P3,000 to plaintiff-appellant. This
is the minimum compensatory damages amount recoverable under Art. 1764 in connection with Art. 2206
of the Civil Code when a breach of contract results in the passengers death. As has been the policy
followed by this Court, this minimal award should be increased to P6,000 x x x. Still, Arts. 2206 and 1764
award moral damages in addition to compensatory damages, to the parents of the passenger killed to
compensate for the mental anguish they suffered. A claim therefor, having been properly made, it
becomes the courts duty to award moral damages. Plaintiff demands P5,000 as moral damages; however,
in the circumstances, We consider P3,000 moral damages, in addition to the P6,000 damages aforestated,
as sufficient. Interest upon such damages are also due to plaintiff-appellant.
Likewise, in the matter of the compensatory damages for the loss of earning capacity of the deceased, We
also
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336 SUPREME COURT REPORTS ANNOTATED
Heirs of Raymundo Castro vs. Bustos
held in the case of Daniel Bulante v. Chu Liante, G.R. Nos. L-21583 and L-2159192, May 20, 1968 that:
The next item objected to refers to the damages awarded to the heirs of the deceased passengers for
loss of earning capacity, separately from the indemnities by reason of death. The ground for the objection
is that loss of earning capacity was not specifically pleaded or claimed in the complaint. This item,
however, may be considered included in the prayer for actual damages and for other just and equitable
reliefs, especially if taken in the light of Art. 2206, in connection with Art. 1764, of the Civil Code, which
allows, in addition to an indemnity of at least P3,000 by reason of death, recovery for loss of earning
capacity on the part of the deceased, the same to be paid to his heirs in every case x x x unless the
deceased on account 01 permanent physical disability not caused by the defendant, had no earning
capacity at the time of his death'."'
To be sure, these cases of Mercado v. Lira, Maranan v. Perez and Bulante v. Chu Liante, from which We
have quoted, were actions based on contracts of common carriers. But the above-mentioned doctrines
are equally applicable to civil liability ex delicto because, after all, Art. 2206 of the Civil Code which was
applied in said cases is precisely the provision pertinent to liability arising from crimes (and quasi-delicts).
No doubt, said Article must have been relied upon by the court in the above cases only because Art. 1764
of the Civil Code provides that said Art. 2206 shall also apply to the death of a passenger caused by the
breach of contract of a common carrier. Accordingly, the interpretation given to said article in those
cases are applicable to the case at bar. In other words, this must be so because under the Civil Code, the
same rules on damages are generally to be observed, whether death results from a crime or a quasidelict
or a breach of the contract of common carriage.
As to the amount of the indemnity for moral damages and loss of earning capacity of the deceased in
the present case, the original decision of the Court of Appeals awarding them, does not afford sufficient
basis for Us to increase the amounts fixed by said court, as prayed for by appellants. As has already been
stated, the said decision failed to follow the Constitution, not only in not stating the law on which it is
based but also in not making
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Heirs of Raymundo Castro vs. Bustos
the necessary findings of fact on which it based its discretion in fixing the respective amounts it awarded
for moral and compensatory damages. Legally, therefore, We can, if We wish to, return this case to that
court for it to supply these constitutional omissions. We opt, however, to save time and further difficulties
for, and damages to, the petitioners. Extant in the records before Us is the fact that the respondent has
never disputed that petitioners are the widow and seven children of the deceased, three of whom were
still minors at the time of his death, nor that the said deceased was a public school teacher, 56 years old,
and earning P2,276.00 a year. These facts appear to have been repeatedly asserted in the briefs of
petitioners in the Court of AppeaIs and in this Court. No denial was ever made by the respondent. When
respondent moved for the reconsideration of the original decision of the Court of Appeals, (Annex E of
Petition for Certiorari) he only argued that in view of the mitigating circumstances credited to him by said
court, petitioners were not entitled to moral damages and to indemnity for loss of earning capacity of the
deceased; the amounts fixed theref or by said courthe never questioned. When petitioners filed their
motion for reconsideration of the amended decision of the Court of Appeals, these facts (relationship,
earnings, etc.) were reiterated. (Annex G, id.) Respondent did not file any answer to said motion despite
the resolution requiring him to do so. (Par. 12, Petition for Certiorari) Neither has respondent filed any
brief in the present instance, notwithstanding repeated requests on his part for extension to file the same,
which, incidentally, were all granted. Under these circumstances, We feel justified in brushing aside strict
technicalities of procedure in order to accomplish substantial justice more expeditiously. Anyway, as We
said at the outset, petitioners are asking Us, in the prayer of their petition for certiorari, for nothing more
than to affirm in toto the original decision of the Court of Appeals, and in their lone assignment of error
in the present instance, their only claim is that the Court of Appeals erred when it issued the amended
decision eliminating the award of P6,000 moral damages and the award of P13,380.00 loss of earn-
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338 SUPREME COURT REPORTS ANNOTATED
Heirs of Raymundo Castro vs. Bustos
ings of the deceased Raymundo Castro. In these circumstances, even if We should award the amounts
of damages just mentioned, inspite of the absence of the pertinent findings of fact by the Court of Appeals,
We would not have to reach beyond amounts that are undisputed by the respondent.
We, therefore, overrule the prayer for additional damages in petitioners brief and We hold that, on
the basis of the facts not questioned by respondent, they are entitled only to the P6,000.00 as moral
damages and the P13,380.00 as compensatory damages for the loss of earning capacity of the deceased
awarded in the original decision of the Court of Appeals in addition, of course, to the indemnity for death
fixed also by said court at P6,000.00. This amount of P6,000.00 We cannot increase to P12,000.00, as
allowed in People v. Pantoja, supra, and the subsequent cases, (People v. Mongaya, G.R. No. L-23708,
October 31, 1968, and People v. Ramos, G.R. No. L-19143, November 29, 1968) because in the instant suit,
neither party has appealed in relation thereto. This case is now before Us on appeal by the offended party
only as to specific portions of the civil indemnity to be paid by the respondent. It would have been
different if the whole criminal case were up for our review because then, even without any appeal on the
part of the offended party, We could have still increased the said liability of the accused, herein
respondent. (See Mercado v. Lira, supra.)
At this juncture, for the guidance of parties similarly situated as petitioners herein, and so that there
may be no useless expenses in appeals by offended parties in regard to the civil aspect of a criminal case
when no separate civil action has been filed by them, it should be made clear that when there is no such
separate civil action and the claim for civil indemnity is joined with the criminal case, no record on appeal,
whether printed, typewritten or mimeographed, is necessary, except perhaps when formal pleading
raising complicated questions are filed in connection therewith, and still, this would be purely optional on
the appellant because anyway the whole original
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Heirs of Raymundo Castro vs. Bustos
record of the case is elevated in appeals in criminal cases. It is already settled that appeals relating to the
civil aspects 01 a criminal case should follow the procedure for appeal required by the rules of criminal
procedure. (People vs. Lorredo, 50 Phil. 209, 220221; People v. Villanueva, G.R. No. L-18769, May 27,
1966)
WHEREFORE, the amended decision of the Court of Appeals is modified as hereinabove indicated, in
so far as the civil liability of respondent is concerned, with costs against him in this instance.
Dizon, Makalintal, Zaldivar, Fernando and Teehankee, JJ., concur.
Concepcion, C.J., Reyes, J.B.L. and Sanchez, JJ., concur in the result.
Castro, J., reserves his vote.
Capistrano, J., concurs in a separate opinion.

CAPISTRANO, J., concurring:

I concur, and take this opportunity to express my views on certain points not covered by the majority
opinion.
1. In the criminal action f or death by crime, as murder, homicide, and homicide through reckless
imprudence, it is the duty of the Fiscal, unless the heirs reserve their right to file a separate civil action, to
demand payment, for the benefit of the heirs of the deceased, of the damages ordained in Articles 2206
and 2230 of the Civil Code. This duty is apparent from the following considerations: (a) A crime is an
offense against both the State and the offended party. This is so because before the State intervened in
its punishment, a crime was an offense purely against the injured party calling for private vengeance. It
was only after the period of private vengeance in the history of criminal law that the State decided to
intervene in the punishment of crime for reasons of social defense. (b) The civil liability in crime is
generally determined in the criminal action pursuant to the basic principle that every person criminally
liable is civilly liable. Since the Fiscal has full control of the criminal action, he is the only one who may
demand payment therein of the civil indemnity for the benefit
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340 SUPREME COURT REPORTS ANNOTATED
Heirs of Raymundo Castro vs. Bustos
of the heirs of the deceased. (c) In case the Fiscal does not demand payment of the civil indemnity in the
criminal action and the judgment does not order its payment, said judgment will constitute a bar to a
future civil action to recover the civil indemnity. (d) Most of the injured parties in crime are poor or
ignorant. For this reason, the intervention of a private prosecutor, hired by the heirs of the deceased, in
the criminal action, is rare. (e) The trial court usually awards only the amount of P12,000 as damages f or
the death unless the other items of damages specified in Articles 2206 and 2230 of the Civil Code are
demanded by the Fiscal The failure of the Fiscals throughout the country to make such demand in the
criminal actions has resulted in the law (Art. 2206, except par. 1, and Art. 2230) having fallen into disuse
for a period of more than 18 years (from 1950 when the New Civil Code took effect, until now), contrary
to the great expectations of the Code Commission and the Legislature. Said failure has also resulted in
great injustice to the countless heirs of the victims of murder, homicide and homicide through reckless
imprudence during said period of 18 years.
2. Accordingly, unless the heirs reserve their right to file a separate civil action, the Fiscal should also
allege in the information all the items of damages recoverable for the benefit of the heirs of the deceased
as follows: (a) P12,000 for the death of the victim; (b) the amount constituting loss of the earning capacity
of the deceased; (c) the amount of monthly support to be given by the accused for the period not
exceeding five years in case the deceased was obligated to give support under Article 291 of the Civil Code
to a recipient who is not an intestate heir of the deceased; (d) that moral damages are demanded by and
on behalf of the surviving spouse, legitimate and illegitimate descendants, and ascendants of the
deceased for mental anguish by reason of the death of the deceased, the amount of award to each of
them individually to be determined in the discretion of the court on proof of mental anguish and the depth
or intensity of the same; and (e) exemplary damages in the amount to be determined by the court to be
paid to the heirs of the deceased
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Heirs of Raymundo Castro vs. Bustos
in case of the presence of one or more aggravating circumstances in the commission of the crime.
3. Where a private prosecutor, hired by the heirs of the deceased, intervenes in the criminal action, as
in the case at bar, the heirs may also demand and recover reasonable attorneys fees and expenses of
litigation. This is just. From the provision of Article 2208(9) of the Civil Code which allows recovery of
attorneys fees and expenses of litigation in case of a separate civil action to recover civil liability arising
from a crime, it does not follow that the converse is true. Whether the heirs recover the civil liability
through a private prosecutor in criminal action or through counsel in a separate civil action, they are
entitled to attorneys fees and expenses of litigation. What is important is not in what action the civil
liability is recovered, but the fact that in either action the heirs have paid attorneys fees and expenses of
litigation.
4. The heirs entitled to the civil indemnity are the intestate heirs of the deceased in the order of
intestate succession. The Fiscal should therefore give in the information the names and personal
circumstances of the heirs entitled to the civil indemnity in accordance with the law of intestate succession
so that the trial court may make the award in their names. This will avoid further or subsequent litigation
on who, among several claimants, are really the heirs entitled to the civil indemnity. The practice of the
trial courts in awarding the civil indemnity to the heirs of the deceased, does not satisfy the law and
should be abandoned.
Does the term heirs include testamentary heirs ? An affirmative answer is proper. According to
Manresa, Donde la ley no distingue, no debemos distinguir. The heirs, whether testate or intestate, are
a continuation of the juridical personality of the decedent. The law has a tender regard for the will of the
testator expressed in his last will and testament on the ground that any disposition made by the testator
is better than that which the law can make. For this reason, intestate succession is nothing more than a
disposition based upon the presumed will of the decedent.
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342 SUPREME COURT REPORTS ANNOTATED
City of Baguio vs. Marcos
5, The award of moral damages to the surviving spouse, legitimate and illegitimate descendants, and
ascendants of the deceased, should be made to each of them individually and in varying amounts
depending upon proof of mental anguish and the depth or intensity of the same. Where it is shown that
one or some did not suffer mental anguish or could not have suffered the same, no award of moral
damages should be made to him or to them. For example: The evidence shows that the surviving widow,
who had a paramour, when inf ormed of the death of her husband, said: Mabuti nga. Ngayon maaari na
akong pakasal kay Pepe. Another example: The evidence shows that three legitimate children (or
grandchildren) were aged one, two and four at the time their father was killed. In the very nature of things
these children (or descendants) could not have suffered mental anguish. In these examples there should
be no award of moral damages to the widow and the infant children.
Decision modified.