PLJ Volume 44 Number 1 -04- Bienvenido C. Ambion - Civil Law - Part Three

8/3/2019 PLJ Volume 44 Number 1 -04- Bienvenido C. Ambion - Civil Law - Part Three

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CIVIL LAW- ART THREETORTS AND DAMAGES

Bienvenido C. Ambion"If the annual survey of Supreme Court decisions in Torts and

Damages be referred to as a crop or harvest, then the survey of 1968decisions compared with the survey of the preceding year could beconsidered as more bountiful. This is our considered though con-servative opinion, taking into account that in this particular branchof the law among the decisions under review, there are four whichdeserve special attention. The rest of the decisions in this surveyare merely reiterations of previous rulings of the Supreme Court.

In a nutshell these four mentioned decisions follow: (1) PeopleV . o j d is precedent-setting as it increased to F12,000.00 minimum,the compensatory damages recoverable for death arising from crimeor quasi-delict. ( 2 ) Caedo v . Y u Khe Thai2 although not a case offirst impression as it determines when the owner who is present in thevehicle at the time of the mishap will be solidarily liable with thenegligent employee, points out that car owners are not held to auniform and inflexible standard of diligence as are professional drivers,so that employment of professional drivers by car owners who by theirinadequacies have real need for services of drivers, would be effectivelyproscribed were the law to sequire a uniform standard of perceptivenessamong car owners. ( 3 ) S h g s o n v . B m k of the Philippine Islands3ahhough not a case of first impression, either, emphasizes that theexistence of a contract between the parties is not a bar to the com-mission of a tort by one against the other, thus modifying the provisionof the new Civil Code4 that liability for quasi-delict arises if no pre-existing contractua1 relation between the parties exists. ( 4 ) The Receiverof North Negros Sugar Co. Inc. v. Ybaiiez5 is novel, for althoughgoverned by the Spanish Civil Code of 1889, since the facts occurredand the action was filed before the effectivity of the New Civil Code,yet after recourse is made to the French Civil Code6 as a persuasiveauthority and after reference is made to a transitional provision of

* Pmfess07 of Law, University of the Philippines.l G . R . No. 18793,October 11, 1968.2G .R . No. 20392, December 18, 1968.3 G . R . No. 24837, June 27, 1968.4A r t . 2127 defining quasi-delict.5 G . R . No. 22183, August 30, 1968.eArt . 1383 which is the counterpart provision of Art. 1902 of the SpanishCivil Code.


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19691 CIVIL LAW 101Lhe New Civil Code, the case is finally decided under the newCivil Codes as to whether a brother or sister could recover moraldamages for the victims death caused by culpa aquiliana.Quasi-delict used interchangeably with torts although latter hm broadercon notation

When the Code Commission was confronted with the problem ofnomenclature for an obligation not arising from law, contract, quasi-contract nor from delict, it finally adopted the term quasi-delict.This conforms with the Spanish and Roman law classification ofobligations according to source or origin as ex-lege, ex-contractu,quasi ex-contractu, ex-delicto, and quasi ex-delito. Although this typeof obligation has been designated also as culpa aquiliana or culpaextra-contractual yet these terms had been disregarded consideringthat the former makes reference to an ancient law the Lex Aquilia,while the latter is broad enough to cover quasi-contractual and penalobligations.

The legal category tort of Anglo-American has also been con-sidered but it is much broader in scope than the Spanish-Philippineconcept of non-contractual negligence since tort of American lawincludes not only negligent acts but also intentional criminal actsas deceit, false imprisonment, and battery and a s~ au l t .~ n thepertinent decisions under review the Supreme Court in some instancesused tort and quasi-delict interchangeably, or retained quasi-delict,or adopted tort followed immediately by culpa aquiliana in parenthesis.Decisions on torts and decisions on damages arising from quasi-delictand breach of contract of carriage are lengthily discussed, althoughcases on damages arising from other extra-contractual obligations arealso included yet their detailed discussions will be found in thesurvey of the corresponding branch of the law to which they properlypertain.

TORTSW he n s ta te m ag be held liable ~ O Torts

In Republic c . PaZacio,lo the Supreme Court held that as embodiedin the New Civil Codell the State is liable only for torts caused byits special agents specially commissioned to carry out the acts, in the

rt. 2257.SArt. 2206.9Rep0rt of the Code Comiission, pp. 161-162 (1948).10G.R. No. 20322, May 29, 1968.11Art. 2180.


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102 PHILiPPINE LAW JOURNAL [VOL. 44performance of which the torts arise, and which acts are outside ofSuch agents regular duties, citing the cases of Merritt V . ZnsularGovernmmt12 and Rosete v . Auditor Generd.13 If there would beany liability this should arise from a tort and not from a breach ofcontract since the initial complaint against the Irrigation Service Unitwas that it had induced the Handong Irrigation Association, Inc. toinvade and occupy the land owned by plaintiff Ildefonso Ortiz.Inasmuch as there was no proof that the making of the tortious induce-ment was authorized, neither the State-the Irrigation Service Unitbeing an office of the Governmnet d the Republic-nor its funds canbe made liable for the said tortious acts.

In ruling upon a petition for review of the Court of Appealsjudgment, the Supreme Court declared null and void the order ofgarnishment issued by the Sheriff of Manila on the Pump and Imga-tion Trust Fund in the account of he rrigation Service Unit withthe Philippine National Bank and the writ of preliminary injunctionis made permanent. The Government of the, Republic created theIrrigation Service Unit to promote a specific economic policy, andif ever this Office engages in the activity of selling irrigation pumpson installment basis to farmers, and charging interest on the unpaidportion of the purchase price, this is not intended to be profit-making and this does not convert the economic project into a corporateactivity, so that the Republic therefore has not waived its immunityfrom suits.

Moreover, even though the State waived its immunity by consentingtobe sued, it does not follow that it is liable, and it does notfollow that its property and funds can be seized upon a levy ofexecution. Where there is a waiver, and the liability d the Statehas been judicially ascertained, the power of the Courts end upon therendition of the judgment. The Supreme Court further explainedthat execution cannot issue on a judgment against the State, for theState is free to determine whether to pay the judgment or not, itbeing implied that the lawmaking body will recognize such judgmentas final and executory, and will therefore make provision for thesatisfaction thereof by legislation.Existence of a contract between the parties is not a bar to the c m -mission of tort b y one against the other

In defining quasi-delict the New Civil Code14 provides: Whoeverby act or omission causes damage to another, there being fault or

12 34 Phil. 331 (1916).Is 81 Phil.453 (1948).14Art. 2176.


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--w19691 ' CIVLL LAWnegligence, is obliged to pay for the damage done. Such fault ornegligence, if there is no pre-existing contractual relation between theparties is called a quasi-delict and is governed by the provisions ofthis Chapter." In determining when liability for quasi-delict mayarise this article expressly excludes cases where there is pre-existingcontractual relation between the parties.I"

In effect this requirement has been modified by the ruling inthe case of Singson v. Bank of the Philippine I s tCmdP which statesthat the existence of a contract between the parties does not barthe commission of tort by one as against the lather. As a consequenceof the illegal freezing of the account of the plaintiffs two checksissued by the plaintiffs had been dishonored for payment, hence theaction for damages against the defendant bank and its president.It turned out that plaintiff Singson was not included in the writ ofexecution and notice of garnishment served upon the Bank, thus thefreezing of account was illegal. The lower court held that plaintiffs'claim for damages cannot be based upon a tort or quasi-delict sincetheir pre-existing relationship with the defendants was contractual.However the Supreme Court ruled that the existence of a contractbetween the parties does not bar the commission of a tort by oneagainst the other, thus there could be consequent recovery of damages.

This stand has been repeatedly adhered to by the Supreme Court.The Court cited with approval the comparatively recent decision ofAir France v. Carr~scoso,~~heie a plane passenger with a firstclass ticket was illegally ousted from h is first class accoimmodationseat and transferred to the tourist or economy compartment seat.The passenger was entitled to recover damages from the air linerfor such tortious act, for although the relationship between the partiesmay be contractual in nature and origin. yet the act of the carrierwhich produces the breach of contract may also constitute a tort.Basis of liability of employer, under cicil law, for the iaegligent actof employee is not respondeat superior hut the relationship of p d m -familias; when employer present in vehicle is solidarily liable with negli-gent employee

In C w d o c. Ytt Khe T h a P the Supreme Court, after citing theapplicable provision of the New Civil Code19 and the case of Chapmanv. U n d w w d z o held: "If the causative factor was the driver's negligence,

115 FOESv. Miranda, G.R. No. 12163, March 4, 1959, 57 0 . G . 7938 (Oct., 1961),7' G.R. No. 21438, September 28, 19G6, 64 O.G. 4524 (May, 1968).G.R. No. 24836, June 27, 1968.l9 Art. 2184.18Supra, note 2.

' 2 0 2 7 Phil. 3'34 (1914).


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104 PHILIPPINE LAW JOURNAL [VOL. 44the owner of the vehicle who was present is likewise held liable ifhe could have prevented the mishap by the exercise of due diligence.In this vehicular mishap the collision was directly traceable to thenegligence of the employee Rafael Bernard0 so that this driver of thecar was held liable for the damages suffered by the plaintiffs. In itsdecision the Supreme Court further held that the owner who waspresent should not be held solidarily liable with the negligent driver;that actual compensatory damages to be allowed must be proved by theevidence adduced; and that the amounts of moral damages grantedby the trial court are excessive.

Under the civil law, the basis of liability of the employer forthe negligent act of his employee is the relationship of pcrterfamiliasand not the doctrine of r q o n d e d superior. In the final analysisthe employer is negligent himself, which consists of culpa en vigilando,for the negligence of the servant if known to the master and is sus-ceptible of timely correction by him, amounts to negligence of themaster, if he fails to correct it to avert the harm or injury which couldhave been avoided.

Under article 2184 of the New Civil Code, the test of imputednegligence must necessarily be subjective. Unlike professional drivers,the car owners are not bound to a uniform and inflexible standard ofdiligence. Many car Owners hire others to drive for them because theydo not have the training or sufficient discernment tmo know the trafficrules or to appreciate the different dangers continuously arising fromdifferent situations encountered while driving. The same standard ofdiligence cannot be exacted from a car owner who is young and knowshow to drive, compared with another who is old and sickly and knowsnot how to handle a motor vehicle.

A person is not required by law to have a certain degree of pro-ficiency in driving OF in the observance of traffic rules, before he canown a motor vehicle. Under article 2184 the test of his negligence ishis omission to do that which the evidence of his own senses tells himhe should do in order to prevent the mishap. The Court continued:Were the law to require a unihiform standard of perceptiveness, em-ployment of professional drivers by car owners who by their very inade-quacies, have real need of drivers services, would be effectively pro-scribed. There is therefore no minimum level imposed by law withrespect to perception.

Provisions of special laws in addition to pertinent coda1 provisionsmay give rise to tortious liability. As pointed out at the outset, the tortsof American law cover not only non-contractual negligence but even


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19691 CIVIL LAW 105intentional acts, like deceit, which may constitute offenses in our juris-diction. In infringement of trademark, as an example, there is not onlydeceit or fraud, but there is also involved invasion of property rights.Fraud is exercised upon the buying public being led to believe that thegoods of the piratical manufacturer are those of the pioneer manufacturer;there is a violation of the property rights since the former takes a freeride on the goodwill and reputation already earned by the latter.Trademark cannot be registered if it resembles a registered trademurk,or a trademark previouslg used b y &her and not abandoned; tobe entitled to registration, oppwitor must show pmor use

In Lim Koh v. Kagnee C O . ~ t was shown that where the oppositionto the registration of a trademark has been dismissed, it did not followthat the application for registgation should be granted. An applicationfor registration of a trademark, Kaynee, first used in 1957 for articlesof attire, was opposed by a South Carolina Corporation, which claimedto have registered it in the U.S. Patents Office as early as 1913, and tohave used same trademark in the Philippines for similaT goods since1951. Since there is no licensing agreement, nor dealership, nor dBtrib-utorship agreement with Aguinaldo Department Store, the oppositor hasno direct hand in the introduction of goods bearing this trademark in thePhilippines, inasmuch as it was due only to Aguinaldo Department Storesimportation and activities that the said trademark has been previouslyused in the Philippines. If the oppositor has established a prior use ofits trademark in the Philippines then the buying public might be misledto ascribe a common origin of the oppositors and applicants goods.Since there is no such prior use, then the opposition must he dismissed.

With the dismissal of the opposition ilt does not automaticallyfollow that the application for registration will be granted becauseunder section 4(d) of the. Trademarks Lawz2 a trademark is not reg-istrable if it resembles a trademark registered in the Philippines ora trademark previously used in the Philippines by another, and notabandoned. In the case at bar, the previous use by Aguinaldo Depart-ment Store constitutes the use by another, so the application for reg-isbation is rejected or denied. Being supported by substantial evidencethis finding of facts by the Director of Patents is conclusive on theSupreme Court, citing the cases of Chung T e v . N g Kian GiabZ3 ndChua Chee v . Phitippines Patent Office?

a*G.R.No. 24802 October 14. 1968.22 Rep. Act No. 166 (1947).*3G.R.No. 23791, November 23, 1966.*G.R. No. 18337, January 30, 196.5.


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106 PHILIPPINE LAW JOURNAL [VOL. 44DAMAGES

Action for moral damages and attorneys fees gmenzed b y the CivilCode of 1889In the case of Receiver for North Negros Sugar Co., lnc . , v. YbaiiezZ5

the Supreme Court had occasion to appIy article. 1902 of the Spanish GivilCodez6 although the New Civil Code is already effective. On August31, 1937 a collision took place between Train No. 5 owned by the NorthNegros Sugar Co. and the car driven by Gil Dominguez and in whichCesar V. Ybaiiez was riding, and the latter was one of two persons whodied as a consequence thereof. The immediate heirs of Cesar were hisbrother Pedro and sister Rosario, both summed V. Ybaiiez, and sinceRosario died during the pendency of the action leaving as her heir thebrother Pedro, then Pedro Ybaiiez should properly be the only respondentin this action. In reversing the judgment of the lower court, the Courtof Appeals held North Negros Sugar Go. Inc. liable for the death ofCesar V. Ybafiez ordering it to pay to plaintiff-appellant Pedro V.Ybaiiez damages consisting of several amounts or items, namely, com-pensatory damages for lost earnings or lucro cesante, for death indemnity,for funeral expenses; moral damages for the mental anguish sufferedby the heir; and attorneys fees in the protracted litigation. The SupremeCourt reviewed the decision of the Court of Appeals as far as its awardsof moral damages and attorneys fees are concerned. Inasmuch as theacts and events which gave rise to this litigation took place in lW ,and this action was filed in 1940, the provisions of the Spanish CivilCode of 1889 were applicable.Scope of liability for damges under ar t ic le 1902 of old Civil Code

Under article 1902 of the Spanish Civil Code of 1889, any personwho by act or omission, characterized by fault or negligence, causesdamage to another, shall be liable for the damage done. A personwill be liable for the injury suffered by another due to the culpableact of the former. The Court further declared that a culpable aclis any act which is blameworthy under lacoepted legal standards.This i s undoubtedly broad enough to include any rational concep-tion of liability for the tortious acts likely to be developed in anysociety citing the case of Daywalt v. Corporacion d e P P . AgustinosRecoletos.27

2 5 G . R . No. 22183,August 30, 1968.26 Counterpart provision of art. 2176 of the New Civil Code defining quasi-deli&37 39 Phil. 587 (1919).


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19691 CIVIL LAW 107Scope of damages under article 1902 and persons who may be awardedmoral damages therein

Damage used as a general term in said article 1902 includesall damages or injuries that a human being may suffer in any and allmanifestations of his life: the physical or material, the maral or psycho-logical, the mental or spiritual, the financial or economic, the social,political, and religious aspects, ruled the Supreme Court, citing the caseof Castro v. Acro Taxicab CO.~* rticle 1902 stresses the passive subjectwho should be liable and does not limit or specify the active subjectand neither does it mention the relationship #hat must exist between thevictim of culpa aquiliana and the person who may recover damages.From the foregoing the inference therefore is that anybody who suffersdamage from a quasi-delict whether a relative of the victim or not,may recover damages from the tortfeasor. Under the old Civil Code,moral damages had been granted not only to the victim himself as shownin Lilius v . ManiEa Railroad C O . ~ ~ut also to the legitimate childTenand heirs of the deceased as illustrated by Alcantara v . S W ~ O . ~ ~arents,and even natural parents, have also recovered damages arising from thedeath of their children said the Court citing the cases of Alanzmresv. Moreta31 and Astudillo v. Manila Electric C O . ~ ~Recourse to decisions of French Courts as persuasive authority

The court had not come across any decision in this jurisdiction wherea brother or sister of the victim of culpa aquiliana had been awardedmoral damages. Recourse was made to persuasive authority and thedecisions of the courts of France had been resorted to since article 1383of the French Civil Code provides substanhially the same as article1902 of the Spanish Civil Code. Under said provision French courtshave awarded moral damages to parents, children, spouse, brothers andsisters of the victim, and also to his natural grandparents, and god-children..4pplication of N e w Cioil Code provisions-article 2257, a transitionalprovision; and article 2206 under which a brother or sister of the vic-tim of Culpa Aquiliana cannot recover moral damages

Thus if article 1902 of the Spanish Civil Code were to be appliedas it had been applied in France, then the person guilty of culpaaqudiana under our old Civil Code would be liable for moral damages

28 82 Phil. 359 (1948).2959 Phil. 768 (1934).3l38 Phil. 821 (1918).32 55 Phi. 427 (1930).ao 93 Phil. 473 (1953).


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108 PHILIPPINE LAW JOURNAL [VOL. 44to the victim, or to his spouse, children, parents, brothers and sisters,and even his godchildren. This means that under our old C,ivil Codeliability for moral damages due to culpu aquiliana was in favor of morepersons than the new Civil Code covers in article 2206 for this latterarticle mentions only the spouse, legitimbate and illegitimate descendantsand ascendants of the deceased who are entitled to moral damageswithout including the brothers and sister and godchildren of the victim.Therefore the New Civil Code has a less severe sanction compared withthe old Civil Code.

A transitional provision, article -2257 of the New Civil Code statesthat if an act or omission condemned or \forbidden by the New CivilCode in form of Q civil sanction or penalty or deprivation of rights, werealso punished by the previous legislation-the old Civil Code -the lesssevere sanction shall be the one applied. Therefore article 2206 dthe New Civil Code is applicable under which no moral damages couldbe awarded to petitioner fur his brothers death caused by a culpaaquil iana.Recozjery of attorneys fees

The Supreme Court further held that although under paragraph11 of article 2208 of the New Civil Code, award of attorneys feesmay be made whenever i t may be just and equitable, said articleis not applicable because the case at bar was instituted before the.effectivity of the New Civil Code. Before the New Civil Code becameeffective, attorneys fees other than those allowed as costs under theRules of Court are not recoverable as damages against the losing litigant,otherwise this would place a penalty on the right to litigate, the Courtruled citing the case of George Edward Koster, In c . v. Z ~ l u e t a . ~ ~To the same effect as the Koster decision is the ruling in Filipino Pipeand Foundry Corporation v. Central Bank of th e Philipp ines.34 Howeverattorneys fees and expenses of litigation may be granted when defendantacted in gross and evident bad faith in refusing to satisfy plaintiffsplainly valid just and demanldable claim, as authorized by the NewCivil Code.s5

In the absence of stipulation, attorneys fees are not recoverable.However several exceptions to this rule are provided in article 2208of the New Cie l Code. This is the ruling in Angel Jose WarehousingCo. , Inc. v. Chelda enterprise^.'^ This principle is reiterated in Y a pTeck Suy v . Manila Port Service.37 Award of reasonable attorneys fees is33 99 Phil. 945 (1956).3 4 G . R . No. 24429, June 22, 1968.35Art.2208. ~a r . .36 G.R. No. 25704, April 24, 1968.37 C.R. No. 24677, May 29, 1968.


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19691 CIVIL LAW 109justified when it is provided in the stipulation and the appellant ispersistent in maintaining a clearly unfounded or untenable action.Award of nomin'al damages and attorney's fees

In Singson v. Bank of the Philippine the wrong done tothe plainatiffs consisted in the illegal freezing of latter's account resultingin dishonor for payment of two checks issued by the palintiffs. Since thewrong was immediately remedied by the defendant President of theBank, upon realizing the mistake committed b y him and by thesubordinate employee, the Supreme Court awarded nominal damagesto the plaintiffs in the sum of P1OOO which need not be proven,citing the case of Ventanil la v. C e n t e n a S 9 For the vindication of theplaintiffs' rights which had been unlawfully violated, requiring plaintiffsto retain services of counsel, the amount of P500 as attorney's f e ewas also awarded.R e c o v m y of moral damages in cases of seduction, abduction, rupe grother ~ c i v i o u s cts

In People v. Fontanilla40 where the amused was convicted ofqualified seduction of a damestic, who is the niece of his wife, the awardof moral damages was inoreased from P5W to B2,500 considering thatthe offended party was a virgin who was deflowemd so that her matri-monial future is definitely impaired by her loss of virginity and by theattendant shame and scan'dal. Under article 2219 of the New CivilCode moral damages are recoverable by the offended party in casesof seduction, abduction, rape or other lascivious acts, and the parentsof the female seduced, abducted, raped, or abused may also recovermoral damages.

In the same criminal action the accused can be required to paymoral damages to the victim and her parents, the conviction of theaccused being sufficient basis for such award without necessity ofindependent proof thereof. The law presumes that the victim a3 wellas her parents suffered besmirched reputation, social humiliation, woundedfeelings, and mental anguish, so that the P2,500 moraI damages awardedshould be paid to the victim and her parents.Resp onsibility for breach of c m tr a c t of carriarge; basis of award ofcornpensdory damarges

In Marchan v. Mendom+ the petitioner bus firm and the petitionerdriver of the passenger bus responsible for injuries inflicted upon

38Suwra. note 16.39G.R. No. 14333, January 28, 1961, 61 O.G. 2785 (May, 1965).4 0 G .R . No. 25354, June 28, 1968.' IG.R. No. 24471, August 30, 1968.


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110 PHILIPPINE LAW JOURNAL [VOL. 44passengers- espondents, were required to pay several amounts ascompensatory damages, as exemplary damages, and as attorneys fees.The compensatory damages and attorneys fees were to earn interestfrom the date of the decision of the lower court, while the exemplarydamages to earn interest from the date of decision of the Court ofAppeals, the Court citing the case of Soberano v . Manila Railroad Co.concerning the date of earning of interest.

Under the New Civil Code42 common carriers cannot escaperesponsibility for injuries to life or limb of passengers through thenegligence or wilful acts af tho cmiers employees although said em-ployees may have acted beyond the scope of their authority or inviolation of orders or instructions. This is not merely a subsidiary orsecondary liability but this is a direct and immediate liability of thecarrier.

The age of the plaintiff-respondent, his expected life span, andhis earning capacity within that life span had been considered inconiputing the award of compensatory damages. As the plaintiff wasin his middle twenties, and by the negligence of the carrier he lostthe use of limbs thus making him a paralytic the rest of his days,the amount of F4O,,ooO awarded as compensatory damages was con-sidered reasonable, and was well within the discretion of the Courtwhich ordered the award.Award of exemplary damages discretionary with court; may be giventhough not expressly pleaded in complaint; when award may be re-oietced

In addition, among others, to compensatory damages, the Courtat its discretion, may award exemplary damages, by way of correction,example, or deterrence, although not expressly prayed, nor pleadedin the complaint. The amount of exemplary damages need not beproved for its determination depends upon the amount of compensatorydamages awarded to the claimant victim. If the amount of exemplarydamages need not be proved, then it need not be pleaded and it neednot be alleged in the complaint, because the same cannot be predeter-mined, citing with approval, the case of Singson v. Arag~n .~

The amount of exemplary damages will be determined by the Courtif in the exercise of its discretion the same is warranted by theevidence adduced. On the other hand, when it could be shown thatthe Court acted with vindictiveness or wantonness and not in theexercise of honest judgment, then the award may be reviewed by

4 2 G . R . No. 19407, November 23, 1966.43Ar t . 1759.4492Phil. 514 (1953).


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19691 CIVIL LAW 111the higher or appellate tribunal as held in the case of Corpus u.Cuaderno."W h e n moral and exemplary dmnages ma y be awarded in breach ofcontract

In Pan Pacific Co. (Phil .) v. P h i l i p p i n e A d v e r t i s i n g C o r p ~ r a t i o n ~ ~the Supreme Court affirmed the award of moral and exemplary damagesCiting articles 2229 and 2232

1 Code, the Court concluded that the defendants inutter disregard of the rights of the plaintiff had refused delibaatelyand wantonly to pay to the plaintiff what is justly due the plaintiff.The defendant only paid the down payment on the 18 bowling alleysand without just cause he absolutely refused to pay the balance thereof,as well as the cost of the bowling and billiard accessories. Althoughthe defendant had been continuously receiving a lucrative incomefrom the opening of the bowling aIleys and the operation of thebilliard tables, and although he had promised to pay the balance ofthe price in installments, defendant continuously refused, without justcause to pay what is due and what should be paid to the plaintiff.

Plaintiff is entitled to moral and exemplary damages becausethe defendants acted wantonly, oppressively, if not fraudulentIy inthe performance of their obligations, as the plaintiff has been awardedexemplary damages and since the defendant acted in gross and evidentbad faith in deliberately refusing to satisfy the plaintiffs valid, just,and demandable claim, the Court concluded that it is just and equitablethat attorney's fees and expenses of litigation should be allowed infavor of plaintiff.

fees to the plaintiff.

When e x e m p l a r y d a m a g e m u y be awarded in a brecrch of contractof carriage; party to a contract to hc held liable for exemplary dam-ages due to wrongful ac t of agent must in e f fec t be a co-part ic ipwtthereinIn Muasayac 2). d e L a r d T the plaintiff-appellee suffered injuries

while riding as a passenger on a jeepney owned and operated by thedefendant-appellant. The driver who drove at an excessive speedalthough the road was under repair, was held to be reckland was required to pay exemplary damages and attorney's fee inaddition to actual compensatory damages, which items are upheld b ythe Court of Appeals and which are now reviewed by the Supreme Courton certiorari.

45 G.R. No. 23721, March 31, 1965.4 6 G . R . No. 22Q50, June 13, 1968.4 7 G . R . No. 21151, June 26, 1968.


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112 PHILIPPINE LAW JOURNAL [ V O L . 44Under the New Civil Code48 exemplary damages are imposed by

way of example or correction for the public good so that this kindof damages may also be referred to as corrective, punitive, or vin-dictive. Under the New Civil Code49 in contracts, exemplary damagesmay be awarded by the courts if the defendant actedfraudulent, reckless, oppressive or malevolent manner.

The Court concluded: The defendant in a breachcould not be held to have acted in a wanton, reckless,oppressive or malevolent manner for something he did or

in wanton,

of contractf.raudulent,

he did notdo after the breach which had no causal connection therewith. ,4sa party to the contract, he is personally liable, so the breach is his,so that if he should be held liable for exemplary damages due to thewrongful act of his agent, he must in effect be a co-participant therein,from the fact that he had previously authorized or knowingly ratifiedit, amounting to owners approval or demonstrative tolerance of thecausative negligent act of his agent or employee actually in chargeof the vehicle.

To the same effect regarding co-participation is the rule nowobtaining, after the repeal of the rule of vicarious liability by theenactment of Republic Act 875, which present rule states that fora labor union or its officers and members to be liable, there must beclear proof of actual participation in, or authorization, or ratificationof the illegal acts. This is the holding in Benguet Consolidated, Inc.v. Benguet Consolidated Inc. Employees and Workers Union- a f l ~ . ~ ~When moral damages may be allowed in breach of contract of cwriage

In Bulante v. Chua Limttesl a passenger bus collided with a cargotruck, as a consequence of which, ten persons died and seven wereinjured. Actions for damages and attorneys fees had been filedagainst Bulante, operator and registered owner of the bus, by theinjured passengers and the heirs of the deceased bus passengers basedon a culpa contractual; and by Chua Liante, owner of the cargo truckbased on tort (culpa aquiliana). The trial count gave credence todefendant-petitioner Bulantes version while the Court of Appeals be-lieved the version of plaintiffs-respondents Liante et al, ordering Bulanteto pay them various sums ascending a total of 3?100,771.50 by wayof actual, compensatory and moral damages and costs. Judgment of theCourt of Appeals is f i r m e d with the following modifications: elimination

8Art. 2229.9Art. 2232.5OG.R. No. 24il1, April 30, 1968.51 G.R. Nos. 21583, 21591-92, May 20, 1968.


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19891 --CIVlL LAW 113of the award of moral damages and reduction of the reparation ofthe damage caused to the cargo truck fo r the basis of the computa-tion should not be the cost of acquisition for there must be alloweda 25% depreciation or diminution in value up to the time of themishap.

The three injured passengers are not entitled to moral damagesfor their cause of action is based on breach of contract and as suchunder article 2 of the New Civil Code moral damages mayonly be allowed recovered from a defendant who acted fraudulently,or in bad faith. Petitioner is sued personally as a party to thecontract of carriage, and nowhere in the complaint has fraud or badfairh been alleged, nor may this be imputed to him merely by reasonof his driver's gross negligence in the manner h e was drivbus at the time of the mishap. As discussed in Fores o. Mfraud and bad faith refer to wanton, reckless, oppconduct, or at least to gross negligence amounting to or equivalentto malice.Scope of indemnit?y in case of death of passenger

The Court further declared that article 2206 of the New CivilCode allows as damages-in addition to an indemnity of a leastP3,000, now f12,000 as held in People 2'. P a n t o j ~ , ~ ~y reason ofdeath caused by a crime, a quasi-delict, and by virtue of article 1764,a breach of contract of carriage-recovery for loss of earning capacityon the part of the deceased passenger, the same to be paid to hisheirs, unless the deceased had no earning capacity at the time of hisdeath due to a permanent physical disability not caused by defendant.This item of damages may be allowed even though not specificallypleaded or claimed in the complaint for this should be consideredincluded in the petition for actual compensatory damages and for otherjust and equitable reliefs as may be proper in the premises.Increase to P12,OOO of indemnity in case of death c a w e d b y mirm 01"yumi-delict

In the precedent-setting decision rendered by the Supreme Courtin People 0. P a ~ t t o j a ~ ~he minimum amount of compensatory damagesfor death arising from crime or quasi-delict is raised from 3?6,000t o F12,OOo. In this murder case, the Court traced the history of thelaw on the subject. In 1947 when the project of the Civil Code wasdrdfted by the Code Comniission the amount of F3,OOO was fixed as

52 Supra, note 15.53 SUPTU, note 1.54 Zd.


15/15

, 114 PHILIPPINE LAW JOURNAL [VOL. 44'' the minimum indemnity for death arising from crime or quasi-delict.This project became Republic Act 386, the New Civil Code, approved

in 1949 and effective in 1950. In 1948, the Supreme Court promulgatedits decision in People v. A r n a n ~ e c ~ ~warding %,OoO, compensatorydamages fo r death caused by a crime, consi ng the difference betwmnthe value of the present currency and that at the time when the lawfixing a minimum indemnity of F'2,OOO was enacted, referring toCommonwealth Act 284 effective in 1938. At the time of the promul-gation of the Amansec decision in 1948 the purchasing power of thepeso was one third of its purchasing power in prewar days. Comwealth Act 284 was repealed in 1950 upon the effectivity of the NewCivil Code in which article 2203 fixed P3,000 as indemnity for deatharising from crime or quasi-delict. For this indemnity the courts couldhave properly awarded F9,OOO when the New Civil Code becameeffective, further explained the Supreme Court.

The purchasing power of the Philippine. peso continued to declineso that in 1%8, the rate of exchange in the free market was $1.00US. o F4.00 Philippine peso. The Supreme Court concluded thatsince the present purchasing power of the Philippine peso is one-fourthof its pre-war purchasing power, the amount of award of compensatorydamages for death caused by a crime or quasi-delict should beY2,000. This ruling has been reiterated in the following 1963 decisions:

v. M r n g ~ a , ~ ~eople v. S a n g a ~ a n , ~ ~eople D. Gutiarrez:8 Peoplem0 8 ~ ~nd People v. Buenbrazo.'10 Viewed from its historical per-

spective this decisional ruIe has attended to a long felt need for achange in the law on the matter. Bearing in mind the passage that

is not in the state o repose, it can be said that at least forthe moment the ideal situation has been attained since the law as i tis, now coincides with the law as it ought to be, by virtue of thisprecedent-setting decision.

55 80 Phil. '424 (1948).5'3G.R. No. 23708, October 31, 1968.5'G.R. No. 21757, November 26, 2968.-58C.R. No. 25372, November 29, 1968.55G.R. No. 19143, November 29, 1968

PLJ Volume 44 Number 1 -04- Bienvenido C. Ambion - Civil Law - Part Three

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