Torts Digest 7 (Moral Damages)

KIERULF

1. The driver of Pantranco bus, while driving along EDSA, lost control causing it to swerve to the center island and bumped an Isuzu pickup driven by Legaspi.

2. both vehicles were damaged and physical injuries were inflicted on Legaspi and his passenger Lucila Kierulf, both

of whom were treated at the Quezon City General Hospital. The bus also hit and injured a pedestrian who was then crossing EDSA.

3. It also hit a Caltex gas station. The pickup truck was smashed.

4. On Pantranco’s defense, they said that a used engine accidentally dropped from a junk truck infront of the bus

throwing the driver from his seat.

5. TC awarded: 200,000 actual damages and 25,000 moral damages where they prayed for 1M and 100k, no loss of

income was awarded,

ISSUE: pouses Kierulf and Legaspi argue that the damages awarded were inadequate while Pantranco counters that they

were astronomical, bloated and not duly proved.

HELD:

1. The court properly ruled that the bus driver was at fault and it’s not due to fortuitous event.2. MORAL DAMAGES:

a. Grounds: social and financial standing of the injured parties and 17 their wounded moral feelings and personal pride.

b. Others pleaded: loss of their conjugal fellowship and the impairment or destruction of their sexual life; that the spouses aver that the disfigurement of Lucila's physical appearance cannot but affect their marital right to "consortium" which would have remained normal were it not for the accident. Thus, the moral damages awarded in favor of Lucila should be increased to P1,000,000.00, not only for Lucila but also for her husband Victor who also suffered "psychologically."

c. Legal basis: Rodriguez ruled that when a person is injured to the extent that he/she is no longer capable of giving love, affection, comfort and sexual relations to his or her spouse, that spouse has suffered a direct and real personal loss. The loss is immediate and consequential rather than remote and unforeseeable; it is personal to the spouse and separate and distinct from that of the injured person.

d. However, Victor's claim for deprivation of his right to consortium, although argued before Respondent Court, is not supported by the evidence on record. His wife might have been badly disfigured, but he had not testified that, in consequence thereof, his right to marital consortium was affected.

3. On consideration of social and financial standing:

a. The social and financial standing of a claimant of moral damages may be considered in awarding moral

damages only if he or she was subjected to contemptuous conduct despite the offender's knowledge of his or her social and financial standing.

b. Be that as it may, it is still proper to award moral damages to Petitioner Lucila for her physical sufferings,

mental anguish, fright, serious anxiety and wounded feelings. She sustained multiple injuries on the scalp, limbs and ribs. She lost all her teeth. She had to undergo several corrective operations and treatments.

4. On loss of income: Lucila's claim of loss of earning capacity has not been duly proven. The alleged loss must be established by factual evidence for it partakes of actual damages. A party is entitled to adequate compensation for such pecuniary loss actually suffered and duly proved. Such

damages, to be recoverable, must not only be capable of proof, but must actually be shown with a reasonable degree of certainty.

5. Award: award of moral damages to Lucila and Legaspi is hereby INCREASED to P400,000.00 and P50,000.00

respectively; exemplary damages to Lucila is INCREASED to P200,000.00. Legaspi is awarded exemplary damages of P50,000.00. The amount of P 16,500.00 as actual or compensatory damages is also GRANTED to Legaspi.

RAAGAS VS TRAYA

1. Melquiades Raagas and Adela Laudiano Raagas against Octavio Traya, his wife, and Bienvenido Canciller,

alleges that the latter recklessly drove and hit their three year old son in a highway in Leyte which caused the death.

2. The plaintiffs ask for actual damages in the sum of P10,000, moral, nominal and corrective damages in a sum to

be determined by the court, P1,000 as attorney's fees, P1,000 for expenses of litigation, plus costs.

3. deny that Canciller was "driving recklessly" at the time of the mishap, and assert that the truck "was fully loaded

and was running at a very low speed and on the right side of the road"; that it was the child who "rushed from an unseen position and bumped the truck so that he was hit by the left rear tire of the said truck and died", and consequently the defendants are not to blame for the accident which was "entirely attributable to an unforeseen event" or due to the fault of the child and negligence of his parents;

4. TC rendered judgment on the pleadings and ordered them to pay.

a. The court reasoned that the denial in the answer of the charge of reckless driving "did not affect the

plaintiffs' positive allegation in their complaint that the truck . . . did not have a current year registration plate . . . for the year 1958 when the accident occurred that "this failure . . . has the effect of admitting hypothetically that they operated ... the said truck without proper license . . . when the accident occurred," and that "unless there is proof to the contrary, it is presumed that a person driving a motor vehicle has been negligent if at the time of the mishap, he was violating any traffic regulation

ISSUE: Claim for damages

HELD:

1. Judgment onf the pleadings not valid: The plaintiffs' claim for actual, moral, nominal and corrective damages, was

controverted by the averment in the answer to the effect that the defendants "have no knowledge or information sufficient to form a belief as to the truth of the allegations" as to such damages, "the truth of the matter being that the death of Regino Raagas was occasioned by an unforeseen event and/or by the fault of the small boy Regino Raagas or his parents." Such averment has the effect of tendering a valid issue.

2. we held that even if the allegations regarding the amount of damages in the complaint are not specifically denied in

the answer, such damages are not deemed admitted.

3. we declared in no uncertain terms that actual damages must be proved, and that a court cannot rely on

"speculation, conjecture or guesswork" as to the fact and amount of damages, but must depend on actual proof that damage had been suffered and on evidence of the actual amount.

4. we reaffirmed the rule that although an allegation is not necessary in order that moral damages may be awarded,

"it is, nevertheless, essential that the claimant satisfactorily prove the existence of the factual basis of the damage and its causal relation to defendant's acts."

Today is Wednesday, October 01, 2014

Republic of the PhilippinesSUPREME COURT

Manila

EN BANC

G.R. No. L-18287 March 30, 1963

TRINIDAD J. FRANCISCO, plaintiff-appellee, vs.GOVERNMENT SERVICE INSURANCE SYSTEM, defendant-appellant.

-----------------------------

G.R. No. L-18155 March 30, 1963

TRINIDAD J. FRANCISCO, plaintiff-appellant, vs.GOVERNMENT SERVICE INSURANCE SYSTEM, defendant-appellee.

Vicente J. Francisco for plaintiff-appellee.The Government Corporate Counsel for defendant-appellant.

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

Appeal by the Government Service Insurance System from the decision of the Court of First Instance of Rizal (Hon. Angel H. Mojica, presiding), in its Civil Case No. 2088-P, entitled "Trinidad J. Francisco, plaintiff, vs. Government Service Insurance System, defendant", the dispositive part of which reads as follows:

WHEREFORE, judgment is hereby rendered: (a) Declaring null and void the consolidation in the name of the defendant, Government Service Insurance System, of the title of the VIC-MARI Compound; said title shall be restored to the plaintiff; and all payments made by the plaintiff, after her offer had been accepted by the defendant, must be credited as amortizations on her loan; and (b) Ordering the defendant to abide by the terms of the contract created by plaintiff's offer and it's unconditional acceptance, with costs against the defendant.

The plaintiff, Trinidad J. Francisco, likewise appealed separately (L-18155), because the trial court did not award the P535,000.00 damages and attorney's fees she claimed. Both appeals are, therefore, jointly treated in this decision.

The following facts are admitted by the parties: On 10 October 1956, the plaintiff, Trinidad J. Francisco, in consideration of a loan in the amount of P400,000.00, out of which the sum of P336,100.00 was released to her, mortgaged in favor of the defendant, Government Service Insurance System (hereinafter referred to as the System) a parcel of land containing an area of 18,232 square meters, with twenty-one (21) bungalows, known as Vic-Mari Compound, located at Baesa, Quezon City, payable within ten (10) years in monthly installments of P3,902.41, and with interest of 7% per annum compounded monthly.

On 6 January 1959, the System extrajudicially foreclosed the mortgage on the ground that up to that date the plaintiff-mortgagor was in arrears on her monthly installments in the amount of P52,000.00. Payments made by the plaintiff at the time of foreclosure amounted to P130,000.00. The System itself was the buyer of the property in the foreclosure sale.

On 20 February 1959, the plaintiff's father, Atty. Vicente J. Francisco, sent a letter to the general manager of the defendant corporation, Mr. Rodolfo P. Andal, the material portion of which recited as follows:

Yesterday, I was finally able to collect what the Government owed me and I now propose to pay said amount of P30,000 to the GSIS if it would agree that after such payment the foreclosure of my daughter's mortgage would be set aside. I am aware that the amount of P30,000 which I offer to pay will not cover the total arrearage of P52,000 but as regards the balance, I propose this arrangement: for the GSIS to take over the administration of the mortgaged property and to collect the monthly installments, amounting to about P5,000, due on the unpaid purchase price of more than 31 lots and houses therein and the monthly installments collected shall be applied to the payment of Miss Francisco's arrearage until the same is fully covered. It is requested, however, that from the amount of the monthly installments collected, the sum of P350.00 be deducted for necessary expenses, such as to pay the security guard, the street-caretaker, the Meralco Bill for the street lights and sundry items.

It will be noted that the collectible income each month from the mortgaged property, which as I said consists of installments amounting to about P5,000, is more than enough to cover the monthly amortization on Miss Francisco's loan. Indeed, had she not encountered difficulties, due to unforeseen circumstances, in collecting the said installments, she could have paid the amortizations as they fell due and there would have been really no need for the GSIS to resort to foreclosure.

The proposed administration by the GSIS of the mortgaged property will continue even after Miss Francisco's account shall have been kept up to date. However, once the arrears shall have been paid, whatever amount of the monthly installments collected in excess of the amortization due on the loan will be turned over to Miss Francisco.

I make the foregoing proposal to show Francisco's sincere desire to work out any fair arrangement for the settlement of her obligation. I trust that the GSIS, under the broadminded policies of your administration, would give it serious consideration.

Sincerely,.

s/ Vicente J. Francisco t/ VICENTE J. FRANCISCO

On the same date, 20 February 1959, Atty. Francisco received the following telegram:.

VICENTE FRANCISCO SAMANILLO BLDG. ESCOLTA.

GSIS BOARD APPROVED YOUR REQUEST RE REDEMPTION OF FORECLOSED PROPERTY OF YOUR DAUGHTER

ANDAL"

On 28 February 1959, Atty. Francisco remitted to the System, through Andal, a check for P30,000.00, with an accompanying letter, which reads:

I am sending you herewith BPI Check No. B-299484 for Thirty Thousand Pesos (P30,000.00) in accordance with my letter of February 20th and your reply thereto of the same date, which reads:

GSIS BOARD APPROVED YOUR REQUEST RE REDEMPTION OF FORECLOSED PROPERTY OF YOUR DAUGHTER

x x x x x x x x x

The defendant received the amount of P30,000.00, and issued therefor its official receipt No. 1209874, dated 4 March 1959. It did not, however, take over the administration of the compound. In the meantime, the plaintiff received the monthly payments of some of the occupants thereat; then on 4

March 1960, she remitted, through her father, the amount of P44,121.29, representing the total monthly installments that she received from the occupants for the period from March to December 1959 and January to February 1960, minus expenses and real estate taxes. The defendant also received this amount, and issued the corresponding official receipt.

Remittances, all accompanied by letters, corresponding to the months of March, April, May, and June, 1960 and totalling P24,604.81 were also sent by the plaintiff to the defendant from time to time, all of which were received and duly receipted for.

Then the System sent three (3) letters, one dated 29 January 1960, which was signed by its assistant general manager, and the other two letters, dated 19 and 26 February 1960, respectively, which were signed by Andal, asking the plaintiff for a proposal for the payment of her indebtedness, since according to the System the one-year period for redemption had expired.

In reply, Atty. Francisco sent a letter, dated 11 March 1960, protesting against the System's request for proposal of payment and inviting its attention to the concluded contract generated by his offer of 20 February 1959, and its acceptance by telegram of the same date, the compliance of the terms of the offer already commenced by the plaintiff, and the misapplication by the System of the remittances she had made, and requesting the proper corrections.

By letter, dated 31 May 1960, the defendant countered the preceding protest that, by all means, the plaintiff should pay attorney's fees of P35,644.14, publication expenses, filing fee of P301.00, and surcharge of P23.64 for the foreclosure work done; that the telegram should be disregarded in view of its failure to express the contents of the board resolution due to the error of its minor employees in couching the correct wording of the telegram. A copy of the excerpts of the resolution of the Board of Directors (No. 380, February 20, 1959) was attached to the letter, showing the approval of Francisco's offer —

... subject to the condition that Mr. Vicente J. Francisco shall pay all expenses incurred by the GSIS in the foreclosure of the mortgage.

Inasmuch as, according to the defendant, the remittances previously made by Atty. Francisco were allegedly not sufficient to pay off her daughter's arrears, including attorney's fees incurred by the defendant in foreclosing the mortgage, and the one-year period for redemption has expired, said defendant, on 5 July 1960, consolidated the title to the compound in its name, and gave notice thereof to the plaintiff on 26 July 1960 and to each occupant of the compound.

Hence, the plaintiff instituted the present suit, for specific performance and damages. The defendant answered, pleading that the binding acceptance of Francisco's offer was the resolution of the Board, and that Andal's telegram, being erroneous, should be disregarded. After trial, the court below found that the offer of Atty. Francisco, dated 20 February 1959, made on behalf of his daughter, had been unqualifiedly accepted, and was binding, and rendered judgment as noted at the start of this opinion.

The defendant-appellant corporation assigns six (6) errors allegedly committed by the lower court, all of which, however, are resolvable on the single issue as to whether or not the telegram generated a contract that is valid and binding upon the parties.

Wherefore, the parties respectfully pray that the foregoing stipulation of facts be admitted and approved by this Honorable Court, without prejudice to the parties adducing other evidence to prove their case not covered by this stipulation of facts. 1äwphï1.ñët

We find no reason for altering the conclusion reached by the court below that the offer of compromise made by plaintiff in the letter, Exhibit "A", had been validly accepted, and was binding on the defendant. The terms of the offer were clear, and over the signature of defendant's general manager, Rodolfo Andal, plaintiff was informed telegraphically that her proposal had been accepted. There was nothing in the telegram that hinted at any anomaly, or gave ground to suspect its veracity, and the plaintiff, therefore, can not be blamed for relying upon it. There is no denying that the telegram was within Andal's apparent authority, but the defense is that he did not sign it, but that it was sent by the Board Secretary in his name and without his knowledge. Assuming this to be true, how was appellee to know it? Corporate transactions would speedily come to a standstill were every person dealing with a corporation held duty-bound to disbelieve every act of its responsible officers, no matter how regular they should appear on their face. This Court has observed in Ramirez vs. Orientalist Co., 38 Phil. 634, 654-655, that —

In passing upon the liability of a corporation in cases of this kind it is always well to keep in mind the situation as it presents itself to the third party with whom the contract is made. Naturally he can have little or no information as to what occurs in corporate meetings; and he must necessarily rely upon the external manifestations of corporate consent. The integrity of commercial transactions can only be maintained by holding the corporation strictly to the liability fixed upon it by its agents in accordance with law; and we would be sorry to announce a doctrine which would permit the property of a man in the city of Paris to be whisked out of his hands and carried into a remote quarter of the earth without recourse against the corporation whose name and authority had been used in the manner disclosed in this case. As already observed, it is familiar doctrine that if a corporation knowingly permits

one of its officers, or any other agent, to do acts within the scope of an apparent authority, and thus holds him out to the public as possessing power to do those acts, the corporation will, as against any one who has in good faith dealt with the corporation through such agent, be estopped from denying his authority; and where it is said "if the corporation permits" this means the same as "if the thing is permitted by the directing power of the corporation."

It has also been decided that —

A very large part of the business of the country is carried on by corporations. It certainly is not the practice of persons dealing with officers or agents who assume to act for such entities to insist on being shown the resolution of the board of directors authorizing the particular officer or agent to transact the particular business which he assumes to conduct. A person who knows that the officer or agent of the corporation habitually transacts certain kinds of business for such corporation under circumstances which necessarily show knowledge on the part of those charged with the conduct of the corporate business assumes, as he has the right to assume, that such agent or officer is acting within the scope of his authority. (Curtis Land & Loan Co. vs. Interior Land Co., 137 Wis. 341, 118 N.W. 853, 129 Am. St. Rep. 1068; as cited in 2 Fletcher's Encyclopedia, Priv. Corp. 263, perm. Ed.)

Indeed, it is well-settled that —

If a private corporation intentionally or negligently clothes its officers or agents with apparent power to perform acts for it, the corporation will be estopped to deny that such apparent authority is real, as to innocent third persons dealing in good faith with such officers or agents. (2 Fletcher's Encyclopedia, Priv. Corp. 255, Perm. Ed.)

Hence, even if it were the board secretary who sent the telegram, the corporation could not evade the binding effect produced by the telegram..

The defendant-appellant does not disown the telegram, and even asserts that it came from its offices, as may be gleaned from the letter, dated 31 May 1960, to Atty. Francisco, and signed "R. P. Andal, general manager by Leovigildo Monasterial, legal counsel", wherein these phrases occur: "the telegram sent ... by this office" and "the telegram we sent your" (emphasis supplied), but it alleges mistake in couching the correct wording. This alleged mistake cannot be taken seriously, because while the telegram is dated 20 February 1959, the defendant informed Atty. Francisco of the alleged mistake only on 31 May 1960, and all the while it accepted the various other remittances, starting on 28 February 1959, sent by the plaintiff to it in compliance with her performance of her part of the new contract.

The inequity of permitting the System to deny its acceptance become more patent when account is taken of the fact that in remitting the payment of P30,000 advanced by her father, plaintiff's letter to Mr. Andal quoted verbatim the telegram of acceptance. This was in itself notice to the corporation of the terms of the allegedly unauthorized telegram, for as Ballentine says:

Knowledge of facts acquired or possessed by an officer or agent of a corporation in the course of his employment, and in relation to matters within the scope of his authority, is notice to the corporation, whether he communicates such knowledge or not. (Ballentine, Law on Corporations, section 112.)

since a corporation cannot see, or know, anything except through its officers.

Yet, notwithstanding this notice, the defendant System pocketed the amount, and kept silent about the telegram not being in accordance with the true facts, as it now alleges. This silence, taken together with the unconditional acceptance of three other subsequent remittances from plaintiff, constitutes in itself a binding ratification of the original agreement (Civil Code, Art. 1393).

ART. 1393. Ratification may be effected expressly or tacitly. It is understood that there is a tacit ratification if, with knowledge of the reason which renders the contract voidable and such reason having ceased, the person who has a right to invoke it should execute an act which necessarily implies an intention to waive his right.

Nowhere else do the circumstances call more insistently for the application of the equitable maxim that between two innocent parties, the one who made it possible for the wrong to be done should be the one to bear the resulting loss..

The defendant's assertion that the telegram came from it but that it was incorrectly worded renders unnecessary to resolve the other point on controversy as to whether the said telegram constitutes an actionable document..

Since the terms offered by the plaintiff in the letter of 20 February 1959 (Exhibit "A") provided for the setting aside of the foreclosure effected by the defendant System, the acceptance of the offer left the account of plaintiff in the same condition as if no foreclosure had taken place. It follows, as the

lower court has correctly held, that the right of the System to collect attorneys' fees equivalent to 10% of the due (P35,694.14) and the expenses and charges of P3,300.00 may no longer be enforced, since by the express terms of the mortgage contract, these sums were collectible only "in the event of foreclosure."

The court a quo also called attention to the unconscionability of defendant's charging the attorney's fees, totalling over P35,000.00; and this point appears well-taken, considering that the foreclosure was merely extra-judicial, and the attorneys' work was limited to requiring the sheriff to effectuate the foreclosure. However, in view of the parties' agreement to set the same aside, with the consequential elimination of such incidental charges, the matter of unreasonableness of the counsel fees need not be labored further.

Turning now to the plaintiff's separate appeal (Case G.R. No. L-18155): Her prayer for an award of actual or compensatory damages for P83,333.33 is predicated on her alleged unrealized profits due to her inability to sell the compound for the price of P750,000.00 offered by one Vicente Alunan, which sale was allegedly blocked because the System consolidated the title to the property in its name. Plaintiff reckons the amount of P83,333.33 by placing the actual value of the property at P666,666.67, a figure arrived at by assuming that the System's loan of P400,000.00 constitutes 60% of the actual value of the security. The court a quo correctly refused to award such actual or compensatory damages because it could not determine with reasonable certainty the difference between the offered price and the actual value of the property, for lack of competent evidence. Without proof we cannot assume, or take judicial notice, as suggested by the plaintiff, that the practice of lending institutions in the country is to give out as loan 60% of the actual value of the collateral. Nor should we lose sight of the fact that the price offered by Alunan was payable in installments covering five years, so that it may not actually represent true market values.

Nor was there error in the appealed decision in denying moral damages, not only on account of the plaintiff's failure to take the witness stand and testify to her social humiliation, wounded feelings, anxiety, etc., as the decision holds, but primarily because a breach of contract like that of defendant, not being malicious or fraudulent, does not warrant the award of moral damages under Article 2220 of the Civil Code (Ventanilla vs. Centeno, L-14333, 28 Jan. 1961; Fores vs. Miranda, L-12163, 4 March 1959).

There is no basis for awarding exemplary damages either, because this species of damages is only allowed in addition to moral, temperate, liquidated, or compensatory damages, none of which have been allowed in this case, for reasons herein before discussed (Art. 2234, Civil Code; Velayo vs. Shell Co. of P.I., L-7817, Res. July 30, 1957; Singson, et al. vs. Aragon and Lorza, L-5164, Jan. 27, 1953, 49 O.G. No. 2, 515).

As to attorneys' fees, we agree with the trial court's stand that in view of the absence of gross and evident bad faith in defendant's refusal to satisfy the plaintiff's claim, and there being none of the other grounds enumerated in Article 2208 of the Civil Code, such absence precludes a recovery. The award of attorneys' fees is essentially discretionary in the trial court, and no abuse of discretion has been shown.

FOR THE FOREGOING REASONS, the appealed decision is hereby affirmed, with costs against the defendant Government Service Insurance System, in G.R. No.L-18287.

Bengzon, C.J., Padilla, Bautista Angelo, Labrador, Concepcion, Barrera, Paredes, Dizon, Regala and Makalintal, JJ., concur.

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Manila

THIRD DIVISION

G.R. No. 127823 January 29, 1998

"J" MARKETING CORPORATION represented by HECTOR L. CALUDAC, petitioner, vs.FELICIDAD SIA, JR. and COURT OF APPEALS, respondents.

FRANCISCO, J.:

This is a case of damages and attorney's fees. The undisputed facts are as follows:

(Petitioner), J. Marketing Corporation, a company engaged in the business of appliances and motorcycles, received on April 24, 1983 from Kawasaki Motors (Phils.) a brand new Kawasaki motorcycle, color Blue, Model HD-11 (1985) with Engine No. G7E- 04848 and Chassis No. KG-805535. Upon receipt, petitioner's representative placed the motorcycle in the bodega of YKS Bldg., Rizal Avenue, Tacloban City. However, on April 20, 1987, (Petitioner) found out that the motorcycle unit was missing in the bodega and the loss was immediately reported to the police authorities specifically to the Headquarters Constabulary Highway Patrol District No. 8, Tacloban City. Subsequently, (petitioner) tried to trace the lost motor cycle to one Felicidad Sia, Jr., herein (private respondent), who bought a motorcycle from one Renato Pelande, Jr. on May 25, 1987. Allegedly, petitioner's representative went to the house of the private respondent and examined the chassis and motor numbers of the motorcycle in his (private respondent) possession, and found out that the chassis and motor numbers of the motorcycle in private respondent's possession have been tampered to jibe with the chassis and motor numbers of the motorcycle unit previously purchased by Renato Pelande, Jr. from petitioner. When petitioner's representative confronted private respondent at the Constabulary Highway Patrol Group office anent the questionable motorcycle, private respondent refused to return the said motorcycle to petitioner and instead told petitioner's representative to file a case in court. Hence, on September 24, 1987, petitioner filed a complaint for replevin with damages against private respondent Felicidad C. Sia, Jr. before the Regional Trial Court of Tacloban City, Branch 8.

On April 14, 1988, private respondent Felicidad C. Sia Jr. filed a third party complaint against Renato Pelante, Jr. from whom he purchased his motorcycle. Said third party defendant was subsequently declared as in default. 1

After trial, the lower court rendered a decision dismissing petitioner's complaint but awarded damages and attorney's fees to private respondent. 2 On appeal, the CA affirmed the decision of the court a quo. 3 Hence this petition where the sole issue raised is whether the award of

attorney's fees and damages (moral and exemplary) is proper.

A person's right to litigate should not be penalized by holding him liable for damages. This is especially true when the filing of the case is to enforce what he believes to be his rightful claim against another although found to be erroneous. In this case, petitioner precisely instituted the replevin case against private respondent based on the latter's own challenge to the former that if they really had a right on the motorcycle, then they should institute the necessary case in court. When petitioner did sue private respondent and filed a third party complaint against the person from whom private respondent claims to have bought the motorcycle, it cannot be said that the institution of the replevin suit was tainted with gross and evident bad faith or was done maliciously to harass, embarrass, annoy or ridicule private respondent.

Moreover, the adverse result of an action — dismissal of petitioner's complaint — does not per se make an act unlawful and subject the actor to the payment of moral damages. It is not a sound public policy to place a premium on the right to litigate. 4 No damages can be charged on those who may exercise such precious right in good faith, even if done erroneously. 5

The award of exemplary damages has likewise no factual basis. It is a requisite that the act must be accompanied by bad faith or done in wanton, fraudulent or malevolent manner 6 — circumstances which are absent in this case. In addition, exemplary damages cannot be awarded as the requisite element of compensatory damages was not present. 7

With respect to the attorney's fees, an adverse decision does not ipso facto justify the award thereof to the winning party. 8 All indications point to the fact that petitioner honestly thought that they had a good cause of action, so that notwithstanding the dismissal of their case, no attorney's fees can be granted to private respondent. 9 Considering that the latter claims to be the owner of the motorcycle, petitioner was compelled to sue him. When the former "necessarily" became a party defendant no attorney's fees and litigation expenses can automatically be recovered even if he should win, as it is not the fact of winning alone that entitles recovery of such items but rather the attendance of special circumstances 10 — the enumerated exceptions in Article 2208 of the New Civil Code. 11 There being no bad faith reflected in petitioner's persistence in pursuing its case, other than an erroneous conviction of the righteousness of its cause, attorney's fees cannot not be recovered as cost. 12

WHEREFORE, premises considered, the decision of the Court of Appeals is AFFIRMED WITH THE MODIFICATION that the award of damages, attorney's fees and cost to private respondent is deleted.

SO ORDERED.

Narvasa, C.J., Romero, Melo and Panganiban, JJ., concur.

Footnotes

1 Annex "A" to the Petition; Rollo, p. 20.

2 The dispositive portion of the RTC Decision reads:

"WHEREFORE, in view of the foregoing, this Court —

1. Orders the dismissal of plaintiff's complaint for replevin with damages for lack of merit;

2. Orders plaintiff to pay defendant Felicidad Sia, Jr. P5,000.00 for moral damages and another P5,000.00 for exemplary damages;

3. Orders plaintiff to pay defendant P20,000.00 for attorney's fees (for his two hired counsels) and

4. To pay cost of the suit.

SO ORDERED." (Rollo, p. 19.)

3 Court of Appeals decision promulgated on September 26, 1996.

4 Arenas v. CA, 169 SCRA 558; Mirasol v. Dela Cruz, 84 SCRA 337.

5 Barreto v. Arevalo, 99 Phil. 771.

6 Philippine National Bank v. CA, 256 SCRA 44.

7 Philippine National Bank v. CA, supra.

8 Ramos v. Ramos, 61 SCRA 284 citing Herrera v. Lim Kuy Guan, 110 Phil. 1020; Lazatin v. Twaño and Castro, 112 Phil. 733.

9 Herrera v. Lim Kuy Guan, supra.

10 Rizal Surety and Insurance, Co., Inc. v. CA, et al., 126 Phil. 430.

11 Article 2208. In the absence of stipulation, attorney's fees and expenses of litigation, other than judicial costs, cannot be recovered except:

(1) When exemplary damages are a awarded;

(2) When the defendant's act or omission has compelled the plaintiff to litigate with third persons or to incur expenses to protect his interest;

(3) In criminal cases of malicious prosecution against the plaintiff;

(4) In case of a clearly unfounded civil action or proceeding against the plaintiff;

(5) Where the defendant acted in gross and evident bad faith in refusing to satisfy the plaintiff's plainly valid, just and demandable claim;

(6) In actions for legal support;

(7) In actions for the recovery of wages of household helpers, laborers and skilled workers;

(8) In actions for indemnity under workmen's compensation and employer's liability laws;

(9) In a separate civil action to recover civil liability arising from a crime;

(10) When at least double judicial costs are awarded;

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

In all cases, the attorney's fees and expenses of litigation must be reasonable.

12 Servicewide Specialists, Incorporated v. CA, 256 SCRA 649.




Manila

FIRST DIVISION

G.R. No. 134784 December 9, 2002

CARLOS ARCONA y MOBAN, petitioner, vs.THE COURT OF APPEALS and PEOPLE OF THE PHILIPPINES, respondents.

D E C I S I O N

YNARES-SANTIAGO, J.:

Petitioner Carlos Arcona y Moban1 and his brother Benito Arcona y Moban were charged with Murder and Frustrated Murder2 in separate information which read:

Criminal Case No. 6408 (Murder)

That on or about the 27th day of June, 1986 at Barangay Labog, Municipality of Brooke’s Point, Province of Palawan, Philippines, and within the jurisdiction of this Honorable Court the above-named accused conspiring, confederating together and mutually helping one another, with intent to kill and with evident premeditation and treachery, did then and there willfully, unlawfully and feloniously attack, assault and stab one NAPOLEON ONG with a bladed weapon to wit; a knife hitting him in vital part of his body and inflicting upon him injury which was the direct and immediate cause of his death shortly thereafter.

Criminal Case No. 6409 (Frustrated Murder)

That on or about the 27th day of June 1986 at Barangay Labog, Municipality of Brooke’s Point, Province of Palawan, Philippines, and within the jurisdiction of this Honorable Court the above-named accused conspiring, confederating together and mutually helping one another, with evident premeditation and treachery and with intent to kill did then and there willfully, unlawfully and feloniously attack, assault, strike and beat with a bamboo pole one EDGARDO TALANQUINES hitting him on different parts of his body and inflicting upon him injuries which would have caused his death thru performing all the acts of execution which would have produced the crime of murder as a consequence but nevertheless did not produce it by reason of causes independent of the will of the accused that is EDGARDO TALANQUINES have parried the blows, escape away from his assailant and by the timely and able medical assistance rendered to said Edgardo Talanquines which prevented his death.

On arraignment both accused pleaded "not guilty". Thereafter, the cases were jointly tried.

It appears that at around 7:30 in the evening of June 27, 1986, Napoleon Ong and Edgardo Talanquines were walking along the national highway at Barangay Labog, Brooke’s Point, Palawan, on their way home after coming from a birthday party. When they were near the house of Jerry Boston, Edgardo heard a loud thud. He turned around saw Napoleon slump to the ground. Suddenly, someone hit Edgardo from behind with a piece of bamboo, causing him to fall. He saw no one in the immediate premises except petitioner. Edgardo then stood up and ran towards the house of Cesar

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Umapas to ask for help.

Prosecution witness Leo Zaragoza testified that he was standing in front of Jerry Boston’ house, about seven (7) meters away, when he saw petitioner stab Napoleon.

Napoleon expired on the way to the hospital. Dr. Joaquin Fabellon, who conducted the autopsy on Napoleon’s body, certified that the cause of death was the stab wound sustained at the stomach area just above the waistline.

Petitioner voluntarily surrendered to T/Sgt. Romeo Laging at the PC Detachment Command in Barangay Lugod.

In his defense, petitioner alleged that in the evening of June 27, 1986, he was walking alone when he met Napoleon Ong and Edgardo Talanquines. Without any provocation, Napoleon suddenly drew his bolo and shouted, "Caloy, I will kill you!"3 Napoleon swung the bolo at him twice but missed him. Petitioner then drew out his knife and stabbed Napoleon. When he saw Edgardo Talanquines rushing towards him, he grabbed a piece of bamboo from the newly constructed culvert and hit the former on the left arm. Talanquines ran away. Petitioner also left the premises and went home. On the way, he met his brother, Benito, and together they proceeded to their house.4

After trial, the court a quo rendered judgment in Criminal Case No. 6408 convicting petitioner of Homicide and acquitting Benito Arcona. In Criminal Case No. 6409, the trial court convicted Benito Arcona of Slight Physical Injuries and acquitted petitioner. The dispositive portion of the decision5 reads:

WHEREFORE, premises considered, the Court renders judgment in Criminal Case No. 6408 finding Carlos Arcona y Moban GUILTY beyond reasonable doubt of the crime of Homicide under Art. 249 of the Revised Penal Code, with the mitigating circumstance of voluntary surrender to authorities and no aggravating circumstances. He is hereby sentenced to suffer the indeterminate penalty of SIX (6) YEARS and ONE (1) DAY of PRISION MAYOR as MINIMUM to FOURTEEN (14) YEARS and ONE (1) DAY OF RECLUSION TEMPORAL as MAXIMUM, and to indemnify the heirs of Napoleon Ong the sum of THIRTY THOUSAND PESOS (P30,000.00) for his death, TEN THOUSAND PESOS (P10,000.00) as actual damages and TEN THOUSAND PESOS (P10,000.00) as moral damages. Benito Arcona is acquitted of the crime charged, for failure of Prosecution to prove his guilt beyond reasonable doubt.

In Criminal Case No. 6409, Benito Arcona is found GUILTY beyond reasonable doubt of the crime of Slight Physical injuries and is sentenced to suffer imprisonment of TWENTY (20) DAYS of ARRESTO MENOR and to indemnify Edgardo Talanquines the sum of TEN THOUSAND PESOS (P 10,000.00) as actual damages. Carlos Arcona is ACQUITTED of the crime charged for failure of Prosecution to prove his guilt beyond reasonable doubt.

Only petitioner appealed to the Court of Appeals, assailing his conviction for Homicide in Criminal Case No. 6408. On January 28, 1997, the Court of Appeals affirmed the findings of the trial court but increased the civil indemnity to P50,000.00, thus:

WHEREFORE, for all the foregoing, the decision of the trial court finding appellant Carlos Arcona guilty of Homicide mitigated by his voluntary surrender to the authorities is hereby AFFIRMED, with the sole modification that the civil indemnity Carlos Arcona shall pay to the heirs of Napoleon Ong is hereby increased to Fifty Thousand Pesos (P50,000.00).6

Petitioner filed the instant petition for review. He maintains that he acted in self-defense when he stabbed Napoleon and hit Edgardo with a bamboo stick. He contends that Napoleon committed unlawful aggression when drew an unsheathed bolo and attempted to hack him with it twice. Moreover, petitioner invokes the testimony of Jerry Boston, to the effect that before the stabbing incident he heard somebody shout, "Caloy, patayon kita." (Caloy, I will kill you!)7

We are not persuaded. It is settled jurisprudence that when an accused invokes self-defense, the onus probandi to show that the killing was justified shifts to him. Even if the prosecution evidence was weak, it could not be readily dismissed considering that the accused had openly admitted his responsibility for the killing.8

To prove self-defense, the accused must show with clear and convincing evidence that: (1) he is not the unlawful aggressor; (2) there was lack of sufficient provocation on his part; and (3) he employed reasonable means to prevent or repel the aggression. Self-defense, like alibi, is a defense easy to concoct. It is axiomatic that once an accused had admitted that he inflicted fatal injuries on the deceased, it is incumbent upon him, in order to avoid criminal liability, to prove the justifying circumstance claimed by him with clear, satisfactory and convincing evidence.9

The question whether accused-appellant acted in self-defense is essentially a question of fact. In self-defense, unlawful aggression is a primordial element.10

In the case at bar, the trial court was evidently not satisfied and convinced with petitioner’s claim that Napoleon was the unlawful aggressor, thus:

It has been established that a bolo identified as belonging to Napoleon Ong was found at the scene of the crime. The Court is also convinced that the stabbing incident was preceded by the sounds of a scuffle or fight because it was these unusual noises which led Leo Zaragosa and Benito Arcona to go out of the house of Jerry Boston in order to investigate what had happened. However, the presence of the bolo of Napoleon Ong, and the shout of "Caloy, I will kill you" allegedly uttered by the deceased are circumstantial evidence and not sufficient to conclude that the deceased had committed acts of unlawful aggression which justified the stabbing by accused Carlos Arcona.11

We agree with the findings of the trial court. The presence of Napoleon’s unsheathed bolo at the crime scene and the scattered bamboo sticks suggest a number of scenarios. While the physical evidence may suggest that Napoleon drew the bolo from its scabbard, such fact alone would not in any way satisfactorily support the conclusion that, indeed, Napoleon was the unlawful aggressor.

Likewise, the trial court was correct in refusing to give any weight to the shout, "Caloy, I will kill you!" which Jerry Boston allegedly heard immediately prior to the actual stabbing incident. Indeed, Jerry Boston testified that "somebody" shouted those words. He did not categorically say that it was Napoleon. Even granting that Napoleon uttered those words, it was still possible that he said it while being assaulted by petitioner.

Significantly, Jerry only heard the shouted words but never saw the sequence of events preceding the stabbing incident, thereby rendering doubtful the contention that Napoleon was the unlawful aggressor. Simply, these circumstances are insufficient to conclusively establish that Napoleon was the unlawful aggressor. lavvphil.net

Parenthetically, the Court of Appeals concurred with the findings of the trial court and even concluded that the physical evidence only made petitioner’s claim improbable, thus:

Accused-appellant miserably failed to convince the trial court that the stabbing was indeed in self-defense. Accused-appellant’s version that he was waylaid by Edgardo Talanquines and the deceased Napoleon Ong is highly improbable because he escaped the alleged ambush without a single scratch considering that there were allegedly two (2) attackers and one was even armed with a bolo (TSN, March 27, 1990, pp. 3, 7 and 9). Moreover, accused-appellant’s claim that Edgardo Talanquines rushed him is also questionable because appellant who was then already armed with a knife was purportedly attacked by Mr. Talanquines who was not at all armed (Ibid, p. 10).12

In fine, the plea of self-defense cannot be justifiably entertained where it is not only uncorroborated by any separate competent evidence but also extremely doubtful in itself. Accused-appellant having failed to discharge the burden proving his defense, his conviction shall of necessity follow, on the basis of his admission to the killing.13

We have consistently ruled that the trial judge is the best person to evaluate the veracity of a witness’s testimony as he is in the most ideal position to see the demeanor, actuation and countenance of a witness. Hence, we do not generally disturb the findings of the trial court except in cases where the judge acted arbitrarily.14 In the case at bar, petitioner failed to point out any arbitrariness on the part of the trial court.

Thus, we find that the court a quo was correct in convicting petitioner of Homicide attended by the mitigating circumstance of voluntary surrender and no aggravating circumstance. The penalty prescribed by law for Homicide, reclusion temporal, shall be imposed in its minimum period, pursuant to Article 64 (2) of the Revised Penal Code. Under the Indeterminate Sentence Law, petitioner shall be entitled to a minimum term of imprisonment to be taken from the penalty next lower in degree, prision mayor. Therefore, the indeterminate sentence imposed on him by the trial court, ranging from six (6) years and one (1) day of prision mayor, as minimum, to fourteen (14) years and one (1) day of reclusion temporal, as maximum, is affirmed.

Likewise, the Court of Appeals was correct in increasing the amount of civil indemnity to P50,000.00, in line with existing jurisprudence.15 In cases of murder, homicide, parricide and rape, civil indemnity in the amount of P50,000.00 is automatically granted to the offended party or his heirs in case of his death, without need of further evidence other than the fact of the commission of the crime.16

On the other hand, the award of moral damages in the sum of P 10,000.00 must be increased to P50,000.00. As borne out by human nature and experience, a violent death invariably and necessarily brings about emotional pain and anguish on the part of the victim’s family. It is inherently human to suffer sorrow, torment, pain and anger when a loved one becomes the victim of a violent or brutal killing. Such violent death or brutal killing not only steals from the family of the deceased his precious life, deprives them forever of his love, affection and support, but often leaves them with the gnawing feeling that an injustice has been done to them. For this reason, moral damages must be awarded even in the absence of any allegation and proof of the heirs’ emotional suffering.17

Finally, the award of actual damages in the amount of P10,000.00 does not appear to have been substantiated. Only those expenses which are duly proven, or those that appear to have been genuinely incurred in connection with the death, wake or burial of the victim, will be recognized in court.18 Hence, the same must be deleted. 1awph!l.net

WHEREFORE, in view of the foregoing, the petition for review is DENIED. The decision of the Court of Appeals, finding petitioner Carlos Arvuna y Morban guilty beyond reasonable doubt of Homicide, attended by the mitigating circumstance of voluntary surrender, and sentencing him to suffer the indeterminate penalty of six (6) years and one (1) day of prision mayor, as minimum, to fourteen (14) years and one (1) day of reclusion temporal, as maximum, and to pay the heirs of the deceased Napoleon Ong the sum of P50,000.00 as civil indemnity, is AFFIRMED with MODIFICATION. As modified, petitioner is further ordered to pay the heirs of the deceased moral damages in the increased amount of P50,000.00. The award of actual damages is deleted for lack of factual and legal basis.

SO ORDERED.

Davide, Jr., C.J., (Chairman), Vitug, Carpio, and Azcuna, JJ., concur.

Footnotes

1 Spelled as "Maban" in the RTC Records.

2 Criminal Cases Nos. 6408 and 6409 respectively.

3 TSN, March 27, 1990, p.7.

4 Ibid., p. 10.

5 Penned by Judge Sabas R. Acosta, Records, pp. 50-67.

6 Penned by Associate Justice Arturo B. Buena and concurred in by Associate Justices Ma. Alicia Austria-Martinez (now Associate Justice of the supreme Court) and Bernardo LI. Salas.

7 TSN, September 19, 1989, p. 5.

8 People v. Zeta, G.R. Nos. 140901-02, May 9, 2002.

9 People v. Bonifacio, G.R. No. 133799, February 5, 2002.

10 People v. Zeta, supra.

11 Record, p. 65.

12 Rollo, p. 39.

13 People v. Caguing, 347 SCRA 374 [2000].

14 People v. Lacbayan, 339 SCRA 396 [2000].

15 People v. Marquez, G.R. No. 136736, April 11, 2002.

16 People v. Bangcado, 346 SCRA 189, 210 [2000].

17 People v. Cabote, G.R. No. 136143, November 15, 2001, citing People v. Panado, 348 SCRA 679, 690-691 [2000].

18 People v. Bulfango, G.R. No. 138647, September 27, 2002.




Manila

THIRD DIVISION

G.R. No. 111584 September 17, 2001

PRODUCERS BANK OF THE PHILIPPINES, petitioner, vs.COURT OF APPEALS and SPOUSES SALVADOR Y. CHUA and EMILIA U. CHUA, respondents.

MELO, J.:

The instant petition assails the decision of the Court of Appeals in its CA G.R.CV No. 20220, dated October 31, 1991, affirming with modification the decision of Branch 48 of the Regional Trial Court of the 6th Judicial Region stationed in Bacolod City, as well as the resolution dated August 12, 1993 denying petitioner's motion for partial consideration. Undersigned ponente was given this case in pursuance of A. M. No. 00-9-03-SC dated February 27, 2001 distributing the so-called back-log cases.

The generative facts of the case may be chronicled as follows:

Sometime in April, 1982, respondent Salvador Chua was offered by Mr. Jimmy Rojas, manager of petitioner bank, to transfer his account from Pacific Banking Corporation to herein petitioner Producers Bank of the Philippines. In view of Rojas' assurances of longer loan terms and lower rates of interest, respondent spouses opened and maintained substantial savings and current deposits with the Bacolod branch of petitioner bank. Likewise, private respondents obtained various loans from petitioner bank, one of which was a loan for P2,000,000.00 which was secured by a real estate mortgage and payable within a period of three (3) years or from 1982 to 1985. On January 20, 1984, private respondents deposited with petitioner bank the total sum of P960,000.00, which was duly entered in private respondents' savings account passbook. However, petitioner bank failed to credit this deposit in private respondents' savings account due to the fact that its Branch Manager, Sixto Castillo, absconded with the money of the bank's depositors. Also, petitioner bank dishonored the checks drawn out by private respondents in favor of their various creditors on the ground of insufficient funds, despite the fact that at that time, the balance of private respondents' deposit was in the amount of P1,051,051.19. These events prompted private respondents to request for copies of their ledgers covering their savings and current accounts, but petitioner bank refused. Due to petitioner bank's refusal to furnish private respondents copies of their ledgers, private respondents instituted on January 30, 1984 an action for damages against petitioner bank which was docketed as Civil Case No. 2718. On the other hand, petitioner bank filed with the City Sheriff of Bacolod a petition for extrajudicial foreclosure of the real estate mortgage during the pendency of Civil Case No. 2718. As a result, private respondents filed a complaint for injunction and damages docketed as Civil Case No. 3276, alleging that the petition for extrajudicial foreclosure was without basis and was instituted maliciously in order to harass private respondents. On April 26, 1988, the trial court rendered its decision on the latter case, the dispositive portion of which reads:

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WHEREFORE, from the evidence adduced, judgment is hereby rendered in favor of plaintiff ordering the defendant as follows:

1) To pay plaintiff the sum of P2,000,000.00 as moral damages, with legal rate of interest; the sum of P90,000.00 per month and P18,000.00 per month representing plaintiff's unrealized profits from his cement and gasoline station business, respectively, to commence from October 16, 1984, with legal rate of interest until fully paid; the sum of P250,000.00 as exemplary damages;

2) To off-set the sum of P960,000.00 deposited by plaintiff on January 20, 1984 and entered in his Passbook No. 38240, together with its incremental interests computed at banking rate and to commence from January 20, 1984 with his agricultural loan account in the sum of P1,300,000.00 with interest thereon computed at fourteen (14%) percent per annum, to commence from January 4, 1984, covered by a real estate mortgage, both of which shall have a cut-off time frame on the date of this decision;

3) That should the said savings deposit and its interest be sufficient to cover the off-setting, compensation shall take place and to be taken from the amounts awarded to plaintiff in the form of moral, actual and compensatory damages;

4) That the time loan in the sum of P175,000.00 and the clean loan of P400,000.00, both without interest, shall be off-settled by the moral, actual and compensatory damages herein awarded to plaintiff;

5) That after compensation or set-off had taken place, to pay plaintiff the balance of the adjudged moral, actual and compensatory damages, with legal rate of interest until fully paid;

6) To render an accounting to plaintiff with respect to his Account Nos. 0142-0014-0 and 042-0014-1 for the period covering January to December, 1982;

7) That in order to make the bank's record complete, to reform the deed of real estate mortgage conformably with the agreement by stipulating in the said document that the maturity date of the agricultural loan is April 5, 1987 at the same rate of interest of fourteen (14%) percent per annum, deducting from the original amount of the loan the payments made on the principal and interests; this reformation shall take place simultaneously with the off-setting of accounts;

8) To pay plaintiff the sum equivalent to fifteen (15%) percent of the amount representing the balance of the sums awarded as moral, actual and compensatory damages as attorney's fees;

9) To pay plaintiff the costs of suit;

10) The writ of preliminary injunction issued by this Court is rendered permanent; and

11) The counterclaim is hereby dismissed.

SO ORDERED.

(Rollo, pp. 261-263.)

On October 31, 1991, upon appeal by petitioner bank, the Court of Appeals modified the decision of the trial court as follows:

WHEREFORE, from the evidence adduced, judgment is hereby rendered as follows:

1. Ordering the defendant —

a. To pay plaintiff the sum of P500,000.00 as moral and exemplary damages;

b. To pay the sum of P18,000.00 per month representing plaintiffs' unrealized profits from his gasoline station business to commence from October 16, 1984, with legal rate of interest, until fully paid;

c. To allow the plaintiffs to offset their financial obligation with the defendant bank by the moral, exemplary, actual and compensatory damages herein awarded in favor of the aforesaid plaintiffs;

d. If, after the off-setting, a balance remains in favor of the plaintiffs, to pay the said plaintiffs such balance of the adjudged moral, exemplary, actual and compensatory damages, with legal rate of interest until fully paid, as of the time of off-setting;

e. To render an accounting to plaintiffs with respect to their Account Nos. 0142-0014-0 and 042-0014-1 for the period covering January to December, 1982;

f. To pay plaintiffs the sum of P100,000.00 as attorney's fees.

g. To pay the costs of suit.

2. Ordering the plaintiffs —

a. To settle their loan obligation with the defendant bank within 90 days from the finality of this decision, subject to the resolution of this Court to the effect that they shall be relieved from the payment of penalties and surcharges on their outstanding balance starting January 20, 1984;

3. The plaintiffs' prayer for reformation of their mortgage contract or annulment thereof is hereby denied;

4. The counterclaim of defendant-appellant are hereby dismissed.

SO ORDERED.

(Rollo, pp. 86-87.)

Petitioner moved for a partial reconsideration of the above decision but the same was denied on August 12, 1993. Hence, the instant petition with the following submissions which allegedly warrant our review of the assailed decision, viz.:

1. The Court of Appeals erred in not ruling that the application for extrajudicial foreclosure of real estate mortgage is legal and valid;

2. The Court of Appeals erred in not granting petitioner bank its right to foreclose extrajudicially the real estate mortgage and to proceed with its application for extrajudicial foreclosure of real estate mortgage;

3. The Court of Appeals erred in ruling that private respondents be relieved from the payment of penalties and surcharges on their outstanding balance starting January 20, 1984;

4. The Court of Appeals erred in awarding moral and exemplary damages of P500,000.00, unrealized profit of P18,000.00 per month, and attorney's fees of P100,000.00 against petitioner bank;

5. The Court of Appeals erred in ordering an accounting to private respondents with respect to their Account Nos. 0142-0014-0 and 042-0014-1 for the period covering January to December, 1982.

It should at once be apparent that except for the first and second imputed errors which involve petitioner bank's right to foreclose extrajudicially the real estate mortgage, the resolution of the assigned errors entails a review of the factual conclusions of the appellate court and the evidentiary bases thereof. Such an assessment is not, as a rule, proper in appeals from the Court of Appeals which should be confined to a consideration and determination only of issues of law as its findings of fact are deemed conclusive (Villanueva vs. Court of Appeals, 294 SCRA 90 [1998]) especially so in this case because the findings of fact of the appellate court concur with those of the trial court. To reiterate, this Court's jurisdiction is only limited to reviewing errors of law in the absence of any showing that the findings complained of are totally devoid of support in the record or they are glaringly erroneous as to constitute serious abuse of discretion. Nonetheless, considering the amount involved, as well as for the satisfaction of the parties who have vigorously pursued this case since 1984, the Court, in the exercise of its discretion, examined the factual bases, particularly with respect to the propriety of the damages awarded to private respondents.

The first and second assignments of error, being interrelated, shall be jointly discussed.

Petitioner contends that it has the right to foreclose the real estate mortgage executed by private respondents in its favor as the loan under the real estate mortgage contract had become due and demandable. This argument is not well-taken. Foreclosure is but a necessary consequence of non-payment of a mortgage indebtedness. As a rule, the mortgage can be foreclosed only when the debt remains unpaid at the time it is due (Gov't. of the P.I. vs. Espejo, 57 Phil. 496 [1932]). As found by the trial court and the Court of Appeals, and as borne by the evidence on record, private respondents were constantly paying their loan obligations with petitioner bank. In fact the amount of P960,000.00 was properly deposited with petitioner bank as evidenced by the corresponding deposit slip and the entry made in private respondents' savings account passbook. It is, therefore, not the fault of private respondents that their payment amounting to P960,000.00 was not credited to their account. Thus, it is certain that the loan which was secured by a real estate mortgage cannot be considered as unpaid so as to warrant foreclosure on the mortgage.

Clearly, private respondents have not yet defaulted on the payment of their loans. Moreover, the term of the loan, as agreed upon by the parties, is three years, or from 1982 to 1985. But petitioner filed its application for extrajudicial foreclosure on October 15, 1984. Indisputably, the application for foreclosure of the mortgage on October 15, 1984 was premature because by then, private respondents' loan was not yet due and demandable.

Likewise, both the Court of Appeals and the trial court found that private respondents are entitled to moral and exemplary damages. We agree. Moral and exemplary damages may be awarded without proof of pecuniary loss. In awarding such damages, the court shall take into account the circumstances obtaining in the case and assess damages according to its discretion. As borne out by the record of this case, private respondents are engaged in several businesses, such as rice and corn trading, cement dealership, and gasoline proprietorship. The dishonor of private respondents' checks and the foreclosure initiated by petitioner adversely affected the credit standing as well as the business dealings of private respondents as their suppliers discontinued credit lines resulting in the collapse of their businesses. In the case of Leopoldo Araneta vs. Bank of America (40 SCRA 144 [1971]), we held that:

"The financial credit of a businessman is a prized and valuable asset, it being a significant part of the foundation of his business. Any adverse reflection thereon constitutes some financial loss to him."

The damage to private respondents' reputation and social standing entitles them to moral damages. Article 2217, in relation to Article 2220, of the Civil Code explicitly provides that "moral damages include physical suffering, mental anguish, fright, serious anxiety, besmirched reputation, wounded feelings, moral shock, social humiliation, and similar injury." Obviously, petitioner bank's wrongful act caused serious anxiety, embarrassment, and humiliation to private respondents for which they are entitled to recover moral damages in the amount of P300,000.00 which we deem to be reasonable.

The award of exemplary damages is in order in view of the malicious and unwarranted application for extrajudicial foreclosure by petitioner which was obviously done to harass, embarrass, annoy, or ridicule private respondents. Likewise, petitioner, in its application for extrajudicial foreclosure, included the other loans of private respondents which were not covered by the real estate mortgage agreement, such as the loan of P175,000.00 which was a time loan, and the amount of P400,000.00 which was a clean loan. Moreover, petitioner unjustifiably refused to give private respondents copies of their account ledgers which would show the deposits made by them. Also, petitioner bank's failure to credit the deposit in the account of private respondents constituted gross negligence in the performance of its contractual obligation which amounts to evident bad faith. Verily, all these acts of petitioner were accompanied by bad faith and done in wanton, fraudulent and malevolent manner warranting the award of exemplary damages in favor of private respondents, in accordance with Article 2232 of the Civil Code which provides:

ART. 2232. In contracts and quasi-contracts, the court may award exemplary damages if the defendant acted in a wanton, fraudulent, reckless, oppressive, or malevolent manner.

Of course, a plaintiff need not prove the actual extent of exemplary damages, for its determination is addressed to the sound discretion of the court upon proof of the plaintiff's entitlement to moral, temperate, or compensatory damages (Article 2234, Civil Code). In the instant case, exemplary damages in the amount of P150,000.00 are proper.

Anent the award of actual damages, the Court of Appeals granted private respondents the amount of P18,000.00 per month representing private respondents' unrealized profits from his gasoline station business, to commence from October 16, 1984. 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. 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 (Tolentino, Civil Code of the Phil., Vol. V, 1992 ed., pp. 633-636). 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 experienced, or direct inference from known circumstances

(Talisay-Silay Milling Co., Inc. vs. Asociacion de Agricultores de Talisay-Silay, Inc., 247 SCRA 361 [1995])

In the case at bar, actual damages in the form of unrealized profits were awarded on the basis of the sole testimony of private respondent Salvador Chua, to wit:

Atty. Chua:

Q: You mentioned earlier during your direct testimony that you are engaged in gasoline business. Do you have a gasoline station?

A: Yes, sir.

Q: Where is that located?

A: It is located at Corner Araneta-San Sebastian Sts.

Q: Before the filing of the Extra Judicial Foreclosure, how much more or less, you earned from that gasoline station by way of conservative estimate?

A: In my gasoline business, based on my record, I have an average of 114,000 liters.

Q: Do you mean to say you can dispose 114,000 liters a month?

A: Yes, sir.

Q: How much is the mark up per liter?

A: Before the publication of the Extra Judicial Foreclosure the markup is P0.27 per liter. So, it comes out that the profit is P30,78.00 (sic).

Q: How much is your overhead for disposing that much liters of gasoline every month?

A: The overhead is about 12,280.00.

Q: That will give you an average of P18,000.00 a month?

A: Yes, sir.

Q: After the filing of the Extra Judicial Foreclosure, what happened to your gasoline business?

A: Because of the publication of the Extra Judicial Foreclosure I did not have credit line anymore. Since I have no capital I was forced to sell my right to operate to my relatives.

(tsn, March 25, 1986, pp. 9-12)

However, other than the testimony of Salvador Chua, private respondents failed to present documentary evidence which is necessary to substantiate their claim for actual or compensatory damages. In order to recover this kind of damages, the injured party must prove his case, thus:

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 that 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 defendant's wrongful act, he is entitled to recover. Cerreno vs. Tan Chuco, 28 Phil. 312 [1914] quoted in Central Bank of the Philippines vs. Court of Appeals, 63 SCRA 431 [1975])

Applying the foregoing test to the instant case, the Court finds the evidence of private respondents insufficient to be considered within the purview of "best evidence." The bare assertion of private respondent Salvador Chua that he lost an average of P18,000.00 per month is inadequate if not speculative and should be admitted with extreme caution especially because it is not supported by independent evidence. Private respondents could have presented such evidence as reports on the average actual profits earned by their gasoline business, their financial statements, and other evidence of profitability which could aid the court in arriving with reasonable certainty at the amount of profits which private respondents failed to earn. Private respondents did not even present any instrument or deed evidencing their claim that they have transferred their right to operate their gasoline station to their relatives. We cannot, therefore, sustain the award of P18,000.00 a month as unrealized profits commencing from October 16, 1984 because this amount is not amply justified by the evidence on record.

Further, well-settled is the rule that even if the petition for extrajudicial foreclosure filed by petitioner against private respondents is clearly unfounded, this does not necessarily mean, in the absence of specific facts proving damages, that actual damage has been sustained. The Court cannot rely on speculations as to the fact and amount of damages. It must depend on actual proof of the damages alleged to have been suffered (Perfecto vs. Gonzales, 128 SCRA 635 [1984]).

Finally, the award of attorney's fees as part of damages is deemed just and equitable under the circumstances. Attorney's fees may be awarded when a party is compelled to litigate or to incur expenses to protect his interest by reason of an unjustified act of the other party (Ching Sen Ben vs. Court of Appeals, 314 SCRA 762 [1999]). In this case, petitioner bank's act of not crediting private respondents' deposit of P960,000.00, as well as the premature filing of the extrajudicial foreclosure, have compelled private respondents to institute an action for injunction and damages primarily in order to protect their rights and interests. The award of attorney's fees is also justified under Article 2208 of the Civil Code which provides:

ART. 2208. In the absence of stipulation, attorney's fees and expenses of litigation, other than judicial costs, cannot be recovered, except:

(1) when exemplary damages are awarded;

(2) when the defendant's act or omission has compelled the plaintiff to litigate with third persons or to incur expenses to protect his interest;

WHEREFORE, the decision of the Court of Appeals in its CA-G.R. CV No. 20220 is affirmed with MODIFICATION only as to the award of damages in that petitioner bank is ordered to pay private respondents the following:

1. Three Hundred Thousand Pesos (P300,000.00) as moral damages;

2. One Hundred Fifty Thousand Pesos (P150,000.00) as exemplary damages; and

3. One Hundred Thousand Pesos (P100,000.00) as attorney's fees and litigation expenses.

In all other respects, the said judgment is affirmed.

SO ORDERED.

Vitug, Panganiban, Gonzaga-Reyes and Sandoval-Gutierez, JJ , concur.


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Manila

SECOND DIVISION

G.R. No. 120262 July 17, 1997

PHILIPPINE AIRLINES, INC., petitioner, vs.COURT OF APPEALS and LEOVIGILDO A. PANTEJO, respondents.

REGALADO, J.:

In this appeal by certiorari, petitioner Philippine Airlines, Inc. (PAL) seeks to set aside the decision of respondent Court of Appeals, 1 promulgated on December 29, 1994, which affirmed the award for damages made by the trial court in favor of herein private respondent Leovegildo A. Pantejo.

On October 23, 1988, private respondent Pantejo, then City Fiscal of Surigao City, boarded a PAL plane in Manila and disembarked in Cebu City where he was supposed to take his connecting flight to Surigao City However, due to typhoon Osang, the connecting flight to Surigao City was cancelled.

To accommodate the needs of its stranded passengers, PAL initially gave out cash assistance of P100.00 and, the next day, P200.00, for their expected stay of two days in Cebu. Respondent Pantejo requested instead that he be billeted in a hotel at PAL's expense because he did not have cash with him at that time, but PAL refused. Thus, respondent Pantejo was forced to seek and accept the generosity of a co-passenger, an engineer named Andoni Dumlao, and he shared a room with the latter at Sky View Hotel with the promise to pay his share of the expenses upon reaching Surigao.

On October 25, 1988 when the flight for Surigao was resumed, respondent Pantejo came to know that the hotel expenses of his co-passengers, one

Superintendent Ernesto Gonzales and a certain Mrs. Gloria Rocha, an auditor of the Philippine National Bank, were reimbursed by PAL. At this point, respondent Pantejo informed Oscar Jereza, PAL's Manager for Departure Services at Mactan Airport and who was in charge of cancelled flights, that he was going to sue the airline for discriminating against him. It was only then that Jereza offered to pay respondent Pantejo P300.00 which, due to the ordeal and anguish he had undergone, the latter decline.

On March 18, 1991, the Regional Trial Court of Surigao City, Branch 30, rendered judgment in the action for damages filed by respondent Pantejo against herein petitioner, Philippine Airlines, Inc., ordering the latter to pay Pantejo P300.00 for actual damages, P150,000.00 as moral damages, P100,000.00 as exemplary damages, P15,000.00 as attorney's fees, and 6% interest from the time of the filing of the complaint until said amounts shall have been fully paid, plus costs of suit. 2 On appeal, respondent court affirmed the decision of the court a quo, but with the exclusion of the award of attorney's fees and litigation expenses.

The main issue posed for resolution is whether petitioner airlines acted in bad faith when it failed and refused to provide hotel accommodations for respondent Pantejo or to reimburse him for hotel expenses incurred by reason of the cancellation of its connecting flight to Surigao City due to force majeure.

To begin with, it must be emphasized that a contract to transport passengers is quite different in kind and degree from any other contractual relation, and this is because of the relation which an air carrier sustain with the public. Its business is mainly with the travelling public. It invites people to avail of the comforts and advantages it offers. The contract of air carriage, therefore, generates a relation attended with a public duty. Neglect or malfeasance of the carrier's employees naturally could give ground for an action for damages. 3

In ruling for respondent Pantejo, both the trial court and the Court of Appeals found that herein petitioner acted in bad faith in refusing to provide hotel accommodations for respondent Pantejo or to reimburse him for hotel expenses incurred despite and in contrast to the fact that other passengers were so favored.

In declaring that bad faith existed, respondent court took into consideration the following factual circumstances:

1. Contrary to petitioner's claim that cash assistance was given instead because of non-availability of rooms in hotels where petitioner had existing tie-ups, the evidence shows that Sky View Hotel, where respondent Pantejo was billeted, had plenty of rooms available.

2. It is not true that the P300.00 Paid to Ernesto Gonzales, a co-passenger of respondent, was a refund for his plane ticket, the truth being that it was a reimbursement for hotel and meal expenses.

3. It is likewise not denied that said Gonzales and herein respondent came to know about the reimbursements only because another passenger, Mrs. Rocha, informed them that she was able to obtain the refund for her own hotel expenses.

4. Petitioner offered to pay P300.00 to private respondent only after he had confronted the airline's manager about the discrimination committed against him, which the latter realized was an actionable wrong.

5. Service Voucher No. 199351, presented by petitioner to prove that it gave cash assistance to its passengers, was based merely on the list of passengers already given cash assistance and was purportedly prepared at around 10:00 A.M. of October 23, 1988. This was two hours before respondent came to know of the cancellation of his flight to Surigao, hence private respondent could not have possibly refused the same. 4

It must be stressed that these factual findings, which are supported by substantial evidence, are binding, final and conclusive upon this Court absent any reason, and we find none, why this settled evidential rule should not apply.

Petitioner theorizes that the hotel accommodations or cash assistance given in case a flight is cancelled is in the nature of an amenity and is merely a privilege that may be extended at its own discretion, but never a right that may be demanded by its passengers. Thus, when respondent Pantejo was offered cash assistance and he refused it, petitioner cannot be held liable for whatever befell respondent Pantejo on that fateful day, because it was merely exercising its discretion when it opted to just give cash assistance to its passengers.

Assuming arguendo that the airline passengers have no vested right to these amenities in case a flight is cancelled due to force majeure, what makes petitioner liable for damages in this particular case and under the facts obtaining herein is its blatant refusal to accord the so-called amenities equally to all its stranded passengers who were bound for Surigao City. No compelling or justifying reason was advanced for such discriminatory and prejudicial conduct.

More importantly, it has been sufficiently established that it is petitioner's standard company policy, whenever a flight has been cancelled, to extend to its hapless passengers cash assistance or to provide them accommodations in hotels with which it has existing tie-ups. In fact, petitioner's Mactan Airport Manager for departure services, Oscar Jereza, admitted that PAL has an existing arrangement with hotels to accommodate stranded passengers, 5 and that the hotel bills of Ernesto Gonzales were reimbursed 6 obviously pursuant to that policy.

Also, two witnesses presented by respondent, Teresita Azarcon and Nerie Bol, testified that sometime in November, 1988, when their flight from Cebu to Surigao was cancelled, they were billeted at Rajah Hotel for two nights and three days at the expense of PAL. 7 This was never denied by PAL.

Further, Ernesto Gonzales, the aforementioned co-passenger of respondent on that fateful flight, testified that based on his previous experience hotel accommodations were extended by PAL to its stranded passengers either in Magellan or Rajah Hotels, or even in Cebu Plaza. Thus, we view as impressed with dubiety PAL's present attempt to represent such emergency assistance as being merely ex gratia and not ex debito.

While petitioner now insists that the passengers were duly informed that they would be reimbursed for their hotel expenses, it miserably and significantly failed to explain why the other passengers were given reimbursement while private respondent was not. Although Gonzales was subsequently given a refund, this was only so because he came to know about it by accident through Mrs. Rocha, as earlier explained.

Petitioner could only offer the strained and flimsy pretext that possibly the passengers were not listening when the announcement was made. This is absurd because when respondent Pantejo came to know that his flight had been cancelled, he immediately proceeded to petitioner's office and requested for hotel accommodations. He was not only refused accommodations, but he was not even informed that he may later on be reimbursed for his hotel expenses. This explains why his co-passenger, Andoni Dumlao, offered to answer for respondent's hotel bill and the latter promised to pay him when they arrive in Surigao. Had both know that they would be reimbursed by the airline, such arrangement would not have been necessary.

Respondent Court of Appeals thus correctly concluded that the refund of hotel expenses was surreptitiously and discriminatorily made by herein petitioner since the same was not made known to everyone, except through word of mouth to a handful of passengers. This is a sad commentary on the quality of service and professionalism of an airline company, which is the country's flag carrier at that.

On the bases of all the foregoing, the inescapable conclusion is that petitioner acted in bad faith in disregarding its duties as a common carrier to its passengers and in discriminating against herein respondent Pantejo. It was even oblivious to the fact that this respondent was exposed to humiliation and embarrassment especially because of his government position and social prominence, which altogether necessarily subjected him to ridicule, shame and anguish. It remains uncontroverted that at the time of the incident, herein respondent was then the City Prosecutor of Surigao City, and that he is a member of the Philippine Jaycee Senate, past Lt. Governor of the Kiwanis Club of Surigao, a past Master of the Mount Diwata Lodge of Free Masons of the Philippines, member of the Philippine National Red Cross, Surigao Chapter,and past Chairman of the Boy Scouts of the Philippines, Surigao del Norte Chapter. 8

It is likewise claimed that the moral and exemplary damages awarded to respondent Pantejo are excessive and unwarranted on the ground that respondent is not totally blameless because of his refusal to accept the P100.00 cash assistance which was inceptively offered to him. It bears emphasis that respondent Pantejo had every right to make such refusal since it evidently could not meet his needs and that was all that PAL claimed it could offer.

His refusal to accept the P300.00 proffered as an afterthought when he threatened suit was justified by his resentment when he belatedly found out that his co-passengers were reimbursed for hotel expenses and he was not. Worse, he would not even have known about it were it not for a co-passenger who verbally told him that she was reimbursed by the airline for hotel and meal expenses. It may even be said that the amounts, the time and the circumstances under which those amounts were offered could not salve the moral wounds inflicted by PAL on private respondent but even approximated insult added to injury.

The discriminatory act of petitioner against respondent ineludibly makes the former liable for moral damages under Article 21 in relation to Article 2219 (10) of the Civil Code. 9 As held in Alitalia Airways vs. CA, et al., 10 such inattention to and lack of care by petitioner airline for the interest of its passengers who are entitled to its utmost consideration, particularly as to their convenience, amount to bad faith which entitles the passenger to the award of moral damages.

Moral damages are emphatically not intended to enrich a plaintiff at the expense of the defendant. They are awarded only to allow the former to obtain means, diversion, or amusements that will serve to alleviate the moral suffering he has undergone due to the defendant's culpable action and must, perforce, be proportional to the suffering inflicted. 11 However, substantial damages do not translate into excessive damages. 12 Except for attorney's fees and costs of suit, it will be noted that the Court of Appeals affirmed point by point the factual findings of the lower court upon which the award of damages had been based. 13 We, therefore, see no reason to modify the award of damages made by the trial

court.

Under the peculiar circumstances of this case, we are convinced that the awards for actual, moral and exemplary damages granted in the judgment of respondent court, for the reasons meticulously analyzed and thoroughly explained in its decision, are just and equitable. It is high time that the travelling public is afforded protection and that the duties of common carriers, long detailed in our previous laws and jurisprudence and thereafter collated and specifically catalogued in our Civil Code in 1950, be enforced through appropriate sanctions.

We agree, however, with the contention that the interest of 6% imposed by respondent court should be computed from the date of rendition of judgment and not from the filing of the complaint. The rule has been laid down inEastern Shipping Lines, Inc. vs. Court of Appeals, et al. 14 that:

When an obligation, not constituting a loan or forbearance of money, is breached, an interest on the amount of damages awarded may be imposed at the discretion of the court at the rate of 6% per annum. No interest, however, shall be adjudged on unliquidated claims or damages except when or until the demand can be established with reasonable certainty. Accordingly, where the demand is established with reasonable certainty, the interest shall begin to run from the time the claim is made judicially or extrajudicially (Art. 1169, Civil Code) but when such certainty cannot be so reasonably established at the time the demand is made, the interest shall begin to run only from the date the judgment of the court is made (at which time the quantification of damages may be deemed to have been reasonably ascertained). The actual base for the computation of legal interest shall, in any case, be on the amount finally adjudged.

This is because at the time of the filing of the complaint, the amount of damages to which plaintiff may be entitled remains unliquidated and not known, until it is definitely ascertained, assessed and determined by the court, and only after the presentation of proof thereon. 15

WHEREFORE, the challenged judgment of respondent Court of Appeals is hereby AFFIRMED, subject to the MODIFICATION regarding the computation of the 6% legal rate of interest on the monetary awards granted therein to private respondent

SO ORDERED.

Romero and Puno, JJ., concur.

Mendoza, J., took no part.

Torres, Jr., J., is on leave.

Footnotes

1 CA-G.R CV 33842; Presiding Justice Nathaniel P. De Pano, Jr., ponente; Associate Justices Artemon de Luna and Ramon U. Mabutas, Jr. concurring; Annex A, Petition; Rollo, 48.

2 Petition, 3; Rollo, 30.

3 Zulueta, et al. vs. Pan American World Airways, Inc., L-28589, February 29, 1972, 43 SCRA 397.

4 Rollo, 52-57.

5 Ibid., 54.

6 Ibid., 57.

7 Ibid., 52.

8 Ibid., 58.

9 Sibal vs. Notre Dame of Greater Manila, et al., G.R. No. 75093, February 23, 1990, 182 SCRA 538.

10 G.R. No. 77011, July 24, 1990, 187 SCRA 763.

11 Philtranco Service Enterprises, Inc., et al. vs. CA, et al., G.R. No. 120553, June 17, 1997.

12 National Power Corporation, et al. vs. CA, et al., G.R. No. 113103, June 13, 1997.

13 Meneses, et al. vs. CA, et al., G.R. No 82220, July 14, 1995, 246 SCRA 162.

14 G.R. No. 97412, July 12, 1994, 234 SCRA 78.

15 Korean Airlines Co., Ltd. vs. Court of Appeals, et al., G.R. No. 114061, August 3, 1994, 234 SCRA 717.




Manila

FIRST DIVISION

G.R. No. 128690 January 21, 1999

ABS-CBN BROADCASTING CORPORATION, petitioner, vs.HONORABLE COURT OF APPEALS, REPUBLIC BROADCASTING CORP, VIVA PRODUCTION, INC., and VICENTE DEL ROSARIO, respondents.

DAVIDE, JR., CJ.:

In this petition for review on certiorari, petitioner ABS-CBN Broadcasting Corp. (hereafter ABS-CBN) seeks to reverse and set aside the decision 1 of 31 October 1996 and the resolution 2 of 10 March 1997 of the Court of Appeals in CA-G.R. CV No. 44125. The former affirmed with modification the decision 3 of 28 April 1993 of the Regional Trial Court (RTC) of Quezon City, Branch 80, in Civil Case No. Q-92-12309. The latter denied the motion to reconsider the decision of 31 October 1996.

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The antecedents, as found by the RTC and adopted by the Court of Appeals, are as follows:

In 1990, ABS-CBN and Viva executed a Film Exhibition Agreement (Exh. "A") whereby Viva gave ABS-CBN an exclusive right to exhibit some Viva films. Sometime in December 1991, in accordance with paragraph 2.4 [sic] of said agreement stating that —.

1.4 ABS-CBN shall have the right of first refusal to the next twenty-four (24) Viva films for TV telecast under such terms as may be agreed upon by the parties hereto, provided, however, that such right shall be exercised by ABS-CBN from the actual offer in writing.

Viva, through defendant Del Rosario, offered ABS-CBN, through its vice-president Charo Santos-Concio, a list of three(3) film packages (36 title) from which ABS-CBN may exercise its right of first refusal under the afore-said agreement (Exhs. "1" par, 2, "2," "2-A'' and "2-B"-Viva). ABS-CBN, however through Mrs. Concio, "can tick off only ten (10) titles" (from the list) "we can purchase" (Exh. "3" - Viva) and therefore did not accept said list (TSN, June 8, 1992, pp. 9-10). The titles ticked off by Mrs. Concio are not the subject of the case at bar except the film ''Maging Sino Ka Man."

For further enlightenment, this rejection letter dated January 06, 1992 (Exh "3" - Viva) is hereby quoted:

6 January 1992

Dear Vic,

This is not a very formal business letter I am writing to you as I would like to express my difficulty in recommending the purchase of the three film packages you are offering ABS-CBN.

From among the three packages I can only tick off 10 titles we can purchase. Please see attached. I hope you will understand my position. Most of the action pictures in the list do not have big action stars in the cast. They are not for primetime. In line with this I wish to mention that I have not scheduled for telecast several action pictures in out very first contract because of the cheap production value of these movies as well as the lack of big action stars. As a film producer, I am sure you understand what I am trying to say as Viva produces only big action pictures.

In fact, I would like to request two (2) additional runs for these movies as I can only schedule them in our non-primetime slots. We have to cover the amount that was paid for these movies because as you very well know that non-primetime advertising rates are very low. These are the unaired titles in the first contract.

1. Kontra Persa [sic].

2. Raider Platoon.

3. Underground guerillas

4. Tiger Command

5. Boy de Sabog

6. Lady Commando

7. Batang Matadero

8. Rebelyon

I hope you will consider this request of mine.

The other dramatic films have been offered to us before and have been rejected because of the ruling of MTRCB to have

them aired at 9:00 p.m. due to their very adult themes.

As for the 10 titles I have choosen [sic] from the 3 packages please consider including all the other Viva movies produced last year. I have quite an attractive offer to make.

Thanking you and with my warmest regards.

(Signed)

Charo Santos-Concio

On February 27, 1992, defendant Del Rosario approached ABS-CBN's Ms. Concio, with a list consisting of 52 original movie titles (i.e. not yet aired on television) including the 14 titles subject of the present case, as well as 104 re-runs (previously aired on television) from which ABS-CBN may choose another 52 titles, as a total of 156 titles, proposing to sell to ABS-CBN airing rights over this package of 52 originals and 52 re-runs for P60,000,000.00 of which P30,000,000.00 will be in cash and P30,000,000.00 worth of television spots (Exh. "4" to "4-C" Viva; "9" -Viva).

On April 2, 1992, defendant Del Rosario and ABS-CBN general manager, Eugenio Lopez III, met at the Tamarind Grill Restaurant in Quezon City to discuss the package proposal of Viva. What transpired in that lunch meeting is the subject of conflicting versions. Mr. Lopez testified that he and Mr. Del Rosario allegedly agreed that ABS-CRN was granted exclusive film rights to fourteen (14) films for a total consideration of P36 million; that he allegedly put this agreement as to the price and number of films in a "napkin'' and signed it and gave it to Mr. Del Rosario (Exh. D; TSN, pp. 24-26, 77-78, June 8, 1992). On the other hand, Del Rosario denied having made any agreement with Lopez regarding the 14 Viva films; denied the existence of a napkin in which Lopez wrote something; and insisted that what he and Lopez discussed at the lunch meeting was Viva's film package offer of 104 films (52 originals and 52 re-runs) for a total price of P60 million. Mr. Lopez promising [sic]to make a counter proposal which came in the form of a proposal contract Annex "C" of the complaint (Exh. "1"·- Viva; Exh. "C" - ABS-CBN).

On April 06, 1992, Del Rosario and Mr. Graciano Gozon of RBS Senior vice-president for Finance discussed the terms and conditions of Viva's offer to sell the 104 films, after the rejection of the same package by ABS-CBN.

On April 07, 1992, defendant Del Rosario received through his secretary, a handwritten note from Ms. Concio, (Exh. "5" - Viva), which reads: "Here's the draft of the contract. I hope you find everything in order," to which was attached a draft exhibition agreement (Exh. "C''- ABS-CBN; Exh. "9" - Viva, p. 3) a counter-proposal covering 53 films, 52 of which came from the list sent by defendant Del Rosario and one film was added by Ms. Concio, for a consideration of P35 million. Exhibit "C" provides that ABS-CBN is granted films right to 53 films and contains a right of first refusal to "1992 Viva Films." The said counter proposal was however rejected by Viva's Board of Directors [in the] evening of the same day, April 7, 1992, as Viva would not sell anything less than the package of 104 films for P60 million pesos (Exh. "9" - Viva), and such rejection was relayed to Ms. Concio.

On April 29, 1992, after the rejection of ABS-CBN and following several negotiations and meetings defendant Del Rosario and Viva's President Teresita Cruz, in consideration of P60 million, signed a letter of agreement dated April 24, 1992. granting RBS the exclusive right to air 104 Viva-produced and/or acquired films (Exh. "7-A" - RBS; Exh. "4" - RBS) including the fourteen (14) films subject of the present case. 4

On 27 May 1992, ABS-CBN filed before the RTC a complaint for specific performance with a prayer for a writ of preliminary injunction and/or temporary restraining order against private respondents Republic Broadcasting Corporation 5 (hereafter RBS ), Viva Production (hereafter VIVA), and Vicente Del Rosario. The complaint was docketed as Civil Case No. Q-92-12309.

On 27 May 1992, RTC issued a temporary restraining order 6 enjoining private respondents from proceeding with the airing, broadcasting, and televising of the fourteen VIVA films subject of the controversy, starting with the film Maging Sino Ka Man, which was scheduled to be shown on private respondents RBS' channel 7 at seven o'clock in the evening of said date.

On 17 June 1992, after appropriate proceedings, the RTC issued an order 7 directing the issuance of a writ of preliminary injunction upon ABS-CBN's posting of P35 million bond. ABS-CBN moved for the reduction of the bond, 8 while private respondents moved for reconsideration of the order and offered to put up a counterbound. 9

In the meantime, private respondents filed separate answers with counterclaim. 10 RBS also set up a cross-claim against VIVA..

On 3 August 1992, the RTC issued an order 11 dissolving the writ of preliminary injunction upon the posting by RBS of a P30 million counterbond to answer for whatever damages ABS-CBN might suffer by virtue of such dissolution. However, it reduced petitioner's injunction bond to P15 million as a condition precedent for the reinstatement of the writ of preliminary injunction should private respondents be unable to post a counterbond.

At the pre-trial 12 on 6 August 1992, the parties, upon suggestion of the court, agreed to explore the possibility of an amicable settlement. In the meantime, RBS prayed for and was granted reasonable time within which to put up a P30 million counterbond in the event that no settlement would be reached.

As the parties failed to enter into an amicable settlement RBS posted on 1 October 1992 a counterbond, which the RTC approved in its Order of 15 October 1992. 13

On 19 October 1992, ABS-CBN filed a motion for reconsideration 14 of the 3 August and 15 October 1992 Orders, which RBS opposed. 15

On 29 October 1992, the RTC conducted a pre-trial. 16

Pending resolution of its motion for reconsideration, ABS-CBN filed with the Court of Appeals a petition 17challenging the RTC's Orders of 3 August and 15 October 1992 and praying for the issuance of a writ of preliminary injunction to enjoin the RTC from enforcing said orders. The case was docketed as CA-G.R. SP No. 29300.

On 3 November 1992, the Court of Appeals issued a temporary restraining order 18 to enjoin the airing, broadcasting, and televising of any or all of the films involved in the controversy.

On 18 December 1992, the Court of Appeals promulgated a decision 19 dismissing the petition in CA -G.R. No. 29300 for being premature. ABS-CBN challenged the dismissal in a petition for review filed with this Court on 19 January 1993, which was docketed as G.R. No. 108363.

In the meantime the RTC received the evidence for the parties in Civil Case No. Q-192-1209. Thereafter, on 28 April 1993, it rendered a decision 20 in favor of RBS and VIVA and against ABS-CBN disposing as follows:

WHEREFORE, under cool reflection and prescinding from the foregoing, judgments is rendered in favor of defendants and against the plaintiff.

(1) The complaint is hereby dismissed;

(2) Plaintiff ABS-CBN is ordered to pay defendant RBS the following:

a) P107,727.00, the amount of premium paid by RBS to the surety which issued defendant RBS's bond to lift the injunction;

b) P191,843.00 for the amount of print advertisement for "Maging Sino Ka Man" in various newspapers;

c) Attorney's fees in the amount of P1 million;

d) P5 million as and by way of moral damages;

e) P5 million as and by way of exemplary damages;

(3) For defendant VIVA, plaintiff ABS-CBN is ordered to pay P212,000.00 by way of reasonable

attorney's fees.

(4) The cross-claim of defendant RBS against defendant VIVA is dismissed.

(5) Plaintiff to pay the costs.

According to the RTC, there was no meeting of minds on the price and terms of the offer. The alleged agreement between Lopez III and Del Rosario was subject to the approval of the VIVA Board of Directors, and said agreement was disapproved during the meeting of the Board on 7 April 1992. Hence, there was no basis for ABS-CBN's demand that VIVA signed the 1992 Film Exhibition Agreement. Furthermore, the right of first refusal under the 1990 Film Exhibition Agreement had previously been exercised per Ms. Concio's letter to Del Rosario ticking off ten titles acceptable to them, which would have made the 1992 agreement an entirely new contract.

On 21 June 1993, this Court denied 21 ABS-CBN's petition for review in G.R. No. 108363, as no reversible error was committed by the Court of Appeals in its challenged decision and the case had "become moot and academic in view of the dismissal of the main action by the court a quo in its decision" of 28 April 1993.

Aggrieved by the RTC's decision, ABS-CBN appealed to the Court of Appeals claiming that there was a perfected contract between ABS-CBN and VIVA granting ABS-CBN the exclusive right to exhibit the subject films. Private respondents VIVA and Del Rosario also appealed seeking moral and exemplary damages and additional attorney's fees.

In its decision of 31 October 1996, the Court of Appeals agreed with the RTC that the contract between ABS-CBN and VIVA had not been perfected, absent the approval by the VIVA Board of Directors of whatever Del Rosario, it's agent, might have agreed with Lopez III. The appellate court did not even believe ABS-CBN's evidence that Lopez III actually wrote down such an agreement on a "napkin," as the same was never produced in court. It likewise rejected ABS-CBN's insistence on its right of first refusal and ratiocinated as follows:

As regards the matter of right of first refusal, it may be true that a Film Exhibition Agreement was entered into between Appellant ABS-CBN and appellant VIVA under Exhibit "A" in 1990, and that parag. 1.4 thereof provides:

1.4 ABS-CBN shall have the right of first refusal to the next twenty-four (24) VIVA films for TV telecast under such terms as may be agreed upon by the parties hereto, provided, however, that such right shall be exercised by ABS-CBN within a period of fifteen (15) days from the actual offer in writing (Records, p. 14).

[H]owever, it is very clear that said right of first refusal in favor of ABS-CBN shall still be subject to such terms as may be agreed upon by the parties thereto, and that the said right shall be exercised by ABS-CBN within fifteen (15) days from the actual offer in writing.

Said parag. 1.4 of the agreement Exhibit "A" on the right of first refusal did not fix the price of the film right to the twenty-four (24) films, nor did it specify the terms thereof. The same are still left to be agreed upon by the parties.

In the instant case, ABS-CBN's letter of rejection Exhibit 3 (Records, p. 89) stated that it can only tick off ten (10) films, and the draft contract Exhibit "C" accepted only fourteen (14) films, while parag. 1.4 of Exhibit "A'' speaks of the next twenty-four (24) films.

The offer of V1VA was sometime in December 1991 (Exhibits 2, 2-A. 2-B; Records, pp. 86-88; Decision, p. 11, Records, p. 1150), when the first list of VIVA films was sent by Mr. Del Rosario to ABS-CBN. The Vice President of ABS-CBN, Ms. Charo Santos-Concio, sent a letter dated January 6, 1992 (Exhibit 3, Records, p. 89) where ABS-CBN exercised its right of refusal by rejecting the offer of VIVA.. As aptly observed by the trial court, with the said letter of Mrs. Concio of January 6, 1992, ABS-CBN had lost its right of first refusal. And even if We reckon the fifteen (15) day period from February 27, 1992 (Exhibit 4 to 4-C) when another list was sent to ABS-CBN after the letter of Mrs. Concio, still the fifteen (15) day period within which ABS-CBN shall exercise its right of first refusal has already expired.22

Accordingly, respondent court sustained the award of actual damages consisting in the cost of print advertisements and the premium payments for the counterbond, there being adequate proof of the pecuniary loss which RBS had suffered as a result of the filing of the complaint by ABS-CBN. As to the award of moral damages, the Court of Appeals found reasonable basis therefor, holding that RBS's reputation was debased by the filing of the complaint in Civil Case No. Q-92-12309 and by the non-showing of the film "Maging Sino Ka Man." Respondent court also held that exemplary

damages were correctly imposed by way of example or correction for the public good in view of the filing of the complaint despite petitioner's knowledge that the contract with VIVA had not been perfected, It also upheld the award of attorney's fees, reasoning that with ABS-CBN's act of instituting Civil Case No, Q-92-1209, RBS was "unnecessarily forced to litigate." The appellate court, however, reduced the awards of moral damages to P2 million, exemplary damages to P2 million, and attorney's fees to P500, 000.00.

On the other hand, respondent Court of Appeals denied VIVA and Del Rosario's appeal because it was "RBS and not VIVA which was actually prejudiced when the complaint was filed by ABS-CBN."

Its motion for reconsideration having been denied, ABS-CBN filed the petition in this case, contending that the Court of Appeals gravely erred in

I

. . . RULING THAT THERE WAS NO PERFECTED CONTRACT BETWEEN PETITIONER AND PRIVATE RESPONDENT VIVA NOTWITHSTANDING PREPONDERANCE OF EVIDENCE ADDUCED BY PETITIONER TO THE CONTRARY.

II

. . . IN AWARDING ACTUAL AND COMPENSATORY DAMAGES IN FAVOR OF PRIVATE RESPONDENT RBS.

III

. . . IN AWARDING MORAL AND EXEMPLARY DAMAGES IN FAVOR OF PRIVATE RESPONDENT RBS.

IV

. . . IN AWARDING ATTORNEY'S FEES IN FAVOR OF RBS.

ABS-CBN claims that it had yet to fully exercise its right of first refusal over twenty-four titles under the 1990 Film Exhibition Agreement, as it had chosen only ten titles from the first list. It insists that we give credence to Lopez's testimony that he and Del Rosario met at the Tamarind Grill Restaurant, discussed the terms and conditions of the second list (the 1992 Film Exhibition Agreement) and upon agreement thereon, wrote the same on a paper napkin. It also asserts that the contract has already been effective, as the elements thereof, namely, consent, object, and consideration were established. It then concludes that the Court of Appeals' pronouncements were not supported by law and jurisprudence, as per our decision of 1 December 1995 in Limketkai Sons Milling, Inc. v. Court of Appeals,23 which cited Toyota Shaw, Inc. v. Court of Appeals, 24 Ang Yu Asuncion v. Court of Appeals, 25 and Villonco Realty Company v. Bormaheco. Inc. 26

Anent the actual damages awarded to RBS, ABS-CBN disavows liability therefor. RBS spent for the premium on the counterbond of its own volition in order to negate the injunction issued by the trial court after the parties had ventilated their respective positions during the hearings for the purpose. The filing of the counterbond was an option available to RBS, but it can hardly be argued that ABS-CBN compelled RBS to incur such expense. Besides, RBS had another available option, i.e., move for the dissolution or the injunction; or if it was determined to put up a counterbond, it could have presented a cash bond. Furthermore under Article 2203 of the Civil Code, the party suffering loss or injury is also required to exercise the diligence of a good father of a family to minimize the damages resulting from the act or omission. As regards the cost of print advertisements, RBS had not convincingly established that this was a loss attributable to the non showing "Maging Sino Ka Man"; on the contrary, it was brought out during trial that with or without the case or the injunction, RBS would have spent such an amount to generate interest in the film.

ABS-CBN further contends that there was no clear basis for the awards of moral and exemplary damages. The controversy involving ABS-CBN and RBS did not in any way originate from business transaction between them. The claims for such damages did not arise from any contractual dealings or from specific acts committed by ABS-CBN against RBS that may be characterized as wanton, fraudulent, or reckless; they arose by virtue only of the filing of the complaint, An award of moral and exemplary damages is not warranted where the record is bereft of any proof that a party acted maliciously or in bad faith in filing an action. 27 In any case, free resort to courts for redress of wrongs is a matter of public policy. The law recognizes the right of every one to sue for that which he honestly believes to be his right without fear of standing trial for damages where by lack of sufficient evidence, legal technicalities, or a different interpretation of the laws on the matter, the case would lose ground. 28 One who makes use of his own legal right does no injury. 29 If damage results front the filing of the complaint, it is damnum absque injuria. 30 Besides, moral damages are generally not awarded in favor of a juridical person, unless it enjoys a good reputation that was debased by the offending party resulting in social humiliation. 31

As regards the award of attorney's fees, ABS-CBN maintains that the same had no factual, legal, or equitable justification. In sustaining the trial court's award, the Court of Appeals acted in clear disregard of the doctrines laid down in Buan v. Camaganacan 32 that the text of the decision should state the reason why attorney's fees are being awarded; otherwise, the award should be disallowed. Besides, no bad faith has been imputed on, much less proved as having been committed by, ABS-CBN. It has been held that "where no sufficient showing of bad faith would be reflected in a party' s persistence in a case other than an erroneous conviction of the righteousness of his cause, attorney's fees shall not be recovered as cost." 33

On the other hand, RBS asserts that there was no perfected contract between ABS-CBN and VIVA absent any meeting of minds between them regarding the object and consideration of the alleged contract. It affirms that the ABS-CBN's claim of a right of first refusal was correctly rejected by the trial court. RBS insist the premium it had paid for the counterbond constituted a pecuniary loss upon which it may recover. It was obliged to put up the counterbound due to the injunction procured by ABS-CBN. Since the trial court found that ABS-CBN had no cause of action or valid claim against RBS and, therefore not entitled to the writ of injunction, RBS could recover from ABS-CBN the premium paid on the counterbond. Contrary to the claim of ABS-CBN, the cash bond would prove to be more expensive, as the loss would be equivalent to the cost of money RBS would forego in case the P30 million came from its funds or was borrowed from banks.

RBS likewise asserts that it was entitled to the cost of advertisements for the cancelled showing of the film "Maging Sino Ka Man" because the print advertisements were put out to announce the showing on a particular day and hour on Channel 7, i.e., in its entirety at one time, not a series to be shown on a periodic basis. Hence, the print advertisement were good and relevant for the particular date showing, and since the film could not be shown on that particular date and hour because of the injunction, the expenses for the advertisements had gone to waste.

As regards moral and exemplary damages, RBS asserts that ABS-CBN filed the case and secured injunctions purely for the purpose of harassing and prejudicing RBS. Pursuant then to Article 19 and 21 of the Civil Code, ABS-CBN must be held liable for such damages. Citing Tolentino, 34 damages may be awarded in cases of abuse of rights even if the act done is not illicit and there is abuse of rights were plaintiff institutes and action purely for the purpose of harassing or prejudicing the defendant.

In support of its stand that a juridical entity can recover moral and exemplary damages, private respondents RBScited People v. Manero, 35 where it was stated that such entity may recover moral and exemplary damages if it has a good reputation that is debased resulting in social humiliation. it then ratiocinates; thus:

There can be no doubt that RBS' reputation has been debased by ABS-CBN's acts in this case. When RBS was not able to fulfill its commitment to the viewing public to show the film "Maging Sino Ka Man" on the scheduled dates and times (and on two occasions that RBS advertised), it suffered serious embarrassment and social humiliation. When the showing was canceled, late viewers called up RBS' offices and subjected RBS to verbal abuse ("Announce kayo nang announce, hindi ninyo naman ilalabas," "nanloloko yata kayo") (Exh. 3-RBS, par. 3). This alone was not something RBS brought upon itself. it was exactly what ABS-CBN had planned to happen.

The amount of moral and exemplary damages cannot be said to be excessive. Two reasons justify the amount of the award.

The first is that the humiliation suffered by RBS is national extent. RBS operations as a broadcasting company is [sic] nationwide. Its clientele, like that of ABS-CBN, consists of those who own and watch television. It is not an exaggeration to state, and it is a matter of judicial notice that almost every other person in the country watches television. The humiliation suffered by RBS is multiplied by the number of televiewers who had anticipated the showing of the film "Maging Sino Ka Man" on May 28 and November 3, 1992 but did not see it owing to the cancellation. Added to this are the advertisers who had placed commercial spots for the telecast and to whom RBS had a commitment in consideration of the placement to show the film in the dates and times specified.

The second is that it is a competitor that caused RBS to suffer the humiliation. The humiliation and injury are far greater in degree when caused by an entity whose ultimate business objective is to lure customers (viewers in this case) away from the competition. 36

For their part, VIVA and Vicente del Rosario contend that the findings of fact of the trial court and the Court of Appeals do not support ABS-CBN's claim that there was a perfected contract. Such factual findings can no longer be disturbed in this petition for review under Rule 45, as only questions of law can be raised, not questions of fact. On the issue of damages and attorneys fees, they adopted the arguments of RBS.

The key issues for our consideration are (1) whether there was a perfected contract between VIVA and ABS-CBN, and (2) whether RBS is entitled to

damages and attorney's fees. It may be noted that the award of attorney's fees of P212,000 in favor of VIVA is not assigned as another error.

I.

The first issue should be resolved against ABS-CBN. A contract is a meeting of minds between two persons whereby one binds himself to give something or to render some service to another 37 for a consideration. there is no contract unless the following requisites concur: (1) consent of the contracting parties; (2) object certain which is the subject of the contract; and (3) cause of the obligation, which is established. 38 A contract undergoes three stages:

(a) preparation, conception, or generation, which is the period of negotiation and bargaining, ending at the moment of agreement of the parties;

(b) perfection or birth of the contract, which is the moment when the parties come to agree on the terms of the contract; and

(c) consummation or death, which is the fulfillment or performance of the terms agreed upon in the contract. 39

Contracts that are consensual in nature are perfected upon mere meeting of the minds, Once there is concurrence between the offer and the acceptance upon the subject matter, consideration, and terms of payment a contract is produced. The offer must be certain. To convert the offer into a contract, the acceptance must be absolute and must not qualify the terms of the offer; it must be plain, unequivocal, unconditional, and without variance of any sort from the proposal. A qualified acceptance, or one that involves a new proposal, constitutes a counter-offer and is a rejection of the original offer. Consequently, when something is desired which is not exactly what is proposed in the offer, such acceptance is not sufficient to generate consent because any modification or variation from the terms of the offer annuls the offer. 40

When Mr. Del Rosario of VIVA met with Mr. Lopez of ABS-CBN at the Tamarind Grill on 2 April 1992 to discuss the package of films, said package of 104 VIVA films was VIVA's offer to ABS-CBN to enter into a new Film Exhibition Agreement. But ABS-CBN, sent, through Ms. Concio, a counter-proposal in the form of a draft contract proposing exhibition of 53 films for a consideration of P35 million. This counter-proposal could be nothing less than the counter-offer of Mr. Lopez during his conference with Del Rosario at Tamarind Grill Restaurant. Clearly, there was no acceptance of VIVA's offer, for it was met by a counter-offer which substantially varied the terms of the offer.

ABS-CBN's reliance in Limketkai Sons Milling, Inc. v. Court ofAppeals 41 and Villonco Realty Company v. Bormaheco, Inc., 42 is misplaced. In these cases, it was held that an acceptance may contain a request for certain changes in the terms of the offer and yet be a binding acceptance as long as "it is clear that the meaning of the acceptance is positively and unequivocally to accept the offer, whether such request is granted or not." This ruling was, however, reversed in the resolution of 29 March 1996, 43 which ruled that the acceptance of all offer must be unqualified and absolute, i.e., it "must be identical in all respects with that of the offer so as to produce consent or meeting of the minds."

On the other hand, in Villonco, cited in Limketkai, the alleged changes in the revised counter-offer were not material but merely clarificatory of what had previously been agreed upon. It cited the statement in Stuart v. Franklin Life Insurance Co. 44 that "a vendor's change in a phrase of the offer to purchase, which change does not essentially change the terms of the offer, does not amount to a rejection of the offer and the tender of a counter-offer." 45 However, when any of the elements of the contract is modified upon acceptance, such alteration amounts to a counter-offer.

In the case at bar, ABS-CBN made no unqualified acceptance of VIVA's offer. Hence, they underwent a period of bargaining. ABS-CBN then formalized its counter-proposals or counter-offer in a draft contract, VIVA through its Board of Directors, rejected such counter-offer, Even if it be conceded arguendo that Del Rosario had accepted the counter-offer, the acceptance did not bind VIVA, as there was no proof whatsoever that Del Rosario had the specific authority to do so.

Under Corporation Code, 46 unless otherwise provided by said Code, corporate powers, such as the power; to enter into contracts; are exercised by the Board of Directors. However, the Board may delegate such powers to either an executive committee or officials or contracted managers. The delegation, except for the executive committee, must be for specific purposes, 47 Delegation to officers makes the latter agents of the corporation; accordingly, the general rules of agency as to the bindings effects of their acts would apply. 48 For such officers to be deemed fully clothed by the corporation to exercise a power of the Board, the latter must specially authorize them to do so. That Del Rosario did not have the authority to accept ABS-CBN's counter-offer was best evidenced by his submission of the draft contract to VIVA's Board of Directors for the latter's approval. In any event, there was between Del Rosario and

Lopez III no meeting of minds. The following findings of the trial court are instructive:

A number of considerations militate against ABS-CBN's claim that a contract was perfected at that lunch meeting on April 02, 1992 at the Tamarind Grill.

FIRST, Mr. Lopez claimed that what was agreed upon at the Tamarind Grill referred to the price and the number of films, which he wrote on a napkin. However, Exhibit "C" contains numerous provisions which, were not discussed at the Tamarind Grill, if Lopez testimony was to be believed nor could they have been physically written on a napkin. There was even doubt as to whether it was a paper napkin or a cloth napkin. In short what were written in Exhibit "C'' were not discussed, and therefore could not have been agreed upon, by the parties. How then could this court compel the parties to sign Exhibit "C" when the provisions thereof were not previously agreed upon?

SECOND, Mr. Lopez claimed that what was agreed upon as the subject matter of the contract was 14 films. The complaint in fact prays for delivery of 14 films. But Exhibit "C" mentions 53 films as its subject matter. Which is which If Exhibits "C" reflected the true intent of the parties, then ABS-CBN's claim for 14 films in its complaint is false or if what it alleged in the complaint is true, then Exhibit "C" did not reflect what was agreed upon by the parties. This underscores the fact that there was no meeting of the minds as to the subject matter of the contracts, so as to preclude perfection thereof. For settled is the rule that there can be no contract where there is no object which is its subject matter (Art. 1318, NCC).

THIRD, Mr. Lopez [sic] answer to question 29 of his affidavit testimony (Exh. "D") states:

We were able to reach an agreement. VIVA gave us the exclusive license to show these fourteen (14) films, and we agreed to pay Viva the amount of P16,050,000.00 as well as grant Viva commercial slots worth P19,950,000.00. We had already earmarked this P16, 050,000.00.

which gives a total consideration of P36 million (P19,950,000.00 plus P16,050,000.00. equals P36,000,000.00).

On cross-examination Mr. Lopez testified:

Q. What was written in this napkin?

A. The total price, the breakdown the known Viva movies, the 7 blockbuster movies and the other 7 Viva movies because the price was broken down accordingly. The none [sic] Viva and the seven other Viva movies and the sharing between the cash portion and the concerned spot portion in the total amount of P35 million pesos.

Now, which is which? P36 million or P35 million? This weakens ABS-CBN's claim.

FOURTH. Mrs. Concio, testifying for ABS-CBN stated that she transmitted Exhibit "C" to Mr. Del Rosario with a handwritten note, describing said Exhibit "C" as a "draft." (Exh. "5" - Viva; tsn pp. 23-24 June 08, 1992). The said draft has a well defined meaning.

Since Exhibit "C" is only a draft, or a tentative, provisional or preparatory writing prepared for discussion, the terms and conditions thereof could not have been previously agreed upon by ABS-CBN and Viva Exhibit "C'' could not therefore legally bind Viva, not having agreed thereto. In fact, Ms. Concio admitted that the terms and conditions embodied in Exhibit "C" were prepared by ABS-CBN's lawyers and there was no discussion on said terms and conditions. . . .

As the parties had not yet discussed the proposed terms and conditions in Exhibit "C," and there was no evidence whatsoever that Viva agreed to the terms and conditions thereof, said document cannot be a binding contract. The fact that Viva refused to sign Exhibit "C" reveals only two [sic] well that it did not agree on its terms and conditions, and this court has no authority to compel Viva to agree thereto.

FIFTH. Mr. Lopez understand [sic] that what he and Mr. Del Rosario agreed upon at the Tamarind Grill was only provisional, in the sense that it was subject to approval by the Board of Directors of Viva. He testified:

Q. Now, Mr. Witness, and after that Tamarind meeting ... the second meeting wherein you claimed that you have the meeting of the minds between you and Mr. Vic del Rosario, what happened?

A. Vic Del Rosario was supposed to call us up and tell us specifically the result of the discussion with the Board of Directors.

Q. And you are referring to the so-called agreement which you wrote in [sic] a piece of paper?

A. Yes, sir.

Q. So, he was going to forward that to the board of Directors for approval?

A. Yes, sir. (Tsn, pp. 42-43, June 8, 1992)

Q. Did Mr. Del Rosario tell you that he will submit it to his Board for approval?

A. Yes, sir. (Tsn, p. 69, June 8, 1992).

The above testimony of Mr. Lopez shows beyond doubt that he knew Mr. Del Rosario had no authority to bind Viva to a contract with ABS-CBN until and unless its Board of Directors approved it. The complaint, in fact, alleges that Mr. Del Rosario "is the Executive Producer of defendant Viva" which "is a corporation." (par. 2, complaint). As a mere agent of Viva, Del Rosario could not bind Viva unless what he did is ratified by its Board of Directors. (Vicente vs. Geraldez, 52 SCRA 210; Arnold vs. Willetsand Paterson, 44 Phil. 634). As a mere agent, recognized as such by plaintiff, Del Rosario could not be held liable jointly and severally with Viva and his inclusion as party defendant has no legal basis. (Salonga vs. Warner Barner [sic] , COLTA , 88 Phil. 125; Salmon vs. Tan, 36 Phil. 556).

The testimony of Mr. Lopez and the allegations in the complaint are clear admissions that what was supposed to have been agreed upon at the Tamarind Grill between Mr. Lopez and Del Rosario was not a binding agreement. It is as it should be because corporate power to enter into a contract is lodged in the Board of Directors. (Sec. 23, Corporation Code). Without such board approval by the Viva board, whatever agreement Lopez and Del Rosario arrived at could not ripen into a valid contract binding upon Viva (Yao Ka Sin Trading vs. Court of Appeals, 209 SCRA 763). The evidence adduced shows that the Board of Directors of Viva rejected Exhibit "C" and insisted that the film package for 140 films be maintained (Exh. "7-1" - Viva ). 49

The contention that ABS-CBN had yet to fully exercise its right of first refusal over twenty-four films under the 1990 Film Exhibition Agreement and that the meeting between Lopez and Del Rosario was a continuation of said previous contract is untenable. As observed by the trial court, ABS-CBN right of first refusal had already been exercised when Ms. Concio wrote to VIVA ticking off ten films, Thus:

[T]he subsequent negotiation with ABS-CBN two (2) months after this letter was sent, was for an entirely different package. Ms. Concio herself admitted on cross-examination to having used or exercised the right of first refusal. She stated that the list was not acceptable and was indeed not accepted by ABS-CBN, (TSN, June 8, 1992, pp. 8-10). Even Mr. Lopez himself admitted that the right of the first refusal may have been already exercised by Ms. Concio (as she had). (TSN, June 8, 1992, pp. 71-75). Del Rosario himself knew and understand [sic] that ABS-CBN has lost its rights of the first refusal when his list of 36 titles were rejected (Tsn, June 9, 1992, pp. 10-11) 50

II

However, we find for ABS-CBN on the issue of damages. We shall first take up actual damages. Chapter 2, Title XVIII, Book IV of the Civil Code is the specific law on actual or compensatory damages. Except as provided by law or by stipulation, one is entitled to compensation for actual damages only for such pecuniary loss suffered by him as he has duly proved. 51 The indemnification shall comprehend not only the value of the loss suffered, but also that of the profits that the obligee failed to obtain. 52 In contracts and quasi-contracts the damages which may be awarded are dependent on whether the obligor acted with good faith or otherwise, It case of good faith, the damages recoverable are those which are the natural and probable consequences of the breach of the obligation and which the parties have foreseen or could have reasonably foreseen at the time of the constitution of the obligation. If the obligor acted with fraud, bad faith, malice, or wanton attitude, he shall be responsible for all damages which may be reasonably attributed to the non-performance of the obligation. 53 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, whether or not such damages has been foreseen or could have reasonably been foreseen by the defendant. 54

Actual damages may likewise be recovered for loss or impairment of earning capacity in cases of temporary or permanent personal injury, or for injury to the plaintiff's business standing or commercial credit. 55

The claim of RBS for actual damages did not arise from contract, quasi-contract, delict, or quasi-delict. It arose from the fact of filing of the complaint despite ABS-CBN's alleged knowledge of lack of cause of action. Thus paragraph 12 of RBS's Answer with Counterclaim and Cross-claim under the heading COUNTERCLAIM specifically alleges:

12. ABS-CBN filed the complaint knowing fully well that it has no cause of action RBS. As a result thereof, RBS suffered actual damages in the amount of P6,621,195.32. 56

Needless to state the award of actual damages cannot be comprehended under the above law on actual damages. RBS could only probably take refuge under Articles 19, 20, and 21 of the Civil Code, which read as follows:

Art. 19. Every person must, in the exercise of his rights and in the performance of his duties, act with justice, give everyone his due, and observe honesty and good faith.

Art. 20. Every person who, contrary to law, wilfully or negligently causes damage to another, shall indemnify the latter for tile same.

Art. 21. Any person who wilfully causes loss or injury to another in a manner that is contrary to morals, good customs or public policy shall compensate the latter for the damage.

It may further be observed that in cases where a writ of preliminary injunction is issued, the damages which the defendant may suffer by reason of the writ are recoverable from the injunctive bond. 57 In this case, ABS-CBN had not yet filed the required bond; as a matter of fact, it asked for reduction of the bond and even went to the Court of Appeals to challenge the order on the matter, Clearly then, it was not necessary for RBS to file a counterbond. Hence, ABS-CBN cannot be held responsible for the premium RBS paid for the counterbond.

Neither could ABS-CBN be liable for the print advertisements for "Maging Sino Ka Man" for lack of sufficient legal basis. The RTC issued a temporary restraining order and later, a writ of preliminary injunction on the basis of its determination that there existed sufficient ground for the issuance thereof. Notably, the RTC did not dissolve the injunction on the ground of lack of legal and factual basis, but because of the plea of RBS that it be allowed to put up a counterbond.

As regards attorney's fees, the law is clear that in the absence of stipulation, attorney's fees may be recovered as actual or compensatory damages under any of the circumstances provided for in Article 2208 of the Civil Code. 58

The general rule is that attorney's fees cannot be recovered as part of damages because of the policy that no premium should be placed on the right to litigate. 59 They are not to be awarded every time a party wins a suit. The power of the court to award attorney's fees under Article 2208 demands factual, legal, and equitable justification. 60 Even when claimant is compelled to litigate with third persons or to incur expenses to protect his rights, still attorney's fees may not be awarded where no sufficient showing of bad faith could be reflected in a party's persistence in a case other than erroneous conviction of the righteousness of his cause. 61

As to moral damages the law is Section 1, Chapter 3, Title XVIII, Book IV of the Civil Code. Article 2217 thereof defines what are included in moral damages, while Article 2219 enumerates the cases where they may be recovered, Article 2220 provides that moral damages may be recovered in breaches of contract where the defendant acted fraudulently or in bad faith. RBS's claim for moral damages could possibly fall only under item (10) of Article 2219, thereof which reads:

(10) Acts and actions referred to in Articles 21, 26, 27, 28, 29, 30, 32, 34, and 35.

Moral damages 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. 62 The award is not meant to enrich the complainant at the expense of the defendant, but to enable the injured party to obtain means, diversion, or amusements that will serve to obviate then moral suffering he has undergone. It is aimed at the restoration, within

the limits of the possible, of the spiritual status quo ante, and should be proportionate to the suffering inflicted. 63 Trial courts must then guard against the award of exorbitant damages; they should exercise balanced restrained and measured objectivity to avoid suspicion that it was due to passion, prejudice, or corruption on the part of the trial court. 64

The award of moral damages cannot be granted in favor of a corporation because, being an artificial person and having existence only in legal contemplation, it has no feelings, no emotions, no senses, It cannot, therefore, experience physical suffering and mental anguish, which call be experienced only by one having a nervous system.65 The statement in People v. Manero 66 and Mambulao Lumber Co. v. PNB 67 that a corporation may recover moral damages if it "has a good reputation that is debased, resulting in social humiliation" is an obiter dictum. On this score alone the award for damages must be set aside, since RBS is a corporation.

The basic law on exemplary damages is Section 5, Chapter 3, Title XVIII, Book IV of the Civil Code. These are imposed by way of example or correction for the public good, in addition to moral, temperate, liquidated or compensatory damages. 68 They are recoverable in criminal cases as part of the civil liability when the crime was committed with one or more aggravating circumstances; 69 in quasi-contracts, if the defendant acted with gross negligence;70 and in contracts and quasi-contracts, if the defendant acted in a wanton, fraudulent, reckless, oppressive, or malevolent manner. 71

It may be reiterated that the claim of RBS against ABS-CBN is not based on contract, quasi-contract, delict, or quasi-delict, Hence, the claims for moral and exemplary damages can only be based on Articles 19, 20, and 21 of the Civil Code.

The elements of abuse of right under Article 19 are the following: (1) the existence of a legal right or duty, (2) which is exercised in bad faith, and (3) for the sole intent of prejudicing or injuring another. Article 20 speaks of the general sanction for all other provisions of law which do not especially provide for their own sanction; while Article 21 deals with acts contra bonus mores, and has the following elements; (1) there is an act which is legal, (2) but which is contrary to morals, good custom, public order, or public policy, and (3) and it is done with intent to injure. 72

Verily then, malice or bad faith is at the core of Articles 19, 20, and 21. Malice or bad faith implies a conscious and intentional design to do a wrongful act for a dishonest purpose or moral obliquity. 73 Such must be substantiated by evidence. 74

There is no adequate proof that ABS-CBN was inspired by malice or bad faith. It was honestly convinced of the merits of its cause after it had undergone serious negotiations culminating in its formal submission of a draft contract. Settled is the rule that the adverse result of an action does not per se make the action wrongful and subject the actor to damages, for the law could not have meant to impose a penalty on the right to litigate. If damages result from a person's exercise of a right, it is damnum absque injuria. 75

WHEREFORE, the instant petition is GRANTED. The challenged decision of the Court of Appeals in CA-G.R. CV No, 44125 is hereby REVERSED except as to unappealed award of attorney's fees in favor of VIVA Productions, Inc. 1âwphi1.nêt

No pronouncement as to costs.

SO ORDERED.

Melo, Kapunan, Martinez and Pardo JJ., concur.

Footnotes

1 Per Adefuin-Dela Cruz, J., with Lantin and Tayao-Jaguros, JJ., concurring; Rollo, 49-60.

2 Rollo, 62.

3 Per Judge Efren N. Ambrosio; Rollo, 134-161.

4 RTC Decision, Rollo, 146-149.

5. This should be Republic Broadcasting System, now GMA Network Inc., upon approval by the Securities and Exchange

Commission of the change in corporate name on 20 February 1996.

6 Vol. 1, Original Record (OR), Civil Case No. Q-92-12309, 27-28, Hereafter, OR shall refer to the record of this case.

7 Vol, 1 OR, 170-173.

8 Vol. 1, OR, 217-220.

9 Id., 184-216.

10 Id., 177-183 (VIVA and Del Rosario); 222-228 (RBS).

11 Id., 331-332.

12 Id., 369.

13 Id., 397.

14 Id., 398-402, 403-404.

15 Id., 406-409.

16 Id., 453-454.

17 Vol. 2, OR, 465-484.

18 Id., 464.

19 Id., 913-928.

20 Id., 1140-1166; Rollo, 134-161.

21 Vol. 2, OR, 2030-2035.

22 Rollo, 55.

23 290 SCRA 523 [1995].

24 244 SCRA 320 [1995].

25 238 SCRA [1994].

26 65 SCRA 352 [1975].

27 Citing Francel Realty Corp. v. Court of Appeals, 252 SCRA 127, 134 [1996].

28 Citing Tan v. Court of Appeals, 131 SCRA 397, 404 [1984].

29 Citing Auyong Hian v. Court of Tax Appeals, 59 SCRA 110, 134 [1974].

30 Citing Ilocos Norte Electric Company v. Court of Appeals, 179 SCRA 5 [1989].

31 Citing People v. Manero, 218 SCRA 85,96-97 [1993]; citing Simex International Manila) Inc. v. Court of Appeals, 183 SCRA 360 [1990].

32 16 SCRA 321 [1966].

33 See Gonzales v. National Housing Corp., 94 SCRA 786 [1979]; Servicewide Specialist, Inc. v. Court of Appeals, 256 SCRA 649 [1996].

34 I ARTUTRO M. TOLENTINO, COMMENTARIES AND JURISPRUDENCE ON THE CIVIL CODE OF THE PHILIPPINES 63-66 [1983 Ed).

35 Supra note 31.

36 Rollo, 191.

37 Art. 1305, Civil Code.


39 Toyota Shaw, Inc. v. Court of Appeals, Supra note 24, at 329.

40 See IV ARTURO M. TOLENTINO, COMMENTARIES AND JURISPRUDENCE ON THE CIVIL CODE OF THE PHILIPPINES 450 (6th ed., 1996).

41 Supra note 23.

42 Supra note 26.

43 255 SCRA 626, 639 [1996].

44 165 Fed. 2nd 965, Citing Sec. 79 Williston on Contracts.

45 Villonco Realty Company v. Bormaheco, Inc. Supra note 25, at 365-366.

46 B.P. Blg. 68, Sec. 23.

47 Jose C. VITUG, PANDECT OF COMMERCIAL LWA AND JURISPRUDENCE 356 (Reviced ed; 1990).

48 I JOSE C. CAMPOS, JR., and MARIA CLARA LOPEZ-CAMPOS, THE CORPORATION CODE, 348-385 (1990 ed.)

49 RTC Decision, Rollo, 153-156.

50 Id., 158.


52 Art. 2200, Id.

53 Art. 2201, id.

54 Art. 2202, id.

55 Art. 2205, id.

56 Vol. 1, OR, 225.

57 Sec. 4 in relation to Section 8, Rule 58 1997 Rules of Civil Procedure.

58 It reads as follows:

Art. 2208. In the absence of stipulation, attorney's fees and expenses of litigation, other than judicial costs, cannot be recovered, except:

(1) When exemplary damages are awarded;

(2) When the defendant's act or omission has compelled the plaintiff to litigate with third persons or to incur expenses to protect his interest;

(3) In criminal cases of malicious prosecution against the plaintiff;

(4) In case of a clearly unfounded civil action or proceeding against the plaintiff;

(5) Where the defendant acted in gross and evident bad faith in refusing to satisfy the plaintiffs plainly valid, just and demandable claim;

(6) In actions for legal support;

(7) In actions for the recovery of wages of household helpers, laborers and skilled workers;

(8) In actions for indemnity under workmen's compensation and employer's liability laws;

(9) In a separate civil action to recover civil liability arising from a crime;

(10) When at least double judicial costs are awarded;

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

In all cases, the attorney's fees and expenses of litigation must be reasonable.

59 Firestone Tire & Rubber Company of the Philippines v. Ines Chaves & Co. Ltd., 18 SCRA 356,358 [1966]; Philippine Air Lines v. Miano, 242 SCRA 235, 240 [1995].

60 Scott Consultants & Resource Development Corporation, Inc. v. Court of Appeals, 242 SCRA 393 . 406 [1995].

61 Gonzales v. National Housing Corp., 94 SCRA 786, 792 [1979]; Servicewide Specialists, Inc. v. Court of Appeals, supra note ,73, at 655.

62 Pagsuyuin v. Intermediate Appellate Court, 193 SCRA 547, 555 [1991].

63 Visayan Sawmill Company v. Court of Appeals, 219 SCRA 378, 392 [1993], citing R&B Security Insurance Co., Inc. v. Intermediate appellate Court 129 SCRA 736 [1984]; De la Serna v. Court of Appeals, 233 SCRA 325, 329-330 [1994].

64 People v. Wenceslao, 212 SCRA 560, 569 [1992], citing Filinvest Credit Corp. v. Intermediate Appellate Court, 166 SCRA 155[1998].

65 Prime White Cement Corp. v. Intermediate Appellate Court, 220 SCRA 103, 113-114 [1993] LBC Express Inc. v. Court of Appeals, 236 SCRA 602, 607 [1994]; Acme Shoe, Rubber and Plastic Corp. v. Court of Appeals, 260 SCRA 714, 722 [1996].

66 Supra note 31.

67 130 Phil. 366 [1968].


69 Art. 2230, id.

70 Art. 2231, id.

71 Art. 2232, id.

72 Albenson Enterprises Corp. v. Court of Appeals, 217 SCRA I 16, 25 [1993].

73 Far East Bank and Trust Company v. Court of Appeals, 241 SCRA 671, 675 [1995].

74 Philippine Air Lines v. Miano, supra note 59.

75 Tiera International Construction Corp. v. NLRC, 211 SCRA 73, 81 [1992] citing Saba v. Court of Appeals, 189 SCRA 50, 55 [1990].




http://www.lawphil.net/judjuris/juri1999/jan1999/gr_128690_1999.html#top

Manila

THIRD DIVISION

G.R. No. 126204 November 20, 2001

NATIONAL POWER CORPORATION, petitioner, vs.PHILIPP BROTHERS OCEANIC, INC., respondent.

SANDOVAL-GUTIERREZ, J.:

Where a person merely uses a right pertaining to him, without bad faith or intent to injure, the fact that damages are thereby suffered by another will not make him liable.1

This principle finds useful application to the present case.

Before us is a petition for review of the Decision2 dated August 27, 1996 of the Court of Appeals affirming in toto the Decision3 dated January 16, 1992 of the Regional Trial Court, Branch 57, Makati City.

The facts are:

On May 14, 1987, the National Power Corporation (NAPOCOR) issued invitations to bid for the supply and delivery of 120,000 metric tons of imported coal for its Batangas Coal-Fired Thermal Power Plant in Calaca, Batangas. The Philipp Brothers Oceanic, Inc. (PHIBRO) prequalified and was allowed to participate as one of the bidders. After the public bidding was conducted, PHIBRO's bid was accepted. NAPOCOR's acceptance was conveyed in a letter dated July 8, 1987, which was received by PHIBRO on July 15, 1987.The "Bidding Terms and Specifications"4provide for the manner of shipment of coals, thus:

"SECTION V

SHIPMENT

The winning TENDERER who then becomes the SELLER shall arrange and provide gearless bulk carrier for the shipment of coal to arrive at discharging port on or before thirty (30) calendar days after receipt of the Letter of Credit by the SELLER or its nominee as per Section XIV hereof to meet the vessel arrival schedules at Calaca, Batangas, Philippines as follows:

60,000 +/ - 10 % July 20, 1987

60,000 +/ - 10% September 4, 1987"5

On July 10, 1987, PHIBRO sent word to NAPOCOR that industrial disputes might soon plague Australia, the shipment's point of origin, which could seriously hamper PHIBRO's ability to supply the needed coal.6 From July 23 to July 31, 1987, PHIBRO again apprised NAPOCOR of the situation in Australia, particularly informing the latter that the ship owners therein are not willing to load cargo unless a "strike-free" clause is incorporated in the charter party or the contract of carriage.7 In order to hasten the transfer of coal, PHIBRO proposed to NAPOCOR that they equally share the burden of a "strike-free" clause. NAPOCOR refused.

On August 6, 1987, PHIBRO received from NAPOCOR a confirmed and workable letter of credit. Instead of delivering the coal on or before the thirtieth day after receipt of the Letter of Credit, as agreed upon by the parties in the July contract, PHIBRO effected its first shipment only on November 17, 1987.

Consequently, in October 1987, NAPOCOR once more advertised for the delivery of coal to its Calaca thermal plant. PHIBRO participated anew in this subsequent bidding. On November 24, 1987, NAPOCOR disapproved PHIBRO's application for pre-qualification to bid for not meeting the minimum requirements.8 Upon further inquiry, PHIBRO found that the real reason for the disapproval was its purported failure to satisfy NAPOCOR's demand for

damages due to the delay in the delivery of the first coal shipment.

This prompted PHIBRO to file an action for damages with application for injunction against NAPOCOR with the Regional Trial Court, Branch 57, Makati City.9 In its complaint, PHIBRO alleged that NAPOCOR's act of disqualifying it in the October 1987 bidding and in all subsequent biddings was tainted with malice and bad faith. PHIBRO prayed for actual, moral and exemplary damages and attorney's fees.

In its answer, NAPOCOR averred that the strikes in Australia could not be invoked as reason for the delay in the delivery of coal because PHIBRO itself admitted that as of July 28, 1987 those strikes had already ceased. And, even assuming that the strikes were still ongoing, PHIBRO should have shouldered the burden of a "strike-free" clause because their contract was "C and F Calaca, Batangas, Philippines," meaning, the cost and freight from the point of origin until the point of destination would be for the account of PHIBRO. Furthermore, NAPOCOR claimed that due to PHIBRO's failure to deliver the coal on time, it was compelled to purchase coal from ASEA at a higher price. NAPOCOR claimed for actual damages in the amount of P12,436,185.73, representing the increase in the price of coal, and a claim of P500,000.00 as litigation expenses.10

Thereafter, trial on the merits ensued.

On January 16, 1992, the trial court rendered a decision in favor of PHIBRO, the dispositive portion of which reads:

"WHEREFORE, judgment is hereby rendered in favor of plaintiff Philipp Brothers Oceanic Inc. (PHIBRO) and against the defendant National Power Corporation (NAPOCOR) ordering the said defendant NAPOCOR:

1. To reinstate Philipp Brothers Oceanic, Inc. (PHIBRO) in the defendant National Power Corporation's list of accredited bidders and allow PHIBRO to participate in any and all future tenders of National Power Corporation for the supply and delivery of imported steam coal;

2. To pay Philipp Brothers Oceanic, Inc. (PHIBRO);

a. The peso equivalent at the time of payment of $864,000 as actual damages,

b. The peso equivalent at the time of payment of $100,000 as moral damages;

c. The peso equivalent at the time of payment of $50,000 as exemplary damages;

d. The peso equivalent at the time of payment of $73,231.91 as reimbursement for expenses, cost of litigation and attorney's fees;

3. To pay the costs of suit;

4. The counterclaims of defendant NAPOCOR are dismissed for lack of merit.

SO ORDERED."11

Unsatisfied, NAPOCOR, through the Solicitor General, elevated the case to the Court of Appeals. On August 27, 1996, the Court of Appeals rendered a Decision affirming in toto the Decision of the Regional Trial Court. It ratiocinated that:

"There is ample evidence to show that although PHIBRO's delivery of the shipment of coal was delayed, the delay was in fact caused by a) Napocor's own delay in opening a workable letter of credit; and b) the strikes which plaqued the Australian coal industry from the first week of July to the third week of September 1987. Strikes are included in the definition of force majeure in Section XVII of the Bidding Terms and Specifications, (supra), so Phibro is not liable for any delay caused thereby.

Phibro was informed of the acceptance of its bid on July 8, 1987. Delivery of coal was to be effected thirty (30) days from Napocor's opening of a confirmed and workable letter of credit. Napocor was only able to do so on August 6, 1987.

By that time, Australia's coal industry was in the middle of a seething controversy and unrest, occasioned by strikes, overtime bans, mine stoppages. The origin, the scope and the effects of this industrial unrest are lucidly described in the uncontroverted testimony

of James Archibald, an employee of Phibro and member of the Export Committee of the Australian Coal Association during the time these events transpired.

xxx xxx xxx

The records also attest that Phibro periodically informed Napocor of these developments as early as July 1, 1987, even before the bid was approved. Yet, Napocor did not forthwith open the letter of credit in order to avoid delay which might be caused by the strikes and their after-effects.

"Strikes" are undoubtedly included in the force majeure clause of the Bidding Terms and Specifications (supra). The renowned civilist, Prof. Arturo Tolentino, defines force majeure as "an event which takes place by accident and could not have been foreseen." (Civil Code of the Philippines, Volume IV, Obligations and Contracts, 126, [1991]) He further states:

"Fortuitous events may be produced by two general causes: (1) by Nature, such as earthquakes, storms, floods, epidemics, fires, etc., and (2) by the act of man, such as an armed invasion, attack by bandits, governmental prohibitions, robbery, etc."

Tolentino adds that the term generally applies, broadly speaking, to natural accidents. In order that acts of man such as a strike, may constitute fortuitous event, it is necessary that they have the force of an imposition which the debtor could not have resisted. He cites a parallel example in the case of Philippine National Bank v. Court of Appeals, 94 SCRA 357 (1979), wherein the Supreme Court said that the outbreak of war which prevents performance exempts a party from liability.

Hence, by law and by stipulation of the parties, the strikes which took place in Australia from the first week of July to the third week of September, 1987, exempted Phibro from the effects of delay of the delivery of the shipment of coal."12

Twice thwarted, NAPOCOR comes to us via a petition for review ascribing to the Court of Appeals the following errors:

I

"Respondent Court of Appeals gravely and seriously erred in concluding and so holding that PHIBRO's delay in the delivery of imported coal was due to NAPOCOR's alleged delay in opening a letter of credit and to force majeure, and not to PHIBRO's own deliberate acts and faults."13

II

"Respondent Court of Appeals gravely and seriously erred in concluding and so holding that NAPOCOR acted maliciously and unjustifiably in disqualifying PHIBRO from participating in the December 8, 1987 and future biddings for the supply of imported coal despite the existence of valid grounds therefor such as serious impairment of its track record."14

III

"Respondent Court of Appeals gravely and seriously erred in concluding and so holding that PHIBRO was entitled to injunctive relief, to actual or compensatory, moral and exemplary damages, attorney's fees and litigation expenses despite the clear absence of legal and factual bases for such award."15

IV

"Respondent Court of Appeals gravely and seriously erred in absolving PHIBRO from any liability for damages to NAPOCOR for its unjustified and deliberate refusal and/or failure to deliver the contracted imported coal within the stipulated period."16

V

"Respondent Court of Appeals gravely and seriously erred in dismissing NAPOCOR's counterclaims for damages and litigation expenses."17

It is axiomatic that only questions of law, not questions of fact, may be raised before this Court in a petition for review under Rule 45 of the Rules of

Court.18 The findings of facts of the Court of Appeals are conclusive and binding on this Court19 and they carry even more weight when the said court affirms the factual findings of the trial court.20 Stated differently, the findings of the Court of .Appeals, by itself, which are supported by substantial evidence, are almost beyond the power of review by this Court.21

With the foregoing settled jurisprudence, we find it pointless to delve lengthily on the factual issues raised by petitioner. The existence of strikes in Australia having been duly established in the lower courts, we are left only with the burden of determining whether or not NAPOCOR acted wrongfully or with bad faith in disqualifying PHIBRO from participating in the subsequent public bidding.

Let us consider the case in its proper perspective.

The Court of Appeals is justified in sustaining the Regional Trial Court's decision exonerating PHIBRO from any liability for damages to NAPOCOR as it was clearly established from the evidence, testimonial and documentary, that what prevented PHIBRO from complying with its obligation under the July 1987 contract was the industrial disputes which besieged Australia during that time. Extant in our Civil Code is the rule that no person shall be responsible for those events which could not be foreseen, or which, though foreseen, were inevitable.22 This means that when an obligor is unable to fulfill his obligation because of a fortuitous event or force majeure, he cannot be held liable for damages for non-performance.23

In addition to the above legal precept, it is worthy to note that PHIBRO and NAPOCOR explicitly agreed in Section XVII of the "Bidding Terms and Specifications"24 that "neither seller (PHIBRO) nor buyer (NAPOCOR) shall be liable for any delay in or failure of the performance of its obligations, other than the payment of money due, if any such delay or failure is due to Force Majeure." Specifically, they defined force majeure as "any disabling cause beyond the control of and without fault or negligence of the party, which causes may include but are not restricted to Acts of God or of the public enemy; acts of the Government in either its sovereign or contractual capacity; governmental restrictions; strikes, fires, floods, wars, typhoons, storms, epidemics and quarantine restrictions."

The law is clear and so is the contract between NAPOCOR and PHIBRO. Therefore, we have no reason to rule otherwise.

However, proceeding from the premise that PHIBRO was prevented by force majeure from complying with its obligation, does it necessarily follow that NAPOCOR acted unjustly, capriciously, and unfairly in disapproving PHIBRO's application for pre-qualification to bid?

First, it must be stressed that NAPOCOR was not bound under any contract to approve PHIBRO's pre-qualification requirements. In fact, NAPOCOR had expressly reserved its right to reject bids. The Instruction to Bidders found in the "Post-Qualification Documents/Specifications for the Supply and Delivery of Coal for the Batangas Coal-Fired Thermal Power Plant I at Calaca, Batangas Philippines,"25 is explicit, thus:

"IB-17 RESERVATION OF NAPOCOR TO REJECT BIDS

NAPOCOR reserves the right to reject any or all bids, to waive any minor informality in the bids received. The right is also reserved to reject the bids of any bidder who has previously failed to properly perform or complete on time any and all contracts for delivery of coal or any supply undertaken by a bidder."26(Emphasis supplied)

This Court has held that where the right to reject is so reserved, the lowest bid or any bid for that matter may be rejected on a mere technicality.27 And where the government as advertiser, availing itself of that right, makes its choice in rejecting any or all bids, the losing bidder has no cause to complain nor right to dispute that choice unless an unfairness or injustice is shown. Accordingly, a bidder has no ground of action to compel the Government to award the contract in his favor, nor to compel it to accept his bid. Even the lowest bid or any bid may be rejected.28In Celeste v. Court of Appeals,29 we had the occasion to rule:

"Moreover, paragraph 15 of the Instructions to Bidders states that 'the Government hereby reserves the right to reject any or all bids submitted.' In the case of A.C. Esguerra and Sons v. Aytona, 4 SCRA 1245, 1249 (1962), we held:

'x x x [I]n the invitation to bid, there is a condition imposed upon the bidders to the effect that the bidders shall be subject to the right of the government to reject any and all bids subject to its discretion. Here the government has made its choice, and unless an unfairness or injustice is shown, the losing bidders have no cause to complain, nor right to dispute that choice.'

Since there is no evidence to prove bad faith and arbitrariness on the part of the petitioners in evaluating the bids, we rule that the private respondents are not entitled to damages representing lost profits." (Emphasis supplied)

Verily, a reservation of the government of its right to reject any bid, generally vests in the authorities a wide discretion as to who is the best and most

advantageous bidder. The exercise of such discretion involves inquiry, investigation, comparison, deliberation and decision, which are quasi-judicial functions, and when honestly exercised, may not be reviewed by the court.30 In Bureau Veritas v. Office of the President,31 we decreed:

"The discretion to accept or reject a bid and award contracts is vested in the Government agencies entrusted with that function. The discretion given to the authorities on this matter is of such wide latitude that the Courts will not interfere therewith, unless it is apparent that it is used as a shield to a fraudulent award. (Jalandoni v. NARRA, 108 Phil. 486 [1960]) x x x. The exercise of this discretion is a policy decision that necessitates prior inquiry, investigation, comparison, evaluation, and deliberation. This task can best be discharged by the Government agencies concerned, not by the Courts. The role of the Courts is to ascertain whether a branch or instrumentality of the Government has transgresses its constitutional boundaries. But the Courts will not interfere with executive or legislative discretion exercised within those boundaries. Otherwise, it strays into the realm of policy decision-making. x x x." (Emphasis supplied)

Owing to the discretionary character of the right involved in this case, the propriety of NAPOCOR's act should therefore be judged on the basis of the general principles regulating human relations, the forefront provision of which is Article 19 of the Civil Code which provides that "every person must, in the exercise of his rights and in the performance of his duties, act with justice, give everyone his due, and observe honesty and good faith."32Accordingly, a person will be protected only when he acts in the legitimate exercise of his right, that is, when he acts with prudence and in good faith; but not when he acts with negligence or abuse.33

Did NAPOCOR abuse its right or act unjustly in disqualifying PHIBRO from the public bidding?

We rule in the negative.

In practice, courts, in the sound exercise of their discretion, will have to determine under all the facts and circumstances when the exercise of a right is unjust, or when there has been an abuse of right.34

We went over the record of the case with painstaking solicitude and we are convinced that NAPOCOR's act of disapproving PHIBRO's application for pre-qualification to bid was without any intent to injure or a purposive motive to perpetrate damage. Apparently, NAPOCOR acted on the strong conviction that PHIBRO had a "seriously-impaired" track record. NAPOCOR cannot be faulted from believing so. At this juncture, it is worth mentioning that at the time NAPOCOR issued its subsequent Invitation to Bid, i.e., October 1987, PHIBRO had not yet delivered the first shipment of coal under the July 1987 contract, which was due on or before September 5, 1987. Naturally, NAPOCOR is justified in entertaining doubts on PHIBRO's qualification or capability to assume an obligation under a new contract.

Moreover, PHIBRO's actuation in 1987 raised doubts as to the real situation of the coal industry in Australia. It appears from the records that when NAPOCOR was constrained to consider an offer from another coal supplier (ASEA) at a price of US$33.44 per metric ton, PHIBRO unexpectedly offered the immediate delivery of 60,000 metric tons of Ulan steam coal at US$31.00 per metric ton for arrival at Calaca, Batangas on September 20-21, 1987."35 Of course, NAPOCOR had reason to ponder — how come PHIBRO could assure the immediate delivery of 60,000 metric tons of coal from the same source to arrive at Calaca not later than September 20/21, 1987 but it could not deliver the coal it had undertaken under its contract?

Significantly, one characteristic of a fortuitous event, in a legal sense, and consequently in relations to contracts, is that "the concurrence must be such as to render it impossible for the debtor to fulfill his obligation in a normal manner."36 Faced with the above circumstance, NAPOCOR is justified in assuming that, may be, there was really no fortuitous event or force majeure which could render it impossible for PHIBRO to effect the delivery of coal. Correspondingly, it is also justified in treating PHIBRO's failure to deliver a serious impairment of its track record. That the trial court, thereafter, found PHIBRO's unexpected offer actually a result of its desire to minimize losses on the part of NAPOCOR is inconsequential. In determining the existence of good faith, the yardstick is the frame of mind of the actor at the time he committed the act, disregarding actualities or facts outside his knowledge. We cannot fault NAPOCOR if it mistook PHIBRO's unexpected offer a mere attempt on the latter's part to undercut ASEA or an indication of PHIBRO's inconsistency. The circumstances warrant such contemplation.

That NAPOCOR believed all along that PHIBRO's failure to deliver on time was unfounded is manifest from its letters37 reminding PHIBRO that it was bound to deliver the coal within 30 days from its (PHIBRO's) receipt of the Letter of Credit, otherwise it would be constrained to take legal action. The same honest belief can be deduced from NAPOCOR's Board Resolution, thus:

"On the legal aspect, Management stressed that failure of PBO to deliver under the contract makes them liable for damages, considering that the reasons invoked were not valid. The measure of the damages will be limited to actual and compensatory damages. However, it was reported that Philipp Brothers advised they would like to have continuous business relation with NPC so they are willing to sit down or even proposed that the case be submitted to the Department of Justice as to avoid a court action or arbitration.

xxx xxx xxx

On the technical-economic aspect, Management claims that if PBO delivers in November 1987 and January 1988, there are some advantages. If PBO reacts to any legal action and fails to deliver, the options are: one, to use 100% Semirara and second, to go into urgent coal order. The first option will result in a 75 MW derating and oil will be needed as supplement. We will stand to lose around P30 M. On the other hand, if NPC goes into an urgent coal order, there will be an additional expense of $786,000 or P16.11 M, considering the price of the latest purchase with ASEA. On both points, reliability is decreased."38

The very purpose of requiring a bidder to furnish the awarding authority its pre-qualification documents is to ensure that only those "responsible" and "qualified" bidders could bid and be awarded with government contracts. It bears stressing that the award of a contract is measured not solely by the smallest amount of bid for its performance, but also by the "responsibility" of the bidder. Consequently, the integrity, honesty, and trustworthiness of the bidder is to be considered. An awarding official is justified in considering a bidder not qualified or not responsible if he has previously defrauded the public in such contracts or if, on the evidence before him, the official bona fide believes the bidder has committed such fraud, despite the fact that there is yet no judicial determination to that effect.39Otherwise stated, if the awarding body bona fide believes that a bidder has seriously impaired its track record because of a particular conduct, it is justified in disqualifying the bidder. This policy is necessary to protect the interest of the awarding body against irresponsible bidders.

Thus, one who acted pursuant to the sincere belief that another willfully committed an act prejudicial to the interest of the government cannot be considered to have acted in bad faith. Bad faith has always been a question of intention. It is that corrupt motive that operates in the mind. As understood in law, it contemplates a state of mind affirmatively operating with furtive design or with some motive of self-interest or ill-will or for ulterior purpose.40While confined in the realm of thought, its presence may be ascertained through the party's actuation or through circumstantial evidence.41 The circumstances under which NAPOCOR disapproved PHIBRO's pre-qualification to bid do not show an intention to cause damage to the latter. The measure it adopted was one of self-protection. Consequently, we cannot penalize NAPOCOR for the course of action it took. NAPOCOR cannot be made liable for actual, moral and exemplary damages.

Corollarily, in awarding to PHIBRO actual damages in the amount of $864,000, the Regional Trial Court computed what could have been the profits of PHIBRO had NAPOCOR allowed it to participate in the subsequent public bidding. It ruled that "PHIBRO would have won the tenders for the supply of about 960,000 metric tons out of at least 1,200,000 metric tons" from the public bidding of December 1987 to 1990. We quote the trial court's ruling, thus:

". . . PHIBRO was unjustly excluded from participating in at least five (5) tenders beginning December 1987 to 1990, for the supply and delivery of imported coal with a total volume of about 1,200,000 metric tons valued at no less than US$32 Million. (Exhs. "AA," "AA-1-1," to "AA-2"). The price of imported coal for delivery in 1988 was quoted in June 1988 by bidders at US$41.35 to US$43.95 per metric ton (Exh. "JJ"); in September 1988 at US$41.50 to US$49.50 per metric ton (Exh. "J-1"); in November 1988 at US$39.00 to US$48.50 per metric ton (Exh. "J-2") and for the 1989 deliveries, at US$44.35 to US$47.35 per metric ton (Exh. "J-3") and US$38.00 to US$48.25 per metric ton in September 1990 (Exh. "JJ-6" and "JJ-7"). PHIBRO would have won the tenders for the supply and delivery of about 960,000 metric tons of coal out of at least 1,200,000 metric tons awarded during said period based on its proven track record of 80%. The Court, therefore finds that as a result of its disqualification, PHIBRO suffered damages equivalent to its standard 3% margin in 960,000 metric tons of coal at the most conservative price of US$30,000 per metric ton, or the total of US$864,000 which PHIBRO would have earned had it been allowed to participate in biddings in which it was disqualified and in subsequent tenders for supply and delivery of imported coal."

We find this to be erroneous.

Basic is the rule that to recover actual damages, the amount of loss must not only be capable of proof but must actually be proven with reasonable degree of certainty, premised upon competent proof or best evidence obtainable of the actual amount thereof.42 A court cannot merely rely on speculations, conjectures, or guesswork as to the fact and amount of damages. Thus, while indemnification for damages shall comprehend not only the value of the loss suffered, but also that of the profits which the obligee failed to obtain,43 it is imperative that the basis of the alleged unearned profits is not too speculative and conjectural as to show the actual damages which may be suffered on a future period.

In Pantranco North Express, Inc. v. Court of Appeals,44 this Court denied the plaintiff's claim for actual damages which was premised on a contract he was about to negotiate on the ground that there was still the requisite public bidding to be complied with, thus:

"As to the alleged contract he was about to negotiate with Minister Hipolito, there is no showing that the same has been awarded to him. If Tandoc was about to negotiate a contract with Minister Hipolito, there was no assurance that the former would get it or that the latter would award the contract to him since there was the requisite public bidding. The claimed loss of profit arising out of that alleged contract which was still to be negotiated is a mere expectancy. Tandoc's claim that he could have earned P2 million in profits is highly speculative and no concrete evidence was presented to prove the same. The only unearned income to which Tandoc is

entitled to from the evidence presented is that for the one-month period, during which his business was interrupted, which is P6,125.00, considering that his annual net income was P73,500.00."

In Lufthansa German Airlines v. Court of Appeals,45 this Court likewise disallowed the trial court's award of actual damages for unrealized profits in the amount of US$75,000.00 for being highly speculative. It was held that "the realization of profits by respondent . . . was not a certainty, but depended on a number of factors, foremost of which was his ability to invite investors and to win the bid." This Court went further saying that actual or compensatory damages cannot be presumed, but must be duly proved, and proved with reasonable degree of certainty.

And in National Power Corporation v. Court of Appeals,46 the Court, in denying the bidder's claim for unrealized commissions, ruled that even if NAPOCOR does not deny its (bidder's) claims for unrealized commissions, and that these claims have been transmuted into judicial admissions, these admissions cannot prevail over the rules and regulations governing the bidding for NAPOCOR contracts, which necessarily and inherently include the reservation by the NAPOCOR of its right to reject any or all bids.

The award of moral damages is likewise improper. To reiterate, NAPOCOR did not act in bad faith. Moreover, moral damages are not, as a general rule, granted to a corporation.47 While it is true that besmirched reputation is included in moral damages, it cannot cause mental anguish to a corporation, unlike in the case of a natural person, for a corporation has no reputation in the sense that an individual has, and besides, it is inherently impossible for a corporation to suffer mental anguish.48 In LBC Express, Inc. v. Court of Appeals,49 we ruled:

"Moral damages are granted in recompense for physical suffering, mental anguish, fright, serious anxiety, besmirched reputation, wounded feelings, moral shock, social humiliation, and similar injury. A corporation, being an artificial person and having existence only in legal contemplation, has no feelings, no emotions, no senses; therefore, it cannot experience physical suffering and mental anguish. Mental suffering can be experienced only by one having a nervous system and it flows from real ills, sorrows, and griefs of life — all of which cannot be suffered by respondent bank as an artificial person."

Neither can we award exemplary damages under Article 2234 of the Civil Code. Before the court may consider the question of whether or not exemplary damages should be awarded, the plaintiff must show that he is entitled to moral, temperate, or compensatory damages.

NAPOCOR, in this petition, likewise contests the judgment of the lower courts awarding PHIBRO the amount of $73,231.91 as reimbursement for expenses, cost of litigation and attorney's fees.

We agree with NAPOCOR.

This Court has laid down the rule that in the absence of stipulation, a winning party may be awarded attorney's fees only in case plaintiff's action or defendant's stand is so untenable as to amount to gross and evident bad faith.50This cannot be said of the case at bar. NAPOCOR is justified in resisting PHIBRO's claim for damages. As a matter of fact, we partially grant the prayer of NAPOCOR as we find that it did not act in bad faith in disapproving PHIBRO's pre-qualification to bid.

Trial courts must be reminded that attorney's fees may not be awarded to a party simply because the judgment is favorable to him, for it may amount to imposing a premium on the right to redress grievances in court. We adopt the same policy with respect to the expenses of litigation. A winning party may be entitled to expenses of litigation only where he, by reason of plaintiff's clearly unjustifiable claims or defendant's unreasonable refusal to his demands, was compelled to incur said expenditures. Evidently, the facts of this case do not warrant the granting of such litigation expenses to PHIBRO.

At this point, we believe that, in the interest of fairness, NAPOCOR should give PHIBRO another opportunity to participate in future public bidding. As earlier mentioned, the delay on its part was due to a fortuitous event.

But before we dispose of this case, we take this occasion to remind PHIBRO of the indispensability of coal to a coal-fired thermal plant. With households and businesses being entirely dependent on the electricity supplied by NAPOCOR, the delivery of coal cannot be venturesome. Indeed, public interest demands that one who offers to deliver coal at an appointed time must give a reasonable assurance that it can carry through. With the deleterious possible consequences that may result from failure to deliver the needed coal, we believe there is greater strain of commitment in this kind of obligation.

WHEREFORE, the decision of the Court of Appeals in CA-G.R. CV No. 126204 dated August 27, 1996 is hereby MODIFIED. The award, in favor of PHIBRO, of actual, moral and exemplary damages, reimbursement for expenses, cost of litigation and attorney's fees, and costs of suit, is DELETED.

SO ORDERED.

Vitug, Panganiban and Carpio, JJ., concur.

Dissenting Opinions

MELO, J., dissenting:

While I agree with the majority opinion insofar as it finds that the delay in delivery of coal by respondent Philipp Brothers Oceanic, Inc. (hereafter PHIBRO) to petitioner National Power Corporation (hereafter NAPOCOR) was not due to the former's fault, I have to dissent from the majority insofar as it denies the award of actual, moral, and exemplary damages to PHIBRO for the latter's act of excluding PHIBRO from participating in biddings conducted by NAPOCOR.

The facts are undisputed.

On July 8, 1987, private respondent PHIBRO, one of the largest trading firms in energy worldwide, was awarded by NAPOCOR the contract to supply 120,000 MT of steam coal for the Batangas Coal Fired Thermal Power Plant, the same to be delivered in two (2) equal shipments on July 20 and September 14, 1987.

However, while the contract provided for the arrival schedule of the two coal shipments, it also provided that PHIBRO had to effect delivery not later than 30 days from receipt of the letter of credit to be opened by NAPOCOR. Petitioner NAPOCOR was able to open its letter of credit only on August 6, 1987. Moreover, the contract had a clause which excused any delay occasioned by force majeure. This clause included strikes as one of the events to be considered as constituting force majeure.

From July to September 1987, a series of strikes in the collieries in New South Wales (NSW), Australia, and the coal loading facility at Newcastle Port took place, which adversely affected PHIBRO's ability to deliver the first shipment on time.

Pursuant to the contract, PHIBRO notified NAPOCOR of these force majeure conditions and that as a result of the strikes, vessels were not readily available and shipowners were unwilling to load cargo unless a strike-free risk was incorporated in the charter party.

PHIBRO proposed an equal sharing in the strike-free risk, but NAPOCOR refused. Instead, it demanded delivery of the first shipment not later than 30 days from the opening of its letter of credit.

In the meantime, NAPOCOR negotiated to buy from a company called ASEA 60,000MT imported steam coal at US$33.00/MT. This higher priced coal was purchased by NAPOCOR despite PHIBRO's offer for the same tonnage and delivery date at only US$31.00/MT, a price differential of US$2.00/MT. The PHIBRO offer was with the understanding that the existing 120,000MT contract would be delivered in accordance with a shipping schedule to be mutually agreed between PHIBRO and NAPOCOR, taking into account the strikes and NAPOCOR's needs. NAPOCOR ignored the offer and bought the higher priced material from ASEA.

In October 1987, NAPOCOR conducted a tender for the supply of 180,000 MT imported coal. PHIBRO, as in prior tenders, complied with all prequalification requirements of the tender. However, NAPOCOR disqualified PHIBRO allegedly for "not meeting the minimum prequalification requirements." PHIBRO was also refused the tender documents. In addition, NAPOCOR, in total disregard of the force majeure clause incorporated in the July 8, 1987 contract, demanded that unless its claims for damages due to the delayed delivery of the coal in said contract were first settled, PHIBRO would not be allowed to participate in any and all subsequent tenders to be conducted by NAPOCOR for the supply of imported coal. On November 25, 1987, PHIBRO protested the wrongful and unjust action taken by NAPOCOR inasmuch as PHIBRO had all the qualifications and none of the disqualifications. PHIBRO demanded that it be provided with tender and post qualification documents but NAPOCOR withheld the release of tender documents to PHIBRO. After, inquiry, PHIBRO was told that the real reason for the disqualification was not its "failure to meet the minimum prequalification requirements," but was principally the claim of NAPOCOR for alleged damages due to the delayed delivery of the first shipment of the July 8, 1987 contract. PHIBRO, on the other hand, maintained that its delayed deliveries were due to force majeure and NAPOCOR's delayed opening of its letter of credit. Despite this, however, NAPOCOR continued to bar PHIBRO from participating in tenders.

Consequently, PHIBRO initiated suit before the Makati Regional Trial Court on December 4, 1987 against NAPOCOR, docketed therein as Civil Case No. 18473, complaining against the latter's alleged capricious, malevolent, iniquitous, discriminatory, oppressive and unjustified disqualification of

PHIBRO, and asking for damages and that NAPOCOR be enjoined from blacklisting PHIBRO in the subsequent NAPOCOR tenders.

After trial on the merits, the Makati Regional Trial Court, Branch 57, rendered its Decision on January 16, 1992 in favor of PHIBRO and against NAPOCOR, the dispositive portion of which reads:

WHEREFORE, judgment is hereby rendered in favor of the plaintiff Philipp Brothers Oceanic, Inc. (PHIBRO) and against the defendant National Power Corporation (NAPOCOR) ordering the said defendant NAPOCOR:

1. To reinstate Philipp Brothers Oceanic, Inc. (PHIBRO) in the defendant National Power Corporation's list of accredited bidders and allow PHIBRO to participate in any and all future tenders of National Power Corporation for the supply and delivery of imported steam coal;

2. To pay Philipp Brothers Oceanic, Inc. (PHIBRO):

a) The peso equivalent at the time of payment of $864,000 actual damages;

b) The peso equivalent at the time of payment of $100,000 as moral damages;

c) The peso equivalent at the time of payment of $50,000 as exemplary damages;

d) The peso equivalent at the time of payment of $73,231.91 as reimbursement for expenses, cost of litigation and attorney's fees;

3. To pay the costs of suit;

4. The counterclaim of defendant NAPOCOR are dismissed for lack of merit.

On January 27, 1992, the Office of the Solicitor General appealed the lower court's decision to the Court of Appeals. The appeal, docketed therein as CA-G.R. CV No. 37906, was decided on August 27, 1996 with the appellate court handing down an affirmance of the decision.

Petitioner NAPOCOR now comes to this Court by way of a petition for review by certiorari under Rule 45 of the Rules of Court seeking to review, reverse, and set aside the aforementioned decision.

Petitioner alleges that the Court of Appeals committed serious errors of law, overlooked certain substantial facts which if properly considered would affect the results of the case, drew incorrect conclusions from facts established by evidence or based on misapprehension of facts, its factual findings being incomplete and do not reflect the actual events that, transpired and the important points were left out and decided the case in a way not in accord with law or the applicable decisions of this Court, which collectively amount to grave abuse of discretion, to the damage and prejudice of petitioner's right to due process. Specifically, petitioner maintains that the Court of Appeals gravely and seriously erred:

(1) in concluding and so holding that PHIBRO's delay in the delivery of imported coal was due to NAPOCOR's alleged delay in opening letter of credit to force majeure, and not to PHIBRO's own deliberate acts and faults;

(2) in concluding and so holding that NAPOCOR acted maliciously and unjustifiably in disqualifying PHIBRO from participating in the December 8, 1987 and future biddings for the supply of imported coal despite the existence of valid grounds therefore such as serious impairment of its track record;

(3) in concluding and so holding that PHIBRO was entitled to injunctive relief, to actual or compensatory, moral and exemplary damages, attorney's fees and litigation expenses despite the clear absence of legal and factual bases for such award;

(4) in absolving PHIBRO from any liability for damages to NAPOCOR for its unjustified and deliberate refusal and/or failure to deliver the contracted imported coal within the stipulated period; and

(5) in dismissing NAPOCOR's counterclaims for damages and litigation expenses.

As correctly pointed out in the majority opinion, the rules are explicit that a petition under Rule 45 of the Rules of Court can raise only questions of law (Section 1, Rule 45, 1997 Rules of Civil Procedure). PHIBRO's delay in the delivery of imported coal was found by both the trial court and the Court of Appeals to have been due to the industrial unrest, occasioned by strikes and work stoppages, that occurred in Australia from the first week of July to the third week of September, 1987. As aptly observed by the Court of Appeals:

There is ample evidence to show that although PHIBRO's delivery of the shipment of coal was delayed, the delay was in fact caused by a) NAPOCOR's own delay in opening a workable letter of credit; and b) the strikes which plagued the Australian coal industry from the first week of July to the week of September, 1987. Strikes are included in the definition of force majeure in Section XVII of the Bidding Terms and Specifications, (supra), so PHIBRO is not liable for any delay caused thereby.

PHIBRO was informed of the acceptance of its bid on July 8, 1987. Delivery of coal was to be effected thirty (30) days from NAPOCOR's opening of a confirmed and workable letter of credit. NAPOCOR was only able to do so on August 6, 1987.

By that time, Australia's coal industry was in the middle of a seething controversy and unrest, occasioned by strikes, overtime bans, and mine stoppages.

The general rule is that findings of fact of the Court of Appeals are binding and conclusive upon this Court (DBP vs. CA, 302 SCRA 362 [1999]). These factual findings carry even more weight when said court affirms the factual findings of the trial court (Lagrosa vs. CA, 312 SCRA 298 [1999]). Thus, it is beyond question that PHIBRO's delay in the delivery of coal is not attributable to its fault or negligence, these being the factual findings of both the trial court and the appellate court.

However, despite this finding, the majority would find NAPOCOR free from liability to PHIBRO for its act of excluding the PHIBRO from NAPOCOR's subsequent biddings on the ground that the exclusion is merely the legitimate exercise of a right vested in NAPOCOR. In fine, The majority opinion would characterize PHIBRO's exclusion asdamnum absque injuria. I beg to disagree.

The majority opinion anchors its thesis on the Instruction to Bidders found in the "Post-Qualification Documents/Specifications for the Supply and Delivery of Coal for the Batangas Coal-Fired Thermal Power Plant I at Calaca, Batangas, Philippines" providing that:

NAPOCOR reserves the right to reject any and all bids, to waive any minor informality in the bids received. The right is also reserved to reject the bids of any bidder who has previously failed to properly perform or complete on time any and all contracts for delivery of coal or any supply undertaken by a bidder.

(Original Records, p. 250.)

My esteemed colleagues declare that since NAPOCOR has reserved the right to reject the bid of any bidder, the exclusion of PHIBRO was, in effect, only the use by NAPOCOR of a right pertaining to it, without bad faith or intent to injure and that the fact that PHIBRO may have suffered injuries thereby would not make NAPOCOR liable. The majority opinion goes on to state that where the government rejects any or all bids, the losing bidder has no cause to complain and that accordingly, "a bidder has no ground of action to compel the Government to award the contract in his favor, nor to compel it to accept his bid."

I would wish to point out the following circumstances which I believe were ignored by the majority.

Firstly, the instant case does not involve the rejection of PHIBRO's bid by NAPOCOR. The fact is that PHIBRO was not even allowed to bid by NAPOCOR. While it may be true that any bid may be rejected on a mere technicality if the right to reject is reserved, there is a whale of a difference between rejecting a bid and excluding a prospective bidder from participating in tenders, more so in this case where the prospective bidder has complied with all the prequalification requirements. Indubitably, the reservation of the right to reject any and all bids does not include the right to exclude a prospective bidder, perforce a qualified one at that.

Secondly, the reservation of the right to reject bids contained in the Instruction to Bidders is of doubtful applicability in this case since PHIBRO was not even allowed to submit a bid by NAPOCOR. The right to reject a bid implies that there was a bid submitted. In this case, PHIBRO was barred from submitting bids for subsequent tenders of NAPOCOR.

Thirdly, this is not a simple case of rejecting a bid but one of barring participation in any and all subsequent bids for the supply of coal. This barring of PHIBRO caused the latter to incur damages, all because of what both the trial court and the Court of Appeals viewed to be an unfounded imputation of

delay to PHIBRO in the July 8, 1987 contract for delivery of coal.

As adverted to earlier, this delay was covered by the force majeure clause of the contract which validly excused the non-compliance with the specified delivery date. The situation was further exacerbated to private respondent's disadvantage when NAPOCOR, instead of accepting PHIBRO's offer to shoulder half the burden of a strike free clause, used the non-delivery on time of the coal as an excuse to exclude private respondent from future bidding processes at NAPOCOR. Thus, the Court of Appeals correctly found that:

Under the factual milieu, the. court a quo correctly made an award of damages to PHIBRO for Napocor's malicious and unjustified act of disqualifying it from any and all subsequent bids for the supply of coal. It was sufficiently established that Phibro was entitled to an amount of US$864,000.00 representing unrealized profits or lucro cessante. Article 2200 of the Civil Code provides:

"Article 2200. Indemnification for damages shall comprehend not only the value for the loss suffered, but also that of the profits when the obligee failed to obtain."

Undoubtedly, PHIBRO could have earned the questioned amount if NAPOCOR did not unjustly discriminate against it during the October, 1987 bidding and all other bidding subsequent thereto. . . .

Moreover, private respondent's business reputation and credibility in the market greatly suffered because of this malicious act of petitioner. As attested to by Vicente del Castillo:

Q. In addition to loss of earnings and opportunity loss which you quantified earlier to be in the range of 770,000.00, what other damage, if any, did Philip Brothers incur?

A. Well, when we were blacklisted by the National Power Corporation, it became known to the international market, and with such an unfair reputation, we had difficulty in obtaining business, new clients since our old clients know what kind of company we are and they continued to do business with us, and our business with Ulan Coal Mines for market other than the Philippines became difficult and we could no longer do business that we used to before this problem came about.

(TSN, January 31, 1989, pp. 50-51.)

Furthermore, James Archibald, an employee of PHIBRO and a member of the Export Committee of the Australia Coal Association, stated in his deposition, thus:

NBP Can you please state what affect the banning of NPC of PHIBRO tendering a supply of coal has had on PHIBRO?

JMA Well, it ended the special relationship between Phibro and Ulan for a start out now I am in the cost trading business and I can tell you that when you loss a significant portion of your throughout like that the industry is extremely incestuous and everybody known very quickly that you have not been so successful as your past years which makes it that much more difficult to gain support from supplier in bidding for other spot contracts.

NBP Can you explain what you mean by incestuous?

JMA It is a very tight industry. Most people have worked in it in a number of companies such as myself, with deals with some markets such as Japan, we have actually joint negotiations and we actually go in to customers, on a collective needs. It is inevitable that we get to know each other very well. Also at the port of Newcastle, ten per cent of the coal shipped is actually traded amongst the various shippers because often one shipper maybe short say ten thousand tonnes for a particular cargo and they would buy in or swap coal with other shippers. A very common port practice. So you know everybody quite well. And also I am a representative of the Coal Association so I may have had a lot more exposure to the people in the industry.

(Exh. (CC-30, 30-31.)

Despite the favorable findings of the lower court and the Court of Appeals attributing no fault to PHIBRO, the harm done to PHIBRO's good standing in the market by the blacklisting of NAPOCOR, at least as far as Philippine setting is concerned, has already beer done. Thus, I believe that the court a

quo, as sustained by the Court of Appeals, correctly made the following findings:

PHIBRO is therefore entitled to damages for the discriminatory, oppressive and unjustified disqualification imposed upon it by NAPOCOR. PHIBRO was unjustly excluded from participating in at least five (5) tenders beginning December 1987 to 1990, for the supply and delivery of imported coal with a total volume of about 1,200,00 metric tons valued at no less than US$32 Million (Exhs. "AA", "AA-1", to "AA-2"). The price of imported coal for delivery in 1988 was quoted in June 1988 by bidders at US$41.35 to US$43.95 per metric ton (Exh. "JJ"); in September 1988 at US$41.50 to US$49.50 per metric ton (Exh. J-1); in November 1988 at US$39.00 to US$48.50 per metric ton (Exh. "J-2"); and for the 1989 deliveries, at US$44.35 to US$47.35 per metric ton (Exh. "J-3") and US$38.00 to US$48.25 per metric ton in September 1990 (Exhs. "JJ-6" and "JJ-7"). PHIBRO would have won the tenders for the supply and delivery of about 960,000 metric tons of coal out of at least 1,200,000 metric tons awarded during said period based on its proven track record of 80%. The Court, therefore, finds that as a result of its disqualification, PHIBRO suffered damages equivalent to its standard 3% margin in 960,000 metric tons of coal at the most conservative price of US$30.00 per metric ton, or the total of US$864,000 which PHIBRO would have earned had it been allowed to participate in biddings in which it was disqualified and in subsequent tenders for supply and delivery of imported coal.

There is likewise uncontested or unrefuted evidence that as a result of PHIBRO's disqualification by NAPOCOR, PHIBRO suffered damages in its international reputation and lost credibility in Government and business circle, and hence an award is authorized by Art. 2205 of our Civil Code.

For the damage done to the business reputation of PHIBRO, I respectfully submit that the Court of Appeals was likewise correct in sustaining the award of US$100,000.00 as moral damages to private respondent — a corporate body — under Article 2217 of the Civil Code.

The Court, in a number of cases (i.e. Asset Privatization Trust vs. CA, 300 SCRA 579 [1998]; Maersk Tabacalera Shipping Agency (Filipina), Inc. vs. CA, 197 SCRA 646 [1991]), has sustained the award of moral damages to a corporation despite the general rule that moral damages cannot be awarded to an artificial person which has no feelings, emotions or senses, and which cannot experience physical suffering and mental anguish (LBC Express Inc. vs. CA, 236 SCRA 602 [1994]; see also Solid Homes, Inc. vs. CA, 275 SCRA 267 [1997]) because a corporation may have a good reputation which, if besmirched, may also be a ground for the award of moral damages (Mambulao Lumber Co. vs. PNB, 22 SCRA 359 [1968]). Thus, in the case of Simex International (Manila), Inc. vs. CA (183 SCRA 360 [1990]), the Court held:

From every viewpoint except that of the petitioner's, its claim of moral damages in the amount of Php1,000,000.00 is nothing short of preposterous. Its business certainly is not that big, or its name that prestigious, to sustain such an extravagant pretense. Moreover, a corporation is not as a rule entitled to moral damages because, not being a natural person, it cannot experience physical suffering or such sentiments as wounded feelings, serious anxiety, mental anguish and moral shock. The only exception to this rule is where the corporation has a good reputation that is debased, resulting in its social humiliation.

We shall recognize that the petitioner did suffer injury because of the private respondent's negligence that caused the dishonor of the checks issued by it. The immediate consequence was that its prestige was impaired because of the bouncing checks and confidence in it as a reliable debtor was diminished. The private respondent makes much of the one instance when the petitioner was sued in a collection case, but that did not prove that it did not have a good reputation that could not be marred, more so since that case was ultimately settled. It does not appear that, as the private respondent would portray it, the petitioner is an unsavory and disreputable entity that has no good name to protect.

Considering all this, we feel that the award of nominal damages in the sum of Php20,000.00 was not the proper relief to which the petitioner was entitled. Under Article 2221 of the Civil Code, "nominal damages are adjudicated in order that a right of the plaintiff, which has been violated or invaded by the defendant, may be vindicated or recognized, and not for the purpose of indemnifying the plaintiff for any loss suffered by him." As we have found that the petitioner has indeed incurred loss through the fault of the private respondent, the proper remedy is the award to it of moral damages, which we impose, in our discretion, in the same amount of Php20,000.00.

It must be noted that trial courts are generally given discretion to determine the amount of moral damages, the same being incapable of pecuniary estimation. The Court of Appeals can only modify or change the amount awarded when they are palpably or scandalously excessive so as to indicate that it was the result of passion, prejudice or corruption on the part of the trial court. In the case at bar, the conclusive finding of the Court of Appeals of petitioner's malice and bad faith justify the award of both moral and exemplary damages. As held in De Guzman vs. NLRC, (211 SCRA 723 [1992]):

When moral damages are awarded, exemplary damages may also be decreed. Exemplary damages are imposed by way of example or correction for the public good, in addition to moral, temperate, liquidated or compensatory damages. According to the Code Commission, "exemplary damages are required by public policy, for wanton acts must be suppressed. They are an antidote so that the poison of wickedness may not run through the body politic." These damages are legally assessible against him.

In addition, NAPOCOR's baseless and unwarranted discrimination against PHIBRO constrained the latter to seek the aid of the courts in order to obtain redress. This calls for an award of attorney's fees, which the lower court correctly made.

Consequently, I vote to dismiss the petition and to affirm the decision of the Court of Appeals.

Footnotes

1 Tolentino, Civil Code of the Philippines, Vol. I, 1997, p. 67.

2 Rollo, pp. 53-69.

3 Rollo, pp. 70-80.

4 Records, pp. 86-110.

5 Records. p. 90.

6 Plaintiff's Exhibits, Part I, Exhibit "C," p. 66.

7 Ibid., Exhibits "D," "E," "F," "G," "H," "I," pp. 67-73.

8 Records, p. 180.

9 Records, pp. 6-23.

10 Records, pp. 187-197.

11 Rollo, p. 80.

12 Rollo, pp. 59-63.

13 Rollo, p. 27.

14 Rollo, pp. 37-38.

15 Rollo, p.42.

16 Rollo, p.45.

17 Rollo, p. 47.

18 Tinio v. Manzano, 307 SCRA 460 (1999); Siguan v. Lim, 318 SCRA 725 (1999); and National Steel Corporation v. Court of Appeals, 283 SCRA 45 (1997).

19 Security Bank and Trust Company v. Triumph Lumber and Construction Corporation, 301 SCRA 537 (1999) American Express International, Inc. v. Court of Appeals, 308 SCRA 65 (1999).

20 Borromeo v. Sun, 317 SCRA 176 (1999); Boneng v. People, 304 SCRA 252 (1999).

21 Pimentel v. Court of Appeals, 307 SCRA 38 (1999).

22 Article 1174 of the Civil Code.

23 Tolentino, Civil Code of the Philippines, Volume IV, 1997 Ed., p. 128.

24 Records, p. 24.

25 Records, p. 234, 279.

26 Records, p. 250.

27 A Treatise on Government Contracts Under Philippine Law, Fernandez, Jr., 1996 Ed. p. 28.

28 A.C. Esguerra & Sons v. Aytona, 4 SCRA 1245 (1962).

29 209 SCRA 79 (1992).

30 Virata v. Bocar, 50 SCRA 468 (1973); Jalandoni v. NARRA, 108 Phil. 486 (1960).

31 205 SCRA 705 (1992).

32 The classical theory is that "he who uses a right inures no one." Traditionally, therefore, it has been a settled doctrine that no person can be held liable for damages occasioned to another by the exercise of a right. The modern tendency, therefore, is to depart from the classical and traditional theory, and to grant indemnity for damages in cases where there is an abuse of right, even when the act is not illicit. Law cannot be given an anti-social effect. If mere fault or negligence in one's act can make him liable for damages for injury caused thereby, with more reason should abuse or bad faith make him liable.

33 Tolentino, Civil Code of the Philippines, Vol. I, 1997, pp. 61-62.

There is an abuse of right when it is exercised only for the purpose of prejudicing or injuring another. When the objective of the actor is illegitimate, the illicit act cannot be concealed under the guise of exercising a right.

34 Ibid., p. 62.

35 Plaintiff's Exhibit, Part I, p. 120.

36 Tolentino, Civil Code of the Philippines, Vol. IV, 1997, p. 128.

37 Dated August 11, 1987, August 27, 1987, September 8, 1987 and September 14, 1987, Defendant's Exhibits, p. 27.

38 Part I, Plaintiff's Exhibit, pp. 178-179.

39 Cobach, Lucenario, Law on Public Bidding and Government Contracts, pp. 92-93. Citing 28 Corn. L.Q. 44;Douglas v. Commonwealth, 108 Pa. 559 (1885); Jacobson v. Board of Education, 64 A. 609 (N.J. 1906).

40 Air France v. Carrascoso, 18 SCRA 155 (1966).

41 Vda. de Laig v. Court of Appeals, 82 SCRA 294 (1978).

42 PNOC Shipping and Transport Corporation v. Court of Appeals, 297 SCRA 402 (1998).

43 Article 2200 of the Civil Code of the Philippines.

44 224 SCRA 477 (1993).

45 243 SCRA 600 (1995).

46 273 SCRA 420 (1997).

47 Sea Commercial Company, Inc. v. Court of Appeals; (G.R. No. 122823, November 25, 1999).

48 Agbayani, Commentaries and Jurisprudence on the Commercial Laws of the Philippines, 1996 Edition, Vol. 3, p. 17; Tamayo v. University of Negros Occidental, 58 OG No. 37, p. 6023, September 10, 1962, citing Memphis Telephone Co. v. Cumberland Telephone and Telegraph Co., 145 Fed. 906 and other cases cited in 52 ALR 1192-3 and 90 ALR 1180-1.

49 236 SCRA 602 (1994); See also Acme Shoe, Rubber & Plastic Corp. v. Court of Appeals, 260 SCRA 714 (1996).

50 Jimenez v. Bucoy, 103 Phil. 40 (1958); Castillo v. Samonte, 106 Phil. 1023 (1960).


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Torts Digest 7 (Moral Damages)

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