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Torts and Damages Notes Outline Case Overview

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TORTS AND DAMAGES

I. Concept of Torts
A. Elements of Torts or Quasi-Delict
B. Negligence
C. Kinds of Negligence
D. Quasi-Delict distinguished from other sources of obligation
E. Civil liability in Quasi-Delict vs. Civil liability in Delict
 Laws
o Civil Code
 Article 20
 Article 2176
 Article 2177
 Article 2178
 Article 1173
 Articles 1170 to 1174

o Revised Penal Code
 Article 365

 Cases
o “Quasi-delict”
 Fausto Barredo v. Severino Garcia and Timotea Almario, G.R. No. 48006
 Pedro Elcano, et al., v. Reginal Hill et al., G.R. No. L-24803
 Porfirio P. Cinco, v. Hon. Mateo Canonoy et al., G.R. No. L-33171
 Gashem Shookat Baksh v. Hon. Court of Appeals, et al., G.R. No. 97336
 Maria Benita A. Dulay, et al., v. The Court of Appeals, et al., G.R. No. 108017
 Bernabe Castillo et al v. Hon. Court of Appeals, et al G.R. No. 48541

o “Elements of Quasi-Delict”
 German Garcia et al., v. The Hon. Mariano M. Florido et al., G.R. No. L-35095
 Natividad V. Andamo, et al., v. Intermediate Appellate Court et al., G.R. No. 74761
 David Taylor v. Manila Electric Company and Light Company G.R. No. 4977
 Heirs of Pedro Tayag v. Hon. Fernando S. Alcantara, et al. G.R. No. 50959

o “Negligence”
 Amado Picart v. Frank Smith G.R. No. L-12219
 Mr. and Mrs. Amador C. Ong v. Metropolitan Water District G.R. No. L-7664
 Civil Aeronautics Administration v. Court of Appeals G.R. No. 51806

o “Pater familias”
 Preciolita V. Corliss v. The Manila Railroad Co., G.R. No. L-21291

II. Special Rules

 Laws:
o Civil Code
 Article 1173
 Article 2180
 Article 2182
 Article 2185
 Article 2187

o Family Code
 Article 221

o Revised Penal Code
 Article 12
 Article 100

 Cases:
o Good Father of a Family
 Julian del Rosario v. Manila Electric Co., 57 Phil 478
 Taylor v. Manila Electric Railroad and Light Co., 16 Phil 8
 Federico Ylarde v. Edgardo Aquino, 163 SCRA 697
 Jarco Marketing v. CA, GR No. 129792

o Experts and Professionals
 Culion Ice, Fish and Electric co v. Phil Motors Corp., G.R. No. 32611
 US v. Pineda, 37 Phil 456
 BPI v. CA, 216 SCRA 51
 Fernando v. CA, G.R. No. 92087

o Intoxication
 Wright v. Manila Electric, 28 Phil 122

o Insanity
 US v. Baggay 20 Phil 142

o Calculation of risk
 Valenzuela v. CA, GR No. 115024

III. Degrees of Negligence
 Civil Code
o Article 2231

 Cases
o Marinduque v. Workmen’s, G.R. No. L-8110, June 30, 1956
o Benguet Electric Cooperative, Inc. v. Court of Appeals, G.R. No. 127326, December 23, 1999

IV. Proof of Negligence
A. Burden of Proof

 Rules of Court
o Section 1, Rule 131

B. Res Ipsa Loquitur
 Cases:
o Perla Compania De Seguros, Inc., et al. v. Sps. Gaudencio and Primitiva Sarangaya, G.R. No. 147746, October 25, 2005
o Marcelo Macalinao, et al., v. Eddie Medecielo Ong, G.R. No. 146635, December 14, 2005
o Joaquinita P. Capili v. Sps. Dominador and Rosalita Cardana, G.R. No. 157906, November 2, 2006
o Professional Services, Inc. v. Natividad and Enrique Agana, G.R. No. 126297, January 31, 2007

C. Last Clear Chance
 Cases:
o Anuran v. Buno, G.R. Nos. L-21353 and L-21354, May 20, 1966
o Pantranco North Express, Inc. v. Maricar Baesa, G.R. Nos. 79050-51, November 14, 1989
o Bustamante v. CA, G.R. No. 89880. February 6, 1991
o Philippine Bank of Commerce v. CA, G.R. No. 97626, March 14, 1997
o Canlas v. CA, GR No. 112160, February 28, 2000
o Engada v. CA, GR No. 140698, June 20, 2003

V. Causation
1) Definition of Proximate Cause
 Cases:
o Salud Villanueva Vda. De batacan, et al., v. Mariano Media, G.R. No. L-10126, October 22, 1957
o Filomeno Urbano v. Intermediate Appellate Court, G.R. No. 72964, January 7, 1988
o Phoenix Construction, Inc. v. Intermediate Appellate Court, G.R. No. L-65295, March 10, 1987
o Quezon City Government, et al., v. Fulgencio Dacara, G.R. No. 150304, June 15, 2005

2) Distinguished from other kinds
a. Remote
 Cases:
o Filomeno Urbano v. Intermediate Appellate Court, G.R. No. 72964, January 7, 1988

b. Concurrent
 Cases:
o Prospero Sabido and Aser Lagunda v. Macabuhay Custodio, G.R. No. L-21512, August 31, 1966

VI. Defenses

1) Plaintiff’s Negligence as the Proximate Cause
 Civil Code
o Article 2179
 Cases:
o Manila Electric v. Remonquillo, 99 Phil 117
o The Le Kim v. Philippine Aerial Taxi Co., G.R. No. 39309, November 24, 1933
o Philippine Long Distance Telephone, Co. v. Court of Appeals, GR No. 57079, September 29, 1989

2) Contributory Negligence
 Civil Code
o Article 2179
o Article 2214
 Cases:
o Gregorio Genobiagon v. CA, GR No. 40452, October 12, 1989
o Phoenix Construction, Inc. v. IAC
o Philippine Bank of Commerce v. CA, 269 SCRA 695

3) Fortuitous Event
 Civil Code
o Article 1174
 Cases:
o Roberto Juntilla v. Clemente Fontanar, G.R. No. L-45637, May 31, 1985
o Teodoro M. Hernandez v. Commission on Audit, GR No. 71871, November 6, 1989
o Amparo Servando v. Philippine Steam Navigation, GR No. L-36481-2, October 23, 1982
o National Power Corporation v. Court of Appeals, GR Nos. 103442-45, May 21, 1993
o Southeastern College, Inc. v. Court of Appeals, GR No. 126389, July 10, 1989

4) Assumption of Risk
 Cases:
o Margarita Afialda v. Basilio Hisole, GR No. L-2075, November 29, 1949
o Ilocos Norte Electric Company v. Court of Appeals, GR No. 53401, November 6, 1989

5) Due Diligence
 Cases:
o Placido Ramos and Augusto Ramos v. Pepsi-Cola Bottling Co., G.R. No. L-22533, February 9, 1967
o Metro Manila Transit Corporation v. Court of Appeals, G.R. No. 104408. June 21, 1993

6) Prescription
 Cases:
o Ernesto Kramer v. Court of Appeals, G.R. No. 83524. October 13, 1989
o Allied Banking Corporation v. Court of Appeals, G.R. No. 85868. October 13, 1989

7) Double Recovery
 Civil Code
o Article 2177

VII. Strict Liability
A. Possessor of Animals
 Article 2183
o Vestil v. IAC, G.R. No. 74431, November 6, 1989

B. Things thrown or falling
 Article 2193

C. Death or Injuries in the course of employment
 Articles 1711-1712

D. Product Liability
 Article 2187
 Articles 50-52, 97, 99, 106-107 RA No. 7394
 Section 11, RA No. 3720
o Coca Cola v. Court of Appeals, G.R. No. 110295, October 18, 1993

E. Interference with Contractual Relations
 Article 1314
o Gilchrist v. Cuddy, G.R. No. 9356, February 18, 1915
o So Ping Bun v. Court of Appeals, G.R. No. 120554, September 21, 1999

F. Liability of LGUs
 Article 2189
o Guilatco v. City of Dagupan, G.R. No. 61516, March 21, 1989

VIII. Intentional Torts
A. Abuse of Rights
 Article 19
o Albenson Enterprises Corp, et al., v. Court of Appeals, et al., G.R. No. 88694, January 11, 1993
o Barons Marketing Corp. v. Court of Appeals, et al., G.R. No. 126486, February 9, 1998
o University of the East v. Romeo A. Jader, G.R. No. 132344, February 17, 2000
o Sergio Amonoy v. Spouses Jose Gutierrez and Angela Fornilda, G.R. No. 140420, February 15, 2001

B. Acts contra bonus mores
 Article 21
o Enrique J.L. Ruiz, et al., v. The Secretary of National Defense, et al, G.R. No. L-15526, December 28, 1963
i. Breach of promise, seduction and sexual assault
 Beatriz P. Wassmer v. Francisco X. Velez, G.R. No. L-20089, December 26, 1964
 Apolonio Tanjanco v. Court of Appeals, et al., G.R. No. L-18630, December 17, 1966
 Conrado Bunag, Jr. v. Court of Appeals, G.R. No. 101749, July 10, 1992
 Amelita Constantino, et al., v. Ivan Mendez, et al., G.R. No. 57227, May 14, 1992

ii. Malicious prosecution
 Article 2219
o Magtanggol Que v. IAC, G.R. No. 66865. January 13, 1989
o Franklin M. Drilon v. Court of Appeals, G.R. No. 107019. March 20, 1997
o Andres Lao v. Court of Appeals, et al., G.R. No. 47013, February 17, 2000

iii. Public humiliation
 Grand Union Supermarket et al., v. Jose J. Espino, Jr., et al., G.R. No. L-48250. December 28, 1979
 Rafael Patricio v. Hon. Oscar Leviste, et al., G.R. No. 51832. April 26, 1989

iv. Unjust dismissal
 Ernesto Medina et al., v. Hon. Floreliana Castro-Bartolome, G.R. No. L-59825. September 11, 1982
 Singapore Airlines v. Hon. Ernani Cruz Pano, et al., G.R. No. L-47739, June 22, 1983

IX. Other Torts
1) Dereliction of Duty
 Article 27
o Cornelio Amaro, et al., v. Ambrocio Sumanguit, G.R. No. L-14986. July 31, 1962.

2) Unfair Competition
 Article 28

3) Violation of Human Dignity and Privacy
 Article 26
o St. Louis Realty Corporation v. Court of Appeals, G.R. No. L-46061. November 14, 1984.
o Rodrigo Concepcion v. Court of Appeals, G.R. No. 120706. January 31, 2000

X. Torts with Independent Civil Action
A. Violation of Civil and Political Rights
 Article 32
o Delfin Lim, et al., v. Francisco Ponce De Leon, et al., G.R. No. L-22554, August 29, 1975
o Rogelio Aberca, et al., v. Major General Fabian Ver, et al., G.R. No. 69866, April 15, 1988
o MHP Garments, Inc., et al., v. Court of Appeals, G.R. No. 86720. September 2, 1994

B. Defamation, Fraud and Physical Injuries
 Article 33, Civil Code
 Article 353 up to 359, RPC
o Maximo Marcia, et al., v. Court of Appeals, et al., G.R. No. L-34529. January 27, 1983
o Carmen L. Madeja v. Felix T. Caro, et al., G.R. No. L-51183. December 21, 1983
o Catalino Arafiles, v. Philippine Journalists, Inc., et al., G.R. No. 150256, March 25, 2004

1) Defamation
 MVRS Publications, Inc., et al., v. Islamic Da’Wah Council of the Philippines, G.R. No. 135306. January 28, 2003.

2) Fraud
 Almario Salta v. Jesus De Veyra, G.R. No. L-37733, September 30, 1982

3) Physical Injuries
 Victoria Capuno, et al., v. Pepsi-Cola Bottling Company, et al., G.R. No. L-19331. April 30, 1965
 Laura Corpus, et al., v. Felardo Paje, et al., G.R. No. L-26737. July 31, 1969
 Maria Benita Dulay, et al., v. Court of Appeals, G.R. No. 108017, April 3, 1995

C. Neglect of Duty
 Article 34, Civil Code

D. Action for damages where no independent civil action is provided
 Article 35, Civil Code

XI. The Defendants
A. Concurrent Negligence or Acts
1) Joint Tort-feasors
 Article 2194, Civil Code
o Dean Worcester v. Martin Ocampo, et al., G.R. No. 5932, February 27, 1912


2) Motor Vehicle Mishaps
 Article 2184, Civil Code
o J.H. Chapman v. James Underwood, G.R. No. 9010. March 28, 1914
o Marcial T. Caedo, et al., v. Yu Khe Thai, et al., G.R. No. L-20392. December 18, 1968

B. Vicarious Liability
 Article 2180 up to 2182, Civil Code
 Article 58, Presidential Decree No. 603
 Articles 218, 219, 221, and 236, Family Code
 Articles 101, 102, and 103, RPC
 Section 6, RA No. 9344

1) Parents
 Cresencio Libi v. Intermediate Appellate Court, G.R. No. 70890. September 18, 1992
 Macario Tamargo et al., v. Court of Appeals, G.R. No. 85044. June 3, 1992.

2) Guardians
 Articles 216, 218, Family Code

3) Teachers and Heads of Institutions
 Maximo Soliman, Jr., et al., v. Ramon Tuazon, G.R. No. 66207. May 18, 1992
 St. Mary’s Academy v. William Carpitanos, et al., G.R. No. 143363. February 6, 2002

4) Owners and Managers
 Philippine Rabbit Bus Line, et al., v. Philippine-American Forwarders, Inc., et al., G.R. No. L-25142. March 25, 1975.

5) Employers
 Castilex Industrial Corporation v. Vicente Vasquez, et al., G.R. No. 132266, December 21, 1999
 Light Rail Transit Authority v. Marjorie Navidad, G.R. No. 145804. February 6, 2003

6) State
 City of Manila v. Genero Teotico, et al., G.R. No. L-23052. January 29, 1968.
 Spouses Jose and Virginia Fontanilla v. Inocencio Maliaman, et al., G.R. Nos. 55963 & 61045. February 27, 1991.

XII. DAMAGES
A. Definition and Concept
 2195, 2197 CC
o Heirs of Borlado vs. Vda. De Bulan G.R. 114118 (2001)
o Lazatin vs. Twano 2 SCRA 842 (1961)

B. Kinds of Damages
i. Actual or Compensatory
• 2216, 2199, 2200, 205 CC
o Algarra v. Sandejas 27 Phil 284

i. Kinds
• PNOC v. CA 297 SCRA 402
• Integrated Packing v. CA 333 SCRA 170

ii. Extent
• 2201-2202 CC

iii. Certainty
• DBP v. CA GR No. 118367 (1998) Fuentes v.CA 323 Phil 508 (1996)

iv. Damage to Property
• PNOC v. CA, supra

v. Personal Injury and Death
• Ramos v. CA G.R. No. 124354 (1999) Gatchalian v. Delim 203 SCRA 126

vi. Attorney’s Fee
• 2208 CC
• Quirante v. IAC G.R. No. 73886 (1989)

vii. Interest
• 2209-2213 CC C
• Crismina Garments v. CA G.R. No. 128721 (1999)

viii. Mitigation of Liability

• 2203-2204, 2214, 2215
• Cerrano v. Tan 38 Phil 392

ii. Moral
i. Concept
• 2217 CC
• Kierulf v. CA 269 SCRA 433

ii. Proof and Proximate Cause
• Miranda-Ribaya v. Carbonell 95 SCRA 672
• Del Rosario v. CA 267 SCRA 58
• Raagas v. Traya 22 SCRA 839
• Enervida v. dela Torre 55 SCRA 339
• People v. Bagayong GR. No 126518 (1998)

iii. Cases where allowed
• 2219-2220 CC
• Francisco v. GSIS 7 SCRA 577
• Expert Travel v. CA G.R. No. 130030 (1999)
a. Unfounded Suits
• Mijares v. CA 271 SCRA 558
• De la Pena v. CA 231 SCRA 456
• J Marketing v. Sia 285 SCRA 580
• Cometa v. CA 301 SCRA 459

b. Labor cases
• Triple Eight v. NLRC 299 SCRA 608

c. Taking of Life
• People v. Pirame 327 SCRA (2000)
• Carlos Arcona y Moban v. CA GR No 134784 (2002)

d. Factors in determining the amount
• PNB v. CA 266 SCRA 136
• Fule v. CA 286 SCRA 698
• Philippine Airlines v. CA 275 SCRA 621
• Valenzuela v. CA, supra
• Sumaplong v. CA 268 SCRA 764
• Lopez v. Pan American 16 SCRA 431
• Producer's Bank v. CA GR No 111584 (2001)

e. Who may recover
• Strebel v. Figueros 96 Phil 321
• ABS-CBN v. CA G.R. No. 128690
• National Power v. Philipp Brothers G.R. No 126204

iii. Nominal
• 2221-2223 CC
• Ventanilla v. Centeno 1 SCRA 215
• Robes-Francisco v. CFI 86 SCRA 59
• People v. Gopio 346 SCRA 408
• Armovit v. CA 184 SCRA 476

iv. Temperate
• 2224-2225 CC
• Pleno v. CA G.R. No. 56505 (1988)
• People v. Singh 360 SCRA 404
• People v. Plazo 350 SCRA 433

v. Liquidated
• 2226-2228 CC

vi. Exemplary or Corrective
• 2229-2235 CC
• PNB v. CA 256 SCRA 44
• Del Rosario v. CA 267 SCRA 158

Civil Procedure Notes Outline

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Jurisdiction and its exercise
1. Herrera v. Barretto and Joaquin, 25 Phil. 245 (1913)
2. De la Cruz v. Moir 36 Phil 213 (1917)
3. Coching yan , Jr v. Cloribel 76 SCRA 361 (1977)
4. Fernandez v. Vasquez 31 SCRA 288 (1970)

Jurisdiction over the Person

5. Banco Espanol- Filipino v. Palanca 37 Phil 921 (1918)

Mode of acquiring jurisdiction over the subject matter

6. U.S. v. De la Santa 9 Phil. 22 (1907)
7. Tijam v. Sibonghanoy 23 SCRA 29 (1968)
8. Manila Railroad Co. v. Attorney-General 20 Phil 523 (1911)
9. Serdoncillo v. Benolirao 297 SCRA 448 (1998)
10. Lim Bing It v. Ibanez, et al., 92 Phil 799 1953)
11. US v. Mallari 24 Phil 366 (1913)
12. People v. Mission 87 Phil. 641 (1950)
13. People v. Ocaya 83 SCRA 218 (1978)
14. Hyson Tan, et al. v. Filipinas Compania de Seguros, et al. (1956)
15. Pindangan Agricultural Co., Inc. v. Dans 6 SCRA 14
16. One Heart Club Inc. v. CA 108 SCRA 416 (1981)
17. Agustin v. Bacalan 135 SCRA 340 (1985)

Mode of Acquiring jurisdiction over the person of the parties

Plaintiff

18. Manila Railroad CO. v. Attorney- General 20 Phil 523 (1911)
19. King Mau Wu v. Sycip 94 Phil 784 (1954)
20. Sharuf v. Bubla 12 SCRA 79 (1964)

Elements of Jurisdiction

Civil Cases

21. The Dial Corporation v. Soriano 161 SCRA 737 (1988)
22. Banco Espanol-Filipino v. Palanca 37 Phil. 921 (1918)

Civil Cases

23. People v. Tanada 166 SCRA 360 (1988)
24. Valdepnas v. People 16 SCRA 871 (1966)
25. People vs. Babasa 97 SCRA 672 (1980)
26. People v. Ilarde 125 SCRA 11 (1983)

Validity of Agreement of parties depriving court of jurisdiction

27. Wahl v. Donaldson, Sims & Co. 2 Phil. 301 (1903)
28. Puentabella v. Negros Coal Co., 50 Phil 69 (1927)
29. Vega v. San Carlos Milling Co. Ltd., 51 Phil 908 (1924)
30. Bengzon v. Chan 78 SCRA 113 (1977)

Foreign country may exercise jurisdiction over certain offenses committed within certain portions of the Philippine Territory

31. Dizon v. Phil. Ryukus Command 81 Phil. 286 (1948)

See also Agreement between the Government of the Republic of the Philippines and the Government of USA regarding the treatment of USAF visiting the Philippines.

Jurisdiction of the Supreme Court

Original and Exclusive

32. Pineda v. Lantin 6 SCRA 757 (1962)
33. Poblete Construction Co. v. Social Security Commision 10 SCRA 1 (1964)
34. Kabushiki Kaisha, et al. v. San Diego, et al. 16 SCRA 406 (1966)

Original and Concurrent with the CA and the RTC

35. Vergara Sr. v. Suelto 156 SCRA 753 (1987)

Special Civil Action of Certiorari within 30 days

Decision of Commision on Elections

36. Aratuc v. Commission on Elections 88 SCRA 251 (1979)

Court of Appeals may have appellate jurisdiction in cases wherein jurisdiction of lower court in issue

37. Zapanta v. Bartolome and Chanlionco 83 Phil. 433 (1949)

Jurisdiction of the Court of Appeals

Original Jurisdiction

38. St. Martin Funeral Homes v. NLRC 295 SCRA 494 (1998)
39. Breslin v. Luzon Stevedoring Co. 84 Phil 618 (1949)

Original and Concurrent with the SC and the RTC

40. Vergara vs. Suelto 156 SCRA 753 (1987)

Appeal by Petition for Review

41. Fabian vs. Desierto 295 SCRA 470 (1998)

Jurisdiction of the Regional Trial Court

Test for determining whether subject is not capable of pecuniary estimation

42. Cruz v. Tan 87 Phil. 627 (1950)
43. Manufacturer’s Distributors, Inc. v. Yu Siu Liong 16 SCRA 680
44. De Jesus v. Garcia 19 SCRA 554 (1967)
45. Lapitan v. Scandia 24 SCRA 479 (1968)
46. Singson vs. Isabela Sawmill 88 SCRA 623 (1979)
47. Raymundo v. CA 213 SCRA 457 (1992)

Examples of actions incapable of pecuniary estimation

48. Russell v. Vestil 304 SCRA 738 (1999)
49. Brgy. San Roque v. Heirs of Pastor GR 138896 June 20, 2000
50. Amorganda v. CA 166 SCRA 203(1988)
51. De Jesus et al v. Garcia et al 19 SCRA 554 (1967)

An action for foreclosure is capable of pecuniary estimation

52. Seno v. Pestolante and Barimbao 103 Phil 414 (1958)
53. The Good Devt Corp. v. Tutaan 73 SCRA 189 (1989)

Jurisdiction of the MTC

Original and Exclusive

Civil cases

54. Flores v. Mallare- Phillipps 144 SCRA 377 (1986)

Judgments and processes

55. Uy v. Sandiganbayan 312 SCRA 77 (1999)

Legal Ethics Notes Outline: Code of Professional Responsibility

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A. CODE OF PROFFESIONAL RESPONSIBILTY
ANON 1 - A LAWYER SHALL UPHOLD THE CONSTITUTION, OBEY THE LAWS OF THE LAND AND PROMOTE RESPECT FOR LAW OF AND LEGAL PROCESSES.

Rule 1.01 - A lawyer shall not engage in unlawful, dishonest, immoral or deceitful conduct.

Rule 1.02 - A lawyer shall not counsel or abet activities aimed at defiance of the law or at lessening confidence in the legal system.

Rule 1.03 - A lawyer shall not, for any corrupt motive or interest, encourage any suit or proceeding or delay any man's cause.

Rule 1.04 - A lawyer shall encourage his clients to avoid, end or settle a controversy if it will admit of a fair settlement.

CANON 2 - A LAWYER SHALL MAKE HIS LEGAL SERVICES AVAILABLE IN AN EFFICIENT AND CONVENIENT MANNER COMPATIBLE WITH THE INDEPENDENCE, INTEGRITY AND EFFECTIVENESS OF THE PROFESSION.

Rule 2.01 - A lawyer shall not reject, except for valid reasons, the cause of the defenseless or the oppressed.

Rule 2.02 - In such cases, even if the lawyer does not accept a case, he shall not refuse to render legal advice to the person concerned if only to the extent necessary to safeguard the latter's rights.

Rule 2.03 - A lawyer shall not do or permit to be done any act designed primarily to solicit legal business.

Rule 2.04 - A lawyer shall not charge rates lower than those customarily prescribed unless the circumstances so warrant.
B. CASES (AS TO RELEVANCE)
1) CANON 1
a) Rule 1.01
i) Spouses Yu vs. Atty. Palaña, July 14, 2008
FACTS:
Ø Mr. Mark Anthony U. Uy who introduced himself as the Division Manager of Wealth Marketing and General Services Corporation engaged in spot currency trading.
Ø Mr. Uy persuaded the complainants to invest a minimum amount of P100,000.00 or its dollar equivalent. Wealth Marketing’s promises were false and fraudulent, and that the checks earlier issued were dishonored for the reason “account closed.” It had already ceased its operation and a new corporation was formed named Ur-Link Corporation which supposedly assumed the rights and obligations of the former.
Ø As Wealth Marketing’s Chairman of the Board of Directors, respondent assured the complainants that Ur-Link would assume the obligations of the former company. Respondent signed an Agreement to that effect which, again, turned out to be another ploy to further deceive the investors.
Ø complainants lodged a criminal complaint for syndicated estafa against the respondent and his co-accused.
Ø Despite the standing warrant for his arrest, respondent went into hiding and has been successful in defying the law, to this date.
Ø In an Order dated November 17, 2006, Director for Bar Discipline required respondent to submit his Answer to the complaint but the latter failed to comply. Respondent was thereafter declared in default and the case was heard ex parte.
Ø Commissioner recommended that respondent be disbarred from the practice of law.
ISSUE: W/N Mr. Uy should be disbarred.
HELD:
YES.
Ø Lawyers
instruments in the administration of justice
expected to maintain not only legal proficiency but also a high standard of morality, honesty, integrity and fair dealing.
may be disciplined whether in their professional or in their private capacity for any conduct that is wanting in morality, honesty, probity and good demeanor.
Ø Respondent, being a member of the bar, should note that administrative cases against lawyers belong to a class of their own. They are distinct from and they may proceed independently of criminal cases.
Ø Section 27, Rule 138 of the Rules of Court provides:
A member of the bar may be disbarred or suspended from his office as attorney by the Supreme Court for any deceit, malpractice, or other gross misconduct in such office, grossly immoral conduct, or by reason of his conviction of a crime involving moral turpitude, or for any violation of the oath which he is required to take before admission to practice, or for a willful disobedience of any lawful order of a superior court, or for corruptly or willfully appearing as an attorney for a party to a case without authority to do so. x x x.
Ø power to disbar must always be exercised with great caution for only the most imperative reasons and in clear cases of misconduct affecting the standing and moral character of the lawyer as an officer of the court and a member of the bar.
Ø The Court notes that this is not the first time that respondent is facing an administrative case, for he had been previously suspended from the practice of law in Samala v. Palaña and Sps. Amador and Rosita Tejada v. Palaña. In Samala, respondent also played an important role in a corporation known as First Imperial Resources Incorporated, being its legal officer.
Ø Respondent meted the penalty of suspension for 3 years with a warning that a repetition of the same or similar acts would be dealt with more severely. Likewise, in Tejada, he was suspended for 6 months for his continued refusal to settle his loan obligations.
Ø The fact that respondent went into hiding in order to avoid service upon him of the warrant of arrest issued by the court (where his criminal case is pending) exacerbates his offense.
Ø Finally, we note that respondent’s case is further highlighted by his lack of regard for the charges brought against him. His disobedience to the IBP is in reality a gross, blatant and unpardonable disrespect of the Court.
Ø The contumacious behaviour of respondent in the instant case which grossly degrades the legal profession indeed warrants the imposition of a much graver penalty --- disbarment.

ii) Samala vs. Atty. Palaña, AC No. 6395, April 15, 2005
ADM. CASE No. 6595. April 15, 2005. AZCUNA, J.
FACTS:
Ø complainant was looking for a company where he could invest his dollar savings. He met Raymond Taino, a trader-employee of First Imperial Resources, Inc. (FIRI), a company located at Legaspi Village, Makati City. Taino introduced him to FIRI Manager Jun Agustin, Chief Trader Diosdado Bernal, and Legal Officer Antonuitti K. Palaña, the respondent herein.
Ø Respondent assured him that through FIRI he would be directly putting his investment with Eastern Vanguard Forex Limited, a reputable company based in the Virgin Islands which has been in the foreign exchange business for 13 years.
Ø Subsequently, complainant decided to pull out his investment. He sent FIRI a letter requesting the withdrawal of his investment amounting to US$10,000 and giving FIRI 10 days to prepare the money.
Ø On April 15, 2001, complainant asked Agustin when his money would be returned. Agustin told him that the request was sent to Thomas Yiu of Eastern Vanguard at Ortigas Center. Yiu was surprised when he saw the documents involving complainant’s investment. On the same day, in the presence of respondent, Agustin delivered to complainant a check in the amount of P574,045.09, as the peso equivalent of complainant’s investment with FIRI. The said check was dishonored because it was drawn against insufficient funds.
Ø On June 1, 2001, respondent, as legal officer of FIRI, gave complainant P250,000 in cash and a check in the amount of P329,045.09. The check was dishonored because it was drawn against insufficient funds.
Ø complainant charged Paul Desiderio of Estafa and Violation of Batas Pambansa Bilang 22 at the Prosecutor’s Office of Makati. a warrant of arrest was issued against Paul Desiderio.
Ø Complainant alleged that respondent’s act of representing himself to be the legal officer of FIRI and his assurance that the check he personally delivered to him was signed in his presence by FIRI Officer Paul Desiderio, when no such person appears to exist, is clearly fraudulent and violative of the Canons of Professional Ethics.
Ø Complainant requested the Integrated Bar of the Philippines for a thorough investigation of respondent as a member of the bar.
Ø Commissioner Navarro thus recommended that respondent be suspended from the practice of law for 6 months.
Ø Board of Governors of the IBP adopted and approved the Report and Recommendation of the Investigating Commissioner with the modification that respondent should be suspended from the practice of law for 3 years.
ISSUE: W/N the respondent should be penalized according to the Code of Professional Responsibility.
HELD: Atty. Antonuitti K. Palaña is found GUILTY of violating Rule 7.03 of the Code of Professional Responsibility and hereby suspended from the practice of law for a period of three (3) years effective from receipt of this Resolution, with a warning that a repetition of the same or similar acts will be dealt with more severely.
YES.
Ø Respondent was found to have violated Rule 7.03 of Canon 7 of the Code of Professional Responsibility, which states:
Rule 7.03 – A lawyer shall not engage in conduct that adversely reflects on his fitness to practice law, nor shall he, whether in public or private life, behave in a scandalous manner to the discredit of the legal profession.
Ø FIRI prohibited it from engaging in investment or foreign exchange business and its primary purpose is “to act as consultant in providing professional expertise and reliable data analysis related to partnership and so on.”
Ø Hence, it is clear that the representations of respondent as legal officer of FIRI caused material damage to complainant. In so doing, respondent failed to uphold the integrity and dignity of the legal profession and lessened the confidence of the public in the honesty and integrity of the same.

iii) Spouses Amador vs. Atty. Palaña, AC No. 7434 April 15, 2005
JR., JJ.

FACTS:
Ø Petitioners-spouses Rosita and Amador Tejada filed a Complaint Affidavit before the Integrated Bar of the Philippines (IBP) to initiate disbarment proceedings against respondent Atty. Antoniutti K. Palaña for his continued refusal to settle his long overdue loan obligation to the complainants, in violation of his sworn duty as a lawyer to do justice to every man and Rule 7.03 of Canon 7 of the Code of Professional Responsibility
Ø It turned out that all his assurances that he had a torrens title, he will reconstitute the same and deliver an amount of P170,000.00 to petitioner spouses were all fraudulent representations on his part or else were only fictitious in character to defraud petitioner spouses of their hard owned monies
Ø Despite due notice, respondent failed to file his answer to the complaint as required by the Commission on Bar Discipline of the IBP. Respondent likewise failed to appear on the scheduled date of the mandatory conference despite due notice.
Ø Investigating Commissioner recommended respondent's suspension from the practice of law for 3 months.
ISSUE: W/N respondent should be penalized according tothe Code of Responsibility.
HELD: Antoniutti K. Palaña is SUSPENDED from the practice of law for a period of 6 months.
YES.
Ø Membership in the bar is a privilege burdened with conditions. A high sense of morality, honesty, and fair dealing is expected and required of a member of the bar.
Ø strength of the legal profession lies in the dignity and integrity of its members.
Ø In the instant case, respondent’s unjustified withholding of petitioners’ money years after it became due and demandable demonstrates his lack of integrity and fairness, and this is further highlighted by his lack of regard for the charges brought against him. Instead of meeting the charges head on, respondent did not bother to file an answer nor did he participate in the proceedings to offer a valid explanation for his conduct.
Ø respondent’s acts, which violated the Lawyer's Oath “to delay no man for money or malice” as well as the Code of Professional Responsibility, warrant the imposition of disciplinary sanctions against him.
Ø It is clear that he employed deceit in convincing complainants to part with their hard earned money and the latter could not have been easily swayed to lend the money were it not for his misrepresentations and failed promises as a member of the bar.
Ø Failing in this duty as a member of the bar which is being supervised by the Court under the Constitution, we find that a heavier sanction should fall on respondent.

iv) Guevara vs. Atty. Eala, AC No. 7136, Aug 1, 2007
PUNO, C.J.

FACTS:
Ø After his marriage to Irene, complainant noticed that Irene had been receiving from respondent cellphone calls, as well as messages some of which read “I love you,” “I miss you,” or “Meet you at Megamall.”
Ø Complainant also noticed that Irene habitually went home very late at night or early in the morning of the following day, and sometimes did not go home from work. When he asked about her whereabouts, she replied that she slept at her parents’ house in Binangonan, Rizal or she was busy with her work. Complainant saw Irene and respondent together on two occasions. On the second occasion, he confronted them following which Irene abandoned the conjugal house. Irene was already residing and she was pregnant
Ø The Commissioner recommended that respondent be disbarred for violating Rule 1.01 of Canon 1 of the Code of Professional Responsibility
Ø The IBP Board of Governors annulled and set aside the Recommendation by Resolution XVII-2006-06 CBD Case No. 02-936
ISSUE: W/N Respondent is should be disbarred.
HELD: Respondent, Atty. Jose Emmanuel M. Eala, is DISBARRED for grossly immoral conduct, violation of his oath of office, and violation of Canon 1, Rule 1.01 and Canon 7, Rule 7.03 of the Code of Professional Responsibility.
YES.
Ø Administrative cases against lawyers belong to a class of their own. They are distinct from and they may proceed independently of civil and criminal cases.
Ø In a criminal case, proof beyond reasonable doubt is necessary; in an administrative case for disbarment or suspension, “clearly preponderant evidence” is all that is required.
Ø As a lawyer, respondent should be aware that a man and a woman deporting themselves as husband and wife are presumed, unless proven otherwise, to have entered into a lawful contract of marriage. In carrying on an extra-marital affair with Irene prior to the judicial declaration that her marriage with complainant was null and void, and despite respondent himself being married, he showed disrespect for an institution held sacred by the law.
Ø their illicit affair that was carried out there bore fruit a few months later when Moje gave birth to a girl
Ø It bears emphasis that adultery is a private offense which cannot be prosecuted de oficio and thus leaves the DOJ no choice but to grant complainant’s motion to withdraw his petition for review. But even if respondent and Irene were to be acquitted of adultery after trial, if the Information for adultery were filed in court, the same would not have been a bar to the present administrative complaint.

v) Advincula vs. Atty. Macabata, AC No. 7204, March 7, 2007
CHICO-NAZARIO, J.

FACTS:
Ø complainant Cynthia Advincula seeked the legal advice of the respondent Atty. Macabata, regarding her collectibles from Queensway Travel and Tours.
Ø After their dinner, respondent sent complainant home and while she is about to step out of the car, respondent hold her arm and kissed her on the cheek and embraced her very tightly.
Ø After the meeting at Starbucks coffee shop in West Avenue, Quezon City, respondent offered again a ride, which he usually did every time they met. When she was almost restless respondent stopped his car and forcefully hold her face and kissed her lips while the other hand was holding her breast. Complainant even in a state of shocked succeeded in resisting his criminal attempt and immediately manage to go out of the car.
Ø In the late afternoon, complainant sent a text message to respondent informing him that she decided to refer the case with another lawyer and needs to get back the case folder from him.
Ø Respondent replied "talk to my lawyer in due time." Then another message was received by her at 4:06:33 pm saying "Ano k ba. I’m really sri. Pls. Nxt ime bhave n me." (Ano ka ba. I’m really sorry. Please next time behave na ko), which is a clear manifestation of admission of guilt.
Ø By way of defense, respondent further elucidated that:
there was a criminal case for Acts of Lasciviousness filed by complainant against respondent pending
legal name of complainant is Cynthia Advincula Toriana since she remains married to a certain Jinky Toriana
complainant was living with a man not her husband
complainant never bothered to discuss respondent’s fees and it was respondent who always paid for their bills every time they met and ate at a restaurant.
Ø Commissioner recommended the imposition of the penalty of 1 month suspension on respondent for violation of the Code of Professional Responsibility.
Ø IBP passed Resolution No. XVII-2006-117, approving and adopting, with modification that Atty. Ernesto A. Macabata is SUSPENDED from the practice of law for 3 months
ISSUE: whether respondent committed acts that are grossly immoral or which constitute serious moral depravity that would warrant his disbarment or suspension from the practice of law.
HELD: Atty. Ernesto Macabata, for alleged immorality, is DISMISSED. However, REPRIMANDED with a STERN WARNING.
NO.
Ø Moral character is not a subjective term but one which corresponds to objective reality.
Ø requirement of good moral character has 4 ostensible purposes:
to protect the public
to protect the public image of lawyers
to protect prospective clients
to protect errant lawyers from themselves.
Ø It is difficult to state with precision and to fix an inflexible standard as to what is "grossly immoral conduct" or to specify the moral delinquency and obliquity which render a lawyer unworthy of continuing as a member of the bar. The rule implies that what appears to be unconventional behavior to the straight-laced may not be the immoral conduct that warrants disbarment
Ø Zaguirre v. Castillo:
definition of immoral conduct
o conduct which is so willful, flagrant, or shameless as to show indifference to the opinion of good and respectable members of the community.
o must not simply be immoral, but grossly immoral.
o must be so corrupt as to constitute a criminal act, or so unprincipled as to be reprehensible to a high degree or committed under such scandalous or revolting circumstances as to shock the common sense of decency.
Ø In the case at bar, complainant miserably failed to comply with the burden of proof required of her. A mere charge or allegation of wrongdoing does not suffice.
Ø Moreover, while respondent admitted having kissed complainant on the lips, the same was not motivated by malice. We come to this conclusion because right after the complainant expressed her annoyance at being kissed by the respondent through a cellular phone text message, respondent immediately extended an apology to complainant also via cellular phone text message.
Ø Be it noted also that the incident happened in a place where there were several people in the vicinity considering that Roosevelt Avenue is a major jeepney route for 24 hours. If respondent truly had malicious designs on complainant, he could have brought her to a private place or a more remote place where he could freely accomplish the same.
Ø All told, as shown by the above circumstances, respondent’s acts are not grossly immoral nor highly reprehensible to warrant disbarment or suspension.
Ø The power to disbar or suspend ought always to be exercised on the preservative and not on the vindictive principle, with great caution and only for the most weighty reasons and only on clear cases of misconduct which seriously affect the standing and character of the lawyer as an officer of the court and member of the Bar. Only those acts which cause loss of moral character should merit disbarment or suspension, while those acts which neither affect nor erode the moral character of the lawyer should only justify a lesser sanction unless they are of such nature and to such extent as to clearly show the lawyer’s unfitness to continue in the practice of law. The dubious character of the act charged as well as the motivation which induced the lawyer to commit it must be clearly demonstrated before suspension or disbarment is meted out. The mitigating or aggravating circumstances that attended the commission of the offense should also be considered.
Ø Based on the circumstances of the case as discussed and considering that this is respondent’s first offense, reprimand would suffice.
Ø it was difficult and agonizing on complainant’s part to come out in the open and accuse her lawyer of gross immoral conduct. However, her own assessment of the incidents is highly subjective and partial, and surely needs to be corroborated or supported by more objective evidence.

vi) Heirs of the Late Spouses Lucas vs. Atty. Beradio, AC No. 6270, Jan. 22, 2007
CARPIO, J.

FACTS:
Ø During their lifetime, the spouses Villanueva acquired several parcels of land in Pangasinan. Their 5 children, Simeona, Susana, Maria, Alfonso, and Florencia, survived them.
Ø Alfonso executed an Affidavit of Adjudication stating that as "the only surviving son and sole heirs” of the spouses Villanueva. Alfonso then executed a Deed of Absolute Sale, conveying the property to Adriano Villanueva. Respondent appeared as notary public on both the affidavit of adjudication and the deed of sale.
Ø Contrary to the misrepresentations of Alfonso, his sister Florencia was still alive at the time he executed the affidavit of adjudication and the deed of sale, as were descendants of the other children of the spouses Villanueva. Complainants claimed that respondent was aware of this fact, as respondent had been their neighbor in Balungao, Pangasinan, from the time of their birth, and respondent constantly mingled with their family. Complainants accused respondent of knowing the "true facts and surrounding circumstances" regarding the properties of the spouses Villanueva, yet conspiring with Alfonso to deprive his co-heirs of their rightful shares in the property.
Ø Commissioner Villadolid found that respondent violated the provisions of the Code of Professional Responsibility and the spirit and intent of the notarial law when she notarized the affidavit knowing that Alfonso was not the sole compulsory heir of the spouses Villanueva. It was recommended that respondent be reprimanded or suspended from the practice of law for up to 6 months.
ISSUE: W/N respondent should be suspendended for his actions.
HELD: REVOKE the commission as Notary Public, if still existing, and DISQUALIFY from being commissioned a notary public for 1 year. SUSPEND from the practice of law for 6 months.
YES.
Ø notary public is empowered to perform a variety of notarial acts, most common of which are the acknowledgment and affirmation of a document or instrument. In the performance of such notarial acts, the notary public must be mindful of the significance of the notarial seal as affixed on a document. The notarial seal converts the document from private to public, after which it may be presented as evidence without need for proof of its genuineness and due execution.
Ø By this instrument, Alfonso claimed a portion of his parents’ estate all to himself, to the exclusion of his co-heirs. Shortly afterwards, respondent notarized the deed of sale, knowing that the deed took basis from the unlawful affidavit of adjudication.
Ø Respondent never disputed complainants’ allegation of her close relationship with the Villanueva family spanning several decades. Respondent even underscored this closeness by claiming that Lucas himself requested her to come to his house the day Lucas handed to Alfonso a copy of OCT No. 2522, allegedly so she could hear the conversation between them.
Ø Where admittedly the notary public has personal knowledge of a false statement or information contained in the instrument to be notarized, yet proceeds to affix his or her notarial seal on it, the Court must not hesitate to discipline the notary public accordingly as the circumstances of the case may dictate. Otherwise, the integrity and sanctity of the notarization process may be undermined and public confidence on notarial documents diminished.
Ø In this case, respondent’s conduct amounted to a breach of Canon 1 of the Code of Professional Responsibility, which requires lawyers to obey the laws of the land and promote respect for the law and legal processes. Respondent also violated Rule 1.01 of the Code which proscribes lawyers from engaging in unlawful, dishonest, immoral, or deceitful conduct.
Ø We also view with disfavor respondent’s lack of candor before the IBP proceedings. The transcript of hearings shows that respondent denied preparing or notarizing the deed of sale, when she already admitted having done so in her Comment.

vii) Samala vs. Atty. Valencia, AC 5439, Jan. 22, 2007
AUSTRIA-MARTINEZ, J.

FACTS:
Ø Complainant Clarita J. Samala filed against Atty. Luciano D. Valencia for Disbarment on the following grounds:
serving on 2 separate occasions as counsel for contending parties
knowingly misleading the court by submitting false documentary evidence
initiating numerous cases in exchange for nonpayment of rental fees
having a reputation of being immoral by siring illegitimate children.
Ø Commissioner found respondent guilty of violating Canons 15 and 21 of the Code of Professional Responsibility and recommended the penalty of suspension for 6 months.
Ø IBP Board of Governors adopted and approved the report and recommendation of Commissioner Reyes but increased the penalty of suspension from 6 months to 1 year.
ISSUE: W/N respondent should be suspended.
HELD: respondent Atty. Luciano D. Valencia GUILTY of misconduct and violation of Canons 21, 10 and 1 of the Code of Professional Responsibility. SUSPENDED for 3 years.
YES.
Ø In Civil Case No. 98-6804 filed in the Metropolitan Trial Court entitled "Editha S. Valdez and Joseph J. Alba, Jr. v. Salve Bustamante and her husband" for ejectment, respondent represented Valdez against Bustamante, 1 of the tenants in the property subject of the controversy. Presiding Judge warned respondent to refrain from repeating the act of being counsel of record of both parties in Civil Case No. 95-105-MK.
Ø Rule 15.03, Canon 15 of the Code of Professional Responsibility provides that a lawyer shall not represent conflicting interests except by written consent of all concerned given after a full disclosure of the facts. A lawyer may not, without being guilty of professional misconduct, act as counsel for a person whose interest conflicts with that of his present or former client. This stern rule is founded on the principles of public policy and good taste. One of the tests of inconsistency of interests is whether the acceptance of a new relation would prevent the full discharge of the lawyer's duty of undivided fidelity and loyalty to the client or invite suspicion of unfaithfulness or double-dealing in the performance of that duty.
Ø Canon 21 of the Code of Professional Responsibility "a lawyer shall preserve the confidences and secrets of his client even after the attorney-client relation is terminated."
Ø respondent's representation of :
Valdez and Alba against Bustamante and her husband
Valdez against Alba
is a clear case of conflict of interests which merits a corresponding sanction from this Court.
Ø Respondent may have withdrawn his representation in Civil Case No. 95-105-MK upon being warned by the court, but the same will not exculpate him from the charge of representing conflicting interests in his representation in Civil Case No. 2000-657-MK.
Ø Respondent is reminded to be more cautious in accepting professional employments, to refrain from all appearances and acts of impropriety including circumstances indicating conflict of interests, and to behave at all times with circumspection and dedication befitting a member of the Bar, especially observing candor, fairness and loyalty in all transactions with his clients.
Ø respondent cannot feign ignorance of the fact that the title he submitted was already cancelled in lieu of a new title issued in the name of Alba in 1995 yet, as proof of the latter's ownership.
Ø What is decisive in this case is respondent's intent in trying to mislead the court by presenting TCT No. 273020 despite the fact that said title was already cancelled and a new one, TCT No. 275500, was already issued in the name of Alba.
Ø The act of respondent of filing the aforecited cases to protect the interest of his client, on one hand, and his own interest, on the other, cannot be made the basis of an administrative charge unless it can be clearly shown that the same was being done to abuse judicial processes to commit injustice.
Ø respondent liable for being immoral by siring illegitimate children.
Ø respondent admitted that he sired three children by Teresita Lagmay who are all over 20 years of age, while his first wife was still alive. He also admitted that he has eight children by his first wife, the youngest of whom is over 20 years of age, and after his wife died in 1997, he married Lagmay in 1998.
Ø In this case, the admissions made by respondent are more than enough to hold him liable on the charge of immorality. He even justified his transgression by saying that he does not have any relationship with Lagmay and despite the fact that he sired 3 children by the latter, he does not consider them as his second family
Ø Under Canon 1, Rule 1.01 of the Code of Professional Responsibility, a lawyer shall not engage in unlawful, dishonest, immoral or deceitful conduct. It may be difficult to specify the degree of moral delinquency that may qualify an act as immoral, yet, for purposes of disciplining a lawyer, immoral conduct has been defined as that "conduct which is willful, flagrant, or shameless, and which shows a moral indifference to the opinion of respectable members of the community.

viii) St. Louis University High School Faculty and Staff vs. Atty. dela Cruz, AC No. 6010, Aug. 28,2006
CHICO-NAZARIO, J.

FACTS:
Ø disbarment case filed by the Faculty members and Staff of the Saint Louis University-Laboratory High School against Atty. Rolando C. Dela Cruz, principal of SLU-LHS on the grounds that:
1. Gross Misconduct:
a. pending criminal case for child abuse allegedly committed by him against a high school student
b. a pending administrative case filed by the Teachers, Staff, Students and Parents before an Investigating Board created by SLU for his alleged unprofessional and unethical acts of misappropriating money supposedly for the teachers
c. pending labor case filed by SLU-LHS Faculty before the NLRC, Cordillera Administrative Region, on alleged illegal deduction of salary by respondent.
2. Grossly Immoral Conduct: second marriage despite the existence of his first marriage
o respondent was legally married to Teresita Rivera before Honorable Judge Tomas W. Macaranas. He subsequently married with Mary Jane Pascua before the Honorable Judge Guillermo Purganan which was subsequently annulled for being bigamous.
3. Malpractice: notarizing documents despite the expiration of his commission.
o On the charge of malpractice, complainant alleged that respondent deliberately subscribed and notarized certain legal documents on different dates from 1988 to 1997, despite expiration of respondent’s notarial commission on 31 December 1987. A Certification dated 25 May 1999 was issued by the Clerk of Court of Regional Trial Court to the effect that respondent had not applied for commission as Notary Public for the period 1988 to 1997.
Ø Pacheco submitted his report and recommended that:
1. For contracting a second marriage without taking the appropriate legal steps to have the first marriage annulled first, he be suspended from the practice of law for 1 year
2. For notarizing certain legal documents despite full knowledge of the expiration of his notarial commission, he be suspended from the practice of law for another 1 year.
Ø IBP Board of Governors approved and adopted the recommendation of the Commissioner.
ISSUE: W/N respondent should be penalized for a suspension of 2 years in total.
HELD: Atty. Rolando Dela Cruz guilty of immoral conduct, in disregard of the Code of Professional Responsibility, SUSPENDED from the practice of law for a period of 2 years, and another 2 years for notarizing documents despite the expiration of his commission
Ø A member of the legal fraternity should refrain from doing any act which might lessen in any degree the confidence and trust reposed by the public in the fidelity, honesty and integrity of the legal profession. Towards this end, an attorney may be disbarred or suspended for any violation of his oath or of his duties as an attorney and counselor, which include statutory grounds enumerated in Section 27, Rule 138 of the Rules of Court, all of these being broad enough to cover practically any misconduct of a lawyer in his professional or private capacity.
Ø Equally worthy of remark is that the law profession does not prescribe a dichotomy of standards among its members. There is no distinction as to whether the transgression is committed in the lawyer’s professional capacity or in his private life.
Ø One of the conditions prior to admission to the bar is that an applicant must possess good moral character. Possession of such moral character as requirement to the enjoyment of the privilege of law practice must be continuous. Otherwise, “membership in the bar may be terminated when a lawyer ceases to have good moral conduct.”
Ø Respondent was already a member of the Bar when he contracted the bigamous second marriage. As such, he cannot feign ignorance.
Ø the acquittal of a lawyer in a criminal action is not determinative of an administrative case against him. So long as the quantum of proof - clear preponderance of evidence - in disciplinary proceedings against members of the Bar is met, then liability attaches.
Ø Section 27, Rule 138 of the Rules of Court cites grossly immoral conduct as a ground for disbarment.
o Immoral conduct-conduct which is willful, flagrant, or shameless, and which shows a moral indifference to the opinion of the good and respectable members of the community
o grossly immoral- must be so corrupt and false as to constitute a criminal act or so unprincipled as to be reprehensible to a high degree
Ø In particular, he made a mockery of marriage which is a sacred institution demanding respect and dignity. His act of contracting a second marriage while the first marriage was still in place, is contrary to honesty, justice, decency and morality.
However, measured against the definition, we are not prepared to consider respondent’s act as grossly immoral. This finds support in the following recommendation and observation of the IBP Investigator and IBP Board of Governors, thus:
1. After his first failed marriage and prior to his second marriage or for a period of almost 7 years, he has not been romantically involved with any woman
2. His second marriage was a show of his noble intentions and total love for his wife, whom he described to be very intelligent person
3. He never absconded from his obligations to support his wife and child
4. He never disclaimed paternity over the child and husbandry with relation to his wife
5. After the annulment of his 2nd marriage, they have parted ways when the mother and child went to Australia
6. Since then up to now, respondent remained celibate.
Ø respondent himself acknowledged and declared his abject apology for his misstep. He was humble enough to offer no defense save for his love and declaration of his commitment to his wife and child.
Ø imposition of disbarment upon him to be unduly harsh. The power to disbar must be exercised with great caution, and may be imposed only in a clear case of misconduct that seriously affects the standing and character of the lawyer as an officer of the Court. Disbarment should never be decreed where any lesser penalty could accomplish the end desired. I
Ø a penalty of 2 years suspension is more appropriate.
Ø respondent humbly admitted having notarized certain documents despite his knowledge that he no longer had authority to do so. He alleged that he received no payment in notarizing said documents.
Ø Notarization of a private document converts the document into a public one making it admissible in court without further proof of its authenticity. A notarial document is by law entitled to full faith and credit upon its face and, for this reason, notaries public must observe with the utmost care the basic requirements in the performance of their duties. Otherwise, the confidence of the public in the integrity of this form of conveyance would be undermined.
Ø The requirements for the issuance of a commission as notary public must not be treated as a mere casual formality. The Court has characterized a lawyer’s act of notarizing documents without the requisite commission to do so as “reprehensible, constituting as it does not only malpractice but also x x x the crime of falsification of public documents.”
Ø The Court had occasion to state that where the notarization of a document is done by a member of the Philippine Bar at a time when he has no authorization or commission to do so, the offender may be subjected to disciplinary action or one, performing a notarial act without such commission is a violation of the lawyer’s oath to obey the laws, more specifically, the Notarial Law. Then, too, by making it appear that he is duly commissioned when he is not, he is, for all legal intents and purposes, indulging in deliberate falsehood, which the lawyer’s oath similarly proscribes. These violations fall squarely within the prohibition of Rule 1.01 of Canon 1 of the Code of Professional Responsibility, which provides: “A lawyer shall not engage in unlawful, dishonest, immoral or deceitful conduct.” By acting as a notary public without the proper commission to do so, the lawyer likewise violates Canon 7 of the same Code, which directs every lawyer to uphold at all times the integrity and dignity of the legal profession.
Ø Other charges constituting respondent’s misconduct such as the pending criminal case for child abuse allegedly committed by him against a high school student filed before the Prosecutor’s Office of Baguio City; the pending administrative case filed by the Teachers, Staff, Students and Parents before an Investigating Board created by SLU; and the pending labor case filed by SLU-LHS Faculty before the NLRC, Cordillera Administrative Region, on alleged illegal deduction of salary by respondent, need not be discussed, as they are still pending before the proper forums. At such stages, the presumption of innocence still prevails in favor of the respondent.

ix) Donton vs. Atty. Tansingco, AC No. 6057, June 27, 2006
Related Canons: Canon 1, Rules 1.01 and 1.02 of the Code of Professional Responsibility
FACTS:
· disbarment complaint against respondent Atty. Emmanuel O. Tansingco for estafa thru falsification of a public document against Duane O. Stier, a U.S. citizen and thereby disqualified to own real property in his name, as the notary public who notarized the Occupancy Agreement, recognizing Mr. Stier’s free and undisturbed use of the property for his residence and business operations.
ISSUE: Whether or not respondent Atty. Emmanuel O. Tansingco should be liable for violation of Canon 1 and Rule 1.02 of the Code.
HELD: YES. GUILTY. SUSPEND for SIX MONTHS.
· Canon 1 and Rule 1.02 of the Code.
o A lawyer should not render any service or give advice to any client which will involve defiance of the laws which he is bound to uphold and obey.
o A lawyer who assists a client in a dishonest scheme or who connives in violating the law commits an act which justifies disciplinary action against the lawyer.10
· In effect, respondent advised and aided Stier in circumventing the constitutional prohibition against foreign ownership of lands by preparing said documents.
o Respondent had sworn(oath) to uphold the Constitution.

x) Ronquillo vs. Atty.Chavez, AC No. 6288, June 16, 2006
Ronquillo vs. Atty.Chavez
FACTS:
· Atty. Homobono t. Cezar entered into a Deed of Assignment for the price of P1.5M in favor of Marili C. Ronquillo, a Filipino citizen residing in Cannes, France his rights and interests over a townhouse unit and lot and obligated himself to deliver to complainants a copy of the Contract to Sell he executed with Crown Asia, the townhouse developer
· Respondent received P750,000.00 u pon execution of the Deed of Assignment and was able to encash the first check of P187,500.00
· Complainants subsequently received information from Crown Asia that respondent has not paid in full the price of the townhouse and he also failed to deliver a copy of the Contract to Sell he allegedly executed with Crown Asia.
o Complainant ordered stop payment on the second check of P187,500.00

ISSUE: Whether or not Atty. Homobono t. Cezar should be disbared or suspended for deceit and grossly immoral conduct

HELD: YES. SUSPENDED from the practice of law for a period of 3 YEARS.

· Under Section 27, Rule 138 of the Revised Rules of Court, a member of the Bar may be disbarred or suspended on any of the following grounds: (1) deceit; (2) malpractice or other gross misconduct in office; (3) grossly immoral conduct; (4) conviction of a crime involving moral turpitude; (5) violation of the lawyer’s oath; (6) willful disobedience of any lawful order of a superior court; and (7) willfully appearing as an attorney for a party without authority.
o He did not inform the complainants that he has not yet paid in full the price of the subject townhouse unit and lot, and, therefore, he had no right to sell, transfer or assign said property at the time of the execution of the Deed of Assignment.
· Respondent’s adamant refusal to return to complainant Marili Ronquillo the money she paid him, which was the fruit of her labor as an Overseas Filipino Worker for 10 years, is morally reprehensible.
· Respondent failed to live up to the strict standard of morality required by the Code of Professional Responsibility and violated the trust and respect reposed in him as a member of the Bar, and an officer of the court.
o Lawyers must conduct themselves beyond reproach at all times, whether they are dealing with their clients or the public at large, and a violation of the high moral standards of the legal profession
· whether or not the attorney is still fit to be allowed to continue as a member of the Bar; cannot rule on the issue of the amount of money that should be returned

xi) Tomlin vs. Atty. Moya, AC No. 6971, Feb. 23, 2006
Tomlin vs. Atty. Moya
FACTS:
· Atty. Salvador N. Moya II borrowed from Quirino Tomlin II P600,000.00 partially covered by seven postdated checks which are all dishonored by the drawee bank
o made several demands, the last being a formal letter but still failed and refused to pay his debt without justifiable reason.
· Complaint:
o a case for seven counts of violation of B.P. Blg. 22 against the respondent before the Municipal Trial Court
o case for respondent’s disbarment
ISSUES: Whether or not Atty. Salvador N. Moya II is liable for gross misconduct and violation of the Code.
HELD: YES. GUILTY of gross misconduct and violation of the Code of Professional Responsibility and SUSPENDED from the practice of law for 2 years with a warning that any further infraction by him shall be dealt with most severely.
· good character is an essential qualification for the admission to the practice of law and for the continuance of such privilege.
· respondent admitted his monetary obligations to the complainant but offered no justifiable reason for his continued refusal to pay.
o he refused to recognize any wrongdoing nor shown remorse for issuing worthless checks, an act constituting gross misconduct
o As part of his duties, he must promptly pay his financial obligations.
NOTE:
· administrative cases against lawyers belong to a class of their own
o may proceed independently of criminal cases.
o burden of proof in a criminal case is guilt beyond reasonable doubt while in an administrative case, only preponderance of evidence is required.

xii) Soriano vs. Atty. Dizon, AC No. 6792, Jan 25, 2006
Soriano vs. Atty. Dizon
FACTS:
· Atty. Manuel Dizon was driving his brown Toyota Corolla with his wife. Along Abanao Street, a taxi driver overtook him so he tailed the taxi driver until the latter stopped to make a turn. He berated the taxi driver and held him by his shirt. To stop the aggression, the taxi driver forced open his door causing the accused to fall to the ground. Taking pity on the accused who looked elderly, the taxi driver got out of his car to help him get up. When he was about to hit the taxi driver, he hit the accused in the chest then he got up again and was about to box the taxi driver but the latter caught his fist and turned his arm around. The accused went back to his car and got his revolver making sure that the handle was wrapped in a handkerchief. The taxi driver was on his way back to his vehicle when he noticed the eyeglasses of the accused on the ground. He picked them up intending to return them to the accused. But as he was handing the same to the accused, he was met by the barrel of the gun held by the accused who fired and shot him hitting him on the neck. He fell on the thigh of the accused so the latter pushed him out and sped off.
· witness, Antonio Billanes, who came to the aid of Soriano and brought the latter to the hospital.
o sustained a spinal cord injury, which caused paralysis on the left part of his body and disabled him for his job as a taxi driver.
· Despite positive identification and overwhelming evidence, Respondent denied that he had shot Complainant;
· Apart from [his] denial, Respondent also lied when he claimed that he was the one mauled by Complainant and two unidentified persons
· Although he has been placed on probation, Respondent has not yet (for 4 years) satisfied his civil liabilities to Complainant.
· convicted, by final judgment, of frustrated homicide

ISSUE: Whether or not frustrated homicide involves moral turpitude and where ot not guilt warrants disbarment.

HELD: YES. DISBARRED.

· Moral turpitude has been defined as “everything which is done contrary to justice, modesty, or good morals; an act of baseness, vileness or depravity in the private and social duties which a man owes his fellowmen, or to society in general, contrary to justice, honesty, modesty, or good morals.”
o Good moral character includes at least common honesty.
· Homicide may or may not involve moral turpitude depending on the degree of the crime.
o a question of fact and frequently depends on all the surrounding circumstances
§ act of aggression shown by respondent will not be mitigated by the fact that he was hit once and his arm twisted by complainant. Under the circumstances, those were reasonable actions clearly intended to fend off the lawyer’s assault.
§ He shot the victim when the latter was not in a position to defend himself.
§ To make matters worse, respondent wrapped the handle of his gun with a handkerchief so as not to leave fingerprints.
§ his illegal possession of an unlicensed firearm and his unjust refusal to satisfy his civil liabilities
· Where their misconduct outside of their professional dealings is so gross as to show them morally unfit for their office and unworthy of the privileges conferred upon them by their license and the law, the court may be justified in suspending or removing them from that office.

xiii) Po Cham vs. Atty. Pizarro, AC No. 5499, August 16, 2005
Po Cham vs. Atty. Pizarro
FACTS:
· Emelita Cañete, Elenita Alipio, and now deceased Mario Navarro, offered for sale to him a parcel of land with an area of approximately 40 hectares.
o Respondent being extensively conversant and knowledgeable about the law took advantage of his versatility in the practice of law and committed misrepresentations
§ Respondent presented to him 1) Real Property Tax Order of Payment 2) a Deed of Absolute Sale 3) Special Power of Upon investigation
§ Dead of sale conttained: The SELLERS hereby agree with the BUYER that they are the absolute owners of the rights over the said property; that they have the perfect right to convey the same
§ discovered that the property is not an alienable or disposable land susceptible of private ownership because , said lands fall within the Bataan Natural Park. Under the Public Land Law, lands within this category are not subject for disposition.
· a finding of guilt in the criminal case will not necessarily result in a finding of liability in the administrative case. Conversely, respondent’s acquittal does not necessarily exculpate him administratively.
HELD: SUSPENDED from the practice of law for 1 Year and STERNLY WARNED

b) Unlawful Conduct

i) Rural Bank of Silay vs. Pilla, 350 SCRA 28

ii) Calub vs. Suller, 323 SCRA 556

iii) Orbe vs. Adaza, AC No. 5252, May 20, 2004

iv) Emilio Grande vs. Atty. Evangeline de Silva, AC No. 4838, July 29, 2003

c) Immoral Conduct

i) Paras vs. Paras, 343 SCRA 414

ii) Ui vs. Bonifacio, 333 SCRA 38

iii) Tapucar vs. Tapucar, 293 SCRA 331

iv) Narag vs. Narag, 291 SCRA 451

d) Deceit
i) Cordon vs. Balicanta, AC No. 2797, Oct. 4, 2002

ii) Rayos-Ombac vs. Rayos, 265 SCRA 83

iii) De los Reyes vs. Aznar, 19 SCRA 753

e) Scandalous Conduct

i) Rau Sheng Mo vs. Atty. Velasco, AC No. 4881, Oct. 6, 2003

2) CANON 2

a) Rule 2.01
i) Canoy vs. Ortiz, 453 SCRA 410

CANON 3 - A LAWYER IN MAKING KNOWN HIS LEGAL SERVICES SHALL USE ONLY TRUE, HONEST, FAIR, DIGNIFIED AND OBJECTIVE INFORMATION OR STATEMENT OF FACTS.

Rule 3.01 - A lawyer shall not use or permit the use of any false, fraudulent, misleading, deceptive, undignified, self-laudatory or unfair statement or claim regarding his qualifications or legal services.

Rule 3.02 - In the choice of a firm name, no false, misleading or assumed name shall be used. The continued use of the name of a deceased partner is permissible provided that the firm indicates in all its communications that said partner is deceased.

Rule 3.03 - Where a partner accepts public office, he shall withdrawal from the firm and his name shall be dropped from the firm name unless the law allows him to practice law currently.

Rule 3.04 - A lawyer shall not pay or give anything of value to representatives of the mass media in anticipation of, or in return for, publicity to attract legal business.

CANON 4 - A LAWYER SHALL PARTICIPATE IN THE DEVELOPMENT OF THE LEGAL SYSTEM BY INITIATING OR SUPPORTING EFFORTS IN LAW REFORM AND IN THE IMPROVEMENT OF THE ADMINISTRATION OF JUSTICE.

CANON 5 - A LAWYER SHALL KEEP ABREAST OF LEGAL DEVELOPMENTS, PARTICIPATE IN CONTINUING LEGAL EDUCATION PROGRAMS, SUPPORT EFFORTS TO ACHIEVE HIGH STANDARDS IN LAW SCHOOLS AS WELL AS IN THE PRACTICAL TRAINING OF LAW STUDENTS AND ASSIST IN DISSEMINATING THE LAW AND JURISPRUDENCE.

CANON 6 - THESE CANONS SHALL APPLY TO LAWYERS IN GOVERNMENT SERVICES IN THE DISCHARGE OF THEIR TASKS.
Rule 6.01 - The primary duty of a lawyer engaged in public prosecution is not to convict but to see that justice is done. The suppression of facts or the concealment of witnesses capable of establishing the innocence of the accused is highly reprehensible and is cause for disciplinary action.
Rule 6.02 - A lawyer in the government service shall not use his public position to promote or advance his private interests, nor allow the latter to interfere with his public duties.
Rule 6.03 - A lawyer shall not, after leaving government service, accept engagement or employment in connection with any matter in which he had intervened while in said service.

B. CASES

READ THE CASES ONLY INSOFAR AS THEY ARE RELEVANT TO THE ASSIGNED CANONS

1) CANON 2

Canoy vs. Ortiz, 453 SCRA 410

Tan Tek Beng vs. David, 126 SCRA 389

In re: Tagorda, 53 Phil. 37 (1929)

People vs. Holgado, 85 Phil. 752

Ulep vs. Legal Clinic 223 SCRA 378 (only as to advertising))

2) CANON 3

San Jose Homeowners Assn. v Romanillos, AC No. 5580, June 18, 2005

Atty. Ismael G. Khan, Jr. v Atty. Rizalino T. Simbillo, AC No. 5299, Aug. 10, 2002

B.R. Sebastian Enterprises Inc. vs. Court of Appeals, 206 SCRA 28

Dacanay vs. Baker & Mckenzie, Adm. Case No. 2131 May 10, 1985*

Director of Religious Affairs v. Bayot, A.C. No. L-1117, March 20, 1944*

Beltran v. Abad, A. M. No. 139 March 28, 1983*

In re Tagorda, March 23, 1929*

3) Canon 6

U.S. vs. Barredo, 32 Phil. 449, G.R. No. L-9278 December 7, 1915

Suarez vs. Platon, 69 Phil. 556

Gonzales-Austria, et al. vs. Abaya, 176 SCRA 634

Enriquez Sr. vs. Hon. Gimenez, 107 Phil. 933*

* short cases

Lawyer's Oath

2011-12-18T01:33:00.000-08:00

Lawyer's Oath

I, do solemnly swear that I will maintain allegiance to the Republic of the Philippines,

I will support the Constitution and obey the laws as well as the legal orders of the duly constituted authorities therein;

I will do no falsehood, nor consent to the doing of any in court;

I will not wittingly or willingly promote or sue any groundless, false or unlawful suit, or give aid nor consent to the same;

I will delay no man for money or malice, and will conduct myself as a lawyer according to the best of my knowledge and discretion, with all good fidelity as well to the courts as to my clients;

and I impose upon myself these voluntary obligations without any mental reservation or purpose of evasion. So help me God.

TIPS FOR LAW STUDENTS:

While memorizing this picture yourself passing the bar exam and taking your oath as a deserving lawyer.

Land Titles and Deeds Notes: Mortgage

2011-12-18T00:38:00.001-08:00

1. Mortgage

real right constituted to secure an obligation upon real property or rights therein to satisfy w/ the proceeds of the sale thereof such obligation when the same becomes due and has NOT been paid or fulfilled (Sanchez Roman)
contract by which specific property is hypothecated for the performance of an act, WITHOUT the necessity of a change of possession (Civil Code of California)
a right granted to the creditor over the property of the debtor for the security of his debt, and gives him the power of having the property seized sold in default of payment (Civil Code of Louisiana)
= lien / purpose of security

(NOT) creating a title or estate

can be waived by mortgagee

to collect the principal debt - personal action
mortgage - not personal action

a. Parties

mortgagor - who constitutes the mortgage
mortgagee - whose favor a mortgage is constituted

2. Kinds of Mortgages

a. conventional or voluntary mortgage

created by agreement of the parties

b. legal mortgage

created by operation of law wherein the creditor is given a mortgagee on the property of his debtor, WITHOUT the necessity of the parties actually stipulating for it
required by express provision of law to be executed in favor of certain persons to secure the performance of a principal obligation

EXAMPLES:

claims of laborers engaged in the construction of a building are to be considered as mortgages upon said building by operation of Art. 2243 in relation to Art. 2242 of NCC

c. judicial mortgage

resulting from a judgment

EXAMPLE:

plain deed of sale may be declared to be a mortgage by a competent court

d. equitable mortgage

NOT a mortgage in form but in substance a mere security for a debt or obligation
commonly occurs in pacto de retro sales

3. Laws governing mortgage in general

Contract of Real Estate of Mortgage

Articles 2085 to 2092 of the Civil Code of the Philippines
Articles 2124 to 2131 of the Civil Code of the Philippines

Foreclosure Mortgage

procedure

judicial foreclosures

Rule 68 of the Rules of Court

extrajudicial foreclosure

Act. No. 3135 as amended by Act. No. 4118

Aliens becoming mortgagees

Republic Act 4882 approved June 17, 1967 (Republic Act. No. 133>Republic Act 4381)

4. Essential requisites of mortgage

Art. 2085 of the Civil Code of the Philippines

a. That it be constituted to secure the fulfillment of a principal obligation

b. That the mortgagor be the absolute owner of the thing mortgaged

c. That the person constituting the mortgage has the free disposal of the property, and in the absence

thereof, that he be legally authorized for the purpose

NOTE:

*A 3rd person who is not a debtor or party to the principal obligation may secure the latter by mortgaging by his own property

*must be sold at a public auction and cannot be appropriated by a creditor

Art. 2125 of the Civil Code

d. In order that a mortgage may be validly constituted, that the document in which it appears be registered in the Office of the Registry of Deeds concerned.

Failure to register: limits its binding effect to the parties thereto only (NOT invalidate the mortgage)

Section 51. Conveyance and other dealings by registered owner. An owner of registered land may convey, mortgage, lease, charge or otherwise deal with the same in accordance with existing laws. He may use such forms of deeds, mortgages, leases or other voluntary instruments as are sufficient in law. But no deed, mortgage, lease, or other voluntary instrument, except a will purporting to convey or affect registered land shall take effect as a conveyance or bind the land, but shall operate only as a contract between the parties and as evidence of authority to the Register of Deeds to make registration.

The act of registration shall be the operative act to convey or affect the land insofar as third persons are concerned, and in all cases under this Decree, the registration shall be made in the office of the Register of Deeds for the province or city where the land lies.

Mortgagee in bad faith

ignores a significant fact that would create suspicion in an otherwise reasonable person is not an innocent purchaser for value (DBA v. CA)

EXAMPLES:

aware of adverse claim and notice of lis pendens annotated on the title when it registered the mortgage

Who may constitute a mortgage?

absolute owner of the property

foreclosure sale - transmission only of whatever rights seller had over the thing sold

NO valid real estate mortgage = NO valid foreclosure or valid auction sale

Who is mortgagee is Good Faith?

innocent mortgagee for value

Consent of both parties NOT necessary to registration of mortgage

May be registered by mortgagee alone (even over the objection of the mortgagor)

Rationale: mortgage is a voluntary transaction and CANNOT be permitted to revoke unilaterally (execution = consent NOT the registration)

Once a mortgage has been signed in due form, the mortgage is entitled to its registration as a matter of right

Mortgage cannot be recorded if unregistered land

6. Special characteristics of real mortgage

a. Realty as subject matter

Real property or alienable rights or interests therein (i.e. credits or rights of the mortgagee or encumbrances)

b. Real right

binding against the whole world and may be enforced by real action against all who may have existing rights or interests in the same property, NOT registered prior to the mortgage
Even if personal action on the debt secured has prescribed, a suit to enforce the mortgage may still lie so long as all such debt has NOT been paid

c. Accessory obligation

d. Indivisibility

one and indivisible

e. Inseparability

follows the property to whomever it may be transferred no matter how many times it changes hands as long as the annotation is carried over

f. Retention of Possession

7. When "Pacto de retro" sale = equitable mortgage

where a contract of sale w/ pacto de retro is executed as security for a debt owing by the grantor from the grantee
may be shown by oral evidence
Tests:

Art. 1602. The contract shall be presumed to be an equitable mortgage, in any of the following cases:

(1) When the price of a sale with right to repurchase is unusually inadequate;

(2) When the vendor remains in possession as lessee or otherwise;

(3) When upon or after the expiration of the right to repurchase another instrument extending the period of redemption or granting a new period is executed;

(4) When the purchaser retains for himself a part of the purchase price;

(5) When the vendor binds himself to pay the taxes on the thing sold;

(6) In any other case where it may be fairly inferred that the real intention of the parties is that the transaction shall secure the payment of a debt or the performance of any other obligation.

In any of the foregoing cases, any money, fruits, or other benefit to be received by the vendee as rent or otherwise shall be considered as interest which shall be subject to the usury laws.

Art. 1603. In case of doubt, a contract purporting to be a sale with right to repurchase shall be construed as an equitable mortgage.

Mortgage compared to:

Antichresis
Chattel Mortgage

10. Execution and registration of mortgage

Section 60. Mortgage or lease of registered land. Mortgage and leases shall be registered in the manner provided in Section 54 of this Decree. The owner of registered land may mortgage or lease it by executing the deed in a form sufficient in law. Such deed of mortgage or lease and all instruments which assign, extend, discharge or otherwise deal with the mortgage or lease shall be registered, and shall take effect upon the title only from time of registration.

No mortgagee's or lessee's duplicate certificate of title shall hereafter be issued by the Registers of Deeds, and those issued prior to the effectivity of this Decree are hereby deemed canceled and the holders thereof shall immediately surrender the same to the Register of Deeds concerned.

owner of registered land may mortgage the same by executing a mortgage deed, and such deed may be assigned, extended, discharged, released in whole or in part, or otherwise dealt with by the mortgagee by any form of deed or instrument sufficient in law for the purpose

BUT such mortgage deed, and all instruments assigning, extending, discharging and otherwise dealing w/ the mortgage, shall be registered, and shall take effect upon the title only from the time of registration

Section 112. Forms in conveyancing. The Commissioner of Land Registration shall prepare convenient blank forms as may be necessary to help facilitate the proceedings in land registration and shall take charge of the printing of land title forms.

Deeds, conveyances, encumbrances, discharges, powers of attorney and other voluntary instruments, whether affecting registered or unregistered land, executed in accordance with law in the form of public instruments shall be registerable: Provided, that, every such instrument shall be signed by the person or persons executing the same in the presence of at least two witnesses who shall likewise sign thereon, and shall acknowledged to be the free act and deed of the person or persons executing the same before a notary public or other public officer authorized by law to take acknowledgment. Where the instrument so acknowledged consists of two or more pages including the page whereon acknowledgment is written, each page of the copy which is to be registered in the office of the Register of Deeds, or if registration is not contemplated, each page of the copy to be kept by the notary public, except the page where the signatures already appear at the foot of the instrument, shall be signed on the left margin thereof by the person or persons executing the instrument and their witnesses, and all the ages sealed with the notarial seal, and this fact as well as the number of pages shall be stated in the acknowledgment. Where the instrument acknowledged relates to a sale, transfer, mortgage or encumbrance of two or more parcels of land, the number thereof shall likewise be set forth in said acknowledgment.

sufficient when

made substantially in accordance w/ the forms prescribed therein,
signed by the person in accordance w/ the forms prescribed therein, signed by the person or persons executing the same, in the presence of 2 witnesses who shall sign the instrument as witnesses to the execution thereof, shall be acknowledged to be his or their free act and deed before a notary public or other public officer authorized by law to take acknowledge

Torts and Damages Case Digest: National Power v. Philipp Brothers (2001)

2011-12-15T11:44:00.000-08:00

G.R. No. 126204 November 20, 2001

Lessons Applicable: Who may recover (Torts and Damages)

Laws Applicable:

FACTS:

May 14, 1987: 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 of which Philipp Brothers Oceanic, Inc. (PHIBRO) bidded and was accepted.
July 10, 1987: PHIBRO told NAPOCOR that disputes might soon plague Australia that will seriously hamper its ability to supply coal
July 23 to July 31, 1987: PHIBRO informed NAPOCOR that unless a "strike-free" clause is incorporated in the charter party or the contract of carriage shipowners are unwilling to load their cargo. In order to hasten the transfer of coal, they should share the burden of the "strike-free" clause but NAPOCOR refused.
November 17, 1987: PHIBRO effected its first shipment which was suppose to be on the 30th dat after receipt of the letter of credit of which it received on August 6, 1987
October 1987: NAPOCOR once more advertised for the delivery of coal to its Calaca thermal plant of which PHIBRO applied but was rejected since it was not able to satisfy the demand for damages on its delay.
PHIBRO filed for damages in the RTC alleging that the rejection was tainted with malice and bad faith
RTC: favored PHIBRO. Ordering NAPCOR to reinstate PHIBRO as accredited bidder, to pay $864,000 actual damages, $100,000 moral damages, $50,000 exemplary damages, $73,231.91 reimbursement for expenses, cost of litigation and attorney's fees, cost of suit and dismissed counterclaim of NAPOCOR.
CA: affirmed in toto. "Strikes" are undoubtedly included in the force majeure clause of the Bidding Terms and Specifications

ISSUE: W/N PHIBRO is entitled to damages.

HELD: NO. Modified actual, moral and exemplary damages, reimbursement for expenses, cost of litigation and attorney's fees, and costs of suit, is DELETED

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
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
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. - 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.

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
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 - none here

Jurisprudence: G.R. No. 126204

2011-12-15T10:21:00.000-08:00

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"4 provide 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:

"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

"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

"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

"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.28 In 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."32 Accordingly, 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.39 Otherwise 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.40 While 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.50 This 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:

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 as damnum 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).

Torts and Damages Case Digest: ABS-CBN v. CA (1999)

2011-12-15T10:13:00.000-08:00

G.R. No. 128690 January 21, 1999

Lessons Applicable: Who may recover (Torts and Damages)

Laws Applicable: Articles 19, 20, and 21 of the Civil Code

FACTS:

Viva, through Del Rosario, offered ABS-CBN through its vice-president Charo Santos-Concio, a list of 3 film packages or 36 titles from which ABS-CBN may exercise its right of first refusal
Mrs. Concio informed Vic through a letter that they can only purchase 10 titles to be schedules on non-primetime slots because they were very adult themes which the ruling of the MTRCB advises to be aired at 9:00 p.m
February 27, 1992: Del Rosario approached ABS-CBN's Ms. Concio with a list consisting of 52 original movie titles as well as 104 re-runs proposing to sell to ABS-CBN airing rights for P60M (P30M cash and P30M worth of television spots)
April 2, 1992: Del Rosario and ABS-CBN general manager, Eugenio Lopez III met wherein Del Rosario allegedly agreed to grant rights for 14 films for P30M
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
April 07, 1992: Ms. Concio sent the proposal draft of 53 films for P35M which Viva's Board rejected since they will not accept anything less than P60M
April 29, 1992: Viva granted RBS exclusive grants for P60M
RTC: Issued TRO against RBS in showing 14 films as filed by ABS-CBN.

RBS also set up a cross-claim against VIVA

RTC: ordered ABS-CBN to pay RBS P107,727 premium paid by RBS to the surety which issued their bond to lift the injunction, P191,843.00 for the amount of print advertisement for "Maging Sino Ka Man" in various newspapers, P1M attorney's fees, P5M moral damages, P5M exemplary damages and costs. Cross-claim to VIVA was dismissed.
ABS-CBN appealed. VIVA and Del Rosario also appealed seeking moral and exemplary damages and additional attorney's fees.
CA: reduced the awards of moral damages to P2M, exemplary damages to P2M and attorney's fees to P500,000. 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

ISSUE:
1. W/N RBS is entitled to damages. -YES
2. W/N VIVA is entitled to damages. - NO

HELD: REVERSED except as to unappealed award of attorney's fees in favor of VIVA Productions, Inc.

1. YES.

One is entitled to compensation for actual damages only for such pecuniary loss suffered by him as he has duly proved. The indemnification shall comprehend not only the value of the loss suffered, but also that of the profits that the obligee failed to obtain. 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. 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. 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.
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. 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.
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.
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

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

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. 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.
exemplary damages are imposed by way of example or correction for the public good, in addition to moral, temperate, liquidated or compensatory damages. They are recoverable in criminal cases as part of the civil liability when the crime was committed with one or more aggravating circumstances in quasi-contracts, if the defendant acted with gross negligence and in contracts and quasi-contracts, if the defendant acted in a wanton, fraudulent, reckless, oppressive, or malevolent manner
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.
There is no adequate proof that ABS-CBN was inspired by malice or bad faith. If damages result from a person's exercise of a right, it is damnum absque injuria.

Jurisprudence: G.R. No. 128690

2011-12-15T04:17:00.001-08:00

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.

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-CBN 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 17 challenging 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 RBS cited 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 of
Appeals 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. Willets and 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.

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.

38 Art. 1318, 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.

51 Art. 2199, Civil Code.

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].

68 Art. 2229, Civil Code.

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].

Torts and Damages Case Digest: Strebel v. Figueros (1954)

2011-12-15T04:08:00.000-08:00

G.R. No. L-4722 December 29, 1954

Lessons Applicable: Who may recover (Torts and Damages)

Laws Applicable:

FACTS:

Strebel subleased part of his lot in Sta. Mesa to Standard Vacuum Oil Company who constructed Mobilgas Station operated by a partnership Eustaquio & Co. Then Under-Secretary of Labor Jose Figueras wanted to build a drainage through the lots of Figueras and Stebel by using his social and political influence he managed to influence Assistant City Fiscal of Manila Cornelio S. Ruperto to write an opinion granting his right. Stebel and his parter Primo Eustaquio protested. But the was seemingly abandoned before the property rights could be violated
That due to personal conflicts his wife's son-in-law Manuel Hernandez was removed form his position
September 15, 1949: Figueras use of his official and political influence over Ruperto and Director of Labor Felipe E. Jose to institute a Criminal Case against Strebel and his partner Eustaquio for allegedly compelling several employees to work more than 8 hours a day but was dismissed for lackof prima facie evidence
RTC: Dismissed the complaint of Emilio Strebel against Jose Figueras, Felipe E. Jose and Cornelio S. Ruperto

ISSUE:
1. W/N Strebel can recover damages for the case of Hernandez - NO
2. W/N the wrongful filing of criminal charge is a ground for misconduct or malfeasance arising from an action ex delicto or a tortious act - NO

HELD:

1. NO.

general rule, the right of recovery for mental suffering resulting from bodily injuries is restricted to the person who has suffered the bodily hurt, and there can be no recovery for distress caused by sympathy for another's suffering, or for fright due to a wrong against a third person. So the anguish of mind arising as to the safety of others who may be in personal peril from the same cause cannot be taken into consideration
a husband or wife cannot recover for mental suffering caused by his or her sympathy for the other's suffering
Strebel is not even related to Dr. Hernandez whose wife is a daughter of Mrs. Strebel by a previous marriage

2. NO.

Although the same article permits recovery of said damages in cases of malicious prosecution, this feature of said provision may not be availed of by the plaintiff herein, inasmuch as the acts set forth in the complaint took place in 1949, or before said Code became effective. If the fault is also punished by the previous legislation, the less severe sanction shall be applied.
It is not alleged in the complaint that defendants Felipe Jose and Cornelio Ruperto had any participation whatsoever in the filing of the information for unjust vexation. Obviously, they are exempt from liability in connectiontherewith. Upon the other hand, the assistant city fiscal who signed said information and Antonio Isaac, the offended party therein, have not been included as defendants in the case at bar.