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Damages Digests - Case digest
Business Law (University of Southern Philippines Foundation)
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
Gatchalian vs Delim (actual/compensatory damages, loss/impairment of earning
capacity
Petitioners: Reynalda Gatchalian
Respondents:
Arsenio
Delim
and
the
Hon.
Court
of
Appeals
Respondent Delim’s defense was that (1) the vehicular mishap was due to force majeure; (2)
when Gatchalian signed the Joint Affidavit she already waived her rights to file a case whether
civil or criminal.
Issues:
Facts:
1. Was the waiver valid? NO
On July 1973, Reynalda Gatchalian boarded, as a paying passenger, respondent's "Thames"
minibus at a point in San Eugenio, Aringay, La Union, bound for Bauang, of the same province.
On
the
way,
while
the
bus
was
running
along
the
highway,
"a
snapping sound" was suddenly heard at one part of the bus and, shortly thereafter, the vehicle
bumped a cement flowerpot on the side of the road, went off the road, turned turtle and fell
into a ditch. Several passengers, including Gatchalian, were injured. They
were promptly taken to the hospital for medical treatment. Gatchalian sustained physical
injuries
on
the
leg,
arm,
and
forehead.
While the injured passengers were confined in the hospital, Mrs. Adela Delim, wife of
respondent, visited them and later paid for their hospitalization and medical expenses. She
also gave petitioner P12.00 with which to pay her transportation expense in going
home from the hospital.
The standard used in Yepes and Susaya v. Samar Express Transit
is that: a waiver, to be valid and effective, must in the first place be couched in clear and
unequivocal terms which leave no doubt as to the intention of a person to give up a right or
benefit which legally pertains to him. The phrase “That we are no longer interested to file a
complaint” is not the same as making an actual waiver of right.
However, before Mrs. Delim left, she had the injured passengers, including petitioner, sign an
already prepared Joint Affidavit which stated, among other things: “That we are no
longer interested to file a complaint, criminal or civil against the said driver and owner
of the said Thames, because it was an accident and the said driver and owner of the
said Thames have gone to the extent of helping us to be treated upon our injuries.”
Notwithstanding this document, petitioner Gatchalian filed with the CFI an action extra
contractu to recover compensatory and moral damages. She alleged that her injuries had left
her with a conspicuous white scar measuring 1 by ½ inches on the forehead, generating
mental suffering and an inferiority complex on her part; and that as a result, she had to retire
in seclusion and stay away from her friends. She also alleged that the scar diminished her
facial beauty and deprived her of opportunities for employment.
She prayed for an award of:
 P10,000.00 for loss of employment and other opportunities.
 P10,000.00 for the cost of plastic surgery for removal of the scar on her forehead.
 P30,000.00 for moral damages.
 P1,000.00 as attorney's fees.
Gatchalian suffered dizziness while reading the joint affidavit, and that she only signed
because the other passengers signed. It is doubtful whether she understood fully the import
of the Joint Affidavit (she signed and whether she actually intended thereby to waive any right
of action against private respondent.
Because
what
is
involved
here
is
the
liability
of
a
common
carrier for injuries sustained by passengers in respect of whose safety a common carrier must
exercise extraordinary diligence, we must construe any such purported waiver most strictly
against the common carrier. For a waiver to be valid and effective, it must not be contrary to
law, morals, public policy, or good customs.
2. Was the vehicular mishap force majeure? NO
The case of Servando v. Philippine Steam navigation Company sums up the essential
characteristics of force majeure:
(1) the cause of the unforeseen and unexpected occurrence, or of the failure of the debtor to
comply with his obligation, must be independent of the human will.
(2) it must be impossible to foresee the event which constitutes the "caso fortuito", or if it can
be
foreseen,
it
must
be
impossible
to
avoid.
(3) the occurrence must be such as to render it impossible for the debtor to fulfill his obligation
in a normal manner.
(4) the obligor must be free from any participation in the aggravation of the injury resulting to
the creditor.
Respondent failed to submit any proof to substantiate his defense of force majeure. On the
contrary, the record yields affirmative evidence of fault or negligence. In her direct
examination, petitioner Gatchalian narrated that when a "snapping sound" was suddenly
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heard at one part of the bus, one of the passengers, an old woman, cried out, "What
happened?" ("Apay addan samet nadadaelen?"). The driver replied, nonchalantly, "That is
only normal" ("Ugali ti makina dayta"). The driver did not stop to check if anything had
gone wrong with the bus. Moreover, the driver's reply necessarily indicated that the same
"snapping sound" had been heard in the bus on previous occasions. This could only mean
that the bus had not been checked physically or mechanically to determine what was causing
the "snapping sound" which had occurred so frequently that the driver had gotten accustomed
to it.
3. Is Gatchalian entitled to her claims?
Loss of employment  NO
 She was found to be jobless (she was en route to see a school principal about being
hired as an assistant teacher).
P10,000.00 for the cost of plastic surgery for removal of the scar on her
forehead  YES
 A person is entitled to the physical integrity of his or her body; if that integrity is violated
or diminished, actual injury is suffered for which actual or compensatory damages are
due and assessable. Petitioner Gatchalian is entitled to be placed as nearly as
possible in the condition that she was before the mishap. A scar, especially one on the
face
of
the
woman, resulting from the infliction of injury upon her, is a violation of bodily integrity,
giving rise to a legitimate claim for restoration to her conditio ante.
 NOTE: the court cited here the case of Araneta vs. Areglado. It is interesting to note
that the court said that the young boy was injured in a vehicular accident instead of
being shot in the face.
 Gatchalian was awarded P15,000 although the estimated cost was only P5,000 –
P10,000 because a long time has already passed (1973 to 1991).
P30,000.00 for moral damages  YES
 Respondent common carrier and his driver had been grossly negligent in
connection with the bus mishap which had injured petitioner and other passengers,
and recalling the aggressive maneuvers of respondent, through his wife, to get the
victims to waive their right to recover damages even as they were still hospitalized
for their injuries, petitioner must be held entitled to such moral damages.
Considering the extent of pain and anxiety which petitioner must have suffered as
a result of her physical injuries including the permanent scar on her forehead, we
believe that the amount of P30,000.00 would be a reasonable award.

Oceaneering Contractors vs Barretto (actual/compensatory damages)
Facts:
Barretto and petitioner Oceaneering entered into a Time Charter Agreement whereby the
latter hired the aforesaid barge for a renewable period of thirty calendar days, for the purpose
of transporting construction materials from Manila to Ayungon, Negros Oriental. Barretto’s
Bargeman, Eddie La Chica, executed a Marine Protest, reporting that the barge reportedly
capsized in the vicinity of Cape Santiago, Batangas. Barretto apprised Oceaneering of the
supposed fact that the mishap was caused by the incompetence and negligence of the latter’s
personnel in loading the cargo and that it was going to proceed with the salvage, refloating
and repair of the barge.
Oceaneering caused its counsel to serve Barretto a letter demanding the return of the unused
portion of the charter payment. However, Barretto’s counsel informed Oceaneering that its
unused charter payment was withheld by his client who was likewise seeking reimbursement
for the amount he expended in salvaging, refloating, and repairing the barge. Contending that
the accident was attributable to the incompetence and negligence which attended the loading
of the cargo by Oceaneering’s hired employees, Barretto sought indemnities for expenses
incurred and lost income before the RTC.
Alongside its claim for reimbursement of the sums expended for the salvage operation it
conducted which was denied for lack of evidence to prove the same, Oceaneering’s claim for
the value of its cargo was likewise denied on the ground, among other matters, that the same
was not included in the demand letters it served Barretto.
The CA reversed on the ground that the agreement executed by the parties, by its express
terms, was a time charter where the possession and control of the barge was retained by
Barretto; that the latter is, therefore, a common carrier legally charged with extraordinary
diligence in the vigilance over the goods transported by him; and, that the sinking of the vessel
created a presumption of negligence and/or unseaworthiness which Barretto failed to
overcome.
Applying the rule, however, that actual damages should be proved with a reasonable degree
of certainty, the CA denied Oceaneering’s claim for the value of its lost cargo and merely
ordered the refund of the money it paid for the time charter.
Issue: Whether or not the CA erred in disallowing the claims for actual damages.
Held: The petition is meritorious.
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
Civil Law: Actual damages
Actual or compensatory damages are those damages which the injured party is entitled
to recover for the wrong done and injuries received when none were intended.
Pertaining as they do to such injuries or losses that are actually sustained and susceptible of
measurement, they are intended to put the injured party in the position in which he was before
he was injured. The rule is long and well settled that there must be pleading, and proof of
actual damages suffered for the same to be recovered.
In this regard, Oceaneering correctly faulted the CA for not granting its claim for actual
damages or, more specifically, the portions thereof which were duly pleaded and adequately
proved before the RTC. While concededly not included in the demand letters Oceaneering
served Barretto, the former’s counterclaims for the value of its lost cargo and salvaging
expenses were distinctly pleaded and prayed for in the answer it filed.

PNOC vs CA, GR 107518 (loss, in crimes & quasi delicts)





Facts:
 September 21, 1977 early morning: M/V Maria Efigenia XV, owned by Maria Efigenia
Fishing Corporation on its way to Navotas, Metro Manila collided with the vessel
Petroparcel owned by the Luzon Stevedoring Corporation (LSC)
 Board of Marine Inquiry, Philippine Coast Guard Commandant Simeon N. Alejandro
found Petroparcel to be at fault.
 Maria Efigenia sued the LSC and the Petroparcel captain, Edgardo Doruelo praying
for an award of P692,680.00 representing the value of the fishing nets, boat equipment
and cargoes of M/V Maria Efigenia XV with interest at the legal rate plus 25% as
attorney’s fees and later on amended to add the lost value of the hull less the P200K
insurance and unrealized profits and lost business opportunities.
 During the pendency of the case, PNOC Shipping and Transport Corporation sought
to be substituted in place of LSC as it acquired Petroparcel
 Lower Court: against PNOC ordering it to pay P6,438,048 value of the fishing boat
with interest plus P50K attorney's fees and cost of suit.
 CA: affirmed in toto






Issue: W/N the damage was adequately proven. YES


Held:
Affirming with modification actual damages of P6,438,048.00 for lack of evidentiary bases
therefor. P2M nominal damages instead.
In connection with evidence which may appear to be of doubtful relevancy or
incompetency or admissibility, it is the safest policy to be liberal, not rejecting them on
doubtful or technical grounds, but admitting them unless plainly irrelevant, immaterial
or incompetent, for the reason that their rejection places them beyond the
consideration of the court.
If they are thereafter found relevant or competent, can easily be remedied by
completely discarding or ignoring them.
Two kinds of actual or compensatory damages:
o Loss of what a person already possesses (daño emergente) – failure to receive
as a benefit that which would have pertained to him.
In the case of profit-earning chattels, what has to be assessed is the value of the
chattel to its owner as a going concern at the time and place of the loss, and this
means, at least in the case of ships, that regard must be had to existing and pending
engagements.
If the market value of the ship reflects the fact that it is in any case virtually certain of
profitable employment, then nothing can be added to that value in respect of charters
actually lost, for to do so would be pro tanto to compensate the plaintiff twice over.
If the ship is valued without reference to its actual future engagements and only in the
light of its profit-earning potentiality, then it may be necessary to add to the value thus
assessed the anticipated profit on a charter or other engagement which it was unable
to fulfill.
Damages cannot be presumed and courts, in making an award must point out specific
facts that could afford a basis for measuring whatever compensatory or actual
damages are borne.
Proven through sole testimony of general manager without objection from LSC.
Admissibility of evidence refers to the question of whether or not the circumstance (or
evidence) is to be considered at all. On the other hand, the probative value of evidence
refers to the question of whether or not it proves an issue.
Hearsay evidence whether objected to or not has no probative value.
In the absence of competent proof on the actual damage suffered, private respondent
is `entitled to nominal damages which, as the law says, is adjudicated in order that a
right of the plaintiff, which has been violated or invaded by defendant, may be
vindicated, and recognized, and not for the purpose of indemnifying the plaintiff for any
loss suffered.
Awarded in every obligation arising from law, contracts, quasi-contracts, acts or
omissions punished by law, and quasi-delicts, or in every case where property right
has been invaded.
Damages in name only and not in fact.
Amount to be awarded as nominal damages shall be equal or at least commensurate
to the injury sustained by private respondent considering the concept and purpose of
such damages.
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


Ordinarily, the receipt of insurance payments should diminish the total value of the
vessel quoted by private respondent in his complaint considering that such payment
is causally related to the loss for which it claimed compensation.
Its failure to pay the docket fee corresponding to its increased claim for damages under
the amended complaint should not be considered as having curtailed the lower court’s
jurisdiction since the unpaid docket fee should be considered as a lien on the
judgment.
Candano vs Sugata-on (loss)
Facts:
On March 27, 1996, M/V David Jr., owned by Candano Shipping Lines, sank together with its
cargo in Surigao del Sur. Melquiades Sugata-on employed by Candano Shipping Lines as
third marine engineer in the cargo vessel was one of those missing. Florentina Sugata-on
(respondent and widow of Melquiades Sugata-on), went to the office of Candano Shipping in
Manila to claim the death benefits of her husband but it refused to pay. Thus, Florentina filed
an action before the RTC of Manila. She prayed that actual, moral, and exemplary damages
including attorney's fees, be awarded in her favor in view of the provision of Art. 1711 NCC.
The RTC decided in favor of Florentina. Candano Shipping filed a Motion for Reconsideration
but was denied. It then elevated the RTC decision to the CA which affirmed with modification
the judgment of RTC. The award for actual damages was reduced from P998,400 to
P608,400, while the awards for moral and exemplary damages including attorney's fees were
deleted for lack of sufficient basis for their allowance.
In arriving at the sum of P608,400, the CA applied the standard prescribed by Art. 194 of the
Labor Code. It likewise denied the Motion for Reconsideration of Candano Shipping in a
resolution issued on April 1, 2004. Hence, this petition for review on certiorari.
Issue: WON the formula for fixing the amount of death compensation in Art. 194 of the Labor
Code applies in determining the compensation claimed by the heir of the deceased employee
against the employer under Art. 1711 of the civil code.
Held: Yes. Petition is denied. CA is affirmed.
The remedy availed by Florentina in filing the claim under the New Civil Code has been validly
recognized by the prevailing jurisprudence. Floresca v. Philex Mining Company declared that
the employees may invoke either the Workmen's Compensation Act or the provisions of the
Civil Code, subject to the consequence that the choice of one remedy will exclude the other
and that the acceptance of the compensation under the remedy chosen will exclude the other
remedy except on the basis of supervening facts or developments occurring after he opted for
the first remedy. This doctrinal rule is rooted on theory that the basis of compensation under
the Workmen's Compensation Act is separate and distinct from the award of damages under
the Civil Code.
In this case, Florentina instituted a civil suit for indemnity under the New Civil Code. The
employer shall be liable for the death of personal injury of its employees in the course of
employment as sanctioned by Art. 1711 of the Civil Code. The liability of the employer for
death or personal injury of his employees arose from the contract of employment entered into
between the employer and his employee which is likely imbued with public interest.
Accordingly, when the employee died or was injured in the occasion of employment, the
obligation of the employer automatically attaches. The indemnity may partake in the form of
actual, moral, nominal, temperate, liquidated, or exemplary damages, as the case may be.
The provisions on damages of the New Civil Code must be transformed into a more tangible
and practical mathematical form, so that the purpose of the law to indemnify the employee or
his heirs for his death or injury occasioned by his employment under article 1711 may be
realized. In regard to this, the formula for loss of earning capacity enunciated in the case of
Villa Rey v. Court of Appeals, in computing the amount of actual damages to be awarded to
the claimant under article 1711 of the New Civil Code is adopted in this case.
DISPOSITIVE: WHEREFORE, in view of the foregoing, the instant petition is DENIED, and
the Decision dated 23 May 2003 as well as the Resolution dated 1 April 2004, rendered by
the Court of Appeals in CA-G.R. CV No. 70410, are hereby PARTIALLY AFFIRMED in so far
as it finds petitioner liable to respondent for damages. Pursuant to the appropriate provisions
of the New Civil Code and the prevailing jurisprudence on the matter, petitioner Candano
Shipping Lines, Inc., is ORDERED to pay the amount of P748,800.00, as actual damages,
plus 10% of the amount awarded as attorney's fee plus cost of the suit.

Spouses Zalamea vs CA (in contracts and quasi contracts)
Facts:
Petitioners-spouses Cesar Zalamea and Suthira Zalamea, and their daughter, Liana
purchased 3 airline tickets from the Manila agent of respondent TransWorld Airlines, Inc. for
a flight to New York to Los Angeles. The tickets of petitioners-spouses were purchased at a
discount of 75% while that of their daughter was a full fare ticket. All three tickets represented
confirmed reservations. On the appointed date, however, petitioners checked in but were
placed on the waitlist because the number of passengers who had checked in before them
had already taken all the seats available on the flight. Out of the 42 names on the wait list, the
first 22 names were eventually allowed to board the flight to Los Angeles, including petitioner
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Cesar Zalamea. The two others were not able to fly. Those holding full-fare tickets were given
first priority among the wait-listed passengers. Mr. Zalamea, who was holding the full-fare
ticket of his daughter, was allowed to board the plane; while his wife and daughter, who
presented the discounted tickets were denied boarding. Even in the next TWA flight to Los
Angeles Mrs. Zalamea and her daughter, could not be accommodated because it was also
fully booked. Thus, they were constrained to book in another flight and purchased two tickets
from American Airlines.
Upon their arrival in the Philippines, petitioners filed an action for damages based on breach
of contract of air carriage before the RTC- Makati. The lower court ruled in favor of petitioners.
CA held that moral damages are recoverable in a damage suit predicated upon a breach of
contract of carriage only where there is fraud or bad faith. Since it is a matter of record that
overbooking of flights is a common and accepted practice of airlines in the United States and
is specifically allowed under the Code of Federal Regulations by the Civil Aeronautics Board,
no fraud nor bad faith could be imputed on respondent TransWorld Airlines. Thus, petitioners
raised the case on petition for review on certiorari.
Issue: WON TWZ acted with bad faith and would entitle Zalameas to Moral and Exemplary
damages.
Held:
The U.S. law or regulation allegedly authorizing overbooking has never been proved. Foreign
laws do not prove themselves nor can the courts take judicial notice of them. Like any other
fact, they must be alleged and proved. Written law may be evidenced by an official publication
thereof or by a copy attested by the officer having the legal custody of the record, or by his
deputy, and accompanied with a certificate that such officer has custody. The certificate may
be made by a secretary of an embassy or legation, consul general, consul, vice-consul, or
consular agent or by any officer in the foreign service of the Philippines stationed in the foreign
country in which the record is kept and authenticated by the seal of his office. Respondent
TWA relied solely on the statement of Ms. Gwendolyn Lather, its customer service agent, in
her deposition that the Code of Federal Regulations of the Civil Aeronautics Board allows
overbooking.
No official publication of said code was presented as evidence. Thus, respondent court’s
finding that overbooking is specifically allowed by the US Code of Federal Regulations has no
basis in fact. Even if the claimed U.S. Code of Federal Regulations does exist, the same is
not applicable to the case at bar in accordance with the principle of lex loci contractus which
require that the law of the place where the airline ticket was issued should be applied by the
court where the passengers are residents and nationals of the forum and the ticket is issued
in such State by the defendant airline.
Since the tickets were sold and issued in the Philippines, the applicable law in this case would
be Philippine law. Existing jurisprudence explicitly states that overbooking amounts to bad
faith, entitling the passengers concerned to an award of moral damages.
In Alitalia Airways v. Court of Appeals, where passengers with confirmed bookings were
refused carriage on the last minute, this Court held that when an airline issues a ticket to a
passenger confirmed on a particular flight, on a certain date, a contract of carriage arises, and
the passenger has every right to expect that he would fly on that flight and on that date. If he
does not, then the carrier opens itself to a suit for breach of contract of carriage. Where an
airline had deliberately overbooked, it took the risk of having to deprive some passengers of
their seats in case all of them would show up for the check in. For the indignity and
inconvenience of being refused a confirmed seat on the last minute, said passenger is entitled
to an award of moral damages.
For a contract of carriage generates a relation attended with public duty — a duty to provide
public service and convenience to its passengers which must be paramount to self-interest or
enrichment. Respondent TWA is still guilty of bad faith in not informing its passengers
beforehand that it could breach the contract of carriage even if they have confirmed tickets if
there was overbooking. Respondent TWA should have incorporated stipulations on
overbooking on the tickets issued or to properly inform its passengers about these policies so
that the latter would be prepared for such eventuality or would have the choice to ride with
another airline. Respondent TWA was also guilty of not informing its passengers of its alleged
policy of giving less priority to discounted tickets. Neither did it present any argument of
substance to show that petitioners were duly apprised of the overbooked condition of the flight
or that there is a hierarchy of boarding priorities in booking passengers. It is evident that
petitioners had the right to rely upon the assurance of respondent TWA, thru its agent in
Manila, then in New York, that their tickets represented confirmed seats without any
qualification. The failure of respondent TWA to so inform them when it could easily have done
so thereby enabling respondent to hold on to them as passengers up to the last-minute
amounts to bad faith.
Evidently, respondent TWA placed its self-interest over the rights of petitioners under their
contracts of carriage. Such conscious disregard of petitioners’ rights makes respondent TWA
liable for moral damages. To deter breach of contracts by respondent TWA in similar fashion
in the future, we adjudge respondent TWA liable for exemplary damages, as well. In the case
of Alitalia Airways v. Court of Appeals, this Court explicitly held that a passenger is entitled to
be reimbursed for the cost of the tickets he had to buy for a flight to another airline. Thus,
instead of simply being refunded for the cost of the unused TWA tickets, petitioners should be
awarded the actual cost of their flight from New York to Los Angeles. WHEREFORE, the
petition is hereby GRANTED, and the decision of the respondent Court of Appeals is hereby
MODIFIED.
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 BPI vs Franco (in contracts and quasi contracts)
Franco agreed to an arrangement, as a favor to Sebastian -> P400k from
Franco’s savings account was temporarily transferred to Domingo Quiaoit's
savings account -> to be returned upon issuance of a certificate of deposit
which Quiaoit needed in connection with his visa application at the Taiwan
Embassy. Sebastian retained custody of Quiaoit's savings account passbook
to ensure that no withdrawal would be effected therefrom, and to preserve
Franco's deposits.
May 17, 1990 – Franco pre-terminated his time deposit account. BPI-FB deducted
P63k from the balance representing advance interest paid.
FMIC filed a complaint against BPI-FB for the recovery of the 80M debited from its
account.
BPI Family Savings Bank, Inc. v. FMIC – SC held that BPI-FB failed to exercise the
degree of diligence required by the nature of its obligation to treat the accounts of its
depositors with meticulous care. BPI-FB was ordered to pay P65,332,321.99 plus
interest.
In another related case, Buenaventura, et al., 19 recipients of a P500k check
proceeding from the P80M mistakenly credited to Tevesteco also filed suit.
Buenaventura et al. were also prevented from effecting withdrawals from their current
accounts. SC ruled that BPI-FB had no right to freeze their accounts, BPI-FB is liable
+ damages.
BPI-FB filed separate civil and criminal cases against those believed to be the
perpetrators of the multi-million-peso scam.
o Criminal case – Franco et. al., except for Manuel Bienvenida who was still at
large, were acquitted of the crime of Estafa.
o Civil case remains under litigation and the respective rights and liabilities of the
parties have yet to be adjudicated.
In light of BPI-FB's refusal to unfreeze Franco’s accounts and release his deposits
therein, Franco filed a case on June 4, 1990 with the Manila RTC wherein he prayed
for the following:
1. The interest on the remaining balance of his current account, which was eventually
released to him on October 31, 1991;
2. The balance on his savings account, plus interest thereon;
3. The advance interest paid to him which had been deducted when he preterminated his time deposit account; and
4. The payment of actual, moral and exemplary damages, as well as attorney's fees.
BPI’s defense: it was correct in freezing the accounts of Franco and refusing to release
his deposits. It had a better right to the amounts which consisted of part of the money
allegedly fraudulently withdrawn from it by Tevesteco. The claimed consideration of
2M for the introduction facilitated by Franco between George Daantos and Eladio
Teves, on the one hand, and Jaime Sebastian, on the other, spoke volumes of
Franco's participation in the fraudulent transaction.
o
Facts:
 August 15, 1989 – Tevesteco Arrastre-Stevedoring Co., Inc. (Tevesteco) opened a
savings and current account with BPI-FB, San Francisco Del Monte branch.
 August 25, 1989 – First Metro Investment Corporation (FMIC) also opened a time
deposit account with the same branch with a deposit of P100 million, to mature after
one year.
 August 31, 1989 – Franco opened three accounts (current, 500k; savings, 500k; and
time deposit, 1m maturing after 1 year) with BPI-FB.
 The P2M used to open these 3 accounts is traceable to a check issued by Tevesteco
in consideration of Franco's introduction of Eladio Teves to Jaime Sebastian. The
funding for the check was part of the P80,000,000.00 debited by BPI-FB from FMIC's
time deposit account and credited to Tevesteco's current account pursuant to an
Authority to Debit purportedly signed by FMIC's officers.
o Teves was looking for a bank to facilitate Tevesteco's business transactions.
o Jaime Sebastian was then BPI-FB SFDM's Branch Manager.
 The signatures of FMIC's officers on the Authority to Debit were forged. Tevesteco had
already effected several withdrawals from its current account amounting to
P37,455,410.54, including the P2,000,000.00 paid to Franco.
 September 8, 1989 – BPI-FB debited Franco's savings and current accounts for the
amounts remaining therein. However, Franco's time deposit account could not be
debited due to the capacity limitations of BPI-FB's computer.
 Two checks drawn by Franco against his BPI-FB current account were dishonored
upon presentment for payment and stamped with a notation "account under
garnishment." This was by virtue of an Order of Attachment issued by the Makati RTC
filed by BPI-FB against Franco to recover the P37,455,410.54 representing
Tevesteco's total withdrawals from its account.
 The dishonored checks were issued by Franco and presented for payment at BPI-FB
prior to Franco's receipt of notice that his accounts were under garnishment.
o At the time the Notice of Garnishment was served on BPI-FB, Franco had yet
to be impleaded in the Makati case.
 May 15, 1990 – Franco was impleaded in the Makati case. Franco then filed a Motion
to Discharge Attachment which the Makati RTC granted.
 The Order Lifting the Order of Attachment was served on BPI-FB with Franco
demanding the release to him of the funds in his savings and current accounts.
 BPI-FB could not comply with the demand as the funds had already been debited
because of FMIC's forgery claim.
o BPI-FB's computer indicated that the current account record was "not on file."
 As to Franco's savings account:
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MANILA RTC – Granted Franco’s petition. BPI-FB to pay:
o P76,500 - legal rate of interest on the P450k from May 18, 1990 to October 31,
1991;
o P498,973.23 - balance on Franco's savings account as of May 18, 1990,
together with the interest;
o P30,000.00 by way of attorney's fees; and ○ P10,000.00 as nominal damages.
CA – both parties appealed (Franco as to the denial of the moral and exemplary
damages, and the diminutive award of attorney’s fees; BPI-FB as to the denial of its
counterclaim). CA affirmed RTC with the following modifications:
o BPI-FB to pay P63,189 – interest deducted from Franco’s time deposit.
o P200,000.00 as moral damages and P100,000.00 as exemplary damages
o Deleting the award of nominal damages
o Increasing the award of attorney's fees to P75,000.00.
BPI-FB appealed.
Ruling:
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is claiming ownership of the equivalent amount of money which had
passed from one account to another.
Although BPI owns the deposits in Franco’s accounts, it cannot prevent him from
demanding payment of BPI’s obligation by drawing checks or asking for the release of
the funds in his account. He has every right as a creditor to expect that those checks
would be honored by BPI as debtor.
There is no indubitable evidence establishing Franco’s participation in the forgery so
he remains an innocent party. 1 Art. 559. The possession of movable property
acquired in good faith is equivalent to a title. Nevertheless, one who has lost any
movable or has been unlawfully deprived thereof, may recover it from the person in
possession of the same... 2 Quality of being fungible depends upon the possibility of
the property, because of its nature or the will of the parties, being substituted by others
of the same kind, not having a distinct individuality.
o BPI, which made the present predicament possible, must bear the resulting
loss or inconvenience.
W/N Manila RTC had jurisdiction to order BPI to pay interests to Franco based on their
noncompliance with Makati RTC’s Order Lifting the Order of Attachemnt – YES
W/N BPI had a better right to the deposits in Franco’s account – NO
Deposit of money in banks is governed by the Civil Code provisions on simple loan or mutuum.
As there is a debtor-creditor relationship between a bank and its depositor, BPI-FB ultimately
acquired ownership of Franco’s deposits, but such ownership is coupled with a corresponding
obligation to pay him an equal amount on demand.
 BPI argues that the legal consequences of FMIC’s forgery claim is that the money
transferred by BPI-FB to Tevesteco is its own and that since it was able to recover
possession of the money when it was redeposited by Franco, BPI had the right to set
up its ownership and freeze Franco’s accounts.
o BPI likened it to that of an owner of personal property who regains possession
after it is stolen under Article 5591 of the Civil Code.
 SC found BPI’s argument unsound. Movable property mentioned in Art 559 pertains
to a specific or determinate thing which can be distinguished from others of the same
kind.
o While money is characterized as a movable, it is generic and fungible.
 Money bears no earmarks of peculiar ownership, and this characteristic
is all the more manifest in the instant case which involves money in a
banking transaction gone awry.
 Its primary function is to pass from hand to hand as a medium of
exchange, without other evidence of its title. Money, which had passed
through various transactions in the general course of banking business,
even if of traceable origin, bears no earmarks of peculiar ownership. ○
Art 559 permits the owner to recover the exact same movable while BPI
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Makati RTC is vested with authority to determine the legal consequences of BPI’s
noncompliance with the Order; however, such authority does not preclude the Manila
RTC from ruling on BPI’s liability to Franco for payment of interest based on its
continued and unjustified refusal to perform a contractual obligation upon demand.
W/N the Notice of Garnishment must be served before BPI could place Franco’s
account under garnishment – YES
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It should be noted that the strict requirement on service of court papers upon the
parties affected is designed to comply with the elementary requisites of due process.
See Section 4, Rule 13 of the ROC.
Franco was entitled, as a matter of right, to notice, if the requirements of due process
are to be observed. Yet, he received a copy of the Notice of Garnishment only on
September 27, 1989, several days after the two checks he issued were dishonored by
BPI-FB on September 20 and 21, 1989.
It was premature for BPI-FB to freeze Franco’s accounts without even awaiting service
of the Makati RTC’s Notice of Garnishment on Franco.
W/N BPI should be held liable for moral and exemplary damages – NO
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Franco could not identify any particular circumstance in Art. 2219 upon which to base
his claim for moral damages. Thus, not having acted in bad faith, BPI cannot be held
liable for moral damages under Art. 2220.
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In the absence of fraud or bad faith, moral damages cannot be awarded; and
that the adverse result of an action does not per se make the action wrongful,
or the party liable for it.
BPI acted out of self-protection, not out of malevolence or ill will.
As there is no basis for the award of moral damages, neither can exemplary damages
be granted.
However, the SC found it just and equitable to grant Franco P75k as attorney’s fees
given the complexity of the issues and the time it has taken for this case to be resolved.
o
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 People vs Sarcia (in crimes & quasi delicts)
Facts:
 A complaint for acts of lasciviousness was filed against accused-appellant and upon
review of the evidence by the prosecutor the charge was upgraded to rape.
 The prosecution alleged that accused-appellant committed the crime of rape against
AAA who was then 5 years old.
 AAA was playing with her cousin and two other children in a neighbor’s house when
accused invited her to the backyard of the house and raped her. AAA’s cousin
witnessed what happened.
 The RTC found accused-appellant guilty and imposed the penalty of reclusion
perpetua as well as civil indemnity of P50,000.00 and moral damages of P50,000.00.
 The record of the case was forwarded to the SC for automatic review and then
transferred to the CA for appropriate action and disposition.
 Accused-appellant denied having committed the crime and interposed the following
defenses:
o The inconsistency in the testimonies of AAA and her cousin.
o The inability of AAA to recall the exact date when the crime was committed.
o The delay in filing the case (the case was filed 4 years after the alleged rape
was committed.
o Absence of proof of force or intimidation.
o Medical report on negative lacerations
 The CA affirmed the conviction but modified the penalty imposed to death and
increased the civil indemnity to P75,000.00 and awarded exemplary damages of
P25,000.00 aside from the P50,000.00 for moral damages.
 The case was elevated to the SC for further review.
 RA 9344 took effect while the case was pending before the SC.
Issues:
1. Whether or not accused-appellant was guilty beyond reasonable doubt.
2. If so, whether or not the penalty imposed was proper.
3. Can accused-appellant avail of the retroactive effect of RA 9344 with regard to
automatic suspension of sentence.
Ruling:
1. Guilty as charged.
Inconsistency in the testimonies of AAA and her cousin – Inconsistencies in the testimonies
of witnesses, which refer only to minor details and collateral matters, do not affect the veracity
and weight of their testimonies where there is consistency in relating the principal occurrence
and the positive identification of the accused. Slight contradictions in fact even serve to
strengthen the credibility of the witnesses and prove that their testimonies are not rehearsed
Inability of AAA to recall the exact date when the crime was committed – Discrepancies
regarding exact dates of rapes are inconsequential and immaterial and cannot discredit the
credibility of the victim as a witness. Failure to specify the exact dates or time when the rapes
occurred does not ipso facto make the information defective on its face. As long as it is alleged
that the offense was committed at any time as near to the actual date when the offense was
committed the information is sufficient.
Delay in filing the case (the case was filed 4 years after the alleged rape was committed) –
The rape victim’s delay or hesitation in reporting the crime does not destroy the truth of the
charge nor is it an indication of deceit. In the absence of other circumstances that show that
the charge was a mere concoction and impelled by some ill motive, delay in the filing of the
complainant is not sufficient to defeat the charge. Here, the failure of AAA’s parents to
immediately file this case was sufficiently justified by the complainant’s father in the latter’s
testimony (they had to wait until they saved enough amount of money for litigation).
Absence of proof of force or intimidation – Proof of force, intimidation or consent is
unnecessary since none of these is an element of statutory rape. There is a conclusive
presumption of absence of free consent when the rape victim is below the age of twelve.
Medical report on negative lacerations – A medical report is not indispensable in a prosecution
for rape. What is important is that AAA’s testimony meets the test of credibility that is sufficient
to convict the accused.
2. Penalty improper. The proper imposable penalty for accused-appellant is
reclusion perpetua.
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Under Art. 335 of the RPC, the imposable penalty for statutory rape is death. However,
accused-appellant is entitled to privileged mitigating circumstance of minority because he was
18 years old at the time of the commission of the offense. Since the prosecution was not able
to prove the exact date and time when the rape was committed, it is not certain that the crime
of rape was committed on or after he reached 18 years of age in 1996.
In assessing the attendance of the mitigating circumstance of minority, all doubts should be
resolved in favor of the accused, it being more beneficial to the latter.
Civil indemnity maintained. Imposition of exemplary damages proper. Moral and exemplary
damages increased to P75,000 and P 30,000.00. Reason: award of moral damages is not
dependent on the actual imposition of the death penalty but on the fact that qualifying
circumstances warranting the imposition of the death penalty attended the commission of the
offense. For exemplary damages, the act must be accompanied by bad faith or done in a
wanton, fraudulent, oppressive, or malevolent manner.
3. No suspension of sentence. The promulgation of the sentence of conviction of
accused-appellant by the RTC cannot be suspended as he was about 25 years
of age at that time.
Sec. 38 of R.A. No. 9344 provides for the automatic suspension of sentence of a child in
conflict with the law, even if he/she is already 18 years of age or more at the time he/she is
found guilty of the offense charged. However, Sec. 40 of the same law limits the said
suspension of sentence until the said child reaches the maximum age of 21. Thus, the
application of Secs. 38 and 40 to the suspension of sentence is now moot and academic.
However, accused-appellant shall be entitled to appropriate disposition under Sec. 51 of R.A.
No. 9344 which provides for confinement of convicted children.
Sec. 38. Automatic Suspension of Sentence. – Once the child who is under eighteen (18)
years of age at the time of the commission of the offense is found guilty of the offense charged,
the court shall determine and ascertain any civil liability which may have resulted from the
offense committed. However, instead of pronouncing the judgment of conviction, the court
shall place the child in conflict with the law under suspended sentence, without need of
application: Provided, however, that suspension of sentence shall still be applied even if the
juvenile is already eighteen (18) of age or more at the time of the pronouncement of his/her
guilt.
Upon suspension of sentence and after considering the various circumstances of the child,
the court shall impose the appropriate disposition measures as provided in the Supreme Court
on Juvenile in Conflict with the Law.
Sec. 40. Return of the Child in Conflict with the Law to Court. – If the court finds that the
objective of the disposition measures imposed upon the child in conflict with the law have not
been fulfilled, or if the child in conflict with the law has willfully failed to comply with the
condition of his/her disposition or rehabilitation program, the child in conflict with the law shall
be brought before the court for execution of judgment.
If said child in conflict with the law has reached eighteen (18) years of age while under
suspended sentence, the court shall determine whether to discharge the child in accordance
with this Act, to order execution of sentence, or to extend the suspended sentence for a certain
specified period or until the child reaches the maximum age of twenty-one (21) years.
Sec. 51. Confinement of Convicted Children in Agricultural Camps and Other Training
Facilities. – A child in conflict with the law may, after conviction and upon order of the court,
be made to serve his/her sentence, in lieu of confinement in a regular penal institution, in an
agricultural camp and other training facilities that may be established, maintained, supervised,
and controlled by the BUCOR, in coordination with the DSWD.
 Llorente vs Sandiganbayan (in crimes & quasi delicts)
Facts:
 During a massive reorganization of the Philippine Coconut Authority in 1981, hundreds
of employees resigned including Mrs. Perez, Mr. Azucena, Mrs. Javier, and Mr. Curio.
 In order to receive gratuity benefits, employees are required to have their PCA
clearance signed by the PCA officers provided they have no pending accountabilities.
Then, to be signed by Atty. David Llorente (for rank-and-file employee) or by Col.
Dueñas (in the case of an officer), and then by the corporate auditor.
 Despite pending accountabilities, the clearances of Mrs. Perez and Mr. Azucena (rankand-file employees) were signed by the PCA officers and was subsequently approved
by Atty. Llorente and the corporate auditor. Their pending obligations were just
deducted from their gratuity benefits.
 The same practice was also applied to Mrs. Javier (an officer). Although it was initially
withheld because of her unsettled accountability for the cash advances of P92K, it was
later on released. The same amount was deducted in her gratuity benefits. Such P92k
pertains to the disallowed cash advances released by Mrs. Perez to Mr. Curio. Mr.
Curio, on his part, executed an affidavit that he will assume whatever portion of such
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amount should the result of the pending liquidation process is unfavorable to Mrs.
Javier albeit it was already deducted to the gratuity benefits of Mrs. Javier.
The above practice of deducting the obligations to their gratuity benefits, however, was
not applied in the case of Mr. Curio. On the same month (December 1981), Atty.
Llorente did not approve the clearance of Mr. Curio because of his pending
accountabilities.
Later in 1982, when Mr. Curio brought up the matter to Col. Dueñas who referred it to
the Legal Department, which was under Atty. Llorente as Deputy Administrator of legal
affairs. The same was not approved but the liability was reduced from P92k to P55k.
Mr. Curio elevated the matter to the chairman of the PCA Board who indorsed it again
to Col. Dueñas. This time, Col. Dueñas, through his Manager (who is a cousin of Atty.
Llorente), submitted a formal report justifying the action taken by Atty. Llorente.
The case was elevated to Tanodbayan (now Ombudsman). On 12 November 1986,
the Tanodbayan decided to institute this case in court.
Later on, Mr. Curio received his gratuity benefits in the middle of December 1986.
Between December 1981 and December 1986, Mr. Curio failed to get an employment
because of his failure to present a PCA clearance. As a result, his family literally went
hungry. Thus, an Information for violation of Section 3(c) of the Anti-Graft and Corrupt
Practices Act was filed against Atty. Llorente.
The Sandiganbayan acquitted Atty. Llorente in the absence of any evidence that he
acted in bad faith. However, he was ordered to pay compensatory damages of
P90,000.00.
According to the Sandiganbayan, Atty. Llorente was guilty of abuse of right (under
Article 19 of the Civil Code) and as a public officer, he was liable for damages suffered
by the aggrieved party (under Article 27).
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The records show that the office practice in the PCA was to clear the retiree and deduct
his accountabilities from his gratuity benefits. The same was admitted by Atty.
Llorente.
It is not a defense that he is just complying merely with legal procedures since, as
shown, he was not as strict with respect to the three other retiring employees. There
can be no other logical conclusion that he was acting unfairly to Mr. Curio.
Cited jurisprudence: 1. Velayo vs. Shell Co. of the Philippines – The defendant was
liable under Article 19 of the Civil Code for disposing of its property (although a
perfectly legal act) in order to escape the reach of a creditor. 2. Sevilla vs. Court of
Appeals and Valenzuela vs. Court of Appeals – a principal is liable under Article 19 in
terminating the agency (a legal act) when terminating the agency would deprive the
agent of his legitimate business.
The award of P90,000.00 is justified by Article 2202 of the Civil Code, which holds the
defendant liable for all "natural and probable" damages. As a consequence of Atty.
Llorente’s refusal to clear Mr. Curio, the latter failed to get a job at the Philippine Cotton
Authority and Philippine First Marketing Authority. A job in either office would have
earned him a salary of P2,500.00 a month, or P150,000.00 in five years. Deducting
his probable expenses of reasonably about P1,000.00 a month, or P60,000.00 in five
years, the petitioner owes him a total of actual damages of P90,000.00.
Note: Award of moral damages is designed to compensate claimant for actual
damages suffered and not as a penalty on the wrongdoer. (San Andres vs. Court of
Appeals, 116 SCRA 81.)
 Mercury Drug vs Huang (loss or impairment of earning capacity)
Issue: WON Atty. Llorente shall be liable for the damages.
Ruling: Yes.
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It is the essence of Article 19 of the Civil Code, under which the petitioner was made
to pay damages, together with Article 27, that the performance of duty be done with
justice and good faith.
The Court agrees with the findings of the Sandiganbayan that it found lack of evident
bad faith on the part of Atty. Llorente’s in refusing to clear Curio as it is within the
bounds of law although the practice was that the clearance was nevertheless
approved, and then the amount of the unsettled obligation was deducted from the
gratuity benefits of the employee.
However, although Atty. Llorente did not act with evident bad faith, he nevertheless
acted with bad faith for which he should respond for damages.
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