Republic of the Philippines
SUPREME COURT
SECOND DIVISION
G.R. No. 161760 August 25, 2005
LBC EXPRESS, INC. and, LBC INTERNATIONAL, INC., Petitioners,
vs.
SPOUSES EUBERTO and SISINIA ADO, Respondent.
D E C I S I O N
CALLEJO, SR., J.:
Before us is a petition for review on certiorari of the Decision1 of the Court of Appeals (CA) in CA-G.R. CV No. 73732 affirming that of the Regional Trial Court (RTC) of Naval, Biliran, Branch 16, holding LBC International, Inc. and LBC Express, Inc. solidarily liable for damages.
The factual backdrop of the case, as found by the CA, is as follows:
Euberto Ado was an overseas contract worker, employed as a mechanic in the Marine Workshop of Al Meroouge Group in Bahrain.2 He was the holder of Passport No. L067892.
Al-Mulla Cargo & Packing (AMCP) of Manama, Bahrain was an agent of LBC International, Inc. and LBC Express, Inc. (hereinafter collectively referred to as LBC).3
When his two-year contract of employment expired, Euberto, together with his wife Sisinia, decided to take a three-month vacation to the Philippines. They secured a re-entry visa to Bahrain.
Before flying to the Philippines, on August 8, 1995, Euberto transported five (5) boxes, each weighing 168 kilograms, through AMCP,4 with himself as the consignee of the packages. AMCP issued House Air Waybill (HAWB) No. 004467 covering Euberto’s packages. Under the waybill, Zachary Furagganan, the LBC’s import manager and the representative of AMCP in the Philippines with office at LBC International, Inc., LBC Aviation Center, Domestic Road, Pasay City,5 was the party to notify upon Euberto’s arrival in Manila.6
Upon their arrival in the Philippines, the spouses Ado proceeded to LBC’s Customer Service Department located at the LBC Aviation Center, Domestic Road, Pasay City, to take delivery of the boxes from Furagganan. Myrna Mendoza, an employee of LBC, suggested that Euberto avail of the custom duty exemptions for his packages, and entrust his passport to her for submission to the Customs Office. Euberto hesitated because it contained his re-entry visa to Bahrain, which he needed to get another two-year contract with Al Meroouge. He was concerned that his passport might get lost. However, after being assured that his passport, together with his boxes, would be forwarded to him, he acquiesced. He turned over his passport to LBC, for which he was issued a receipt.7
Euberto’s boxes were delivered to him via the LBC-Ormoc City Branch on different dates: three boxes on September 7, 1995;8 one box on September 14, 19959 and one box on September 16, 1995.10 He inquired about his passport, but the Ormoc City LBC Manager told him that his passport was not in their office. He advised Euberto to wait for a few days, as it might arrive on a later date. Euberto made several follow-ups, to no avail.11 Furagganan sent letter-inquiries to the managers of the LBC-Cebu Branch and LBC-Catbalogan Branch,12 informing them that Euberto’s passport was attached to HAWB No. 004467, together with the waybills and bill of lading of shipments. However, the passport of Euberto could not be located.
Euberto then engaged the services of counsel who, on January 8, 1996, sent a demand letter13 to LBC. Still, LBC did not act on the demand and failed to return his passport. Euberto was not able to return to Bahrain and report back for work.
On September 22, 1997, Euberto filed a Complaint14 for damages against LBC Express, Inc. and LBC International, Inc. with the RTC of Naval, Biliran. The case was docketed as Civil Case No. B-1024 and raffled to Branch 16, and was later amended15 to implead Euberto’s wife Sisinia. The complaint alleged that because of the loss of Euberto’s passport through the gross negligence of the defendants, he failed to report back for work in Bahrain. The spouses Ado prayed that damages for Euberto’s unearned income be awarded to them and that after due proceedings, the court render judgment in their favor, as follows:
1. Condemning and ordering the defendants, jointly and severally, to pay the plaintiff the following sums:
a. ₱300,000.00 as moral damages;
b. ₱200,000.00 as exemplary damages;
c. Actual and compensatory damages of ₱20,000.00 a month from October 10, 1995 with interest at the legal rate of 12% per annum until fully paid;
d. ₱30,000.00 as attorney’s fees;
e. ₱20,000.00 as litigation expenses;
f. To pay the costs of the suit.
2. Plaintiffs further pray for such other reliefs and remedies as [the] Honorable Court may deem just and equitable in the premises.16
In their answer with counterclaim,17 LBC alleged that their delivery van carrying Euberto’s packages was forcibly opened and pilfered by
unidentified person/s at its Pasay City office, and surmised that the said passport was probably one of the items stolen. The spouses Ado had only themselves to blame for the damages they sustained, as Euberto failed to secure a replacement passport from the Department of Foreign Affairs, and a visa from the Embassy of Bahrain.
To prove their claim for actual damages, spouses Ado offered in evidence a certification from Euberto’s employer, which reads:
TO WHOM IT MAY CONCERN:
This is to certify that Mr. Euberto Ado holder of Passport Number L 067892 was working as a Mechanic at our Marine Workshop. He left Bahrain on 08.08.1995 to Manila on holiday for the period of three months. He was getting the basic salary of BD 280.000 (Two hundred & Eighty) only monthly.
He was holding the return visa for coming back to after having his leave. Mr. Euberto Ado could not return back to Bahrain [as] his passport was misplace[d] in Manila.
Your’s (sic) Sincerely,
Praful V. Birje (Manager)18
On August 14, 2001, the spouses Ado filed their formal offer of documentary evidence.19 The defendants were given ten (10) days from August 30, 2001 within which to file their comments thereon. Meanwhile, trial was set at 8:30 a.m. of October 10, 2001 and on November 8 and 9, 2001 for the defendants to adduce their evidence.20 However, the defendants failed to file their respective comments and on October 4, 2001, the court issued an Order21 admitting all the documentary evidence of the plaintiffs. On October 10, 2001, the case was called for hearing. There was no appearance for the defendants, and the court issued an order declaring that the defendants were deemed to have waived their right to adduce their evidence, and that the case was considered submitted for decision.22
On October 22, 2001, the trial court rendered judgment23 in favor of the spouses Ado. The fallo of the decision reads:
WHEREFORE, premises considered, this Court finds in favor of the plaintiffs and renders judgment against the defendants making them liable solidarily to pay the plaintiffs:
(a) ₱480,000.00 in compensatory damages plus legal interest from the filing of this complaint until fully paid;
(b) ₱300,000.00 in moral damages;
(c) ₱30,000.00 in attorney’s fees; and
(d) to pay the costs.
SO ORDERED.24
The trial court declared that Euberto’s passport was lost because of the defendants’ gross negligence.
On November 5, 2001, LBC filed a Motion dated October 31, 2001, for the reconsideration of the trial court’s Order dated October 10, 2001, praying that trial proceed as scheduled on November 8, 2001. The defendants also filed their comments on the plaintiffs’ formal offer of evidence. Before the trial court could resolve the motion, the defendants received a copy of the decision on November 9, 2001.
On November 14, 2001, LBC appealed the decision to the CA. In their Brief, LBC, as appellants, alleged that:
1. The lower court erred in declaring that plaintiff-appellee Euberto Ado lost a renewed contract at a basic salary of 280 Bahrain Dinar that entitles the plaintiffs-appellees for the award of actual and moral damages as well as attorney’s fees.
2. The lower court erred in declaring that the defendants-appellants waived its (sic) right to present the necessary evidence.25
LBC questioned the trial court’s ruling that due to the loss of his passport, Euberto lost the opportunity for the renewal of his two-year contract, at the basic salary of about ₱20,000.00 a month in Bahrain, or for the total peso equivalent of ₱480,000.00 for two years. They argued that such ruling of the court was based on mere speculations. Moreover, the certification issued by Euberto’s employer does not indicate that he had an existing contract, or that he would be given another two-year contract. LBC argued that Euberto failed to lessen the damages he suffered by filing an application for the issuance of another passport and or application for a two-year contract before the Bahrain Embassy in the Philippines; hence, the spouses Ado were not entitled to any damages, much less moral damages as they failed to adduce evidence that LBC acted in bad faith in failing to return Euberto’s passport.
On the second assignment of error, LBC averred that the trial court erred in declaring the case submitted for decision for their failure to appear for the trial on October 10, 2001. If they had been allowed to adduce their evidence, they would have presented Jimwell Morales, who would testify that the shipments and Euberto’s passport were properly handled. When the shipments and cargoes were brought to the LBC Express, Inc., Head Office at Pasay City for sorting and forwarding to their final destination, the delivery van carrying various shipments, including those of the spouses Ado and the passport attached to the shipments’ air waybill, was forcibly opened by robbers along 14th Street, Port Area, South Harbor, Manila.26
On July 10, 2003, the CA rendered judgment affirming the assailed decision.
LBC, now the petitioners, filed their petition for review on certiorari claiming that the CA erred –
A. IN FINDING THAT RESPONDENT EUBERTO ADO HAD A TWO-YEAR CONTRACT WITH HIS FORMER EMPLOYER ABROAD THAT ALLEGEDLY JUSTIFIES THE AWARD TO HIM OF EXORBITAN (SIC) ACTUAL OR COMPENSATORY DAMAGES OF FOUR HUNDRED EIGHTY THOUSAND PESOS (₱480,000.00);
B. IN AFFIRMING THE AWARD OF ACTUAL OR COMPENSATORY DAMAGES BASED ON SPECULATION/OR GUESSWORK, IN VIOLATION OF THE "BEST EVIDENCE OBTAINABLE RULE;"
C. IN AFFIRMING THE AWARD OF THREE HUNDRED THOUSAND PESOS (₱300,000.00) MORAL DAMAGES, FOR PETITIONER COMMITTED NO BAD FAITH AND THERE IS NO SUFFICIENT PROOF ON RESPONDENTS’ ALLEGED MORAL SUFFERING;
D. IN AFFIRMING THE AWARD OF SUCH MORAL DAMAGES, BECAUSE THE SAME HAS BECOME PUNITIVE FOR PETITIONER OR HAS BECOME A MEASURE FOR RESPONDENTS’ ENRICHMENT AT PETITIONERS’ EXPENSE;
E. IN AFFIRMING [THE] AWARD OF ATTORNEY’S FEES, PETITIONER NOT BEING IN BAD FAITH, AND TO PUT A PREMIUM TO LITIGATE NOT BEING A SOUND PUBLIC POLICY.27
The petitioners reiterate their submissions in the appellate court in support of their petition.
The petition is partially granted.
One is entitled to actual or compensatory damages in the form of an adequate compensation for such pecuniary losses suffered as has been duly proved. In contracts, the damages for which the obligor who acted in good faith shall be those that are the natural and probable consequences of the breach of the obligation, and which the parties have foreseen or could have reasonably foreseen at the time the obligation was constituted. In the case where the obligor acted in bad faith, the obligor shall be responsible for all the damages which may be reasonably attributed to the non-performance of the obligation.28
The Court agrees with the petitioners’ contention that the respondents failed to adduce preponderant evidence to prove that upon his return to Bahrain, he would be automatically employed by his former employer for a period of two years and that he will be given the same job with the same compensation as provided for in his expired employment contract.
It is well-settled in our jurisdiction that actual or compensatory damages is not presumed, but must be duly proved with reasonable degree of certainty. A court cannot rely on speculation, conjecture or guesswork as to the fact and amount of damages, but must depend upon competent proof that they have suffered and on evidence of the actual amount thereof.29 Indeed, the party alleging a fact has the burden of proving it and a mere allegation is not evidence.30
In this case, the only evidence adduced by the respondents to prove that Euberto had been granted a two-year re-entry visa and that upon his return to Bahrain he would be automatically given a two-year employment contract is Euberto’s own testimony and his employer’s certification. The CA found the same to be sufficient, and affirmed the award for actual/compensatory damages, thus:
We do not agree. It is worthy to note that appellants’ reproduction of appellee Euberto’s testimony is, to say the least, incomplete. A more judicious scrutiny of the records, however, reveal that while the two-year contract has not actually been executed between appellee Euberto and his employer, his employment is assured by the fact that he was issued a re-entry visa by the embassy. The portion of the cross-examination left out by the appellant reads:
"Q-Is a re-entry visa an assurance of contract (sic)?
A-Yes, automatically.
Q-On what basis?
A-If I could go back to place (sic) of work before the expiration of my re-entry visa, automatically, another contract will be issued.
Q-Is that so?
A-Yes, Sir."
Contrary, therefore, to appellant’s assertion, the re-entry visa may be considered as sufficient proof of the continuation of his contract with Al Meroouge for a period of another two years, since he will not be issued the same by Bahrain’s embassy, absent any showing that he has a valid reason to return to the same country.
Moreover, the Certification (Exhibit "A," Records, p. 193) issued by appellee Euberto’s employer, Al Meroouge, explicitly stated that, when said appellee left Bahrain on August 1995, he was merely "on holiday", or simply on leave, for a period of three months, indicating that he was in fact expected to return to work after the said period. The last portion of said Certification even recognized the reason for his failure to return after his leave, stating thus:
"He was holding the return visa for coming back to (sic) after having his leave. Mr. Euberto Ado could not return to Bahrain has (sic) his passport was misplace (sic) in Manila. (Emphasis and underscoring [sic] supplied)"31
The appellate court’s conclusion based on respondent Euberto’s testimony and the certification of his former employer is a non sequitur. The entirety of the relevant portions of respondent Euberto’s testimony on cross-examination reads:
ATTY. MAYOL:
Q For the period of two (2) years for how long have you been working?
A Two (2) years finished contract.
Q And another contract should be made whenever you return?
A Yes, Sir.
Q In 1995, you were in Al Meroouge, you were able to perform your job on the period of your contract. Supposedly, you go back to Bahrain you will be under the same company?
A Yes, Sir.
Q But you have no contract yet?
A I have re-entry visa. Whenever I will assume work in Bahrain automatically another contract will be issued.
Q At that time, there was no contract yet?
A Not yet.
Q Is a re-entry visa an assurance of contract?
A Yes, automatically.
Q On what basis?
A If I could go back to place of work before the expiration of my re-entry visa, automatically, another contract will be issued.
Q Is that so?
A Yes, Sir.
Q In support of your testimony, you presented a certification from your alleged employer?
A Yes, Sir.
Q Who secured that certification?
A I requested one of my compadre because he was there.
Q You were not the one who secured that certification?
A Yes, of course, because I am here and I could not go back because my passport was lost.
Q How close are you with your manager?
A Very close because I was even entrusted to maintain the yatch owned by the manager.
Q The fact that you were not in Bahrain, you have no personal knowledge about the issuance of certification?
A Yes, I have no personal knowledge.
COURT: What is that certification?
ATTY. SABITSANA:
Certification of employment and salary.
COURT: The past employment?
ATTY. SABITSANA:
Yes, Your Honor.32
Thus, Euberto’s two-year contract of employment had already expired before leaving Bahrain for his three-month vacation in the Philippines. Whether or not respondent Euberto’s employer would automatically employ him upon his return to Bahrain after his sojourn in the Philippines would depend entirely upon his employer. The respondents failed to adduce any evidence that Euberto’s employer would give him his former position under the same terms and conditions stipulated in his previous employment contract. Euberto even failed to prove, by preponderant evidence, other than his self-serving testimony, that the re-entry visa issued to him was at his employer’s behest, with an assurance that upon his return to Bahrain, he would automatically be re-employed. The respondents could very well have secured an undertaking or an authenticated certification from Euberto’s employer that upon his return to Bahrain, he would be automatically employed for a period of two years under the same terms and conditions of the first contract. While they adduced in evidence a certification from Euberto’s employer that he had been issued a re-entry visa, there was no undertaking to automatically re-employ respondent Euberto for another two years upon his return to Bahrain for a monthly salary of 280 Bahrain Dinars. The CA, thus, erred in affirming the award of actual or compensatory damages of ₱480,000.00 to the respondent spouses.
There is preponderant evidence that the respondents indeed suffered some pecuniary loss due to the loss of Euberto’s passport. However, the respondents failed to adduce preponderant evidence of the passport’s value. Nevertheless, they are entitled to temperate damages of ₱10,000.00 under Article 2224 of the New Civil Code which provides: "[t]emperate or moderate damages, which are more than nominal but less than compensatory damages, may be recovered when the court finds that some pecuniary loss has been suffered but its amount cannot, from the nature of the case, be proved with certainty."33
The CA affirmed the award of moral damages in favor of the respondents as follows:
Considering the foregoing and the fact that appellants had in fact been negligent in handling appellee Euberto’s passport, the trial court could not be said to have erred in awarding both actual and moral damages to the appellees, the latter being justified further by the fact that the appellee’s entire family suffered, having lost much-needed source of their income, which also resulted in their failure to complete the construction of the house they were building.34
Case law has it that moral damages may be awarded for breach of contract where the breach thereof by the obligor is wanton, reckless, malicious or in bad faith, oppressive or abusive,35 or where the obligor is guilty of gross negligence amounting to bad faith.36 In the case of Philippine Telegraph & Telephone Corporation v. Court of Appeals,37 the Court had laid the requisites for awarding moral damages, thus: first, evidence of besmirched reputation or physical, mental or psychological suffering sustained by the claimant; second, a culpable act or omission factually established; third, proof that the wrongful act or omission of the defendant is the proximate cause of the damages sustained by the claimant; and fourth, that the case is predicated on any of the instances expressed or envisioned by Article 2219 and Article 2220 of the Civil Code.
Article 2220 of the Civil Code states that breach of contract may be a legal ground for awarding moral damages if the defendant acted fraudulently or in bad faith.
The rulings of the trial and appellate courts that the respondent spouses are entitled to moral damages are correct. While the failure to deliver Euberto’s passport does not per se amount to willful misconduct38 or bad faith, the evidence on record shows that the petitioners indeed acted in bad faith and in wanton disregard of their contractual obligation to the respondents.
The respondents made numerous inquiries from the petitioners on the whereabouts of Euberto’s passport, and repeatedly made requests for its return; the petitioners dilly-dallied and gave various excuses. The petitioners told the respondents that the passport may have been inadvertently transported to their other branches. Exasperated, the respondents had to secure the services of counsel. Their demands for the production of the passport (made through counsel) were ignored by the petitioners. Worse still, the petitioners alleged in their answer to the complaint that the van carrying Euberto’s passport, while parked somewhere along 14th Street, Port Area, South Harbor, Manila, was forcibly opened by unidentified person/s who pilfered its contents, probably including the said passport.39 The trial court found the allegation of pilferage to be baseless and declared as follows:
The defendants LBC failed to notify Euberto Ado at the earliest possible time that his passport was lost. It was only in the second week of October 1996 that he was informed through the letters of Atty. Florencio C. Lameyra, dated October 9, 1996, to the Chief, Legal and Enforcement Division of the Civil Aeronautics Board, and the letter of Atty. Generoso Santos that his passport was lost and not stolen by thieves as asserted in their answer.40
Thus, with the attendant circumstances, there is ample basis for an award of moral damages to the respondents. There is, to be sure, no hard and fast rule for determining what would be a fair amount of moral damages.
Each case has to be resolved based on the attendant particulars. The Court finds that an award of ₱50,000.00 as moral damages in favor of the respondents is commensurate in this case.
Considering that the petitioners were guilty of bad faith and the private respondents were compelled to litigate,41 the latter are entitled to the amount of ₱15,000.00 as attorney’s fees.
IN LIGHT OF ALL THE FOREGOING, the Court of Appeals’ Decision in CA-G.R. CV No. 73732 is AFFIRMED WITH MODIFICATION. The award for actual/compensatory damages is deleted. In lieu thereof, the respondents, spouses Euberto and Sisinia Ado, are awarded temperate damages in the amount of ₱10,000.00. The awards for moral damages and attorney’s fees are reduced to ₱50,000.00 and ₱15,000.00, respectively. No costs.
SO ORDERED.
ROMEO J. CALLEJO, SR.
Associate Justice
WE CONCUR:
REYNATO S. PUNO
Associate Justice
Chairman
MA. ALICIA AUSTRIA-MARTINEZ DANTE O. TINGA
Associate Justice Associate Justice
MINITA V. CHICO-NAZARIO
Associate Justice
ATTESTATION
I attest that the conclusions in the above decision were reached in consultation before the case was assigned to the writer of the opinion of the Court’s Division.
REYNATO S. PUNO
Associate Justice
Chairman, Second Division
C E R T I F I C A T I O N
Pursuant to Section 13, Article VIII of the Constitution and the Division Chairman’s Attestation, it is hereby certified that the conclusions in the above decision were reached in consultation before the case was assigned to the writer of the opinion of the Court’s Division.
HILARIO G. DAVIDE, JR.
Chief Justice
Footnotes
1 Penned by Associate Justice Mercedes Gozo-Dadole, with Associate Justices Conrado M. Vasquez, Jr. and Rosmari D. Carandang, concurring; Rollo, pp. 32-47.
2 Exhibit "A."
3 See Exhibit "B."
4 Ibid.
5 Exhibit "B-2."
6 TSN, 14 March 2001, p. 8.
7 Exhibit "C."
8 Exhibit "D-1."
9 Exhibit "E."
10 Exhibit "F."
11 TSN, 14 March 2001, p. 15.
12 Exhibits "H" and "I."
13 Exhibit "K."
14 Records, p. 1.
15 Id. at 40, 84.
16 Id. at 88-89.
17 Id. at 101.
18 Rollo, p. 193; Exhibit "A."
19 Id. at 189-192.
20 Id. at 203.
21 Id. at 206-208.
22 Records, p. 210.
23 Id. at 211-219; Penned by Judge Enrique O. Asis.
24 Id. at 219.
25 CA Rollo, p. 33.
26 CA Rollo, pp. 50-51.
27 Rollo, pp. 5-6.
28 Article 2201, New Civil Code.
29 Bayer Phils., Inc. v. Court of Appeals, 394 Phil. 777 (2000).
30 Saguid v. Court of Appeals, G.R. No. 150611, 10 June 2003, 403 SCRA 678.
31 Rollo, pp. 43-44.
32 TSN, 1 August 2001, pp. 3-4.
33 Emphasis supplied.
34 Rollo, p. 44.
35 Herbosa v. Court of Appeals, 425 Phil. 431 (2002).
36 Sarmiento v. Spouses Sun-Cabrido, 449 Phil. 108 (2003).
37 437 Phil. 76 (2002).
38 See Luna v. Court of Appeals, G.R. Nos. 100374-75, 27 November 1992, 216 SCRA 107, where the Court did not subscribe to the therein petitioners’ argument that the private respondent’s failure to deliver their luggage at the designated time and place amounted ipso facto to willful misconduct. The Court went on to state that for willful misconduct to exist, there must be a showing that the acts complained of were impelled by an intention to violate the law, or were in persistent disregard of one’s rights; it must be evidenced by a flagrantly or shamefully wrong or improper conduct.
39 Records, p. 103.
40 Rollo, p. 56.
41 See Rollo, p. 53.
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