G.R. No.

193914               November 26, 2014

SEVEN BROTHERS SHIPPING CORPORATION, Petitioner, 

DECISION

SERENO, CJ:

This is a Rule 45 appeal1 dated 18 November 2010 assailing the Decision2 and Resolution3 of the
Court of Appeals (CA) in CA-G.R. CV No. 69819, which affirmed with modifications the Decision4 of
the Regional Trial Court (RTC), Branch 132, Makati City in Civil Case No. 98-699, finding petitioner
liable to respondent for damages.

Petitioner Seven Brothers Shipping Corporation is the owner of the cargo ship M/V "Diamond Rabbit,"
(vessel), while respondent DMC Construction Resource, Inc. is the owner of coal-conveyor facility,
which was destroyed when the vessel became uncontrollable and unmanueverable during a storm.5

We reproduce the narration of facts culled by the CA,6 as follows:

On 23 February 1996, the cargo ship M/V "Diamond Rabbit" (the Vessel) owned and operated by
defendant Seven Brothers Shipping Corporation (Seven Brothers),was at the PICOP Pier in
Mangagoy, Bislig, Surigao del Sur to dock there. According to the record, the weather that day was
windy with a wind force of 10 to 20 knots, and the sea condition was rough, with waves 6 to 8 feet
high. However, the parties also stipulated during pre-trial that prior to the occurrence of the incident,
the vessel was anchored at the cause way of the port of Bislig, where it was safe from inclement
weather.

According to the report of the Master, it heaved its anchor and left the causeway in order to dock at
the PICOP Pier. A lifeboat pulled the vessel towards the Pier with a heaving line attached to the
vessel’s astern mooring rope, when suddenly, the heaving line broke loose, causing the astern
mooring rope to drift freely. The mooring rope got entangled in the vessel’s propeller, thereby choking
and disabling it, and preventing the further use of its main engine for maneuvering.

In order to stop the vessel from further drifting and swinging, its Master dropped her starboard
anchor. To help secure the vessel, its forward mooring rope was sent ashoreand secured at the
mooring fender. However, because of the strong winds and rough seas, the vessel’s anchor and the
mooring rope could not hold the vessel.

Under the influence of the wind and current, the dead weight of the vessel caused it to swung from
side to side until the fender, where the mooring rope was attached, collapsed. The uncontrollable and
unmaneuverable vessel drifted and dragged its anchor until it hit several structures at the Pier,
including the coal conveyor facility owned by DMC Construction Equipment Resources, Inc. (DMC).
(Emphasis in the original)

On 5 March 1996, respondent sent a formal demand letter to petitioner, claiming the amount above-
stated for the damages sustained by their vessel.7

When petitioner failed to pay, respondent filed with the RTC a Complaint for damages against
respondent on 23 March 1998. Based on the pieces of evidence presented by both parties, the RTC
ruled that as a result of the incident, the loading conveyor and related structures of respondent were
indeed damaged.8 In the course of the destruction, the RTC found that no force majeure existed,
considering that petitioner’s captain was well aware of the bad weather, and yet proceeded against
the strong wind and rough seas, instead of staying at the causeway and waiting out the passage of
the typhoon.9 It further concluded that "there was negligence on the part of the captain; hence,
defendant [petitioner] as his employer and owner of the vessel shall be liable for damages caused
thereby."10

Regarding liability, the RTC awarded respondent actual damages in the amount of ₱3,523,175.92
plus legal interest of 6%, based on the testimony of respondent’s engineer, Loreto Dalangin (Engr.
Dalangin). The value represented 50% of the ₱7,046,351.84 claimed by the respondent as the fair
and reasonable valuation of the structure at the time of the loss,11 because as manifested by Engr.
Dalangin at the time of the incident, the loading conveyor and related structures were almost five
years old, with a normal useful life of 10 years.12

Thus, on 18 January 2001, the RTC issued a Decision13 to wit:

WHEREFORE, judgment is hereby rendered ordering defendant to pay plaintiff:

(a) Actual damages in the amount of ₱3,523,175.92 plus legal interest of 6% per annum from
the date of the filing of this complaint until the same is fully paid; and

(b) Costs of suit.

Aggrieved, petitioner appealed via a Notice of Appeal on 5 February 2001.14 The appeal was
dismissed by the CA in a Decision dated 30 April 2010,15 the dispositive portion of which is quoted
herein:

WHEREFORE, the appeal is DISMISSED, and the Decision dated 18 January 2001 of the Regional
Trial Court, Branch 132, Makati City in Civil Case No. 98-699, is AFFIRMED with modification in that
Seven Brothers Shipping Corporation is found liable to DMC Construction Equipment Resources, Inc.
for nominal damages in the amount of 3,523,175.92 due to the destruction of the latter’s coal
conveyor post and terminal by the cargo ship M/V "Diamond Rabbit." (Emphasis in the original)

The CA affirmed the RTC’s Decision with respect to the finding of negligence on the part of the
vessel’s captain. However, the appellate court modified the nature of damages awarded (from actual
to nominal), on the premise that actual damages had not been proved. Respondent merely relied on
estimates to prove the cost of replacing the structures destroyed by the vessel, as no actual receipt
was presented.16

On 19 May 2010, petitioner filed a Motion for Partial Reconsideration.17 Respondent filed a

This Court noted respondent’s Comment dated 27 April 2011;21 respondent’s Manifestation dated 4
May 2011;22 and petitioner’s Reply dated 2 June 2011.23

ISSUE

From the foregoing, the sole issue proffered to us by petitioner is whether or not the CA erred in
awarding nominal damages to respondent after having ruled that the actual damages awarded by the
RTC was unfounded.
 THE COURT’S RULING

Petitioner argues that under Articles 2221 and 2223 of the Civil Code,24 nominal damages are only
awarded to vindicate or recognize a right that has been violated, and not to indemnify a party for any
loss suffered by the latter. They are not awarded as a simple replacement for actual damages that
were not duly proven during trial.25Assuming further that nominal damages were properly awarded by
the CA, petitioner is of the belief that the amount thereof must be equal or at least commensurate to
the injury sustained by the claimant, as ruled in PNOC Shipping and Transportation Corp. v. Court of
Appeals (PNOC).26 Considering that respondent allegedly failed to substantiate its actual loss, it was
therefore improper for the CA to award nominal damages of ₱3,523,175.92, which was based on
respondent’s "highly speculative claims."27

Respondent, on the other hand, alleges that nominal damages were rightly assessed, since there
was a categorical finding that its "property right was indubitably invaded and violated when damage to
its conveyor and port equipment due to petitioner’s negligence,"28 was inflicted. Nominal damages are
recoverable where some injury has been done, but the evidence fails to show the corresponding
amount thereof. Accordingly, the assessment of damages is left to the discretion of the
court.29 Respondent asserts that the CA’s award of ₱3,523,175.92 is not unreasonable, following the
amounts awarded in PNOC.

We rule that temperate, and not nominal, damages should be awarded to respondent in the amount
of ₱3,523,175.92.

Factual findings of appellate and trial courts are entitled to great weight and respect on appeal,
especially when established by unrebutted testimonial and documentary evidence.

To resolve the issue at hand, we must first determine whether there was indeed a violation of
petitioner’s right. In this light, we are inclined to adopt the factual findings of the RTC and the CA as
"[t]his Court has repeatedly held that petitions for review under Rule 45 of the Rules of Court may be
brought only on questions of law, not on questions of fact. Moreover, the factual findings of trial courts
are entitled to great weight and respect on appeal, especially when established by unrebutted
testimonial and documentary evidence. And the findings of facts of the Court of Appeals are
conclusive and binding on the Supreme Court except when they conflict with the findings of the trial
court."30

In this case, two facts have been established by the appellate and trial courts: that respondent
suffered a loss caused by petitioner; and that respondent failed to sufficiently establish the amount
due to him, as no actual receipt was presented.

Temperate or moderate 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 provided with certainty.

Under the Civil Code, when an injury has been sustained, actual damages may be awarded under the
following condition:

Art. 2199. Except as provided by law or by stipulation, one is entitled to an adequate compensation
only for such pecuniary loss suffered by him as he has duly proved. Such compensation is referred to
as actual or compensatory damages. (Emphasis ours)

As we have stated in Dee Hua Liong Electrical Equipment Corp., v. Reyes,31 "[a]ctual or

Jurisprudence has consistently heldthat "[t]o justify an award of actual damages x x x credence can
be given only to claims which are duly supported by receipts."32 We take this to mean by credible
evidence. Otherwise, the law mandates that other forms of damages must be awarded, to wit:

Art. 2216. No proof of pecuniary loss is necessary in order that moral, nominal, temperate, liquidated
or exemplary damages, may be adjudicated. The assessment of suchdamages, except liquidated
ones, is left to the discretion of the court, according to the circumstances of each case.

Under Article 2221 of the Civil Code, nominal damages may be awarded in order that the plaintiff’s
right, 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. We have laid down the concept of
nominal damages in the following wise:

Nominal damages are ‘recoverable where a legal right is technically violated and must be vindicated
against an invasion that has produced no actual present loss of any kind or where there has been a
breach of contract and no substantial injury or actual damages whatsoever have been or can be
shown.’33

Thus, in Saludo v. Court of Appeals,34 nominal damages were granted because while petitioner
suffered no substantial injury, his right to be treated with due courtesy was violated by the
respondent, Transworld Airlines, Inc. Nominal damages were likewise awarded in Northwestern
Airlines v. Cuenca,35 Francisco v. Ferrer,36 and Areola v. Court of Appeals,37 where a right was
violated, but produced no injury or loss to the aggrieved party. In contrast, under Article 2224,
temperate or moderate 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 provided with certainty. This
principle was thoroughly explained in Araneta v. Bank of America,38 which cited the Code
Commission, to wit:

The Code Commission, in explaining the concept of temperate damages under Article 2224, makes
the following comment:

In some States of the American Union, temperate damages are allowed. There are cases where from
the nature of the case, definite proof of pecuniary loss cannot be offered, although the court is
convinced that there has been such loss.For instance, injury to one's commercial credit or to the
goodwill of a business firm is often hard to show with certainty in terms of money. Should damages
be denied for that reason? The judge should be empowered to calculate moderate damages in such
cases, rather than that the plaintiff should suffer, without redress from the defendant's wrongful act.
(Emphasis ours)

Thus, in Tan v. OMC Carriers, Inc.,39 temperate damages were rightly awarded because plaintiff
suffered a loss, although definitive proof of its amount cannot be presented as the photographs
produced as evidence were deemed insufficient. Established in that case, however, was the fact that
respondent’s truck was responsible for the damage to petitioner’s property and that petitioner suffered
some form of pecuniary loss. In Canada v. All Commodities Marketing Corporation,40 temperate
damages were also awarded wherein respondent’s goods did not reach the Pepsi Cola Plant at
Muntinlupa City as a result of the negligence of petitioner in conducting its trucking and hauling
services, even ifthe amount of the pecuniary loss had not been proven. In Philtranco Services
Enterprises, Inc. v. Paras,41 the respondent was likewise awarded temperate damages in an action
for breach of contract of carriage, even if his medical expenses had not been established with
certainty. In People v. Briones,42 in which the accused was found guilty of murder, temperate
damages were given even if the funeral expenses for the victim had not been sufficiently proven.

Given these findings, we are of the belief that temperate and not nominal damages should have been
awarded, considering that it has been established that respondent herein suffered a loss, even if the
amount thereof cannot be proven with certainty.

The amount of temperate damages to be awarded is usually left to the discretion of the courts, but
such amount must be reasonable.

Consequently, in computing the amount of temperate or moderate damages, it is usually left to the
discretion of the courts, but the amount must be reasonable, bearing in mind that temperate damages
should be more than nominal but less than compensatory.43

Here, we are convinced that respondent sustained damages to its conveyor facility due to petitioner's
negligence. Nonetheless, for failure of respondent to establish by competent evidence the exact
amount of damages it suffered, we are constrained to award temperate damages. Considering that
the lower courts have factually established that the conveyor facility had a remaining life of only five of
its estimated total life of ten years during the time of the collision, then the replacement cost of
₱7,046,351.84 should rightly be reduced to 50% or ₱3,523, 175.92. This is a fair and reasonable
valuation, having taking into account the remaining useful life of the facility.

WHEREFORE, the Petition for Review on Certiorari is hereby DISMISSED. The assailed Decision
and Resolution of the Court of Appeals in CA-G.R. CV No. 69819, are hereby MODIFIED, in that
temperate damages in the amount of ₱3,523,175.92 are awarded, in lieu of nominal damages.

SO ORDERED.

MARIA LOURDES P.A. SERENO