Ong vs. Court of Appeals

A document or any evidence not formally offered during trial as required by Section 34, Rule 132 of the Rules of Court has no probative value and cannot be considered by the trial court or on appeal, and actual damages must be pleaded and proved by competent evidence — they may not be presumed.

On February 9, 1987, spouses Renato and Francia Ong were paying passengers on an Inland Trailways bus travelling through Tiaong, Quezon. That bus was operated under a Lease Agreement with Philtranco Service Enterprise, Inc. When the Inland bus slowed down to avoid a stalled cargo truck, it was rear-ended by a bus owned and operated by Philtranco. Both spouses sustained injuries and were hospitalized. They subsequently sued both bus companies for damages.

• The Accident: On February 9, 1987, at around 3:50 a.m., spouses Renato and Francia Ong boarded Inland Bus No. 101 (Plate No. EVB-508) as paying passengers. The bus was operated by Inland Trailways, Inc. under a Lease Agreement with Philtranco Service Enterprise, Inc. and was driven by Calvin Coronel. When the Inland bus slowed to avoid a stalled cargo truck in Tiaong, Quezon, it was bumped from the rear by another bus owned and operated by Philtranco and driven by Apolinar Miralles.

• Injuries and Hospitalization: Francia sustained wounds and fractures in both legs and her right arm, while Renato suffered injuries on his left chest, right knee, right arm, and left eye. They were taken to the San Pablo City District Hospital and confined there from February 9 to 18, 1987.

• The Complaint: On December 22, 1988, petitioners filed an action for damages against Philtranco and Inland. They alleged that their injuries prevented Francia from operating a sari-sari store yielding ₱200 daily and Renato from continuing his overseas work as a pipe welder with a monthly salary of US$690. They claimed ₱10,000 for medical and miscellaneous expenses, ₱500,000 each for moral damages, ₱500,000 each for exemplary damages, and ₱500,000 each for compensatory damages plus 35% attorney’s fees.

• The Defenses: Philtranco answered that the Inland bus was registered and owned by Inland, its driver was Inland’s employee, and under the Lease Agreement, Inland alone was liable for claims arising from the bus’s operation. Philtranco alleged that it exercised the diligence of a good father of a family in selecting and supervising its own driver and that the proximate cause of the accident was the negligence of either the cargo truck or the Inland bus. Inland answered that, according to the Police Report, the Philtranco driver was at fault, as shown by his flight from the scene. Both respondents filed cross-claims against each other.

• Trial and the Order of July 5, 1989: Respondents moved to submit the case for decision without presenting further evidence. The trial court issued an Order dated July 5, 1989, directing petitioners’ counsel to submit a formal offer of evidence within five days, with respondents given five days to comment. The Order also stated: “Considering that the documents are admitted, there is no necessity of any formal written offer of evidence and, therefore, after all the foregoing, the case shall be deemed submitted for decision upon simultaneous memoranda …” Petitioners thereafter filed a written offer of evidence listing only Exhibits “A” through “O,” which were formally admitted by the court on August 2, 1989. The Police Investigation Report that attributed fault to Philtranco’s driver was merely attached as Annex “1” to Inland’s Answer; it was never identified, marked, or formally offered by any party.

• The RTC Decision: On May 7, 1991, the trial court ruled that the proximate cause of the accident was the Philtranco bus rear-ending the Inland bus, relying on the Police Report and passenger affidavits. It held Philtranco liable for quasi-delict under Article 2176 of the Civil Code, finding that Philtranco failed to prove due diligence in the selection and supervision of its employees. Inland was absolved.

• Admissibility of the Police Report: Petitioners argued that the trial court’s July 5, 1989 Order manifested the parties’ agreement to submit the case for resolution based on the pleadings and all documentary evidence, including the Police Report attached to Inland’s Answer. They maintained that Philtranco was therefore precluded from contesting its admissibility, and that the Court of Appeals committed grave abuse of discretion in reversing the trial court’s finding of Philtranco’s liability.

• Proof of Diminution of Arm Use and Lost Income: Petitioners contended that Francia’s oral testimony that her right arm could no longer function normally, and that she lost daily income of ₱200, was credible and uncontroverted. They argued that the appellate court gravely abused its discretion in deleting the ₱50,000 award for diminution of use of the arm and the ₱48,000 award for unrealized income.

• Amount of Damages and Attorney’s Fees: Petitioners insisted that the reduction of actual damages from ₱10,000 to ₱3,977, moral damages from ₱50,000 to ₱30,000, and attorney’s fees from 25% to 10% was unwarranted given the injuries sustained and the expenses incurred. Counsel for petitioners separately lamented the reduction, claiming he used his own money for litigation costs.

• Formal Offer Requirement: Philtranco maintained that the Police Investigation Report was never formally offered in evidence; it was merely an annex to Inland’s answer and therefore without probative value. Liability for quasi-delict could not be predicated upon it.

• Insufficient Proof of Damages: Respondents countered that the claims for lost income and diminution of arm use were not supported by competent evidence and that the awards were properly deleted or reduced by the Court of Appeals.

• Formal Offer of Evidence: Whether the Court of Appeals gravely abused its discretion in absolving Philtranco on the ground that the Police Investigation Report, upon which the trial court anchored Philtranco’s quasi-delictual liability, had not been formally offered in evidence.

• Proof of Damages: Whether the reduction of actual damages, the deletion of awards for diminution of arm use and unrealized income, and the modification of moral damages and attorney’s fees were proper.

• Formal Offer of Evidence: The Police Investigation Report was never formally offered. Under Section 34, Rule 132 of the Rules of Court, a court shall consider no evidence that has not been formally offered. The report was merely attached as an annex to Inland’s answer; it was not identified, marked, or included in petitioners’ formal offer, which listed only Exhibits “A” through “O.” The trial court’s July 5, 1989 Order, contrary to petitioners’ claim, did not dispense with the formal offer requirement — it explicitly directed petitioners to submit a formal offer, and they did so without including the report. Consequently, the report had no probative value and could not be the basis for holding Philtranco liable. The absence of the report left no competent proof of Philtranco’s negligence, and the appellate court thus correctly absolved it from quasi-delictual liability.

• Actual Damages: The reduction of actual damages from ₱10,000 to ₱3,977 was proper. The only documentary evidence of medical expenses proved an outlay of ₱3,977. The trial court’s reliance on judicial notice to cover miscellaneous expenses was erroneous. Under Article 2199 of the Civil Code, actual damages must be duly proven; they cannot be presumed or based on speculation.

• Compensatory Damages for Diminution of Arm Use: The award of ₱50,000 for the alleged diminution of use of Francia’s right arm was correctly deleted. Physical injury of this nature is not a pecuniary loss susceptible of exact measurement. The proper remedy for the mental anguish and anxiety resulting from such injury is an award of moral damages. Because her suffering was sufficiently established, moral damages in her favor were increased from ₱30,000 to ₱50,000. Renato was separately awarded ₱30,000 as moral damages for his own mental anxiety. No separate compensatory damages could be awarded for restorative medical procedures, as no expert testimony was presented regarding the feasibility, practicability, or cost of such an operation.

• Unrealized Income: The claim for ₱48,000 in lost profits (lucrum cessans) was properly disallowed. While Article 2205 of the Civil Code permits recovery for loss of earning capacity, the claimant must adduce the best evidence available. Francia’s bare testimony that she earned ₱200 daily from a market stall, without any documentary support, was insufficient. Her explanation that a lessor handled her tax returns and business licenses did not excuse the failure to present credible corroborative proof. Moreover, she had two helpers and could have returned to work despite a plaster cast.

• Attorney’s Fees: The reduction of attorney’s fees from 25% to 10% of the total award was upheld. The award of attorney’s fees is addressed to sound judicial discretion. Given that counsel’s handling of the case was deficient — marked by a failure to observe elementary rules of procedure and evidence — no abuse of discretion attended the reduction.

• Formal Offer Rule: Under Section 34, Rule 132 of the Rules of Court, no evidence may be considered by the court unless it has been formally offered. Identification and marking of a document during trial are not equivalent to a formal offer; the offer is made when the party rests its case. Evidence not formally offered before the trial court cannot be considered on appeal, because to do so would deny the adverse party the opportunity to examine and object to it.

• Proof of Actual Damages: Article 2199 of the Civil Code requires that actual or compensatory damages be pleaded and proved by competent evidence. They cannot be presumed, and a court may not take judicial notice of unsubstantiated expenses. Only such pecuniary loss as is duly established may be compensated.

• Moral Damages for Physical Injuries: Physical injuries that cause mental anguish, wounded feelings, or anxiety properly ground an award of moral damages. The loss of normal function of a limb, though not a pecuniary loss, may be vindicated through moral damages rather than through a separate compensatory award for “diminution of use” absent expert proof of restorative costs.

• Best Evidence of Lost Profits: A claim for unrealized income or lost profits (lucrum cessans) must be supported by the best evidence of which the case is susceptible. A party’s bare, unsubstantiated testimony is insufficient; documentary or other corroborative evidence is required.

• Attorney’s Fees as Judicial Discretion: Under Article 2208 of the Civil Code, the award of attorney’s fees is subject to the sound discretion of the court, guided by factors such as the amount and character of services rendered, labor and time involved, nature and importance of the case, and results secured. The amount may be reduced when counsel’s performance does not justify a higher fee.

• “The court shall consider no evidence which has not been formally offered. A formal offer is necessary, since judges are required to base their findings of fact and their judgment solely and strictly upon the evidence offered by the parties at the trial.”

• “Evidence not formally offered before the trial court cannot be considered on appeal, for to consider them at such stage will deny the other parties their right to rebut them.”

• “Identification of documentary evidence must be distinguished from its formal offer as an exhibit. The first is done in the course of the trial and is accompanied by the marking of the evidence as an exhibit. The second is done only when the party rests its case and not before.”

• People v. Santito, Jr., 201 SCRA 87 — Distinguished between identification and formal offer of documentary evidence; applied to hold that mere marking of an exhibit does not constitute a formal offer.

• Candido v. Court of Appeals, 253 SCRA 78 — Reiterated that judges must base findings solely on evidence formally offered; relied upon to underscore the mandatory nature of the rule.

• Republic v. Sandiganbayan, 255 SCRA 438 — Cited to reinforce that evidence not formally offered cannot be considered on appeal.

• Vda. de Alvarez v. Court of Appeals, 231 SCRA 309 — Applied to support the rule that a document not formally offered has no probative value.

• Servicewide Specialists, Inc. v. Court of Appeals, 257 SCRA 643 — Used for the principle that evidence not offered before the trial court cannot be entertained for the first time on appeal.

• Mayo v. People, 204 SCRA 642 — Cited as authority that moral damages are the proper remedy for physical injuries causing mental anguish and loss of normal bodily functions, as where a victim lost the use of an eye.

• Gatchalian v. Delim, 203 SCRA 126 — Relied upon for the rule that the cost of restorative medical procedures must be supported by expert testimony; actual damages for plastic surgery were granted because expert evidence was provided.

• GA Machineries, Inc. v. Yaptinchay, 126 SCRA 78 — Applied for the requirement that the best evidence must be produced to prove lost profits.

• Ramos v. Bidin, 161 SCRA 566 — Enumerated the factors for determining the reasonableness of attorney’s fees; used to assess the reduction of the fee in this case.

• Section 34, Rule 132, Revised Rules of Court — “The court shall consider no evidence which has not been formally offered.” The provision was strictly applied; the police report, never formally offered, was excluded.

• Article 2199, New Civil Code — “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.” This mandated the reduction of actual damages to the proven amount.

• Article 2205, New Civil Code — Allows recovery for loss or impairment of earning capacity; cited as the basis for considering lost income but found unavailing due to insufficient proof.

• Article 2208, New Civil Code — Enumerates the cases when attorney’s fees may be recovered and requires that they be reasonable; applied in sustaining the 10% award.

Romero, Vitug, Purisima, and Gonzaga-Reyes, JJ., concurred.