G.R. No.
171303 January 20, 2016 hold Diaz's salary effective July 1, 1988 until further notice considering that
ELIZABETH L. DIAZ, Petitioner, vs. GEORGINA R. EN CANTO, ERNESTO
G. TABUJARA, GEMINO H. ABAD and UNIVERSITY OF THE
PHILIPPINES, Respondents.
DECISION
LEONARDO-DE CASTRO, J.:
This is a Petition for Review on Certiorari under Rule 45 of the 1997 Rules of
Court, as amended, which seeks to reverse and set aside the April 28, 2005
Decision1 and January 20, 2006 Resolution 2 of the Court of Appeals in CA-
G.R. CV No. 55165,3 which reversed the April 17, 1996 Decision4 and
September 1 7, 1996 Order 5 of the Regional Trial Court (RTC), Branch 71,
Pasig City, in Civil Case No. 58397.
The undisputed facts as narrated by the Court of Appeals are as follows:
Plaintiff-appellant [Elizabeth L. Diaz] has been in the service of [the
University of the Philippines] U.P. since 1963. In 1987, she was an associate
professor in the College of Mass Communication (CMC). During the second
semester for Academic Year (A Y) 1987-1988, she was a full time member of
the faculty and taught 12 units on full load. After 2 to 3 weeks of teaching,
she applied for sick leave effective November 23, 1987 until March 1, 1988.
She returned on March 2, 1988 and submitted a Report for Duty Form.
On May 3, 1988, Diaz filed a letter-application directly with U.P.'s "Office of
the President (Abueva) for sabbatical leave with pay for one (1) year effective
June 1988 to May 1989, for "rest, renewal and study." Cecilia Lazaro, Chair
of the Broadcast Department, initially recommended to CMC Dean Encanto
that Diaz's sabbatical application be granted. After they discussed the options
available to the CMC, Lazaro, on May 10, 1988, recommended instead that
Diaz be granted any leave of absence she may be qualified for. In her May 2,
1988 letter, Diaz indicated her unwillingness to teach. Considering the CMC's
experience with Diaz who dropped her courses in the previous semester,
Lazaro deleted Diaz's name in the final schedule of classes for the 1st
semester of A Y 1988-89 beginning June 6, 1988. Incidentally, Diaz received
her salary for June 1988, indicating that her sabbatical might be approved.
Thereafter, Encanto referred Diaz's sabbatical application to the Secretary of
U.P., recommending its denial. When requested by (Chancellor) Tabujara,
Encanto transmitted to the former a Reference Slip together with her
comments thereon. Meanwhile, Encanto requested Ermelina Kalagayan to
her sabbatical application has not yet been approved and that she did not
teach that semester. Consequently, Diaz's name was deleted in the payroll
from September 1988 to January 1989.
On July 4, 1988, Tabujara recommended instead that Diaz be granted a
leave without pay in order to enable the CMC to hire a substitute. The next
day, the U.P.'s Secretary referred to Abad, VicePresident (VP) for Academic
Affairs, the fact of denial of such sabbatical request, for his own
comment/recommendation to the U.P. President. Meantime, Diaz confessed
her problems to Abad. On July 8, 1988, Abad returned the Reference Slip
indicating therein that Diaz had promised him earlier "to put down in writing,
from her point of view, the historical backdrop as it were to the latest denial of
her sabbatical leave." With comments, Abad then referred the matter to the U
.P. President.
Pursuant to Administrative Order No. 42 issued by the U.P. President, the
Academic Policy Coordinating Committee (APCC), on July 21, 1988,
reviewed the case of Diaz. When reminded by Abad, Diaz again promised to
give the background information.
On Diaz's request to teach for that semester, AY 1988-89, the Vice
Chancellor for Academic Affairs, Edgardo Pacheco, and the HRDO Director,
Atty. Pio Frago, instructed Encanto that "Until Prof. Diaz officially reports for
duty, accomplishes the Certificate of Report for Duty, and the Dean of CMC
confirms her date of actual report for duty, she is considered absent without
official leave (AWOL) for the University."
On November 8, 1988, Abad, then as OIC, issued a Memorandum to Diaz to
confirm as valid Encanto' s reason of shortage of teaching staff in denying
her sabbatical. Later, he also informed Diaz of her lack of service during the
first semester of A Y 1988-89, hence, she is not entitled to be paid and asked
her to clarify her status of being on leave without pay.
[While Diaz was able to teach during the second semester of AY 1988-89,
she was not able to claim her salaries for her refusal to submit the Report for
Duty Form.6 She received her salaries for June to July 15, 1989, but could no
longer claim her salary after July 15, 1989, when Encanto reminded the
University Cashier, in a letter dated July 26, 1989, 7 that Diaz had to
"accomplish the Report for Duty Form to entitle her to salaries and make
official her return to the service of the University." 8 Diaz's name was
subsequently included in the payroll starting July 1990, when she submitted a
Report for Duty after her return from compulsory summer leave. 9]
xxxx
In the meantime, on January 3, 1989, Diaz filed a complaint with the Office of
the Ombudsman (OMB-00-89-0049), against Gemino H. Abad, Ernesto G.
Tabujara and Georgina R. Encanto, all officials of the University of the
Philippines, for the alleged violation of Section 3(e) of R.A. 3019, involving
the legality of a Report for Duty Form as a prerequisite to the payment of her
salary.
On May 4, 1989, the Ombudsman dismissed the said complaint and ruled,
inter alia:
Considering that Prof. Diaz was rightfully considered on leave without pay
during the first semester of A Y 1988-1989, to make official her return to the
service of the University, it is advised that she accomplish the Report for Duty
Form which will then be the basis to establish the date of her actual return to
the service. However, if possible, the University authorities can perhaps
dispense with the requirement and pay her salaries for actual services
rendered from November 3, 1988.
Diaz's initial Petition for Certiorari in the Supreme Court (G.R. No. 88834)
assailing the above-quoted Ombudsman's ruling was subsequently
dismissed. She filed another Petition (G.R. No. 89207) raising exactly the
same issued found in G.R. No. 88834.
Meanwhile, on July 18, 1989, Diaz instituted a complaint against the U.P.,
Abueva, Encanto, Tabujara and Abad with the Regional Trial Court, Pasig,
Metro Manila praying that the latter be adjudged, jointly and severally to pay
her damages. She claimed, among others, that [respondents] conspired
together as joint tortfeasors, in not paying her salaries from July 1, 1988 in
the first semester of academic year 1988-89, for the entire period when her
sabbatical application was left unresolved, as well as the salaries she earned
from teaching in the second semester from November 1988 to May 1989.
She likewise claimed moral and exemplary damages and attorney's fees.
On August 31, 1989, the Supreme Court En Banc dismissed Diaz's Petition
in G.R. No. 89207, viz.:
It is noted that the Ombudsman found no manifest partiality, evident bad
faith, or gross inexcusable negligence on the part of the private respondents
in denying the application for sabbatical leave of petitioner (Diaz) and in
requiring her to fill up a Report for Duty Form as a requisite for her
entitlement to salary.
To the petitioner's contentions, the Ombudsman observed, among others, the
following: that, the denial of her sabbatical leave application was due to the
exigencies of the service; that petitioner was not given a teaching assignment
for the first semester of A Y 1988-1989, because she did not want to teach
then; that the delay in action on her leave application was due to petitioner's
own fault for not following the usual procedures in the processing of her
application; and that there is no malice on the part of the private respondents
in requiring petitioner to accomplish the Report for Duty Form which is the
basis of the date of her actual return to the service. 10 (Citations omitted.)
In a Decision dated April 1 7, 1996, the R TC ruled in favor of petitioner Diaz,
the dispositive portion of which reads:
WHEREFORE, judgment is hereby rendered in favor of plaintiff and against
defendants:
1. Ordering defendants, except Abueva, to pay plaintiff, jointly and
severally, the amount of P133,665.50 representing the total unpaid
salaries from July 1, 1988 to May 31, 1989 and from July 16, 1989 to
May 31, 1990 to be covered by corresponding certificate of service,
with legal rate of interest from the date of this Decision until its full
payment.
2. Ordering defendants, except the University and Abueva, to pay
plaintiff, jointly and severally, the amount of P300,000.00 as moral
damages.
3. Ordering defendants, except the University and Abueva, to pay
plaintiff, jointly and severally, the amount of P60,000.00 as
exemplary damages.
4. Ordering defendants, except the University and Abueva, to pay
plaintiff, jointly and severally, the reduced amount of PS0,000.00 as
and by way of attorney's fees.
5. Costs of suit.
The counterclaims filed by defendant Tabujara are DISMISSED. 11
The RTC, ruling that a sabbatical leave is not a right but a privilege, held that
petitioner Diaz was entitled to such privilege and found that the delay in
the_resolution of her application was unreasonable and
unconscionable.
However, on September 17, 1996, the RTC, in denying the Motions for
Reconsideration of the respondents in said case, also amended its earlier
decision by absolving respondent Encanto from any liability, to wit:
WHEREFORE, judgment is hereby rendered in favor of plaintiff and against
defendants:
1. Ordering defendants, except Abueva and Encanto, to pay plaintiff,
jointly and severally, the amount of P133,665.50 representing the
total unpaid salaries from July 1, 1988 to May 31, 1989 and from July
16, 1989 to May 31, 1990 to be covered by corresponding certificate
of service, with legal rate of interest from the date of this Decision
until its full payment.
2. Ordering defendants, except the University, Abueva and Encanto,
to pay plaintiff, jointly and severally, the amount of P300,000.00 as
moral damages.
3. Ordering defendants, except the University, Abueva and Encanto,
to pay plaintiff, jointly and severally, the amount of P60,000.00 as
exemplary damages.
4. Ordering defendants, except University, Abueva and Encanto, to
pay plaintiff, jointly and severally, the reduced amount of P50,000.00
as and by way of attorney's fees.
5. Costs of suit.
The counterclaims filed by defendant Tabujara are DISMISSED. 12
The RTC dismissed the claim of petitioner Diaz against respondent Encanto
on the ground that her function was purely recommendatory in nature. It held
that she was not instrumental in the unreasonable and unconscionable delay
in the resolution of petitioner Diaz's sabbatical application as she transmitted
her recommendation to Abueva within eighteen days from her receipt of such
application.13
Petitioner Diaz14 and respondents Tabujara,15 U.P., Abad16 and even
Encanto17 appealed the RTC's ruling to the Court of Appeals.
As respondent Encanto was absolved of liability by the R TC in its September
1 7, 1996 Order, the Court of Appeals admitted her Brief, 18 as an
incorporation to the other respondents' Brief, 19 and as a comment on
petitioner Diaz's appeal.20
The respondents mainly argued that the R TC erred in holding them liable for
damages despite the absence of bad faith on their part, as held by both the
Ombudsman in OMB-00-89-0049 and the Supreme Court in G.R. No. 89207.
Petitioner Diaz, on the other hand, questioned the reversal of the R TC ruling
only with respect to the liability of respondent Encanto, in a lone assignment
of error, viz.:
THE LOWER COURT GRAVELY ERRED IN REVERSING ITS ORIGINAL
DECISION WITH REGARD TO PRINCIPAL DEFENDANT GEORGINA R.
ENCANTO BY ABSOLVING HER OF LIABILITY FOR DAMAGES TO
PLAINTIFF-APPELLANT ELIZABETH L. DIAZ WITHOUT ALTERING IN
ANY MATERIAL RESPECT WHATSOEVER THE FINDINGS OF FACT IN
THE ORIGINAL DECISION SHOWING CLEARLY THE RESPONSIBILITY
OF DEFENDANT ENCANTO FOR (I) THE WRONGFUL DISAPPROVAL OF
PLAINTIFF'S SABBATICAL APPLICATION; (II) THE UNJUST
DEPRIVATION OF SALARIES DUE THE PLAINTIFF FOR ALMOST ONE
WHOLE SEMESTER DURING WHICH HER SABBATICAL APPLICATION
REMAINED UNRESOLVED; AND (III) THE WRONGFUL WITHHOLDING
OF PLAINTIFF'S EARNED SALARIES IN THE THREE SUCCEEDING
SEMESTERS DURING WHICH THE PLAINTIFF TAUGHT WITHOUT
BEING PAID.21
Ruling of the Court of Appeals
The Court of Appeals trimmed down the issue to whether or not respondents
U.P., Tabujara and Abad were negligent or acted in bad faith in denying
petitioner Diaz's application for sabbatical leave and in withholding her
salaries. In its Decision promulgated on April 28, 2005, it effectively reversed
the decision of the R TC, viz.:
WHEREFORE, the appealed Decision is REVERSED and SET ASIDE and
a NEW JUDGMENT is RENDERED, as follows: (1) defendant-appellant
University of the Philippines, through its appropriate officials, is DIRECTED to
pay plaintiff-appellant Elizabeth Diaz the sum of Twenty-One Thousand, Eight
Hundred Seventy-Nine and 64/100 (P21,879.64) as unpaid salaries and
allowances, and (2) the sums awarded as moral and exemplary damages
and attorney's fees are hereby DELETED. This is without prejudice to the
enforcement of valid rules and regulations of the University of the Philippines
pertaining to Diaz's employment status.22
The Court of Appeals found neither negligence nor bad faith on the part of
the respondents in their denial of petitioner Diaz's sabbatical leave
application and in withholding her salaries.
The Court of Appeals emphasized that a sabbatical leave is not a right which
could be demanded at will, even by petitioner Diaz who has been a veteran
professor of 24 years at U.P. Moreover, the Court of Appeals said that the
eventual denial of her sabbatical leave application was not actionable in view
of the fact that (i) it would be unfair to impute negligence to respondents in
the regular discharge of their functions; and (ii) assuming that there was
delay in the resolution of her application, she herself caused such delay. 23
The Court of Appeals also held that petitioner Diaz's own recalcitrance and
defiance to comply with certain documentary requirements was the reason
her salaries were withheld.24
Petitioner Diaz filed a Motion for Reconsideration to the aforementioned
decision, which was subsequently denied for lack of merit in a Resolution
dated January 20, 2006.
Issues
Undaunted, petitioner Diaz is again before this Court, with the following
Assignments of Error:
FIRST ASSIGNMENT OF ERROR
WITHOUT DISTURBING THE FINDINGS OF FACT OF. THE TRIAL COURT
BASED ON OVERWHELMING EVIDENCE REVEALING THE
COMMISSION BY RESPONDENTS OF THE TORTIOUS ACTS
COMPLAINED OF BY PETITIONER IN DENYING HER SABBATICAL LEA
VE, THE COURT OF APPEALS GRIEVOUSLY ERRED IN IGNORING
THOSE FINDINGS AND ADOPTING AND TREATING AS VALID THE
FLIMSY EXCUSES OF RESPONDENTS TO A VOID THE LEGAL
CONSEQUENCES OF THEIR ACTS.
SECOND ASSIGNMENT OF ERROR
THE COURT OF APPEALS ERRED IN HOLDING CONTRARY TO THE
EVIDENCE ON RECORD, THAT "THERE WAS JUDICIOUS EXERCISE" BY
RESPONDENTS "OF THEIR DISCRETIONARY POWER WITH RESPECT
TO THE DENIAL OF THE SUBJECT SABBATICAL LEAVE."
THIRD ASSIGNMENT OF ERROR
THE COURT OF APPEALS ERRED IN TREATING AS LAWFUL THE
WITHHOLDING OF PETITIONER'S SALARIES, CONTRARY TO THE
EVIDENCE ON RECORD.
FOURTH ASSIGNMENT OF ERROR
THE COURT OF APPEALS ERRED IN CONCLUDING, CONTRARY TO
THE EVIDENCE ON RECORD, THAT PETITIONER "FAILED TO SHOW BY
A PREPONDERANCE OF EVIDENCE THE NEGLIGENCE OF
RESPONDENTS SO AS TO BE ENTITLED TO THE DAMAGES SOUGHT."
FIFTH ASSIGNMENT OF ERROR
THE COURT OF APPEALS ERRED IN NOT CORRECTLY COMPUTING
THE SUM OF PETITIONER'S UNPAID AND EARNED SALARIES, IN
UTTER DISREGARD OF THE EVIDENCE ON RECORD.
SIXTH ASSIGNMENT OF ERROR
THE COURT OF APPEALS ERRED IN NOT FINDING, CONTRARY TO THE
EVIDENCE ON RECORD, THAT RESPONDENTS EN CANTO, TABUJARA
AND ABAD ARE JOINTLY AND SEVERALLY LIABLE TO PETITIONER FOR
ACTUAL, MORAL AND EXEMPLARY DAMAGES AS JOINT
TORTFEASORS UNDER THE LAW.25
The issue in this case boils down to whether or not the respondents acted in
bad faith when they resolved petitioner Diaz's application for sabbatical leave
and withheld her salaries.
Ruling of the Court
The resolution of this case hinges on the question of bad faith on the part of
the respondents in denying petitioner Diaz's sabbatical leave application and
withholding of her salaries. Bad faith, however, is a question of fact and is
evidentiary.26 Thus, contrary to petitioner Diaz's belief that " [ w ]hat is
involved in this stage of the case is the legal interpretation or the legal
consequence of the material facts of this case," the resolution of the issue at
hand involves a question of fact, which the respondents rightly assert, is not
within the province of a Rule 45 petition. 27Nonetheless, the Court makes an
exception in this case especially so that both the RTC and the Court of
Appeals have the same findings of fact, but they arrived at different
conclusions.28
Application for Sabbatical Leave
Petitioner Diaz's complaint29 for recovery of damages before the RTC was
based on the alleged bad faith of the respondents in denying her application
for sabbatical leave vis-a-vis Articles 19 and 20 of the Civil Code.30
Articles 19 and 20 read as follows:
Art. 19. Every person must, in the exercise of his rights and in the
performance of his duties, act with justice, give everyone his due, and
observe honesty and good faith.
Art. 20. Every person who, contrary to law, willfully or negligently causes
damage to another, shall indemnify the latter for the same.
Article 19 of the Civil Code "prescribes a 'primordial limitation on all rights' by
setting certain standards that must be observed in the exercise
thereof."31 Abuse of right under Article 19 exists when the following elements
are present: (1) there is a legal right or duty; (2) which is exercised in bad
faith; (3) for the sole intent of prejudicing or injuring another. 32
This Court, expounding on the concept of bad faith under Article 19, held:
Malice or bad faith is at the core of Article 19 of the Civil Code. Good faith
refers to the state of mind which is manifested by the acts of the individual
concerned. It consists of the intention to abstain from taking an
unconscionable and unscrupulous advantage of another. It is presumed.
Thus, he who alleges bad faith has the duty to prove the same. Bad faith
does not simply connote bad judgment or simple negligence; it involves a
dishonest purpose or some moral obloquy and conscious doing of a wrong, a
breach of known duty due to some motives or interest or ill will that partakes
of the nature of fraud. Malice connotes ill will or spite and speaks not in
response to duty. It implies an intention to do ulterior and unjustifiable harm.
Malice is bad faith or bad motive.33(Citations omitted.)
Undoubtedly, the respondents had a duty to resolve petitioner Diaz's
sabbatical leave application. The crucial question is if they did so with the
intention of prejudicing or injuring petitioner Diaz.
We hold in the negative.
There is no dispute, and both the RTC and the Court of Appeals agree, that
the grant of a sabbatical leave is not a matter of right, but a privilege.
Moreover, the issue of whether or not the respondents acted in bad faith
when they denied petitioner Diaz's application for sabbatical leave has been
answered several times, in separate jurisdictions.
On May 4, 1989, the Ombudsman issued a Resolution 34 in Case No. OMB-0-
89-0049 on the complaint filed by petitioner Diaz against respondents
Encanto, Tabujara, and Abad for violation of Section 3(e) of Republic Act No.
3019, recommending the dismissal of the complaint for lack of merit. It found
no manifest partiality, evident bad faith, or gross inexcusable negligence on
the part of the respondents in their denial of petitioner Diaz's application for
sabbatical leave and in requiring her to accomplish a Report for Duty form as
a prerequisite for her entitlement to salary.
Petitioner Diaz protested the outcome of this resolution by filing a special civil
action for certiorari with this Court, on two occasions. When G.R. No. 88834
was dismissed for non-compliance with Circular No. 1-88, 35 petitioner Diaz
re-filed her petition, raising exactly the same issues, and this was docketed
as G.R. No. 89207.36
On August 31, 1989, this Court issued a Resolution, 37 dismissing petitioner
Diaz's petition in G.R. No. 89207. This Court noted the Ombudsman's
findings and observations and found them to be supported by substantial
evidence.
On April 28, 2005, the Court of Appeals had the same findings and held that
the denial of petitioner Diaz's application for sabbatical leave was "a collegial
decision based on UP. 's established rules, the grant of which is subject to
the exigencies of the service, like acute shortage in teaching staff" It added
that "the UP. officials' eventual denial of [Diaz's} application is not actionable
xx x it is unfair to impute negligence to [respondents] in the regular discharge
of their official functions. "38
The Ombudsman and all three courts, starting from the R TC to this Court,
have already established that a sabbatical leave is not a right and therefore
petitioner Diaz cannot demand its grant. It does not matter that there was
only one reason for the denial of her application, as the approving authorities
found that such reason was enough. Moreover, not only the Court of Appeals
but also the Ombudsman, and this Court, have ruled that the respondents did
not act in bad faith when petitioner Diaz's sabbatical leave application was
denied. Those three separate rulings verily must be given great weight in the
case at bar.
The Court does not find any reason to disregard those findings, especially
when our own perusal of the evidence showed no traces of bad faith or
malice in the respondents' denial of petitioner Diaz's application for
sabbatical leave. They processed her application in accordance with their
usual procedure - with more leeway, in fact, since petitioner Diaz was given
the chance to support her application when she was asked to submit a
historical background; and the denial was based on the recommendation of
respondent Encanto, who was in the best position to know whether petitioner
Diaz's application should be granted or not.
While the RTC declared that petitioner Diaz should have been granted a
sabbatical leave, it is important to note that the RTC awarded damages to
petitioner Diaz merely for the unreasonable and unconscionable delay in
the resolution of her sabbatical leave application, 39 and not its denial per
se. Thus, petitioner Diaz's entitlement to a sabbatical leave should no longer
be an issue in this case. This is supported by petitioner Diaz's own action
when she did not move for the reconsideration of the April 17, 1996 Decision
of the RTC for awarding her damages due only to the delay in the resolution
of her sabbatical leave application and not for its denial; and more so by the
prayer in her petition to this Court wherein she asked that the April 17, 1996
Decision of the RTC be "reinstated and affirmed in toto."40
Nevertheless, on the question of whether or not there was bad faith in the
delay of the resolution of petitioner Diaz's sabbatical leave application, the
Court still rules in the negative. "It is an elementary rule in this jurisdiction
that good faith is presumed and that the burden of proving bad faith rests
upon the party alleging the same." 41 Petitioner Diaz has failed to prove bad
faith on the part of the respondents. There is nothing in the records to show
that the respondents purposely delayed the resolution of her application to
prejudice and injure her. She has not even shown that the delay of six
months in resolving a sabbatical leave application has never happened prior
to her case. On the contrary, any delay that occurred was due to the fact that
petitioner Diaz's application for sabbatical leave did not follow the usual
procedure; hence, the processing of said application took time. 42
In petitioner Diaz's petition, she criticized the Court of Appeals for imputing
the cause of delay to her, arguing that as the requirement that a sabbatical
leave application be filed at least one semester before its intended date of
effectivity was only imposed in 1990, long after she had filed hers in
1988.43 But, precisely, this rule may have been imposed by U.P. to address
any untoward delays and to likewise provide a time frame for the approving
authorities in resolving sabbatical leave applications.
This Court understands petitioner Diaz's frustration, but she cannot keep on
arguing that the facts, as established, and which she herself does not
dispute, had been misappreciated.in different occasions.
Petitioner Diaz's Withheld Salaries
Petitioner Diaz is entitled to her withheld salaries from July 1, 1988 to
October 31, 1988, and from November 1, 1988 to May 31, 1989, and July 16,
1989 to May 31, 1990, upon submission of the required documents.
The denial of petitioner Diaz's salaries during the first semester of Academic
Year (AY) 1988-1989 was due to the fact that she did not teach that
semester. But when respondent Lazaro removed petitioner Diaz's name from
the final schedule of teaching assignments in CMC for the first semester of
AY 1988-89, it was without petitioner Diaz's prior knowledge, as admitted by
respondent Lazaro herself, to wit:
ATTY. DIAZ: Now, did Prof. Diaz ask you to remove her from [the] schedule
of classes?
LAZARO: I did it.
Q: Because you said you did it on your own?
A: Yes.
xxxx
Q: She did not [ask] you?
A: No.44
The Court, however, observes that respondent Lazaro, in so doing, did not
act in bad faith as she expected petitioner Diaz's application for leave, of
whatever nature, to be granted. As such, she did not want Diaz to have to
drop the classes she was already handling once her sabbatical leave was
approved, as was the case the semester before, when petitioner Diaz
dropped her classes, three weeks into the start of the semester, when her
application for sick leave was approved, viz.:
ATTY. GUNO: You mentioned a while ago that you deleted the name of
Professor Diaz from this final schedule of classes.1âwphi1 Why did you
delete it?
LAZARO: I presumed in good faith that based on the letter she sent which
was routed to me where she stated she could no longer be efficient and
effective as a teacher and she was suffering from fatigue and that she could
no longer work under those circumstances, I felt, as a gesture of sympathy to
her that this should be granted suggesting that she be given a leave of
absence of whatever kind she was qualified for and based on my previous
experience on the second semester where two to three weeks into the
course she dropped her courses, I did not want that to happen again. 45
ATTY. GUNO: You also testified that because of the application for sabbatical
leave and the reasons she gave in that letter, you deleted her name in the
final list of class schedule for school year 1988-89 first semester?
LAZARO: Yes.
Q: Why did you delete her name, will you tell the Court?
A: She had applied for sabbatical leave for the whole year of 1988-89 and
based on the experience of her sick leave during the previous semester
which was the second semester of the previous school year where three (3)
weeks into classes she filed for a sick leave and did not teach, based on that
experience, I did not include her name in the class list because the same
thing could happen again.46
While petitioner Diaz was not consulted about the removal of her name from
the class schedule, she did not contest such upon the belief that her
application for sabbatical leave would be approved, as in fact, she was given
her salary in June 1988. As such, this Court believes, in the interest of equity
and fairness, that petitioner Diaz should be entitled to her salary during the
semester when her name was dropped from the final list of schedule of
classes, without her knowledge and consent, and while action on her
application for sabbatical leave was still pending.47
On the matter of her salaries from the second semester of A Y 1988-89 up
until A Y 1989-1990, the respondents legally withheld such, as found by the
Ombudsman and the Court of Appeals for petitioner Diaz's own refusal to
comply with the documentary requirements of U.P. Even the RTC, in its
Omnibus Order of January 12, 1990, denied petitioner Diaz's petition for
mandatory injunction upon the finding that the Report for Duty Form required
of her is a basic and standard requirement that is asked from all employees
of U.P. The RTC held:
It is therefore clear that the acts sought to be enjoined [by Diaz] are in fact
pursuant to the proper observance of administrative or internal rules of the
University. This Court sympathizes with [Diaz] for not being able to receive
her salaries after July 15, 1989. However, such predicament cannot be
outrightly attributable to the defendants, as their withholding of her salaries
appears to be in accordance with existing University regulations.
Apart from such reasons, this Court believes that petitioner Diaz failed to
show why she should be spared from the Report for Duty requirement, which
remains a standard practice even in other offices or institutions. To be entitled
to an injunctive writ, one must show an unquestionable right and/or blatant
violation of said right to be entitled to its issuance. 48
But it cannot be denied that during the periods of November 1, 1988 to May
31, 1988 and July 16, 1989 to May 31, 1990, petitioner Diaz rendered service
to U.P. for which she should be compensated.
Given the foregoing, petitioner Diaz should be paid, as the RTC had
computed, her salaries from July l, 1988 to October 1988, the semester when
petitioner Diaz's name was dropped from the final list of schedule of classes,
without her prior knowledge and consent; and for the periods of November 1,
1988 to May 31, 1989 and July 16, 1989 to May 31, 1990, for the work she
rendered during said periods, but upon petitioner Diaz's submission of
the documents required by U.P.
No Payment of Other Damages
Given that the respondents have not abused their rights, they should not be
held liable for any damages sustained by petitioner Diaz. "The law affords no
remedy for damages resulting from an act which does not amount to a legal
wrong. Situations like this have been appropriately denominated damnum
absque injuria."49 Similarly, the Court cannot grant petitioner Diaz's claim for
attorney's fees as no premium should be placed on the right to litigate. "Even
when a claimant is compelled to litigate or to incur expenses to protect his
rights, still attorney's fees may not be awarded where there is no sufficient
showing of bad faith in a party's persistence in a case other than an
erroneous conviction of the righteousness of his cause." 50
Legal Interest Due on the Salaries Withheld
Pursuant to Nacar v. Gallery Frames,51 the applicable rate of legal interest
due on petitioner Diaz's withheld salaries - (i) from July 1, 1988 to October
31, 1988, the period corresponding to the first semester of A Y 1988-89,
when her name was removed from the final list of class schedule without her
prior knowledge and consent, less the amount she had received in June
1988 - will be from April 17, 1996, the date of the Decision of the RTC, up to
the full satisfaction thereof, is 6% per annum; and (ii) from November 1, 1988
to May 31, 1989, and July 16, 1989 to May 31, 1990, the periods when she
was refused payment of her salaries for not accomplishing a Report for Duty
Form - will be from the time petitioner Diaz submits the required Report for
Duty Form up to the full satisfaction thereof, is 6% per annum.
WHEREFORE, the instant petition is DENIED. The assailed Decision of the
Court of Appeals in CA-G.R. CV No. 55165 is hereby AFFIRMED with
MODIFICATION in that the University of the Philippines, through its
appropriate officials, is directed to pay petitioner Elizabeth L. Diaz her
withheld salaries 1) from July 1, 1988 to October 31, 1988, with legal interest
at the rate of six percent (6%) per annum, computed from the date of the
Decision of the R TC on April 17, 1996 until fully paid; and 2) from November
1, 1988 to May 31, 1989 and July 16, 1989 to May 31, 1990, with legal
interest at the rate of six percent (6%) per annum computed from the date
petitioner Elizabeth L. Diaz submits the documents required by the University After obtaining the foregoing information, Albenson, through counsel, made
of the Philippines until fully paid. an extrajudicial demand upon private respondent Eugenio S. Baltao,
president of Guaranteed, to replace and/or make good the dishonored check.
SO ORDERED.
Respondent Baltao, through counsel, denied that he issued the check, or that
G.R. No. 88694 January 11, 1993 the signature appearing thereon is his. He further alleged that Guaranteed
was a defunct entity and hence, could not have transacted business with
Albenson.
ALBENSON ENTERPRISES CORP., JESSE YAP, AND BENJAMIN
MENDIONA, petitioners, vs. THE COURT OF APPEALS AND EUGENIO S.
BALTAO, respondents. On February 14, 1983, Albenson filed with the Office of the Provincial Fiscal
of Rizal a complaint against Eugenio S. Baltao for violation of Batas
Pambansa Bilang 22. Submitted to support said charges was an affidavit of
BIDIN, J.:
petitioner Benjamin Mendiona, an employee of Albenson. In said affidavit, the
above-mentioned circumstances were stated.
This petition assails the decision of respondent Court of Appeals in
CA-GR CV No. 14948 entitled "Eugenio S. Baltao, plaintiff-appellee vs.
It appears, however, that private respondent has a namesake, his son
Albenson Enterprises Corporation, et al, defendants-appellants", which
Eugenio Baltao III, who manages a business establishment, E.L.
modified the judgment of the Regional Trial Court of Quezon City, Branch
Woodworks, on the ground floor of the Baltao Building, 3267 V. Mapa Street,
XCVIII in Civil Case No. Q-40920 and ordered petitioner to pay private
Sta. Mesa, Manila, the very same business address of Guaranteed.
respondent, among others, the sum of P500,000.00 as moral damages and
attorney's fees in the amount of P50,000.00.
On September 5, 1983, Assistant Fiscal Ricardo Sumaway filed an
information against Eugenio S. Baltao for Violation of Batas Pambansa
The facts are not disputed.
Bilang 22. In filing said information, Fiscal Sumaway claimed that he had
given Eugenio S. Baltao opportunity to submit controverting evidence, but the
In September, October, and November 1980, petitioner Albenson Enterprises latter failed to do so and therefore, was deemed to have waived his right.
Corporation (Albenson for short) delivered to Guaranteed Industries, Inc.
(Guaranteed for short) located at 3267 V. Mapa Street, Sta. Mesa, Manila,
Respondent Baltao, claiming ignorance of the complaint against him,
the mild steel plates which the latter ordered. As part payment thereof,
immediately filed with the Provincial Fiscal of Rizal a motion for
Albenson was given Pacific Banking Corporation Check No. 136361 in the
reinvestigation, alleging that it was not true that he had been given an
amount of P2,575.00 and drawn against the account of E.L. Woodworks
opportunity to be heard in the preliminary investigation conducted by Fiscal
(Rollo, p. 148).
Sumaway, and that he never had any dealings with Albenson or Benjamin
Mendiona, consequently, the check for which he has been accused of having
When presented for payment, the check was dishonored for the reason issued without funds was not issued by him and the signature in said check
"Account Closed." Thereafter, petitioner Albenson, through counsel, traced was not his.
the origin of the dishonored check. From the records of the Securities and
Exchange Commission (SEC), Albenson discovered that the president of
On January 30, 1984, Provincial Fiscal Mauro M. Castro of Rizal reversed
Guaranteed, the recipient of the unpaid mild steel plates, was one "Eugenio
the finding of Fiscal Sumaway and exonerated respondent Baltao. He also
S. Baltao." Upon further inquiry, Albenson was informed by the Ministry of
instructed the Trial Fiscal to move for dismissal of the information filed
Trade and Industry that E.L. Woodworks, a single proprietorship business,
against Eugenio S. Baltao. Fiscal Castro found that the signature in PBC
was registered in the name of one "Eugenio Baltao". In addition, upon
Check No. 136361 is not the signature of Eugenio S. Baltao. He also found
verification with the drawee bank, Pacific Banking Corporation, Albenson was
that there is no showing in the records of the preliminary investigation that
advised that the signature appearing on the subject check belonged to one
Eugenio S. Baltao actually received notice of the said investigation. Fiscal
"Eugenio Baltao."
Castro then castigated Fiscal Sumaway for failing to exercise care and
prudence in the performance of his duties, thereby causing injustice to
respondent who was not properly notified of the complaint against him and of
the requirement to submit his counter evidence.
Because of the alleged unjust filing of a criminal case against him for
allegedly issuing a check which bounced in violation of Batas Pambansa
Bilang 22 for a measly amount of P2,575.00, respondent Baltao filed before
the Regional Trial Court of Quezon City a complaint for damages against
herein petitioners Albenson Enterprises, Jesse Yap, its owner, and Benjamin
Mendiona, its employee.
In its decision, the lower court observed that "the check is drawn against the
account of "E.L. Woodworks," not of Guaranteed Industries of which plaintiff
used to be President. Guaranteed Industries had been inactive and had
ceased to exist as a corporation since 1975. . . . . The possibility is that it was
with Gene Baltao or Eugenio Baltao III, a son of plaintiff who had a business
on the ground floor of Baltao Building located on V. Mapa Street, that the
defendants may have been dealing with . . . ." (Rollo, pp. 41-42).
The dispositive portion of the trial court 's decision reads:
WHEREFORE, judgment is hereby rendered in favor of
plaintiff and against defendants ordering the latter to pay
plaintiff jointly and severally:
1. actual or compensatory damages of P133,350.00;
2. moral damages of P1,000,000.00 (1 million pesos);
3. exemplary damages of P200,000.00;
4. attorney's fees of P100,000.00;
5 costs.
Defendants' counterclaim against plaintiff and claim for
damages against Mercantile Insurance Co. on the bond for
the issuance of the writ of attachment at the instance of
plaintiff are hereby dismissed for lack of merit. (Rollo, pp. 38-
39).
On appeal, respondent court modified the trial court's decision as follows:
WHEREFORE, the decision appealed from is MODIFIED by reducing
the moral damages awarded therein from P1,000,000.00 to
P500,000.00 and the attorney's fees from P100,000.00 to P50,000.00,
said decision being hereby affirmed in all its other aspects. With costs
against appellants. (Rollo, pp. 50-51)
Dissatisfied with the above ruling, petitioners Albenson Enterprises Corp.,
Jesse Yap, and Benjamin Mendiona filed the instant Petition, alleging that the
appellate court erred in:
1. Concluding that private respondent's cause of action is not one based
on malicious prosecution but one for abuse of rights under Article 21 of
the Civil Code notwithstanding the fact that the basis of a civil action for
malicious prosecution is Article 2219 in relation to Article 21 or Article
2176 of the Civil Code . . . .
2. Concluding that "hitting at and in effect maligning (private respondent)
with an unjust criminal case was, without more, a plain case of abuse of
rights by misdirection" and "was therefore, actionable by itself," and which
"became inordinately blatant and grossly aggravated when . . . (private
respondent) was deprived of his basic right to notice and a fair hearing in
the so-called preliminary investigation . . . . "
3. Concluding that petitioner's "actuations in this case were coldly
deliberate and calculated", no evidence having been adduced to support
such a sweeping statement.
4. Holding the petitioner corporation, petitioner Yap and petitioner
Mendiona jointly and severally liable without sufficient basis in law and in
fact.
5. Awarding respondents —
5.1. P133,350.00 as actual or compensatory damages, even in
the absence of sufficient evidence to show that such was
actually suffered.
5.2. P500,000.00 as moral damages considering that the
evidence in this connection merely involved private respondent's
alleged celebrated status as a businessman, there being no
showing that the act complained of adversely affected private
respondent's reputation or that it resulted to material loss.
5.3. P200,000.00 as exemplary damages despite the fact that
petitioners were duly advised by counsel of their legal recourse.
 5.4. P50,000.00 as attorney's fees, no evidence having been
adduced to justify such an award (Rollo, pp. 4-6).
Petitioners contend that the civil case filed in the lower court was one for
malicious prosecution. Citing the case of Madera vs. Lopez (102 SCRA 700
[1981]), they assert that the absence of malice on their part absolves them
from any liability for malicious prosecution. Private respondent, on the other
hand, anchored his complaint for Damages on Articles 19, 20, and 21 ** of
the Civil Code.
Article 19, known to contain what is commonly referred to as the principle of
abuse of rights, sets certain standards which may be observed not only in the
exercise of one's rights but also in the performance of one's duties. These
standards are the following: to act with justice; to give everyone his due; and
to observe honesty and good faith. The law, therefore, recognizes the
primordial limitation on all rights: that in their exercise, the norms of human
conduct set forth in Article 19 must be observed. A right, though by itself legal
because recognized or granted by law as such, may nevertheless become
the source of some illegality. When a right is exercised in a manner which
does not conform with the norms enshrined in Article 19 and results in
damage to another, a legal wrong is thereby committed for which the
wrongdoer must be held responsible. Although the requirements of each
provision is different, these three (3) articles are all related to each other. As
the eminent Civilist Senator Arturo Tolentino puts it: "With this article (Article
21), combined with articles 19 and 20, the scope of our law on civil wrongs
has been very greatly broadened; it has become much more supple and
adaptable than the Anglo-American law on torts. It is now difficult to conceive
of any malevolent exercise of a right which could not be checked by the
application of these articles" (Tolentino, 1 Civil Code of the Philippines 72).
There is however, no hard and fast rule which can be applied to determine
whether or not the principle of abuse of rights may be invoked. The question
of whether or not the principle of abuse of rights has been violated, resulting
in damages under Articles 20 and 21 or other applicable provision of law,
depends on the circumstances of each case. (Globe Mackay Cable and
Radio Corporation vs. Court of Appeals, 176 SCRA 778 [1989]).
The elements of an abuse of right under Article 19 are the following: (1)
There is a legal right or duty; (2) which is exercised in bad faith; (3) for the
sole intent of prejudicing or injuring another. Article 20 speaks of the general
sanction for all other provisions of law which do not especially provide for
their own sanction (Tolentino, supra, p. 71). Thus, anyone who,
whether willfully or negligently, in the exercise of his legal right or duty,
causes damage to another, shall indemnify his victim for injuries suffered
thereby. Article 21 deals with acts contra bonus mores, and has the following
elements: 1) There is an act which is legal; 2) but which is contrary to morals,
good custom, public order, or public policy; 3) and it is done with intent to
injure.
Thus, under any of these three (3) provisions of law, an act which causes
injury to another may be made the basis for an award of damages.
There is a common element under Articles 19 and 21, and that is, the act
must be intentional. However, Article 20 does not distinguish: the act may be
done either "willfully", or "negligently". The trial court as well as the
respondent appellate court mistakenly lumped these three (3) articles
together, and cited the same as the bases for the award of damages in the
civil complaint filed against petitioners, thus:
With the foregoing legal provisions (Articles 19, 20, and 21) in focus,
there is not much difficulty in ascertaining the means by which
appellants' first assigned error should be resolved, given the admitted
fact that when there was an attempt to collect the amount of P2,575.00,
the defendants were explicitly warned that plaintiff Eugenio S. Baltao is
not the Eugenio Baltao defendants had been dealing with (supra, p. 5).
When the defendants nevertheless insisted and persisted in filing a case
— a criminal case no less — against plaintiff, said defendants ran afoul
of the legal provisions (Articles 19, 20, and 21 of the Civil Code) cited by
the lower court and heretofore quoted (supra).
Defendants, not having been paid the amount of P2,575.00, certainly
had the right to complain. But that right is limited by certain constraints.
Beyond that limit is the area of excess, of abuse of rights. (Rollo, pp.
44-45).
Assuming, arguendo, that all the three (3) articles, together and not
independently of each one, could be validly made the bases for an award of
damages based on the principle of "abuse of right", under the circumstances,
We see no cogent reason for such an award of damages to be made in favor
of private respondent.
Certainly, petitioners could not be said to have violated the aforestated
principle of abuse of right. What prompted petitioners to file the case for
violation of Batas Pambansa Bilang 22 against private respondent was their
failure to collect the amount of P2,575.00 due on a bounced check which
they honestly believed was issued to them by private respondent. Petitioners
had conducted inquiries regarding the origin of the check, and yielded the
following results: from the records of the Securities and Exchange
Commission, it was discovered that the President of Guaranteed (the
recipient of the unpaid mild steel plates), was one "Eugenio S. Baltao"; an
inquiry with the Ministry of Trade and Industry revealed that E.L. Woodworks,
against whose account the check was drawn, was registered in the name of
one "Eugenio Baltao"; verification with the drawee bank, the Pacific Banking
Corporation, revealed that the signature appearing on the check belonged to
one "Eugenio Baltao".
In a letter dated December 16, 1983, counsel for petitioners wrote private
respondent demanding that he make good the amount of the check. Counsel
for private respondent wrote back and denied, among others, that private
respondent ever transacted business with Albenson Enterprises Corporation;
that he ever issued the check in question. Private respondent's counsel even
went further: he made a warning to defendants to check the veracity of their
claim. It is pivotal to note at this juncture that in this same letter, if indeed
private respondent wanted to clear himself from the baseless accusation
made against his person, he should have made mention of the fact that there
are three (3) persons with the same name, i.e.: Eugenio Baltao, Sr., Eugenio
S. Baltao, Jr. (private respondent), and Eugenio Baltao III (private
respondent's son, who as it turned out later, was the issuer of the check). He,
however, failed to do this. The last two Baltaos were doing business in the
same building — Baltao Building — located at 3267 V. Mapa Street, Sta.
Mesa, Manila. The mild steel plates were ordered in the name of Guaranteed
of which respondent Eugenio S. Baltao is the president and delivered to
Guaranteed at Baltao building. Thus, petitioners had every reason to believe
that the Eugenio Baltao who issued the bouncing check is respondent
Eugenio S. Baltao when their counsel wrote respondent to make good the
amount of the check and upon refusal, filed the complaint for violation of BP
Blg. 22.
Private respondent, however, did nothing to clarify the case of mistaken
identity at first hand. Instead, private respondent waited in ambush and
thereafter pounced on the hapless petitioners at a time he thought was
propitious by filing an action for damages. The Court will not countenance
this devious scheme.
The criminal complaint filed against private respondent after the latter refused
to make good the amount of the bouncing check despite demand was a
sincere attempt on the part of petitioners to find the best possible means by
which they could collect the sum of money due them. A person who has not
been paid an obligation owed to him will naturally seek ways to compel the
debtor to pay him. It was normal for petitioners to find means to make the
issuer of the check pay the amount thereof. In the absence of a wrongful act
or omission or 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
and subject the actor to the payment of damages, for the law could not have
meant to impose a penalty on the right to litigate (Rubio vs. Court of Appeals,
141 SCRA 488 [1986]).
In the case at bar, private respondent does not deny that the mild steel plates
were ordered by and delivered to Guaranteed at Baltao building and as part
payment thereof, the bouncing check was issued by one Eugenio Baltao.
Neither had private respondent conveyed to petitioner that there are two
Eugenio Baltaos conducting business in the same building — he and his son
Eugenio Baltao III. Considering that Guaranteed, which received the goods in
payment of which the bouncing check was issued is owned by respondent,
petitioner acted in good faith and probable cause in filing the complaint
before the provincial fiscal.
To constitute malicious prosecution, there must be proof that the prosecution
was prompted by a sinister design to vex and humiliate a person, and that it
was initiated deliberately by the defendant knowing that his charges were
false and groundless. Concededly, the mere act of submitting a case to the
authorities for prosecution does not make one liable for malicious
prosecution. (Manila Gas Corporation vs. Court of Appeals, 100 SCRA 602
[1980]). Still, private respondent argues that liability under Articles 19, 20,
and 21 of the Civil Code is so encompassing that it likewise includes liability
for damages for malicious prosecution under Article 2219 (8). True, a civil
action for damages for malicious prosecution is allowed under the New Civil
Code, more specifically Articles 19, 20, 26, 29, 32, 33, 35, and 2219 (8)
thereof. In order that such a case can prosper, however, the following three
(3) elements must be present, to wit: (1) The fact of the prosecution and the
further fact that the defendant was himself the prosecutor, and that the action
was finally terminated with an acquittal; (2) That in bringing the action, the
prosecutor acted without probable cause; (3) The prosecutor was actuated or
impelled by legal malice (Lao vs. Court of Appeals, 199 SCRA 58, [1991]).
Thus, a party injured by the filing of a court case against him, even if he is
later on absolved, may file a case for damages grounded either on the
principle of abuse of rights, or on malicious prosecution. As earlier stated, a
complaint for damages based on malicious prosecution will prosper only if
the three (3) elements aforecited are shown to exist. In the case at bar, the
second and third elements were not shown to exist. It is well-settled that one
cannot be held liable for maliciously instituting a prosecution where one has
acted with probable cause. "Probable cause is the existence of such facts
and circumstances as would excite the belief, in a reasonable mind, acting on
the facts within the knowledge of the prosecutor, that the person charged was
guilty of the crime for which he was prosecuted. In other words, a suit will lie
only in cases where a legal prosecution has been carried on without probable
cause. The reason for this rule is that it would be a very great
discouragement to public justice, if prosecutors, who had tolerable ground of
suspicion, were liable to be sued at law when their indictment miscarried"
(Que vs. Intermediate Appellate Court, 169 SCRA 137 [1989]).
The presence of probable cause signifies, as a legal consequence, the
absence of malice. In the instant case, it is evident that petitioners were not
motivated by malicious intent or by sinister design to unduly harass private
respondent, but only by a well-founded anxiety to protect their rights when
they filed the criminal complaint against private respondent.
To constitute malicious prosecution, there must be proof that
the prosecution was prompted by a sinister design to vex
and humiliate a person, that it was initiated deliberately by
the defendant knowing that his charges were false and
groundless. Concededly, the mere act of submitting a case
to the authorities for prosecution does not make one liable
for malicious prosecution. Proof and motive that the
institution of the action was prompted by a sinister design to
vex and humiliate a person must be clearly and
preponderantly established to entitle the victims to damages
(Ibid.).
In the case at bar, there is no proof of a sinister design on the part of
petitioners to vex or humiliate private respondent by instituting the criminal
case against him. While petitioners may have been negligent to some extent
in determining the liability of private respondent for the dishonored check, the
same is not so gross or reckless as to amount to bad faith warranting an
award of damages.
The root of the controversy in this case is founded on a case of mistaken
identity. It is possible that with a more assiduous investigation, petitioners
would have eventually discovered that private respondent Eugenio S. Baltao
is not the "Eugenio Baltao" responsible for the dishonored check. However,
the record shows that petitioners did exert considerable effort in order to
determine the liability of private respondent. Their investigation pointed to
private respondent as the "Eugenio Baltao" who issued and signed the
dishonored check as the president of the debtor-corporation Guaranteed
Enterprises. Their error in proceeding against the wrong individual was
obviously in the nature of an innocent mistake, and cannot be characterized
as having been committed in bad faith. This error could have been
discovered if respondent had submitted his counter-affidavit before
investigating fiscal Sumaway and was immediately rectified by Provincial
Fiscal Mauro Castro upon discovery thereof, i.e., during the reinvestigation
resulting in the dismissal of the complaint.
Furthermore, the adverse result of an action does not per se make the act
wrongful and subject the actor to the payment of moral damages. The law
could not have meant to impose a penalty on the right to litigate, such right is
so precious that moral damages may not be charged on those who may even
exercise it erroneously. And an adverse decision does not ipso facto justify
the award of attorney's fees to the winning party (Garcia vs. Gonzales, 183
SCRA 72 [1990]).
Thus, an award of damages and attorney's fees is unwarranted where the
action was filed in good faith. If damage results from a person's exercising
his legal rights, it is damnum absque injuria (Ilocos Norte Electric Company
vs. Court of Appeals, 179 SCRA 5 [1989]).
Coming now to the claim of private respondent for actual or compensatory
damages, the records show that the same was based solely on his
allegations without proof to substantiate the same. He did not present proof
of the cost of the medical treatment which he claimed to have undergone as
a result of the nervous breakdown he suffered, nor did he present proof of
the actual loss to his business caused by the unjust litigation against him. In
determining actual damages, the court cannot rely on speculation,
conjectures or guesswork as to the amount. Without the actual proof of loss,
the award of actual damages becomes erroneous (Guilatco vs. City of
Dagupan, 171 SCRA 382 [1989]).
Actual and compensatory damages are those recoverable because of
pecuniary loss — in business, trade, property, profession, job or occupation
— and the same must be proved, otherwise, if the proof is flimsy and
unsubstantiated, no damages will be given (Rubio vs. Court of Appeals, 141
SCRA 488 [1986]). For these reasons, it was gravely erroneous for
respondent court to have affirmed the award of actual damages in favor of
private respondent in the absence of proof thereof.
Where there is no evidence of the other party having acted in wanton,
fraudulent or reckless, or oppressive manner, neither may exemplary
damages be awarded (Dee Hua Liong Electrical Equipment Corporation vs.
Reyes, 145 SCRA 488 [1986]).
As to the award of attorney's fees, it is well-settled that the same is the
exception rather than the general rule. Needless to say, the award of
attorney's fees must be disallowed where the award of exemplary damages
is eliminated (Article 2208, Civil Code; Agustin vs. Court of Appeals, 186
SCRA 375 [1990]). Moreover, in view of the fact that there was no malicious
prosecution against private respondent, attorney's fees cannot be awarded
him on that ground.
In the final analysis, there is no proof or showing that petitioners acted
maliciously or in bad faith in the filing of the case against private respondent.
Consequently, in the absence of proof of fraud and bad faith committed by
petitioners, they cannot be held liable for damages (Escritor, Jr. vs.
Intermediate Appellate Court, 155 SCRA 577 [1987]). No damages can be
awarded in the instant case, whether based on the principle of abuse of
rights, or for malicious prosecution. The questioned judgment in the instant
case attests to the propensity of trial judges to award damages without basis.
Lower courts are hereby cautioned anew against awarding unconscionable
sums as damages without bases therefor.

WHEREFORE, the petition is GRANTED and the decision of the Court of

Appeals in C.A. G.R. C.V. No. 14948 dated May 13, 1989, is hereby
REVERSED and SET ASIDE. Costs against respondent Baltao.

SO ORDERED.
G.R. No. 126486 February 9, 1998
BARONS MARKETING CORP., petitioner, vs. COURT OF APPEALS and
PHELPS DODGE PHILS., INC. respondents.
KAPUNAN, J.:
The instant petition raises two issues: (1) whether or not private respondent
is guilty of abuse of right; and (2) whether or not private respondent is entitled
to interest and attorney's fees.
The facts are undisputed:
On August 31, 1973, plaintiff [Phelps Dodge, Philippines, Inc. private
respondent herein] appointed defendant [petitioner Barons
Marketing, Corporation] as one of its dealers of electrical wires and
cables effective September 1, 1973 (Exh. A). As such dealer,
defendant was given by plaintiff 60 days credit for its purchases of
plaintiff's electrical products. This credit term was to be reckoned
from the date of delivery by plaintiff of its products to defendant (Exh.
1).
During the period covering December 1986 to August 17, 1987,
defendant purchased, on credit, from plaintiff various electrical wires
and cables in the total amount of P4,102,438.30 (Exh. B to K). These
wires and cables were in turn sold, pursuant to previous
arrangements, by defendant to MERALCO, the former being the
accredited supplier of the electrical requirements of the latter. Under
the sales invoices issued by plaintiff to defendant for the subject
purchases, it is stipulated that interest at 12% on the amount due for
attorney's fees and collection (Exh. BB). 1 On September 7, 1987,
defendant paid plaintiff the amount of P300,000.00 out of its total
purchases as above-stated (Exh. S), thereby leaving an unpaid
account on the aforesaid deliveries of P3,802,478.20. On several
occasions, plaintiff wrote defendant demanding payment of its
outstanding obligations due plaintiff (Exhs. L, M, N, and P). In
response, defendant wrote plaintiff on October 5, 1987 requesting
the latter if it could pay its outstanding account in monthly
installments of P500,000.00 plus 1% interest per month commencing
on October 15, 1987 until full payment (Exh. O and O-4). Plaintiff,
however, rejected defendant's offer and accordingly reiterated its
demand for the full payment of defendant's account (Exh. P). 2
On 29 October 1987, private respondent Phelps Dodge Phils., Inc. filed a
complaint before the Pasig Regional Trial Court against petitioner Barons
Marketing Corporation for the recovery of P3,802,478.20 representing the
value of the wires and cables the former had delivered to the latter, including
interest. Phelps Dodge likewise prayed that it be awarded attorney's fees at
the rate of 25% of the amount demanded, exemplary damages amounting to
at least P100,000.00, the expenses of litigation and the costs of suit.
Petitioner, in its answer, admitted purchasing the wires and cables from
private respondent but disputed the amount claimed by the latter. Petitioner
likewise interposed a counterclaim against private respondent, alleging that it
suffered injury to its reputation due to Phelps Dodge's acts. Such acts were
purportedly calculated to humiliate petitioner and constituted an abuse of
rights.
After hearing, the trial court on 17 June 1991 rendered its decision, the
dispositive portion of which reads:
WHEREFORE, from all the foregoing considerations, the Court finds
Phelps Dodge Phils., Inc. to have preponderantly proven its case and
hereby orders Barons Marketing, Inc. to pay Phelps Dodge the
following:
1. P3,108,000.00 constituting the unpaid balance of defendant's
purchases from plaintiff and interest thereon at 12% per
annum computed from the respective expiration of the 60 day credit
term, vis-a-vis the various sales invoices and/or delivery receipts;
2. 25% of the preceding obligation for and as attorney's fees;
3. P10,000.00 as exemplary damages;
4. Costs of suit.3
Both parties appealed to respondent court. Private respondent claimed that
the trial court should have awarded it the sum of P3,802,478.20, the amount
which appeared in the body of the complaint and proven during the trial
rather than P3,1081000.00 The latter amount appears in petitioner's prayer
supposedly as a result of a typographical error.
On the other hand, petitioner reiterated its claims for damages as a result of
"creditor's abuse." It also alleged that private respondent failed to prove its
cause of action against it.
On 25 June 1996, the Court of Appeals rendered a decision modifying the
decision of the trial court, thus:
WHEREFORE, from all the foregoing considerations, the Court finds
Phelps Dodge Phils., Inc. to have preponderantly proven its case and
hereby orders Barons Marketing, Inc. to pay Phelps Dodge the
following:
1. P3,802,478.20 constituting the unpaid balance of defendant's
purchases from plaintiff and interest thereon at 12% per
annum computed from the respective expiration of the 60 day credit
term, vis-a-vis the various sales invoices and/or delivery receipts;
and
2. 5% of the preceding obligation for and as attorney's fees.
No costs.4
Petitioner Barons Marketing is now before this Court alleging that respondent
court erred when it held (1) private respondent Phelps Dodge not guilty of
"creditor's abuse," and (2) petitioner liable to private respondent for interest
and attorney's fees.
I
Petitioner does not deny private respondent's rights to institute an action for
collection and to claim full payment. Indeed, petitioner's right to file an action
for collection is beyond cavil.5 Likewise, private respondent's right to reject
petitioner's offer to pay in installments is guaranteed by Article 1248 of the
Civil Code which states:
Art. 1248. Unless there is an express stipulation to that effect, the
creditor cannot be compelled partially to receive the prestations in
which the obligation consists. Neither may the debtor be required to
make partial payments.
However, when the debt is in part liquidated and in part unliquidated,
the creditor may demand and the debtor may effect the payment of
the former without waiting for the liquidation of the latter.
Under this provision, the prestation, i.e., the object of the obligation, must be
performed in one act, not in parts.
Tolentino concedes that the right has its limitations:
Partial Prestations. — Since the creditor cannot be compelled to
accept partial performance, unless otherwise stipulated, the creditor
who refuses to accept partial prestations does not incur in delay
or mora accipiendi, except when there is abuse of right or if good
faith requires acceptance.6
Indeed, the law, as set forth in Article 19 of the Civil Code, prescribes a
"primordial limitation on all rights" by setting certain standards that must be
observed in the exercise thereof.7 Thus:
Art. 19. Every person must, in the exercise of his rights and in the
performance of his duties, act with justice, give everyone his due,
and observe honesty and good faith.
Petitioner now invokes Article 19 and Article 21 8 of the Civil Code, claiming
that private respondent abused its rights when it rejected petitioner's offer of
settlement and subsequently filed the action for collection considering:
. . . that the relationship between the parties started in 1973 spanning
more than 13 years before the complaint was filed, that the petitioner
had been a good and reliable dealer enjoying a good credit standing
during the period before it became delinquent in 1987, that the
relationship between the parties had been a fruitful one especially for
the private respondent, that the petitioner exerted its outmost efforts
to settle its obligations and avoid a suit, that the petitioner did not
evade in the payment of its obligation to the private respondent, and
that the petitioner was just asking a small concession that it be
allowed to liquidate its obligation to eight (8) monthly installments of
P500,000.00 plus 1% interest per month on the balance which
proposal was supported by post-dated checks.9
Expounding on its theory, petitioner states:
In the ordinary course of events, a suit for collection of a sum of
money filed in court is done for the primary purpose of collecting a
debt or obligation. If there is an offer by the debtor to pay its debt or
obligation supported by post-dated checks and with provision for
interests, the normal response of a creditor would be to accept the
offer of compromise and not file the suit for collection. It is of
common knowledge that proceedings in our courts would normally
take years before an action is finally settled. It is always wiser and
more prudent to accept an offer of payment in installment rather than
file an action in court to compel the debtor to settle his obligation in
full in a single payment.
 xxx xxx xxx
. . . Why then did private respondent elect to file a suit for collection
rather than accept petitioner's offer of settlement, supported by post-
dated checks, by paying monthly installments of P500,000.00 plus
1% per month commencing on October 15, 1987 until full payment?
The answer is obvious. The action of private respondent in filling a
suit for collection was an abuse of right and exercised for the sole
purpose of prejudicing and injuring the petitioner.10
Petitioner prays that the Court order private respondent to pay petitioner
moral and exemplary damages, attorney's fees, as well as the costs of suit. It
likewise asks that it be allowed to liquidate its obligation to private
respondent, without interests, in eight equal monthly installments.
Petitioner's theory is untenable.
Both parties agree that to constitute an abuse of rights under Article 19 the
defendant must act with bad faith or intent to prejudice the plaintiff. They cite
the following comments of Tolentino as their authority:
Test of Abuse of Right. — Modern jurisprudence does not permit acts
which, although not unlawful, are anti-social. There is undoubtedly
an abuse of right when it is exercised for the only purpose of
prejudicing or injuring another. When the objective of the actor is
illegitimate, the illicit act cannot be concealed under the guise of
exercising a right. The principle does not permit acts which, without
utility or legitimate purpose cause damage to another, because they
violate the concept of social solidarity which considers law as rational
and just. Hence, every abnormal exercise of a right, contrary to its
socio-economic purpose, is an abuse that will give rise to
liability. The exercise of a right must be in accordance with the
purpose for which it was established, and must not be excessive or
unduly harsh; there must be no intention to injure another. Ultimately,
however, and in practice, courts, in the sound exercise of their
discretion, will have to determine all the facts and circumstances
when the exercise of a right is unjust, or when there has been an
abuse of right.11
The question, therefore, is whether private respondent intended to prejudice
or injure petitioner when it rejected petitioner's offer and filed the action for
collection.
We hold in the negative. It is an elementary rule in this jurisdiction that good
faith is presumed and that the burden of proving bad faith rests upon the
party alleging the same.12 In the case at bar, petitioner has failed to prove
bad faith on the part of private respondent. Petitioner's allegation that private
respondent was motivated by a desire to terminate its agency relationship
with petitioner so that private respondent itself may deal directly with Meralco
is simply not supported by the evidence. At most, such supposition is merely
speculative.
Moreover, we find that private respondent was driven by very legitimate
reasons for rejecting petitioner's offer and instituting the action for collection
before the trial court. As pointed out by private respondent, the corporation
had its own "cash position to protect in order for it to pay its own obligations."
This is not such "a lame and poor rationalization" as petitioner purports it to
be. For if private respondent were to be required to accept petitioner's offer,
there would be no reason for the latter to reject similar offers from its other
debtors. Clearly, this would be inimical to the interests of any enterprise,
especially a profit-oriented one like private respondent. It is plain to see that
what we have here is a mere exercise of rights, not an abuse thereof Under
these circumstances, we do not deem private respondent to have acted in a
manner contrary to morals, good customs or public policy as to violate the
provisions of Article 21 of the Civil Code.
Consequently, petitioner's prayer for moral and exemplary damages must
thus be rejected. Petitioner's claim for moral damages is anchored on Article
2219 (10) of the Civil Code which states:
Art. 2219. Moral damages may be recovered in the following and
analogous cases:
xxx xxx xxx
(10) Acts and actions referred to in articles 21, 26, 27, 28, 29, 30, 32,
34, and 35.
xxx xxx xxx
Having ruled that private respondent's acts did not transgress the provisions
of Article 21, petitioner cannot be entitled to moral damages or, for that
matter, exemplary damages. While the amount of exemplary damages need
not be proved, petitioner must show that he is entitled to moral, temperate or
compensatory damages before the court may consider the question of
whether or not exemplary damages should be awarded. 13 As we have
observed above; petitioner has failed to discharge this burden.
It may not be amiss to state that petitioner's contract with private respondent
has the force of law between them.14Petitioner is thus bound to fulfill what
has been expressly stipulated therein. 15 In the absence of any abuse of right,
private respondent cannot be allowed to perform its obligation under such
contract in parts. Otherwise, private respondent's right under Article 1248 will
be negated, the sanctity of its contract with petitioner defiled. The principle of
autonomy of contracts16 must be respected.
II
Under said contract, petitioner is liable to private respondent for the unpaid
balance of its purchases from private respondent plus 12% interest. Private
respondent's sales invoices expressly provide that:
. . . Interest at 12% per annum will be charged on all overdue
account plus 25% on said amount for attorney's fees and collection. .
. .17
It may also be noted that the above stipulation, insofar as it provides for the
payment of "25% on said amount for attorney's fees and collection (sic),"
constitutes what is known as a penal clause. 18 Petitioner is thus obliged to
pay such penalty in addition to the 12% annual interest, there being an
express stipulation to that effect.
Petitioner nevertheless urges this Court to reduce the attorney's fees for
being "grossly excessive," "considering the nature of the case which is a
mere action for collection of a sum of money." It may be pointed out however
that the above penalty is supposed to answer not only for attorney's fees but
for collection fees as well. Moreover:
. . . the attorneys' fees here provided is not, strictly speaking, the
attorneys' fees recoverable as between attorney and client spoken of
and regulated by the Rules of Court. Rather, the attorneys' fees here
are in the nature of liquidated damages and the stipulation therefor is
aptly called a penal clause. It has been said that so long as such
stipulation does not contravene law, morals, or public order, it is
strictly binding upon defendant. The attorneys' fees so provided are
awarded in favor of the litigant, not his counsel. It is the litigant, not
counsel, who is the judgment creditor entitled to enforce the
judgment by execution. 19
Nonetheless, courts are empowered to reduce such penalty if the same is
"iniquitous or unconscionable." Article 1229 of the Civil Code states thus:
Art. 1229. The judge shall equitably reduce the penalty when the
principal obligation has been partly or been irregularly complied with
by the debtor. Even if there has no performance, the penalty may
also be reduced by the courts if it is iniquitous or unconscionable.
(Emphasis supplied.)
The sentiments of the law are echoed in Article 2227 of the same Code:
Art. 2227. Liquidated damages, whether intended as an indemnity or
a penalty, shall be equitably reduced if they are iniquitous or
unconscionable.
It is true that we have upheld the reasonableness of penalties in the form of
attorney's fees consisting of twenty-five percent (25%) of the principal debt
plus interest.20 In the case at bar, however, the interest alone runs to some
four and a half million pesos (P4.5M), even exceeding the principal debt
amounting to almost four million pesos (P4.0M). Twenty five percent (25%) of
the principal and interest amounts to roughly two million pesos (P2M). In real
terms, therefore, the attorney's fees and collection fees are manifestly
exorbitant. Accordingly, we reduce the same to ten percent (10%) of
the principal.
Private respondent, however, argues that petitioner failed to question the
award of attorney's fees on appeal before respondent court and raised the
issue only in its motion for reconsideration. Consequently, petitioner should
be deemed to have waived its right to question such award.
Private respondent's attempts to dissuade us from reducing the penalty are
futile. The Court is clothed with ample authority to review matters, even if
they are not assigned as errors in their appeal, if it finds that their
consideration is necessary in arriving at a just decision of the case. 21
WHEREFORE, the decision of the Court of Appeals is hereby MODIFIED in
that the attorney's and collection fees are reduced to ten percent (10%) of the
principal but is AFFIRMED in all other respects.
SO ORDERED.
G.R. No. 175822 October 23, 2013
CALIFORNIA CLOTHING INC. and MICHELLE S. YBAÑEZ, Petitioners, vs.
SHIRLEY G. QUIÑONES, Respondent.
DECISION
PERALTA, J.:
Assailed in this petition for review on certiorari under Rule 45 of the ; Rules of Court
are the Court of Appeals Decision1 dated August 3, 2006 and Resolution2 dated
November 14, 2006 in CA-G.R. CV No. 80309. The assailed decision reversed and
set aside the June 20, 2003 Decision3 of the Regional Trial Court of Cebu City (RTC),
Branch 58, in Civil Case No. CEB-26984; while the assailed resolution denied the
motion for reconsideration filed by petitioner Michelle Ybañez (Ybañez).
The facts of the case, as culled from the records, are as follows:
On July 25, 2001, respondent Shirley G. Quiñones, a Reservation Ticketing
Agent of Cebu Pacific Air in Lapu Lapu City, went inside the Guess USA
Boutique at the second floor of Robinson’s Department Store (Robinson’s) in
Cebu City. She fitted four items: two jeans, a blouse and a shorts, then
decided to purchase the black jeans worth ₱2,098.00. 4 Respondent allegedly
paid to the cashier evidenced by a receipt5 issued by the store.6
While she was walking through the skywalk connecting Robinson’s and
Mercury Drug Store (Mercury) where she was heading next, a Guess
employee approached and informed her that she failed to pay the item she
got. She, however, insisted that she paid and showed the employee the
receipt issued in her favor.7 She then suggested that they talk about it at the
Cebu Pacific Office located at the basement of the mall. She first went to
Mercury then met the Guess employees as agreed upon. 8
When she arrived at the Cebu Pacific Office, the Guess employees allegedly
subjected her to humiliation in front of the clients of Cebu Pacific and
repeatedly demanded payment for the black jeans. 9 They supposedly even
searched her wallet to check how much money she had, followed by another
argument. Respondent, thereafter, went home.10
On the same day, the Guess employees allegedly gave a letter to the
Director of Cebu Pacific Air narrating the incident, but the latter refused to
receive it as it did not concern the office and the same took place while
respondent was off duty.11 Another letter was allegedly prepared and was
supposed to be sent to the Cebu Pacific Office in Robinson’s, but the latter
again refused to receive it.12 Respondent also claimed that the Human
Resource Department (HRD) of Robinson’s was furnished said letter and the
latter in fact conducted an investigation for purposes of canceling
respondent’s Robinson’s credit card. Respondent further claimed that she
was not given a copy of said damaging letter. 13 With the above experience,
respondent claimed to have suffered physical anxiety, sleepless nights,
mental anguish, fright, serious apprehension, besmirched reputation, moral
shock and social humiliation.14 She thus filed the Complaint for
Damages15 before the RTC against petitioners California Clothing, Inc.
(California Clothing), Excelsis Villagonzalo (Villagonzalo), Imelda Hawayon
(Hawayon) and Ybañez. She demanded the payment of moral, nominal, and
exemplary damages, plus attorney’s fees and litigation expenses. 16
In their Answer,17 petitioners and the other defendants admitted the issuance of the
receipt of payment. They claimed, however, that instead of the cashier (Hawayon)
issuing the official receipt, it was the invoicer (Villagonzalo) who did it manually. They
explained that there was miscommunication between the employees at that time
because prior to the issuance of the receipt, Villagonzalo asked Hawayon " Ok na ?,"
and the latter replied " Ok na ," which the former believed to mean that the item has
already been paid.18 Realizing the mistake, Villagonzalo rushed outside to look for
respondent and when he saw the latter, he invited her to go back to the shop to make
clarifications as to whether or not payment was indeed made. Instead, however, of
going back to the shop, respondent suggested that they meet at the Cebu Pacific
Office. Villagonzalo, Hawayon and Ybañez thus went to the agreed venue where they
talked to respondent.19 They pointed out that it appeared in their conversation that
respondent could not recall whom she gave the payment.20 They emphasized that
they were gentle and polite in talking to respondent and it was the latter who was
arrogant in answering their questions.21 As counterclaim, petitioners and the other
defendants sought the payment of moral and exemplary damages, plus attorney’s
fees and litigation expenses.22
On June 20, 2003, the RTC rendered a Decision dismissing both the complaint and
counterclaim of the parties. From the evidence presented, the trial court concluded
that the petitioners and the other defendants believed in good faith that respondent
failed to make payment. Considering that no motive to fabricate a lie could be
attributed to the Guess employees, the court held that when they demanded payment
from respondent, they merely exercised a right under the honest belief that no
payment was made. The RTC likewise did not find it damaging for respondent when
the confrontation took place in front of Cebu Pacific clients, because it was
respondent herself who put herself in that situation by choosing the venue for
discussion. As to the letter sent to Cebu Pacific Air, the trial court also did not take it
against the Guess employees, because they merely asked for assistance and not to
embarrass or humiliate respondent. In other words, the RTC found no evidence to
prove bad faith on the part of the Guess employees to warrant the award of
damages.23
On appeal, the CA reversed and set aside the RTC decision, the dispositive portion of
which reads:
WHEREFORE, the instant appeal is GRANTED. The decision of the Regional Trial
Court of Cebu City, Branch 58, in Civil Case No. CEB-26984 (for: Damages) is hereby
REVERSED and SET ASIDE. Defendants Michelle Ybañez and California Clothing,
Inc. are hereby ordered to pay plaintiff-appellant Shirley G. Quiñones jointly and
solidarily moral damages in the amount of Fifty Thousand Pesos (₱50,000.00) and
attorney’s fees in the amount of Twenty Thousand Pesos (₱20,000.00).
SO ORDERED.24
While agreeing with the trial court that the Guess employees were in good
faith when they confronted respondent inside the Cebu Pacific Office about
the alleged non-payment, the CA, however, found preponderance of
evidence showing that they acted in bad faith in sending the demand letter to
respondent’s employer. It found respondent’s possession of both the official
receipt and the subject black jeans as evidence of payment. 25 Contrary to the
findings of the RTC, the CA opined that the letter addressed to Cebu Pacific’s
director was sent to respondent’s employer not merely to ask for assistance
for the collection of the disputed payment but to subject her to ridicule,
humiliation and similar injury such that she would be pressured to
pay.26 Considering that Guess already started its investigation on the
incident, there was a taint of bad faith and malice when it dragged
respondent’s employer who was not privy to the transaction. This is
especially true in this case since the purported letter contained not only a
narrative of the incident but accusations as to the alleged acts of respondent
in trying to evade payment.27 The appellate court thus held that petitioners
are guilty of abuse of right entitling respondent to collect moral damages and
attorney’s fees. Petitioner California Clothing Inc. was made liable for its
failure to exercise extraordinary diligence in the hiring and selection of its
employees; while Ybañez’s liability stemmed from her act of signing the
demand letter sent to respondent’s employer. In view of Hawayon and
Villagonzalo’s good faith, however, they were exonerated from liability. 28
Ybañez moved for the reconsideration 29 of the aforesaid decision, but the
same was denied in the assailed November 14, 2006 CA Resolution.
Petitioners now come before the Court in this petition for review on certiorari
under Rule 45 of the Rules of Court based on the following grounds:
I. THE HONORABLE COURT OF APPEALS ERRED IN FINDING THAT THE
LETTER SENT TO THE CEBU PACIFIC OFFICE WAS MADE TO
SUBJECT HEREIN RESPONDENT TO RIDICULE, HUMILIATION AND
SIMILAR INJURY.
II. THE HONORABLE COURT OF APPEALS ERRED IN AWARDING MORAL
DAMAGES AND ATTORNEY’S FEES.30
The petition is without merit.
Respondent’s complaint against petitioners stemmed from the principle of
abuse of rights provided for in the Civil Code on the chapter of human
relations. Respondent cried foul when petitioners allegedly embarrassed her
when they insisted that she did not pay for the black jeans she purchased
from their shop despite the evidence of payment which is the official receipt
issued by the shop. The issuance of the receipt notwithstanding, petitioners
had the right to verify from respondent whether she indeed made payment if
they had reason to believe that she did not. However, the exercise of such
right is not without limitations. Any abuse in the exercise of such right and in
the performance of duty causing damage or injury to another is actionable
under the Civil Code. The Court’s pronouncement in Carpio v. Valmonte 31 is
noteworthy:
In the sphere of our law on human relations, the victim of a wrongful act or
omission, whether done willfully or negligently, is not left without any remedy
or recourse to obtain relief for the damage or injury he sustained.
Incorporated into our civil law are not only principles of equity but also
universal moral precepts which are designed to indicate certain norms that
spring from the fountain of good conscience and which are meant to serve as
guides for human conduct. First of these fundamental precepts is the
principle commonly known as "abuse of rights" under Article 19 of the Civil
Code. It provides that " Every person must, in the exercise of his rights and in
the performance of his duties, act with justice, give everyone his due and
observe honesty and good faith."x x x 32 The elements of abuse of rights are
as follows: (1) there is a legal right or duty; (2) which is exercised in bad faith;
(3) for the sole intent of prejudicing or injuring another. 33
In this case, petitioners claimed that there was a miscommunication between
the cashier and the invoicer leading to the erroneous issuance of the receipt
to respondent. When they realized the mistake, they made a cash count and
discovered that the amount which is equivalent to the price of the black jeans
was missing. They, thus, concluded that it was respondent who failed to
make such payment. It was, therefore, within their right to verify from
respondent whether she indeed paid or not and collect from her if she did
not. However, the question now is whether such right was exercised in good
faith or they went overboard giving respondent a cause of action against
them.
Under the abuse of rights principle found in Article 19 of the Civil Code, a
person must, in the exercise of legal right or duty, act in good faith. He would
be liable if he instead acted in bad faith, with intent to prejudice
another.34 Good faith refers to the state of mind which is manifested by the
acts of the individual concerned. It consists of the intention to abstain from
taking an unconscionable and unscrupulous advantage of another. 35 Malice
or bad faith, on the other hand, implies a conscious and intentional design to
do a wrongful act for a dishonest purpose or moral obliquity. 36
Initially, there was nothing wrong with petitioners asking respondent whether
she paid or not. The Guess employees were able to talk to respondent at the
Cebu Pacific Office. The confrontation started well, but it eventually turned
sour when voices were raised by both parties. As aptly held by both the RTC
and the CA, such was the natural consequence of two parties with conflicting
views insisting on their respective beliefs. Considering, however, that
respondent was in possession of the item purchased from the shop, together
with the official receipt of payment issued by petitioners, the latter cannot
insist that no such payment was made on the basis of a mere speculation.
Their claim should have been proven by substantial evidence in the proper
forum.
It is evident from the circumstances of the case that petitioners went
overboard and tried to force respondent to pay the amount they were
demanding. In the guise of asking for assistance, petitioners even sent a
demand letter to respondent’s employer not only informing it of the incident
but obviously imputing bad acts on the part of
respondent.1âwphi1 Petitioners claimed that after receiving the receipt of
payment and the item purchased, respondent "was noted to hurriedly left
(sic) the store." They also accused respondent that she was not completely
being honest when she was asked about the circumstances of payment,
thus:
x x x After receiving the OR and the item, Ms. Gutierrez was noted to
hurriedly left (sic) the store. x x x
When I asked her about to whom she gave the money, she gave out a blank
expression and told me, "I can’t remember." Then I asked her how much
money she gave, she answered, "₱2,100; 2 pcs 1,000 and 1 pc 100 bill."
Then I told her that that would (sic) impossible since we have no such
denomination in our cash fund at that moment. Finally, I asked her if how
much change and if she received change from the cashier, she then
answered, "I don’t remember." After asking these simple questions, I am very
certain that she is not completely being honest about this. In fact, we invited
her to come to our boutique to clear these matters but she vehemently
refused saying that she’s in a hurry and very busy.37
Clearly, these statements are outrightly accusatory. Petitioners accused
respondent that not only did she fail to pay for the jeans she purchased but
that she deliberately took the same without paying for it and later hurriedly
left the shop to evade payment. These accusations were made despite the
issuance of the receipt of payment and the release of the item purchased.
There was, likewise, no showing that respondent had the intention to evade
payment. Contrary to petitioners’ claim, respondent was not in a rush in
leaving the shop or the mall. This is evidenced by the fact that the Guess
employees did not have a hard time looking for her when they realized the
supposed non-payment.
It can be inferred from the foregoing that in sending the demand letter to
respondent’s employer, petitioners intended not only to ask for assistance in
collecting the disputed amount but to tarnish respondent’s reputation in the
eyes of her employer. To malign respondent without substantial evidence and
despite the latter’s possession of enough evidence in her favor, is clearly
impermissible. A person should not use his right unjustly or contrary to
honesty and good faith, otherwise, he opens himself to liability. 38
The exercise of a right must be in accordance with the purpose for which it
was established and must not be excessive or unduly harsh. 39 In this case,
petitioners obviously abused their rights.
Complementing the principle of abuse of rights are the provisions of Articles
20 and 2 of the Civil Code which read:40
Article 20. Every person who, contrary to law, willfully or negligently causes
damage to another, shall indemnify the latter for the same.
Article 21. Any person who willfully causes loss or injury to another in a
manner that is contrary to morals or good customs, or public policy shall
compensate the latter for the damage.
In view of the foregoing, respondent is entitled to an award of moral damages
and attorney s fees. Moral damages may be awarded whenever the
defendant s wrongful act or omission is the proximate cause of the plaintiffs
physical suffering, mental anguish, fright, serious anxiety, besmirched
reputation, wounded feelings, moral shock, social humiliation and similar
injury in the cases specified or analogous to those provided in Article 2219 of
the Civil Code.41 Moral damages are not a bonanza. They are given to ease
the defendant s grief and suffering. They should, thus, reasonably
approximate the extent of hurt caused and the gravity of the wrong
done.42 They are awarded not to enrich the complainant but to enable the
latter to obtain means, diversions, or amusements that will serve to alleviate
the moral suffering he has undergone. 43 We find that the amount of
₱50,000.00 as moral damages awarded by the CA is reasonable under the
circumstances. Considering that respondent was compelled to litigate to
protect her interest, attorney s fees in the amount of of₱20,000.00 is likewise
just and proper.
WHEREFORE, premises considered, the petition is DENIED for lack of merit.
The Court of Appeals Decision dated August 3, 2006 and Resolution dated
November 14, 2006 in CA-G.R. CV No. 80309, are AFFIRMED.

SO ORDERED.
G.R. No. 138964 August 9, 2001
VICENTE RELLOSA, CYNTHIA ORTEGA assisted by husband Roberto
Ortega, petitioner, vs. GONZALO PELLOSIS, INESITA MOSTE, and
DANILO RADAM, respondents.
VITUG, J.:
"Every person must, in the exercise of his rights and in the performance of
his duties, act with justice, give everyone his due, and observe honesty and
good faith." 1 This provision in our law is not just a declaration of principle for
it can in itself constitute, when unduly ignored or violated, a valid source of a
cause of action or defense.
The case seeks to reverse the Court of Appeals in not countenancing an
attempt to abridge and render inutile a legal right to contest an adverse ruling
of an agency of government.
Respondents were lessees of a parcel of land, owned by one Marta Reyes,
located at San Pascual Street, Malate, Manila. Respondents had built their
houses on the land which, over the years, underwent continuous
improvements. After the demise of Marta, the land was inherited by her son
Victor Reyes. Sometime in 1986, Victor informed respondents that, for being
lessees of the land for more than twenty (20) years, they would have a right
of first refusal to buy the land. Sometime in the early part of 1989, without the
knowledge of respondents, the land occupied by them was sold to petitioner
Cynthia Ortega who was able to ultimately secure title to the property in her
name.
On 25 May 1989, Cynthia Ortega, filed a petition for condemnation, docketed
Condemnation Case No. 89-05-007, with the Office of the Building Official,
City of Manila, of the structures on the land.
On 31 May 1989, respondents filed with the Regional Trial Court of Manila a
suit for the "Declaration of Nullity of the Sale," docketed as Civil Case No. 89-
49176, made in favor of petitioner Cynthia Ortega predicated upon their right
of first refusal which was claimed to have been impinged upon the sale of the
land to petitioner Ortega without their knowledge.
After due hearing in the condemnation case, the Office of the Building Official
issued a resolution, dated 27 November 1989, ordering the demolition of the
houses of respondents. Copies of the resolution were served upon
respondents and their counsel on 07 December 1989. The following day, or
on 08 December 1989, Cynthia Ortega, together with her father and co-
petitioner, Vicente Rellosa, hired workers to commence the demolition of
respondents' houses. Due to the timely intervention of a mobile unit of the
Western Police District, the intended demolition did not take place following
talks between petitioner Rellosa and counsel who pleaded that the demolition
be suspended since the order sought to be implemented was not yet final
and executory. On 11 December 1989, respondents filed their appeal
contesting the order of the Office of the Building Official. On 12 December
1989, petitioners once again hired workers and proceeded with the
demolition of respondents' houses.
Resultantly, respondents filed Civil Case No. 89-49176 before the Regional
Trial Court of Manila, Branch 54, praying that petitioners be ordered to pay
moral and exemplary damages, as well as attorney's fee, for the untimely
demolition of the houses. After trial, the court dismissed the complaint of
respondents and instead ordered them to pay petitioners moral damages. On
appeal, the Court of Appeals, on the basis of its findings and conclusions,
reversed the decision of the trial court and ordered petitioners to pay
respondents the following sums:
"1) Seventy Five Thousand Pesos (P75,000.00), or Twenty Five
Thousand Pesos (P25,000.00) for each appellant, by way of moral
damages;"
"2) Seventy Five Thousand Pesos (P75,000.00), or Twenty Five
thousand Pesos (P25,000.00) for each appellant, by way of
exemplary damages;"
"3) Fifteen Thousand Pesos (P15,000.00) as and for attorney's fees;
and
"4) The costs of suit."2
The appellate court ruled:
"Thus, by the clear provisions of paragraph 23 of the Implementing
Rules and Regulations of PD 1096 (otherwise known as the Building
Code), above, appellants, being the parties adversely affected by the
November 27, 1989 Resolution of the Office of the Building Official,
had fifteen (15) days from receipt of a copy of the same within which
to perfect an administrative appeal. Thus, since appellants received
a copy of the Resolution on December 7, 1989, they had until
December 22, 1989 within which to perfect an administrative appeal
and until such time, the said Resolution was not yet final and
executory."
 xxx xxx xxx
"It cannot be denied, therefore, that when appellees commenced to
demolish appellants' houses as early as December 8, 1989 and
eventually on December 12, 1989, neither the Resolution of the
Building Official nor the Demolition Order itself were final and
executory."3
Petitioners filed the instant petition contending that the appellate court
gravely erred in ruling that the premature demolition of respondents' houses
entitled them to the award of damages. Petitioners pointed out that the order
of the Office of the Building Official was eventually upheld on appeal by the
Department of Public Works and Highways in its decision of 14 March 1990.
Furthermore, petitioners added, the structures subject matter of the
demolition order were declared to be dangerous structures by the Office of
the Building Official and, as such, could be abated to avoid danger to the
public.
secure an order of demolition was not condemnable but implementing the
order unmindful of the right of respondents to contest the ruling was a
different matter and could only be held utterly indefensible.
The Court, however, finds the award of P75,000.00 exemplary damages and
another of P75,000.00 moral damages for each respondent to be rather
excessive given the circumstances; the awards must be reduced to the
reasonable amounts of P20,000.00 exemplary damages and P20,000.00
moral damages.
WHEREFORE, the assailed decision of the Court of Appeals is MODIFIED
by reducing the awards of P75,000.00 exemplary damages and of
P75,000.00 moral damages to each respondent reduced to P20,000.00
exemplary damages and P20,000.00 moral damages for each respondent. In
all other respects, the decision of the appellate court is AFFIRMED. No costs.
SO ORDERED.

The Court rules for affirmance of the assailed decision.

A right is a power, privilege, or immunity guaranteed under a constitution,

statute or decisional law, or recognized as a result of long usage, 4 constitutive
of a legally enforceable claim of one person against another.

Petitioner might verily be the owner of the land, with the right to enjoy 5 and to
exclude any person from the enjoyment and disposal thereof, 6 but the
exercise of these rights is not without limitations. The abuse of rights rule
established in Article 19 of the Civil Code requires every person to act with
justice, to give everyone his due; and to observe honesty and good
faith.7 When a right is exercised in a manner which discards these norms
resulting in damage to another, a legal wrong is committed for which the
actor can be held accountable. In this instance, the issue is not so much
about the existence of the right or validity of the order of demolition as the
question of whether or not petitioners have acted in conformity with, and not
in disregard of, the standard set by Article 19 of the Civil Code.

At the time petitioners implemented the order of demolition, barely five days
after respondents received a copy thereof, the same was not yet final and
executory. The law provided for a fifteen-day appeal period in favor of a party
aggrieved by an adverse ruling of the Office of the Building Official but by the
precipitate action of petitioners in demolishing the houses of respondents
(prior to the expiration of the period to appeal), the latter were effectively
deprived of this recourse. The fact that the order of demolition was later
affirmed by the Department of Public Works and Highways was of no
moment. The action of petitioners up to the point where they were able to
G.R. No. 126204 November 20, 2001
NATIONAL POWER CORPORATION, petitioner, vs. PHILIPP BROTHERS
OCEANIC, INC., respondent.
SANDOVAL-GUTIERREZ, J.:
Where a person merely uses a right pertaining to him, without bad faith or
intent to injure, the fact that damages are thereby suffered by another will not
make him liable.1
This principle finds useful application to the present case.
Before us is a petition for review of the Decision 2 dated August 27, 1996 of
the Court of Appeals affirming in toto the Decision 3 dated January 16, 1992 of
the Regional Trial Court, Branch 57, Makati City.
The facts are:
On May 14, 1987, the National Power Corporation (NAPOCOR) issued
invitations to bid for the supply and delivery of 120,000 metric tons of
imported coal for its Batangas Coal-Fired Thermal Power Plant in Calaca,
Batangas. The Philipp Brothers Oceanic, Inc. (PHIBRO) prequalified and was
allowed to participate as one of the bidders. After the public bidding was
conducted, PHIBRO's bid was accepted. NAPOCOR's acceptance was
conveyed in a letter dated July 8, 1987, which was received by PHIBRO on
July 15, 1987.The "Bidding Terms and Specifications" 4provide for the manner
of shipment of coals, thus:
"SECTION V
SHIPMENT
The winning TENDERER who then becomes the SELLER shall
arrange and provide gearless bulk carrier for the shipment of coal to
arrive at discharging port on or before thirty (30) calendar days after
receipt of the Letter of Credit by the SELLER or its nominee as per
Section XIV hereof to meet the vessel arrival schedules at Calaca,
Batangas, Philippines as follows:
60,000 +/ - 10 % July 20, 1987
60,000 +/ - 10% September 4, 1987"5
On July 10, 1987, PHIBRO sent word to NAPOCOR that industrial disputes
might soon plague Australia, the shipment's point of origin, which could
seriously hamper PHIBRO's ability to supply the needed coal. 6 From July 23
to July 31, 1987, PHIBRO again apprised NAPOCOR of the situation in
Australia, particularly informing the latter that the ship owners therein are not
willing to load cargo unless a "strike-free" clause is incorporated in the
charter party or the contract of carriage. 7 In order to hasten the transfer of
coal, PHIBRO proposed to NAPOCOR that they equally share the burden of
a "strike-free" clause. NAPOCOR refused.
On August 6, 1987, PHIBRO received from NAPOCOR a confirmed and
workable letter of credit. Instead of delivering the coal on or before the
thirtieth day after receipt of the Letter of Credit, as agreed upon by the parties
in the July contract, PHIBRO effected its first shipment only on November 17,
1987.
Consequently, in October 1987, NAPOCOR once more advertised for the
delivery of coal to its Calaca thermal plant. PHIBRO participated anew in this
subsequent bidding. On November 24, 1987, NAPOCOR disapproved
PHIBRO's application for pre-qualification to bid for not meeting the minimum
requirements.8 Upon further inquiry, PHIBRO found that the real reason for
the disapproval was its purported failure to satisfy NAPOCOR's demand for
damages due to the delay in the delivery of the first coal shipment.
This prompted PHIBRO to file an action for damages with application for
injunction against NAPOCOR with the Regional Trial Court, Branch 57,
Makati City.9 In its complaint, PHIBRO alleged that NAPOCOR's act of
disqualifying it in the October 1987 bidding and in all subsequent biddings
was tainted with malice and bad faith. PHIBRO prayed for actual, moral and
exemplary damages and attorney's fees.
In its answer, NAPOCOR averred that the strikes in Australia could not be
invoked as reason for the delay in the delivery of coal because PHIBRO itself
admitted that as of July 28, 1987 those strikes had already ceased. And,
even assuming that the strikes were still ongoing, PHIBRO should have
shouldered the burden of a "strike-free" clause because their contract was "C
and F Calaca, Batangas, Philippines," meaning, the cost and freight from the
point of origin until the point of destination would be for the account of
PHIBRO. Furthermore, NAPOCOR claimed that due to PHIBRO's failure to
deliver the coal on time, it was compelled to purchase coal from ASEA at a
higher price. NAPOCOR claimed for actual damages in the amount of
P12,436,185.73, representing the increase in the price of coal, and a claim of
P500,000.00 as litigation expenses.10
Thereafter, trial on the merits ensued.
On January 16, 1992, the trial court rendered a decision in favor of PHIBRO,
the dispositive portion of which reads:
"WHEREFORE, judgment is hereby rendered in favor of plaintiff
Philipp Brothers Oceanic Inc. (PHIBRO) and against the defendant
National Power Corporation (NAPOCOR) ordering the said
defendant NAPOCOR:
1. To reinstate Philipp Brothers Oceanic, Inc. (PHIBRO) in the
defendant National Power Corporation's list of accredited bidders
and allow PHIBRO to participate in any and all future tenders of
National Power Corporation for the supply and delivery of imported
steam coal;
2. To pay Philipp Brothers Oceanic, Inc. (PHIBRO);
a. The peso equivalent at the time of payment of $864,000
as actual damages,
b. The peso equivalent at the time of payment of $100,000
as moral damages;
c. The peso equivalent at the time of payment of $50,000 as
exemplary damages;
d. The peso equivalent at the time of payment of $73,231.91
as reimbursement for expenses, cost of litigation and
attorney's fees;
3. To pay the costs of suit;
4. The counterclaims of defendant NAPOCOR are dismissed for lack
of merit.
SO ORDERED."11
Unsatisfied, NAPOCOR, through the Solicitor General, elevated the case to
the Court of Appeals. On August 27, 1996, the Court of Appeals rendered a
Decision affirming in toto the Decision of the Regional Trial Court. It
ratiocinated that:
"There is ample evidence to show that although PHIBRO's delivery
of the shipment of coal was delayed, the delay was in fact caused by
a) Napocor's own delay in opening a workable letter of credit; and b)
the strikes which plaqued the Australian coal industry from the first
week of July to the third week of September 1987. Strikes are
included in the definition of force majeure in Section XVII of the
Bidding Terms and Specifications, (supra), so Phibro is not liable for
any delay caused thereby.
Phibro was informed of the acceptance of its bid on July 8, 1987.
Delivery of coal was to be effected thirty (30) days from Napocor's
opening of a confirmed and workable letter of credit. Napocor was
only able to do so on August 6, 1987.
By that time, Australia's coal industry was in the middle of a seething
controversy and unrest, occasioned by strikes, overtime bans, mine
stoppages. The origin, the scope and the effects of this industrial
unrest are lucidly described in the uncontroverted testimony of
James Archibald, an employee of Phibro and member of the Export
Committee of the Australian Coal Association during the time these
events transpired.
xxx xxx xxx
The records also attest that Phibro periodically informed Napocor of
these developments as early as July 1, 1987, even before the bid
was approved. Yet, Napocor did not forthwith open the letter of credit
in order to avoid delay which might be caused by the strikes and their
after-effects.
"Strikes" are undoubtedly included in the force majeure clause of the
Bidding Terms and Specifications (supra). The renowned civilist,
Prof. Arturo Tolentino, defines force majeure as "an event which
takes place by accident and could not have been foreseen." (Civil
Code of the Philippines, Volume IV, Obligations and Contracts, 126,
[1991]) He further states:
"Fortuitous events may be produced by two general causes:
(1) by Nature, such as earthquakes, storms, floods,
epidemics, fires, etc., and (2) by the act of man, such as an
armed invasion, attack by bandits, governmental
prohibitions, robbery, etc."
Tolentino adds that the term generally applies, broadly speaking, to
natural accidents. In order that acts of man such as a strike, may
 constitute fortuitous event, it is necessary that they have the force of
an imposition which the debtor could not have resisted. He cites a
parallel example in the case of Philippine National Bank v. Court of
Appeals, 94 SCRA 357 (1979), wherein the Supreme Court said that
the outbreak of war which prevents performance exempts a party
from liability.
Hence, by law and by stipulation of the parties, the strikes which took
place in Australia from the first week of July to the third week of
September, 1987, exempted Phibro from the effects of delay of the
delivery of the shipment of coal."12
Twice thwarted, NAPOCOR comes to us via a petition for review ascribing to
the Court of Appeals the following errors:
I. "Respondent Court of Appeals gravely and seriously erred in
concluding and so holding that PHIBRO's delay in the delivery of
imported coal was due to NAPOCOR's alleged delay in opening
a letter of credit and to force majeure, and not to PHIBRO's own
deliberate acts and faults."13
II. "Respondent Court of Appeals gravely and seriously erred in
concluding and so holding that NAPOCOR acted maliciously and
unjustifiably in disqualifying PHIBRO from participating in the
December 8, 1987 and future biddings for the supply of imported
coal despite the existence of valid grounds therefor such as
serious impairment of its track record."14
III. Respondent Court of Appeals gravely and seriously erred in
concluding and so holding that PHIBRO was entitled to injunctive
relief, to actual or compensatory, moral and exemplary damages,
attorney's fees and litigation expenses despite the clear absence
of legal and factual bases for such award."15
IV. "Respondent Court of Appeals gravely and seriously erred in
absolving PHIBRO from any liability for damages to NAPOCOR
for its unjustified and deliberate refusal and/or failure to deliver
the contracted imported coal within the stipulated period." 16
V. "Respondent Court of Appeals gravely and seriously erred in
dismissing NAPOCOR's counterclaims for damages and
litigation expenses."17
It is axiomatic that only questions of law, not questions of fact, may be raised
before this Court in a petition for review under Rule 45 of the Rules of
Court.18 The findings of facts of the Court of Appeals are conclusive and
binding on this Court19 and they carry even more weight when the said court
affirms the factual findings of the trial court. 20 Stated differently, the findings of
the Court of .Appeals, by itself, which are supported by substantial evidence,
are almost beyond the power of review by this Court. 21
With the foregoing settled jurisprudence, we find it pointless to delve lengthily
on the factual issues raised by petitioner. The existence of strikes in Australia
having been duly established in the lower courts, we are left only with the
burden of determining whether or not NAPOCOR acted wrongfully or with
bad faith in disqualifying PHIBRO from participating in the subsequent public
bidding.
Let us consider the case in its proper perspective.
The Court of Appeals is justified in sustaining the Regional Trial Court's
decision exonerating PHIBRO from any liability for damages to NAPOCOR
as it was clearly established from the evidence, testimonial and documentary,
that what prevented PHIBRO from complying with its obligation under the
July 1987 contract was the industrial disputes which besieged Australia
during that time. Extant in our Civil Code is the rule that no person shall be
responsible for those events which could not be foreseen, or which, though
foreseen, were inevitable.22 This means that when an obligor is unable to
fulfill his obligation because of a fortuitous event or force majeure, he cannot
be held liable for damages for non-performance. 23
In addition to the above legal precept, it is worthy to note that PHIBRO and
NAPOCOR explicitly agreed in Section XVII of the "Bidding Terms and
Specifications"24 that "neither seller (PHIBRO) nor buyer (NAPOCOR) shall
be liable for any delay in or failure of the performance of its obligations, other
than the payment of money due, if any such delay or failure is due to
Force Majeure." Specifically, they defined force majeure as "any disabling
cause beyond the control of and without fault or negligence of the party,
which causes may include but are not restricted to Acts of God or of the
public enemy; acts of the Government in either its sovereign or contractual
capacity; governmental restrictions; strikes, fires, floods, wars, typhoons,
storms, epidemics and quarantine restrictions."
The law is clear and so is the contract between NAPOCOR and PHIBRO.
Therefore, we have no reason to rule otherwise.
However, proceeding from the premise that PHIBRO was prevented by
force majeure from complying with its obligation, does it necessarily follow
that NAPOCOR acted unjustly, capriciously, and unfairly in disapproving
PHIBRO's application for pre-qualification to bid?
First, it must be stressed that NAPOCOR was not bound under any contract
to approve PHIBRO's pre-qualification requirements. In fact, NAPOCOR had
expressly reserved its right to reject bids. The Instruction to Bidders found in
the "Post-Qualification Documents/Specifications for the Supply and Delivery
of Coal for the Batangas Coal-Fired Thermal Power Plant I at Calaca,
Batangas Philippines,"25 is explicit, thus:
"IB-17 RESERVATION OF NAPOCOR TO REJECT BIDS
NAPOCOR reserves the right to reject any or all bids, to waive any
minor informality in the bids received. The right is also reserved to
reject the bids of any bidder who has previously failed to properly
perform or complete on time any and all contracts for delivery of coal
or any supply undertaken by a bidder."26(Emphasis supplied)
This Court has held that where the right to reject is so reserved, the lowest
bid or any bid for that matter may be rejected on a mere technicality. 27 And
where the government as advertiser, availing itself of that right, makes its
choice in rejecting any or all bids, the losing bidder has no cause to complain
nor right to dispute that choice unless an unfairness or injustice is shown.
Accordingly, a bidder has no ground of action to compel the Government to
award the contract in his favor, nor to compel it to accept his bid. Even the
lowest bid or any bid may be rejected.28In Celeste v. Court of Appeals,29 we
had the occasion to rule:
"Moreover, paragraph 15 of the Instructions to Bidders states
that 'the Government hereby reserves the right to reject any or all
bids submitted.' In the case of A.C. Esguerra and Sons v. Aytona, 4
SCRA 1245, 1249 (1962), we held:
'x x x [I]n the invitation to bid, there is a condition imposed
upon the bidders to the effect that the bidders shall be
subject to the right of the government to reject any and all
bids subject to its discretion. Here the government has made
its choice, and unless an unfairness or injustice is shown,
the losing bidders have no cause to complain, nor right to
dispute that choice.'
Since there is no evidence to prove bad faith and arbitrariness on the
part of the petitioners in evaluating the bids, we rule that the private
respondents are not entitled to damages representing lost profits."
(Emphasis supplied)
Verily, a reservation of the government of its right to reject any bid, generally
vests in the authorities a wide discretion as to who is the best and most
advantageous bidder. The exercise of such discretion involves inquiry,
investigation, comparison, deliberation and decision, which are quasi-judicial
functions, and when honestly exercised, may not be reviewed by the
court.30 In Bureau Veritas v. Office of the President,31 we decreed:
"The discretion to accept or reject a bid and award contracts is
vested in the Government agencies entrusted with that function. The
discretion given to the authorities on this matter is of such wide
latitude that the Courts will not interfere therewith, unless it is
apparent that it is used as a shield to a fraudulent award. (Jalandoni
v. NARRA, 108 Phil. 486 [1960]) x x x. The exercise of this discretion
is a policy decision that necessitates prior inquiry, investigation,
comparison, evaluation, and deliberation. This task can best be
discharged by the Government agencies concerned, not by the
Courts. The role of the Courts is to ascertain whether a branch or
instrumentality of the Government has transgresses its constitutional
boundaries. But the Courts will not interfere with executive or
legislative discretion exercised within those boundaries. Otherwise, it
strays into the realm of policy decision-making. x x x." (Emphasis
supplied)
Owing to the discretionary character of the right involved in this case, the
propriety of NAPOCOR's act should therefore be judged on the basis of the
general principles regulating human relations, the forefront provision of which
is Article 19 of the Civil Code which provides that "every person must, in the
exercise of his rights and in the performance of his duties, act with justice,
give everyone his due, and observe honesty and good faith." 32Accordingly, a
person will be protected only when he acts in the legitimate exercise of his
right, that is, when he acts with prudence and in good faith; but not when he
acts with negligence or abuse.33
Did NAPOCOR abuse its right or act unjustly in disqualifying PHIBRO from
the public bidding?
We rule in the negative.
In practice, courts, in the sound exercise of their discretion, will have to
determine under all the facts and circumstances when the exercise of a right
is unjust, or when there has been an abuse of right. 34
We went over the record of the case with painstaking solicitude and we are
convinced that NAPOCOR's act of disapproving PHIBRO's application for
pre-qualification to bid was without any intent to injure or a purposive motive
to perpetrate damage. Apparently, NAPOCOR acted on the strong conviction
that PHIBRO had a "seriously-impaired" track record. NAPOCOR cannot be
faulted from believing so. At this juncture, it is worth mentioning that at the
time NAPOCOR issued its subsequent Invitation to Bid, i.e., October 1987,
PHIBRO had not yet delivered the first shipment of coal under the July 1987
contract, which was due on or before September 5, 1987. Naturally,
NAPOCOR is justified in entertaining doubts on PHIBRO's qualification or
capability to assume an obligation under a new contract.
Moreover, PHIBRO's actuation in 1987 raised doubts as to the real situation
of the coal industry in Australia. It appears from the records that when
NAPOCOR was constrained to consider an offer from another coal supplier
(ASEA) at a price of US$33.44 per metric ton, PHIBRO unexpectedly offered
the immediate delivery of 60,000 metric tons of Ulan steam coal at US$31.00
per metric ton for arrival at Calaca, Batangas on September 20-21,
1987."35 Of course, NAPOCOR had reason to ponder — how come PHIBRO
could assure the immediate delivery of 60,000 metric tons of coal from the
same source to arrive at Calaca not later than September 20/21, 1987 but it
could not deliver the coal it had undertaken under its contract?
Significantly, one characteristic of a fortuitous event, in a legal sense, and
consequently in relations to contracts, is that "the concurrence must be such
as to render it impossible for the debtor to fulfill his obligation in a normal
manner."36 Faced with the above circumstance, NAPOCOR is justified in
assuming that, may be, there was really no fortuitous event or
force majeure which could render it impossible for PHIBRO to effect the
delivery of coal. Correspondingly, it is also justified in treating PHIBRO's
failure to deliver a serious impairment of its track record. That the trial court,
thereafter, found PHIBRO's unexpected offer actually a result of its desire to
minimize losses on the part of NAPOCOR is inconsequential. In determining
the existence of good faith, the yardstick is the frame of mind of the actor at
the time he committed the act, disregarding actualities or facts outside his
knowledge. We cannot fault NAPOCOR if it mistook PHIBRO's unexpected
offer a mere attempt on the latter's part to undercut ASEA or an indication of
PHIBRO's inconsistency. The circumstances warrant such contemplation.
That NAPOCOR believed all along that PHIBRO's failure to deliver on time
was unfounded is manifest from its letters 37 reminding PHIBRO that it was
bound to deliver the coal within 30 days from its (PHIBRO's) receipt of the
Letter of Credit, otherwise it would be constrained to take legal action. The
same honest belief can be deduced from NAPOCOR's Board Resolution,
thus:
"On the legal aspect, Management stressed that failure of PBO to
deliver under the contract makes them liable for damages,
considering that the reasons invoked were not valid. The measure of
the damages will be limited to actual and compensatory damages.
However, it was reported that Philipp Brothers advised they would
like to have continuous business relation with NPC so they are willing
to sit down or even proposed that the case be submitted to the
Department of Justice as to avoid a court action or arbitration.
xxx xxx xxx
On the technical-economic aspect, Management claims that if PBO
delivers in November 1987 and January 1988, there are some
advantages. If PBO reacts to any legal action and fails to deliver, the
options are: one, to use 100% Semirara and second, to go into
urgent coal order. The first option will result in a 75 MW derating and
oil will be needed as supplement. We will stand to lose around P30
M. On the other hand, if NPC goes into an urgent coal order, there
will be an additional expense of $786,000 or P16.11 M, considering
the price of the latest purchase with ASEA. On both points, reliability
is decreased."38
The very purpose of requiring a bidder to furnish the awarding authority its
pre-qualification documents is to ensure that only those "responsible" and
"qualified" bidders could bid and be awarded with government contracts. It
bears stressing that the award of a contract is measured not solely by the
smallest amount of bid for its performance, but also by the "responsibility" of
the bidder. Consequently, the integrity, honesty, and trustworthiness of the
bidder is to be considered. An awarding official is justified in considering a
bidder not qualified or not responsible if he has previously defrauded the
public in such contracts or if, on the evidence before him, the official bona
fide believes the bidder has committed such fraud, despite the fact that there
is yet no judicial determination to that effect.39Otherwise stated, if the
awarding body bona fide believes that a bidder has seriously impaired its
track record because of a particular conduct, it is justified in disqualifying the
bidder. This policy is necessary to protect the interest of the awarding body
against irresponsible bidders.
Thus, one who acted pursuant to the sincere belief that another willfully
committed an act prejudicial to the interest of the government cannot be
considered to have acted in bad faith. Bad faith has always been a question
of intention. It is that corrupt motive that operates in the mind. As understood
in law, it contemplates a state of mind affirmatively operating with furtive
design or with some motive of self-interest or ill-will or for ulterior
purpose.40While confined in the realm of thought, its presence may be
ascertained through the party's actuation or through circumstantial
evidence.41 The circumstances under which NAPOCOR disapproved
PHIBRO's pre-qualification to bid do not show an intention to cause damage
to the latter. The measure it adopted was one of self-protection.
Consequently, we cannot penalize NAPOCOR for the course of action it took.
NAPOCOR cannot be made liable for actual, moral and exemplary damages.
Corollarily, in awarding to PHIBRO actual damages in the amount of
$864,000, the Regional Trial Court computed what could have been the
profits of PHIBRO had NAPOCOR allowed it to participate in the subsequent
public bidding. It ruled that "PHIBRO would have won the tenders for the
supply of about 960,000 metric tons out of at least 1,200,000 metric tons"
from the public bidding of December 1987 to 1990. We quote the trial court's
ruling, thus:
". . . PHIBRO was unjustly excluded from participating in at least five
(5) tenders beginning December 1987 to 1990, for the supply and
delivery of imported coal with a total volume of about 1,200,000
metric tons valued at no less than US$32 Million. (Exhs. "AA," "AA-1-
1," to "AA-2"). The price of imported coal for delivery in 1988 was
quoted in June 1988 by bidders at US$41.35 to US$43.95 per metric
ton (Exh. "JJ"); in September 1988 at US$41.50 to US$49.50 per
metric ton (Exh. "J-1"); in November 1988 at US$39.00 to US$48.50
per metric ton (Exh. "J-2") and for the 1989 deliveries, at US$44.35
to US$47.35 per metric ton (Exh. "J-3") and US$38.00 to US$48.25
per metric ton in September 1990 (Exh. "JJ-6" and "JJ-7"). PHIBRO
would have won the tenders for the supply and delivery of about
960,000 metric tons of coal out of at least 1,200,000 metric tons
awarded during said period based on its proven track record of
80%. The Court, therefore finds that as a result of its disqualification,
PHIBRO suffered damages equivalent to its standard 3% margin in
960,000 metric tons of coal at the most conservative price of
US$30,000 per metric ton, or the total of US$864,000 which
PHIBRO would have earned had it been allowed to participate in
biddings in which it was disqualified and in subsequent tenders for
supply and delivery of imported coal."
We find this to be erroneous.
Basic is the rule that to recover actual damages, the amount of loss must not
only be capable of proof but must actually be proven with reasonable degree
of certainty, premised upon competent proof or best evidence obtainable of
the actual amount thereof.42 A court cannot merely rely on speculations,
conjectures, or guesswork as to the fact and amount of damages. Thus,
while indemnification for damages shall comprehend not only the value of the
loss suffered, but also that of the profits which the obligee failed to obtain, 43 it
is imperative that the basis of the alleged unearned profits is not too
speculative and conjectural as to show the actual damages which may be
suffered on a future period.
In Pantranco North Express, Inc. v. Court of Appeals,44 this Court denied the
plaintiff's claim for actual damages which was premised on a contract he was
about to negotiate on the ground that there was still the requisite public
bidding to be complied with, thus:
"As to the alleged contract he was about to negotiate with Minister
Hipolito, there is no showing that the same has been awarded to him.
If Tandoc was about to negotiate a contract with Minister Hipolito,
there was no assurance that the former would get it or that the latter
would award the contract to him since there was the requisite public
bidding. The claimed loss of profit arising out of that alleged contract
which was still to be negotiated is a mere expectancy. Tandoc's claim
that he could have earned P2 million in profits is highly speculative
and no concrete evidence was presented to prove the same. The
only unearned income to which Tandoc is entitled to from the
evidence presented is that for the one-month period, during which his
business was interrupted, which is P6,125.00, considering that his
annual net income was P73,500.00."
In Lufthansa German Airlines v. Court of Appeals,45 this Court likewise
disallowed the trial court's award of actual damages for unrealized profits in
the amount of US$75,000.00 for being highly speculative. It was held that
"the realization of profits by respondent . . . was not a certainty, but depended
on a number of factors, foremost of which was his ability to invite investors
and to win the bid." This Court went further saying that actual or
compensatory damages cannot be presumed, but must be duly proved, and
proved with reasonable degree of certainty.
And in National Power Corporation v. Court of Appeals,46 the Court, in
denying the bidder's claim for unrealized commissions, ruled that even if
NAPOCOR does not deny its (bidder's) claims for unrealized commissions,
and that these claims have been transmuted into judicial admissions, these
admissions cannot prevail over the rules and regulations governing the
bidding for NAPOCOR contracts, which necessarily and inherently include
the reservation by the NAPOCOR of its right to reject any or all bids.
The award of moral damages is likewise improper. To reiterate, NAPOCOR
did not act in bad faith. Moreover, moral damages are not, as a general rule,
granted to a corporation.47 While it is true that besmirched reputation is
included in moral damages, it cannot cause mental anguish to a corporation,
unlike in the case of a natural person, for a corporation has no reputation in
the sense that an individual has, and besides, it is inherently impossible for a
corporation to suffer mental anguish.48 In LBC Express, Inc. v. Court of
Appeals,49 we ruled:
"Moral damages are granted in recompense for physical suffering,
mental anguish, fright, serious anxiety, besmirched reputation,
 wounded feelings, moral shock, social humiliation, and similar injury.
A corporation, being an artificial person and having existence only in
legal contemplation, has no feelings, no emotions, no senses;
therefore, it cannot experience physical suffering and mental
anguish. Mental suffering can be experienced only by one having a
nervous system and it flows from real ills, sorrows, and griefs of life
— all of which cannot be suffered by respondent bank as an artificial
person."
Neither can we award exemplary damages under Article 2234 of the Civil
Code. Before the court may consider the question of whether or not
exemplary damages should be awarded, the plaintiff must show that he is
entitled to moral, temperate, or compensatory damages.
interest demands that one who offers to deliver coal at an appointed time
must give a reasonable assurance that it can carry through. With the
deleterious possible consequences that may result from failure to deliver the
needed coal, we believe there is greater strain of commitment in this kind of
obligation.
WHEREFORE, the decision of the Court of Appeals in CA-G.R. CV No.
126204 dated August 27, 1996 is hereby MODIFIED. The award, in favor of
PHIBRO, of actual, moral and exemplary damages, reimbursement for
expenses, cost of litigation and attorney's fees, and costs of suit, is
DELETED.
SO ORDERED.

NAPOCOR, in this petition, likewise contests the judgment of the lower

courts awarding PHIBRO the amount of $73,231.91 as reimbursement for
expenses, cost of litigation and attorney's fees.

We agree with NAPOCOR.

This Court has laid down the rule that in the absence of stipulation, a winning
party may be awarded attorney's fees only in case plaintiff's action or
defendant's stand is so untenable as to amount to gross and evident bad
faith.50This cannot be said of the case at bar. NAPOCOR is justified in
resisting PHIBRO's claim for damages. As a matter of fact, we partially grant
the prayer of NAPOCOR as we find that it did not act in bad faith in
disapproving PHIBRO's pre-qualification to bid.

Trial courts must be reminded that attorney's fees may not be awarded to a
party simply because the judgment is favorable to him, for it may amount to
imposing a premium on the right to redress grievances in court. We adopt the
same policy with respect to the expenses of litigation. A winning party may be
entitled to expenses of litigation only where he, by reason of plaintiff's clearly
unjustifiable claims or defendant's unreasonable refusal to his demands, was
compelled to incur said expenditures. Evidently, the facts of this case do not
warrant the granting of such litigation expenses to PHIBRO.

At this point, we believe that, in the interest of fairness, NAPOCOR should

give PHIBRO another opportunity to participate in future public bidding. As
earlier mentioned, the delay on its part was due to a fortuitous event.

But before we dispose of this case, we take this occasion to remind PHIBRO
of the indispensability of coal to a coal-fired thermal plant. With households
and businesses being entirely dependent on the electricity supplied by
NAPOCOR, the delivery of coal cannot be venturesome. Indeed, public
G.R. No. 151866 September 9, 2004
SOLEDAD CARPIO, petitioner, vs. LEONORA A. VALMONTE, respondent.
DECISION
TINGA, J.:
Assailed in the instant petition for review is the Decision of the Court of Appeals
in C.A.-G.R. CV No. 69537,1promulgated on 17 January 2002.2 The appellate
court reversed the trial court’s decision denying respondent’s claim for damages
against petitioner and ordered the latter to pay moral damages to the former in
the amount ofP100,000.00.
Respondent Leonora Valmonte is a wedding coordinator. Michelle del Rosario
and Jon Sierra engaged her services for their church wedding on 10 October
1996. At about 4:30 p.m. on that day, Valmonte went to the Manila Hotel where
the bride and her family were billeted. When she arrived at Suite 326-A, several
persons were already there including the bride, the bride’s parents and relatives,
the make-up artist and his assistant, the official photographers, and the fashion
designer. Among those present was petitioner Soledad Carpio, an aunt of the
bride who was preparing to dress up for the occasion.
After reporting to the bride, Valmonte went out of the suite carrying the items
needed for the wedding rites and the gifts from the principal sponsors. She
proceeded to the Maynila Restaurant where the reception was to be held. She
paid the suppliers, gave the meal allowance to the band, and went back to the
suite. Upon entering the suite, Valmonte noticed the people staring at her. It was
at this juncture that petitioner allegedly uttered the following words to
Valmonte: "Ikaw lang ang lumabas ng kwarto, nasaan ang dala mong bag? Saan
ka pumunta? Ikaw lang and lumabas ng kwarto, ikaw ang kumuha." Petitioner
then ordered one of the ladies to search Valmonte’s bag. It turned out that after
Valmonte left the room to attend to her duties, petitioner discovered that the
pieces of jewelry which she placed inside the comfort room in a paper bag were
lost. The jewelry pieces consist of two (2) diamond rings, one (1) set of diamond
earrings, bracelet and necklace with a total value of about one million pesos. The
hotel security was called in to help in the search. The bags and personal
belongings of all the people inside the room were searched. Valmonte was
allegedly bodily searched, interrogated and trailed by a security guard throughout
the evening. Later, police officers arrived and interviewed all persons who had
access to the suite and fingerprinted them including Valmonte. During all the time
Valmonte was being interrogated by the police officers, petitioner kept on saying
the words "Siya lang ang lumabas ng kwarto." Valmonte’s car which was parked
at the hotel premises was also searched but the search yielded nothing.
A few days after the incident, petitioner received a letter from Valmonte
demanding a formal letter of apology which she wanted to be circulated to the
newlyweds’ relatives and guests to redeem her smeared reputation as a result of
petitioner’s imputations against her. Petitioner did not respond to the letter. Thus,
on 20 February 1997, Valmonte filed a suit for damages against her before the
Regional Trial Court (RTC) of Pasig City, Branch 268. In her complaint, Valmonte
prayed that petitioner be ordered to pay actual, moral and exemplary damages,
as well as attorney’s fees.
Responding to the complaint, petitioner denied having uttered words or done any
act to confront or single out Valmonte during the investigation and claimed that
everything that transpired after the theft incident was purely a police matter in
which she had no participation. Petitioner prayed for the dismissal of the
complaint and for the court to adjudge Valmonte liable on her counterclaim.
The trial court rendered its Decision on 21 August 2000, dismissing Valmonte’s
complaint for damages. It ruled that when petitioner sought investigation for the
loss of her jewelry, she was merely exercising her right and if damage results
from a person exercising his legal right, it is damnum absque injuria. It added that
no proof was presented by Valmonte to show that petitioner acted maliciously
and in bad faith in pointing to her as the culprit. The court said that Valmonte
failed to show that she suffered serious anxiety, moral shock, social humiliation,
or that her reputation was besmirched due to petitioner’s wrongful act.
Respondent appealed to the Court of Appeals alleging that the trial court erred in
finding that petitioner did not slander her good name and reputation and in
disregarding the evidence she presented.
The Court of Appeals ruled differently. It opined that Valmonte has clearly
established that she was singled out by petitioner as the one responsible for the
loss of her jewelry. It cited the testimony of Serena Manding, corroborating
Valmonte’s claim that petitioner confronted her and uttered words to the effect
that she was the only one who went out of the room and that she was the one
who took the jewelry. The appellate court held that Valmonte’s claim for damages
is not predicated on the fact that she was subjected to body search and
interrogation by the police but rather petitioner’s act of publicly accusing her of
taking the missing jewelry. It categorized petitioner’s utterance defamatory
considering that it imputed upon Valmonte the crime of theft. The court concluded
that petitioner’s verbal assault upon Valmonte was done with malice and in bad
faith since it was made in the presence of many people without any solid proof
except petitioner’s suspicion. Such unfounded accusation entitles Valmonte to an
award of moral damages in the amount of ₱100,000.00 for she was publicly
humiliated, deeply insulted, and embarrassed. However, the court found no
sufficient evidence to justify the award of actual damages.
Hence, this petition.
Petitioner contends that the appellate court’s conclusion that she publicly
humiliated respondent does not conform to the evidence presented. She adds
that even on the assumption that she uttered the words complained of, it was not
shown that she did so with malice and in bad faith.
In essence, petitioner would want this Court to review the factual conclusions
reached by the appellate court. The cardinal rule adhered to in this jurisdiction is
that a petition for review must raise only questions of law, 3 and judicial review
under Rule 45 does not extend to an evaluation of the sufficiency of evidence
unless there is a showing that the findings complained of are totally devoid of
support in the record or that they are so glaringly erroneous as to constitute
serious abuse of discretion.4 This Court, while not a trier of facts, may review the
evidence in order to arrive at the correct factual conclusion based on the record
especially so when the findings of fact of the Court of Appeals are at variance
with those of the trial court, or when the inference drawn by the Court of Appeals
from the facts is manifestly mistaken.5
Contrary to the trial court’s finding, we find sufficient evidence on record tending
to prove that petitioner’s imputations against respondent was made with malice
and in bad faith.
Petitioner’s testimony was shorn of substance and consists mainly of denials.
She claimed not to have uttered the words imputing the crime of theft to
respondent or to have mentioned the latter’s name to the authorities as the one
responsible for the loss of her jewelry. Well-settled is the rule that denials, if
unsubstantiated by clear and convincing evidence, are negative and self-serving
which merit no weight in law and cannot be given greater evidentiary value over
the testimony of credible witnesses who testify on affirmative matters. 6
Respondent, however, has successfully refuted petitioner’s testimony. Quite
credibly, she has narrated in great detail her distressing experience on that fateful
day. She testified as to how rudely she was treated by petitioner right after she
returned to the room. Petitioner immediately confronted her and uttered the
words "Ikaw lang ang lumabas ng kwarto. Nasaan ang dala mong bag? Saan ka
pumunta? Ikaw ang kumuha." Thereafter, her body was searched including her
bag and her car. Worse, during the reception, she was once more asked by the
hotel security to go to the ladies room and she was again bodily searched. 7
Sereña Manding, a make-up artist, corroborated respondent’s testimony. She
testified that petitioner confronted respondent in the presence of all the people
inside the suite accusing her of being the only one who went out of the comfort
room before the loss of the jewelry. Manding added that respondent was
embarrassed because everybody else in the room thought she was a thief. 8 If
only to debunk petitioner’s assertion that she did not utter the accusatory
remarks in question publicly and with malice, Manding’s testimony on the point
deserves to be reproduced. Thus,
Q After that what did she do?
A Then Leo came out from the other room she said, she is (sic) the one I
only saw from the comfort room.
Q Now, what exact word (sic) were said by Mrs. Carpio on that matter?
A She said "siya lang yung nakita kong galing sa C.R."
Q And who was Mrs. Carpio or the defendant referring to?
A Leo Valmonte.
Q Did she say anything else, the defendant?
A Her jewelry were lost and Leo was the only one she saw in the C.R.
After that she get (sic) the paper bag then the jewelry were already
gone.
Q Did she confront the plaintiff Mrs. Valmonte regarding that fact?
A Yes.
Q What did the defendant Mrs. Carpio tell the plaintiff, Mrs. Valmonte?
A "Ikaw yung nakita ko sa C.R. nawawala yung alahas ko."
Q When the defendant Mrs. Carpio said that to plaintiff Mrs. Valmonte
were there other people inside the room?
A Yes, sir.
Q Were they able to hear what Mrs. Carpio said to Mrs. Valmonte?
A Yes, sir.
Q What was your thinking at that time that Mrs. Carpio said that to Mrs.
Valmonte?
A "Nakakahiya kasi akala ng iba doon na talagang magnanakaw siya.
Kasi marami na kaming nandodoon, dumating na yung couturier pati
yung video man and we sir.
Q Who was the person you [were] alleging "na nakakahiya" whose (sic)
being accused or being somebody who stole those item of jewelry?
A "Nakakahiya para kay Leo kasi pinagbibintangan siya. Sa dami namin
doon siya yung napagbintangan."
Q And who is Leo, what is her full name?
A Leo Valmonte.
Q Did the defendant tell this matter to other people inside the room?
A Yes, the mother of the bride.
Q And who else did she talk to?
A The father of the bride also.
Q And what did the defendant tell the mother regarding this matter?
A "Nawawala yung alahas ko." Sabi naman nung mother baka naman
hindi mo dala tignan mo munang mabuti.
Q Who was that other person that she talked to?
A Father of the bride.9
Significantly, petitioner’s counsel elected not to pursue her cross-examination of
the witness on this point following her terse and firm declaration that she
remembered petitioner’s exact defamatory words in answer to the counsel’s
question.10
Jaime Papio, Security Supervisor at Manila Hotel, likewise contradicted
petitioner’s allegation that she did not suspect or mention the name of
respondent as her suspect in the loss of the jewelry. 11
To warrant recovery of damages, there must be both a right of action, for a wrong
inflicted by the defendant, and the damage resulting therefrom to the plaintiff.
Wrong without damage, or damage without wrong, does not constitute a cause of
action.12
In the sphere of our law on human relations, the victim of a wrongful act or
omission, whether done willfully or negligently, is not left without any remedy or
recourse to obtain relief for the damage or injury he sustained. Incorporated into
our civil law are not only principles of equity but also universal moral precepts
which are designed to indicate certain norms that spring from the fountain of
good conscience and which are meant to serve as guides for human
conduct.13 First of these fundamental precepts is the principle commonly known
as "abuse of rights" under Article 19 of the Civil Code. It provides that "Every
person must, in the exercise of his rights and in the performance of his duties,
act with justice, give everyone his due and observe honesty and good faith." To
find the existence of an abuse of right, the following elements must be present:
(1) there is a legal right or duty; (2) which is exercised in bad faith; (3) for the sole
intent or prejudicing or injuring another. 14 When a right is exercised in a manner
which discards these norms resulting in damage to another, a legal wrong is
committed for which the actor can be held accountable. 15 One is not allowed to
exercise his right in a manner which would cause unnecessary prejudice to
another or if he would thereby offend morals or good customs. Thus, a person
should be protected only when he acts in the legitimate exercise of his right, that
is when he acts with prudence and good faith; but not when he acts with
negligence or abuse.16
Complementing the principle of abuse of rights are the provisions of Articles 20
and 21 of the Civil Code which read, thus:
Art. 20. Every person who, contrary to law, willfully or negligently causes
damage to another, shall indemnify the latter for the same.
Art. 21. Any person who willfully causes loss or injury to another in a
manner that is contrary to morals or good customs or public policy shall
compensate the latter for the damage.
The foregoing rules provide the legal bedrock for the award of damages
to a party who suffers damage whenever one commits an act in violation
of some legal provision, or an act which though not constituting a
transgression of positive law, nevertheless violates certain rudimentary
rights of the party aggrieved.
In the case at bar, petitioner’s verbal reproach against respondent was certainly
uncalled for considering that by her own account nobody knew that she brought
such kind and amount of jewelry inside the paper bag. 17 This being the case, she
had no right to attack respondent with her innuendos which were not merely
inquisitive but outrightly accusatory. By openly accusing respondent as the only
person who went out of the room before the loss of the jewelry in the presence of
all the guests therein, and ordering that she be immediately bodily searched,
petitioner virtually branded respondent as the thief. True, petitioner had the right
to ascertain the identity of the malefactor, but to malign respondent without an
iota of proof that she was the one who actually stole the jewelry is an act which,
by any standard or principle of law is impermissible. Petitioner had willfully
caused injury to respondent in a manner which is contrary to morals and good
customs. Her firmness and resolve to find her missing jewelry cannot justify her
acts toward respondent. She did not act with justice and good faith for apparently,
she had no other purpose in mind but to prejudice respondent. Certainly,
petitioner transgressed the provisions of Article 19 in relation to Article 21 for
which she should be held accountable.
Owing to the rule that great weight and even finality is given to factual
conclusions of the Court of Appeals which affirm those of the trial court, 18 we
sustain the findings of the trial court and the appellate court that respondent’s
claim for actual damages has not been substantiated with satisfactory evidence
during the trial and must therefore be denied. To be recoverable, actual damages
must be duly proved with reasonable degree of certainty and the courts cannot
rely on speculation, conjecture or guesswork.19
Respondent, however, is clearly entitled to an award of moral damages. Moral
damages may be awarded whenever the defendant’s wrongful act or omission is
the proximate cause of the plaintiff’s physical suffering, mental anguish, fright,
serious anxiety, besmirched reputation, wounded feelings, moral shock, social
humiliation, and similar injury 20in the cases specified or analogous to those
provided in Article 2219 of the Civil Code. 21 Though no proof of pecuniary loss is
necessary in order that moral damages may be adjudicated, courts are mandated
to take into account all the circumstances obtaining in the case and assess
damages according to their discretion. 22 Worthy of note is that moral damages
are not awarded to penalize the defendant, 23 or to enrich a complainant, but to
enable the latter to obtain means, diversions or amusements that will serve to
alleviate the moral suffering he has undergone, by reason of defendant’s
culpable action. In any case, award of moral damages must be proportionate to
the sufferings inflicted.24
Based on the foregoing jurisprudential pronouncements, we rule that the
appellate court did not err in awarding moral damages. Considering respondent’s
social standing, and the fact that her profession is based primarily on trust
reposed in her by her clients, the seriousness of the imputations made by
petitioner has greatly tarnished her reputation and will in one way or the other,
affect her future dealings with her clients, the award of ₱100,000.00 as moral
damages appears to be a fair and reasonable assessment of respondent’s
damages.

WHEREFORE, the instant Petition is DENIED. Costs against petitioner.

SO ORDERED.
G.R. No. 161921 July 17, 2013 Water District (COWD) to complain, a certain Mrs. Madjos told Ma. Theresa
that she was delinquent for three (3) months corresponding to the months of
JOYCE V. ARDIENTE, PETITIONER, vs. SPOUSES JAVIER AND MA. December 1998, January 1999, and February 1999. Ma. Theresa argued that
THERESA PASTORFIDE, CAGAYAN DE ORO WATER DISTRICT AND the due date of her payment was March 18, 1999 yet (T.S.N., October 31,
GASPAR GONZALEZ,* JR., RESPONDENTS. 2000, pp. 11-12). Mrs. Madjos later told her that it was at the instance of
Joyce Ardiente that the water line was cut off (T.S.N., February 5, 2001, p.
31).
DECISION

On March 15, 1999, Ma. Theresa paid the delinquent bills (T.S.N., October
PERALTA, J.:
31, 2000, p. 12). On the same date, through her lawyer, Ma. Theresa wrote a
letter to the COWD to explain who authorized the cutting of the water line
Before the Court is a petition for review on certiorari under Rule 45 of the (Records, p. 160).
Rules of Court seeking to reverse and set aside the Decision 1 and
Resolution2 of the Court of Appeals (CA), dated August 28, 2003 and
On March 18, 1999, COWD, through the general manager, [respondent]
December 17, 2003, respectively, in CA-G.R. CV No. 73000. The CA
Gaspar Gonzalez, Jr., answered the letter dated March 15, 1999 and
Decision affirmed with modification the August 15, 2001 Decision 3of the
reiterated that it was at the instance of Joyce Ardiente that the water line was
Regional Trial Court (RTC) of Cagayan de Oro City, Branch 24, while the CA
cut off (Records, p. 161).
Resolution denied petitioner's Motion for Reconsideration.

Aggrieved, on April 14, 1999, Ma. Theresa Pastorfide [and her husband] filed
The facts, as summarized by the CA, are as follows:
[a] complaint for damages [against petitioner, COWD and its manager
Gaspar Gonzalez] (Records, pp. 2-6).
[Herein petitioner] Joyce V. Ardiente and her husband Dr. Roberto S. Ardiente
are owners of a housing unit at Emily Homes, Balulang, Cagayan de Oro City
In the meantime, Ma. Theresa Pastorfide's water line was only restored and
with a lot area of one hundred fifty-three (153) square meters and covered by
reconnected when the [trial] court issued a writ of preliminary mandatory
Transfer Certificate of Title No. 69905.
injunction on December 14, 1999 (Records, p. 237).4
On June 2, 1994, Joyce Ardiente entered into a Memorandum of Agreement
After trial, the RTC rendered judgment holding as follows:
(Exh. "B", pp. 470-473, Records) selling, transferring and conveying in favor
of [respondent] Ma. Theresa Pastorfide all their rights and interests in the
housing unit at Emily Homes in consideration of ₱70,000.00. The xxxx
Memorandum of Agreement carries a stipulation:
In the exercise of their rights and performance of their duties, defendants did
"4. That the water and power bill of the subject property shall be for the not act with justice, gave plaintiffs their due and observe honesty and good
account of the Second Party (Ma. Theresa Pastorfide) effective June 1, faith. Before disconnecting the water supply, defendants COWD and Engr.
1994." (Records, p. 47) Gaspar Gonzales did not even send a disconnection notice to plaintiffs as
testified to by Engr. Bienvenido Batar, in-charge of the Commercial
Department of defendant COWD. There was one though, but only three (3)
vis-a-vis Ma. Theresa Pastorfide's assumption of the payment of the
days after the actual disconnection on March 12, 1999. The due date for
mortgage loan secured by Joyce Ardiente from the National Home Mortgage
payment was yet on March 15. Clearly, they did not act with justice. Neither
(Records, Exh. "A", pp. 468-469)
did they observe honesty.
For four (4) years, Ma. Theresa's use of the water connection in the name of
They should not have been swayed by the prodding of Joyce V. Ardiente.
Joyce Ardiente was never questioned nor perturbed (T.S.N., October 31,
They should have investigated first as to the present ownership of the house.
2000, pp. 7-8) until on March 12, 1999, without notice, the water connection
For doing the act because Ardiente told them, they were negligent.
of Ma. Theresa was cut off. Proceeding to the office of the Cagayan de Oro
Defendant Joyce Ardiente should have requested before the cutting off of the
water supply, plaintiffs to pay. While she attempted to tell plaintiffs but she did
not have the patience of seeing them. She knew that it was plaintiffs who had
been using the water four (4) years ago and not hers. She should have been
very careful. x x x5
The dispositive portion of the trial court's Decision reads, thus:
WHEREFORE, premises considered, judgment is hereby rendered ordering
defendants [Ardiente, COWD and Gonzalez] to pay jointly and severally
plaintiffs, the following sums:
(a) ₱200,000.00 for moral damages;
(b) 200,000.00 for exemplary damages; and
(c) 50,000.00 for attorney's fee.
The cross-claim of Cagayan de Oro Water District and Engr. Gaspar
Gonzales is hereby dismissed. The Court is not swayed that the cutting off of
the water supply of plaintiffs was because they were influenced by defendant
Joyce Ardiente. They were negligent too for which they should be liable.
SO ORDERED.6
Petitioner, COWD and Gonzalez filed an appeal with the CA.
On August 28, 2003, the CA promulgated its assailed Decision disposing as
follows:
IN VIEW OF ALL THE FOREGOING, the appealed decision is AFFIRMED,
with the modification that the awarded damages is reduced to ₱100,000.00
each for moral and exemplary damages, while attorney's fees is lowered to
₱25,000.00. Costs against appellants.
SO ORDERED.7
The CA ruled, with respect to petitioner, that she has a "legal duty to honor
the possession and use of water line by Ma. Theresa Pastorfide pursuant to
their Memorandum of Agreement" and "that when [petitioner] applied for its
disconnection, she acted in bad faith causing prejudice and [injury to] Ma.
Theresa Pastorfide."8
As to COWD and Gonzalez, the CA held that they "failed to give a notice of
disconnection and derelicted in reconnecting the water line despite payment
of the unpaid bills by the [respondent spouses Pastorfide]." 9
Petitioner, COWD and Gonzalez filed their respective Motions for
Reconsideration, but these were denied by the CA in its Resolution dated
December 17, 2003.
COWD and Gonzalez filed a petition for review on certiorari with this Court,
which was docketed as G.R. No. 161802. However, based on technical
grounds and on the finding that the CA did not commit any reversible error in
its assailed Decision, the petition was denied via a Resolution 10 issued by this
Court on March 24, 2004. COWD and Gonzalez filed a motion for
reconsideration, but the same was denied with finality through this Court's
Resolution11 dated June 28, 2004.
Petitioner, on the other hand, timely filed the instant petition with the following
Assignment of Errors:
7.1 HONORABLE COURT OF APPEALS (ALTHOUGH IT HAS
REDUCED THE LIABILITY INTO HALF) HAS STILL COMMITTED
GRAVE AND SERIOUS ERROR WHEN IT UPHELD THE JOINT
AND SOLIDARY LIABILITY OF PETITIONER JOYCE V. ARDIENTE
WITH CAGAYAN DE ORO WATER DISTRICT (COWD) AND ENGR.
GASPAR D. GONZALES FOR THE LATTER'S FAILURE TO SERVE
NOTICE UPON RESPONDENTS SPOUSES PASTORFIDE PRIOR
TO THE ACTUAL DISCONNECTION DESPITE EVIDENCE
ADDUCED DURING TRIAL THAT EVEN WITHOUT PETITIONER'S
REQUEST, COWD WAS ALREADY SET TO EFFECT
DISCONNECTION OF RESPONDENTS' WATER SUPPLY DUE TO
NON-PAYMENT OF ACCOUNT FOR THREE (3) MONTHS.
7.2 THE HONORABLE COURT OF APPEALS COMMITTED GRAVE
AND SERIOUS ERROR WHEN IT RULED TOTALLY AGAINST
PETITIONER AND FAILED TO FIND THAT RESPONDENTS ARE
GUILTY OF CONTRIBUTORY NEGLIGENCE WHEN THEY FAILED
TO PAY THEIR WATER BILLS FOR THREE MONTHS AND TO
MOVE FOR THE TRANSFER OF THE COWD ACCOUNT IN THEIR
NAME, WHICH WAS A VIOLATION OF THEIR MEMORANDUM OF
AGREEMENT WITH PETITIONER JOYCE V. ARDIENTE.
RESPONDENTS LIKEWISE DELIBERATELY FAILED TO
EXERCISE DILIGENCE OF A GOOD FATHER OF THE FAMILY TO
MINIMIZE THE DAMAGE UNDER ART. 2203 OF THE NEW CIVIL
CODE.
7.3 THE HONORABLE COURT OF APPEALS SERIOUSLY ERRED
WHEN IT DISREGARDED THE FACT THAT RESPONDENT
SPOUSES PASTORFIDE ARE LIKEWISE BOUND TO OBSERVE
ARTICLE 19 OF THE NEW CIVIL CODE, i.e., IN THE EXERCISE
 OF THEIR RIGHTS AND IN THE PERFORMANCE OF THEIR
DUTIES TO ACT WITH JUSTICE, GIVE EVERYONE HIS DUE AND
OBSERVE HONESTY AND GOOD FAITH.
7.4 THE HONORABLE COURT OF APPEALS GRAVELY ERRED
WHEN IT GRANTED AN AWARD OF MORAL AND EXEMPLARY
DAMAGES AND ATTORNEY'S FEES AS AGAINST PETITIONER
ARDIENTE.12
At the outset, the Court noticed that COWD and Gonzalez, who were
petitioner's co-defendants before the RTC and her co-appellants in the CA,
were impleaded as respondents in the instant petition. This cannot be done.
Being her co-parties before the RTC and the CA, petitioner cannot, in the
instant petition for review on certiorari, make COWD and Gonzalez,
adversary parties. It is a grave mistake on the part of petitioner's counsel to
treat COWD and Gonzalez as respondents. There is no basis to do so,
considering that, in the first place, there is no showing that petitioner filed a
cross-claim against COWD and Gonzalez. Under Section 2, Rule 9 of the
Rules of Court, a cross-claim which is not set up shall be barred. Thus, for
failing to set up a cross-claim against COWD and Gonzalez before the RTC,
petitioner is already barred from doing so in the present petition.
More importantly, as shown above, COWD and Gonzalez's petition for review
on certiorari filed with this Court was already denied with finality on June 28,
2004, making the presently assailed CA Decision final and executory insofar
as COWD and Gonzalez are concerned. Thus, COWD and Gonzalez are
already precluded from participating in the present petition. They cannot
resurrect their lost cause by filing pleadings this time as respondents but,
nonetheless, reiterating the same prayer in their previous pleadings filed with
the RTC and the CA.
As to the merits of the instant petition, the Court likewise noticed that the
main issues raised by petitioner are factual and it is settled that the resolution
of factual issues is the function of lower courts, whose findings on these
matters are received with respect and considered binding by the Supreme
Court subject only to certain exceptions, none of which is present in this
instant petition.13 This is especially true when the findings of the RTC have
been affirmed by the CA as in this case.14
In any case, a perusal of the records at hand would readily show that the
instant petition lacks merit.
Petitioner insists that she should not be held liable for the disconnection of
respondent spouses' water supply, because she had no participation in the
actual disconnection. However, she admitted in the present petition that it
was she who requested COWD to disconnect the Spouses Pastorfide's water
supply. This was confirmed by COWD and Gonzalez in their cross-claim
against petitioner. While it was COWD which actually discontinued
respondent spouses' water supply, it cannot be denied that it was through the
instance of petitioner that the Spouses Pastorfide's water supply was
disconnected in the first place.
It is true that it is within petitioner's right to ask and even require the Spouses
Pastorfide to cause the transfer of the former's account with COWD to the
latter's name pursuant to their Memorandum of Agreement. However, the
remedy to enforce such right is not to cause the disconnection of the
respondent spouses' water supply. The exercise of a right must be in
accordance with the purpose for which it was established and must not be
excessive or unduly harsh; there must be no intention to harm
another.15 Otherwise, liability for damages to the injured party will attach. 16 In
the present case, intention to harm was evident on the part of petitioner when
she requested for the disconnection of respondent spouses’ water supply
without warning or informing the latter of such request. Petitioner claims that
her request for disconnection was based on the advise of COWD personnel
and that her intention was just to compel the Spouses Pastorfide to comply
with their agreement that petitioner's account with COWD be transferred in
respondent spouses' name. If such was petitioner's only intention, then she
should have advised respondent spouses before or immediately after
submitting her request for disconnection, telling them that her request was
simply to force them to comply with their obligation under their Memorandum
of Agreement. But she did not. What made matters worse is the fact that
COWD undertook the disconnection also without prior notice and even failed
to reconnect the Spouses Pastorfide’s water supply despite payment of their
arrears. There was clearly an abuse of right on the part of petitioner, COWD
and Gonzalez. They are guilty of bad faith.
The principle of abuse of rights as enshrined in Article 19 of the Civil Code
provides that every person must, in the exercise of his rights and in the
performance of his duties, act with justice, give everyone his due, and
observe honesty and good faith.
In this regard, the Court's ruling in Yuchengco v. The Manila Chronicle
Publishing Corporation17 is instructive, to wit:
xxxx
This provision of law sets standards which must be observed in the exercise
of one’s rights as well as in the performance of its duties, to wit: to act with
justice; give everyone his due; and observe honesty and good faith.
In Globe Mackay Cable and Radio Corporation v. Court of Appeals, it was
elucidated that while Article 19 "lays down a rule of conduct for the
government of human relations and for the maintenance of social order, it
does not provide a remedy for its violation. Generally, an action for damages
under either Article 20 or Article 21 would be proper." The Court said:
One of the more notable innovations of the New Civil Code is the codification
of "some basic principles that are to be observed for the rightful relationship
between human beings and for the stability of the social order." [REPORT
ON THE CODE COMMISSION ON THE PROPOSED CIVIL CODE OF THE
PHILIPPINES, p. 39]. The framers of the Code, seeking to remedy the defect
of the old Code which merely stated the effects of the law, but failed to draw
out its spirit, incorporated certain fundamental precepts which were
"designed to indicate certain norms that spring from the fountain of good
conscience" and which were also meant to serve as "guides for human
conduct [that] should run as golden threads through society, to the end that
law may approach its supreme ideal, which is the sway and dominance of
justice." (Id.) Foremost among these principles is that pronounced in Article
19 x x x.
xxxx
This article, known to contain what is commonly referred to as the principle of
abuse of rights, sets certain standards which must be observed not only in
the exercise of one's rights, but also in the performance of one's duties.
These standards are the following: to act with justice; to give everyone his
due; and to observe honesty and good faith. The law, therefore, recognizes a
primordial limitation on all rights; that in their exercise, the norms of human
conduct set forth in Article 19 must be observed. A right, though by itself legal
because recognized or granted by law as such, may nevertheless become
the source of some illegality. When a right is exercised in a manner which
does not conform with the norms enshrined in Article 19 and results in
damage to another, a legal wrong is thereby committed for which the
wrongdoer must be held responsible. But while Article 19 lays down a rule of
conduct for the government of human relations and for the maintenance of
social order, it does not provide a remedy for its violation. Generally, an
action for damages under either Article 20 or Article 21 would be proper.
Corollarilly, Article 20 provides that "every person who, contrary to law,
willfully or negligently causes damage to another shall indemnify the latter for
the same." It speaks of the general sanctions of all other provisions of law
which do not especially provide for its own sanction. When a right is
exercised in a manner which does not conform to the standards set forth in
the said provision and results in damage to another, a legal wrong is thereby
committed for which the wrongdoer must be responsible. Thus, if the
provision does not provide a remedy for its violation, an action for damages
under either Article 20 or Article 21 of the Civil Code would be proper.
The question of whether or not the principle of abuse of rights has been
violated resulting in damages under Article 20 or other applicable provision of
law, depends on the circumstances of each case. x x x18
To recapitulate, petitioner's acts which violated the abovementioned
provisions of law is her unjustifiable act of having the respondent spouses'
water supply disconnected, coupled with her failure to warn or at least notify
respondent spouses of such intention. On the part of COWD and Gonzalez, it
is their failure to give prior notice of the impending disconnection and their
subsequent neglect to reconnect respondent spouses' water supply despite
the latter's settlement of their delinquent account.
On the basis of the foregoing, the Court finds no cogent reason to depart
from the ruling of both the RTC and the CA that petitioner, COWD and
Gonzalez are solidarily liable.
The Spouses Pastorfide are entitled to moral damages based on the
provisions of Article 2219,19 in connection with Articles 2020 and 2121 of the
Civil Code.
As for exemplary damages, Article 2229 provides that exemplary damages
may be imposed by way of example or correction for the public good.
Nonetheless, exemplary damages are imposed not to enrich one party or
impoverish another, but to serve as a deterrent against or as a negative
incentive to curb socially deleterious actions.22 In the instant case, the Court
agrees with the CA in sustaining the award of exemplary damages, although
it reduced the amount granted, considering that respondent spouses were
deprived of their water supply for more than nine (9) months, and such
deprivation would have continued were it not for the relief granted by the
RTC.
With respect to the award of attorney's fees, Article 2208 of the Civil Code
provides, among others, that such fees may be recovered when exemplary
damages are awarded, when the defendant's act or omission has compelled
the plaintiff to litigate with third persons or to incur expenses to protect his
interest, and where the defendant acted in gross and evident bad faith in
refusing to satisfy the plaintiffs’ plainly valid, just and demandable claim.
WHEREFORE, instant petition for review on certiorari is DENIED. The
Decision and Resolution of the Court of Appeals, dated August 28, 2003 and
December 17, 2003, respectively, in CA-G.R. CV No. 73000 are AFFIRMED.
SO ORDERED.
G.R. No. 168512 March 20, 2007
ORLANDO D. GARCIA, JR., doing business under the name and style
COMMUNITY DIAGNOSTIC CENTER and BU CASTRO, 1 Petitioners, vs.
RANIDA D. SALVADOR and RAMON SALVADOR, Respondents.
DECISION
YNARES-SANTIAGO, J.:
This is a petition for review2 under Rule 45 of the Rules of Court assailing the
February 27, 2004 Decision3 of the Court of Appeals in CA-G.R. CV No.
58668 finding petitioner Orlando D. Garcia liable for gross negligence; and its
June 16, 2005 Resolution4 denying petitioner’s motion for reconsideration.
On October 1, 1993, respondent Ranida D. Salvador started working as a
trainee in the Accounting Department of Limay Bulk Handling Terminal, Inc.
(the Company). As a prerequisite for regular employment, she underwent a
medical examination at the Community Diagnostic Center (CDC). Garcia who
is a medical technologist, conducted the HBs Ag (Hepatitis B Surface
Antigen) test and on October 22, 1993, CDC issued the test result 5 indicating
that Ranida was "HBs Ag: Reactive." The result bore the name and signature
of Garcia as examiner and the rubber stamp signature of Castro as
pathologist.
When Ranida submitted the test result to Dr. Sto. Domingo, the Company
physician, the latter apprised her that the findings indicated that she is
suffering from Hepatitis B, a liver disease. Thus, based on the medical
report6submitted by Sto. Domingo, the Company terminated Ranida’s
employment for failing the physical examination.7
When Ranida informed her father, Ramon, about her ailment, the latter
suffered a heart attack and was confined at the Bataan Doctors Hospital.
During Ramon’s confinement, Ranida underwent another HBs Ag test at the
said hospital and the result 8 indicated that she is non-reactive. She informed
Sto. Domingo of this development but was told that the test conducted by
CDC was more reliable because it used the Micro-Elisa Method.
Thus, Ranida went back to CDC for confirmatory testing, and this time, the
Anti-HBs test conducted on her indicated a "Negative" result. 9
Ranida also underwent another HBs Ag test at the Bataan Doctors Hospital
using the Micro-Elisa Method. The result indicated that she was non-
reactive.10
Ranida submitted the test results from Bataan Doctors Hospital and CDC to
the Executive Officer of the Company who requested her to undergo another
similar test before her re-employment would be considered. Thus, CDC
conducted another HBs Ag test on Ranida which indicated a "Negative"
result.11 Ma. Ruby G. Calderon, Med-Tech Officer-in-Charge of CDC, issued
a Certification correcting the initial result and explaining that the examining
medical technologist (Garcia) interpreted the delayed reaction as positive or
reactive.12
Thereafter, the Company rehired Ranida.
On July 25, 1994, Ranida and Ramon filed a complaint 13 for damages against
petitioner Garcia and a purportedly unknown pathologist of CDC, claiming
that, by reason of the erroneous interpretation of the results of Ranida’s
examination, she lost her job and suffered serious mental anxiety, trauma
and sleepless nights, while Ramon was hospitalized and lost business
opportunities.
On September 26, 1994, respondents amended their complaint 14 by naming
Castro as the "unknown pathologist."
Garcia denied the allegations of gross negligence and incompetence and
reiterated the scientific explanation for the "false positive" result of the first
HBs Ag test in his December 7, 1993 letter to the respondents. 15
For his part, Castro claimed that as pathologist, he rarely went to CDC and
only when a case was referred to him; that he did not examine Ranida; and
that the test results bore only his rubber-stamp signature.
On September 1, 1997,16 the trial court dismissed the complaint for failure of
the respondents to present sufficient evidence to prove the liability of Garcia
and Castro. It held that respondents should have presented Sto. Domingo
because he was the one who interpreted the test result issued by CDC.
Likewise, respondents should have presented a medical expert to refute the
testimonies of Garcia and Castro regarding the medical explanation behind
the conflicting test results on Ranida.17
Respondents appealed to the Court of Appeals which reversed the trial
court’s findings, the dispositive portion of which states:
WHEREFORE, the decision appealed from is REVERSED and SET ASIDE
and another one entered ORDERING defendant-appellee Orlando D. Garcia,
Jr. to pay plaintiff-appellant Ranida D. Salvador moral damages in the
amount of P50,000.00, exemplary damages in the amount of P50,000.00 and
attorney’s fees in the amount of P25,000.00.
SO ORDERED.18
The appellate court found Garcia liable for damages for negligently issuing
an erroneous HBs Ag result. On the other hand, it exonerated Castro for lack
of participation in the issuance of the results.
After the denial of his motion for reconsideration, Garcia filed the instant
petition.
The main issue for resolution is whether the Court of Appeals, in reversing
the decision of the trial court, correctly found petitioner liable for damages to
the respondents for issuing an incorrect HBsAG test result.
Garcia maintains he is not negligent, thus not liable for damages, because he
followed the appropriate laboratory measures and procedures as dictated by
his training and experience; and that he did everything within his professional
competence to arrive at an objective, impartial and impersonal result.
At the outset, we note that the issues raised are factual in nature. Whether a
person is negligent or not is a question of fact which we cannot pass upon in
a petition for review on certiorari which is limited to reviewing errors of law.19
Negligence is the failure to observe for the protection of the interest of
another person that degree of care, precaution and vigilance which the
circumstances justly demand,20 whereby such other person suffers injury. For
health care providers, the test of the existence of negligence is: did the health
care provider either fail to do something which a reasonably prudent health
care provider would have done, or that he or she did something that a
reasonably prudent health care provider would not have done; and that
failure or action caused injury to the patient; 21 if yes, then he is guilty of
negligence.
Thus, the elements of an actionable conduct are: 1) duty, 2) breach, 3) injury,
and 4) proximate causation.
All the elements are present in the case at bar.
Owners and operators of clinical laboratories have the duty to comply with
statutes, as well as rules and regulations, purposely promulgated to protect
and promote the health of the people by preventing the operation of
substandard, improperly managed and inadequately supported clinical
laboratories and by improving the quality of performance of clinical laboratory
examinations.22 Their business is impressed with public interest, as such,
high standards of performance are expected from them.
In F.F. Cruz and Co., Inc. v. Court of Appeals, we found the owner of a
furniture shop liable for the destruction of the plaintiff’s house in a fire which
started in his establishment in view of his failure to comply with an ordinance
which required the construction of a firewall. In Teague v. Fernandez, we
stated that where the very injury which was intended to be prevented by the
ordinance has happened, non-compliance with the ordinance was not only
an act of negligence, but also the proximate cause of the death. 23
In fine, violation of a statutory duty is negligence. Where the law imposes
upon a person the duty to do something, his omission or non-performance
will render him liable to whoever may be injured thereby.
Section 2 of Republic Act (R.A.) No. 4688, otherwise known as The Clinical
Laboratory Law, provides:
Sec. 2. It shall be unlawful for any person to be professionally in-charge of a
registered clinical laboratory unless he is a licensed physician duly qualified
in laboratory medicine and authorized by the Secretary of Health, such
authorization to be renewed annually.
No license shall be granted or renewed by the Secretary of Health for the
operation and maintenance of a clinical laboratory unless such laboratory is
under the administration, direction and supervision of an authorized
physician, as provided for in the preceding paragraph.
Corollarily, Sections 9(9.1)(1), 11 and 25(25.1)(1) of the DOH Administrative
Order No. 49-B Series of 1988, otherwise known as the Revised Rules and
Regulations Governing the Registration, Operation and Maintenance of
Clinical Laboratories in the Philippines, read:
Sec. 9. Management of the Clinical Laboratory:
9.1 Head of the Clinical Laboratory: The head is that person who assumes
technical and administrative supervision and control of the activities in the
laboratory.
For all categories of clinical laboratories, the head shall be a licensed
physician certified by the Philippine Board of Pathology in either Anatomic or
Clinical Pathology or both provided that:
(1) This shall be mandatory for all categories of free-standing clinical
laboratories; all tertiary category hospital laboratories and for all secondary
category hospital laboratories located in areas with sufficient available
pathologist.
xxxx
Sec. 11. Reporting: All laboratory requests shall be considered as
consultations between the requesting physician and pathologist of the
laboratory. As such all laboratory reports on various examinations of human
specimens shall be construed as consultation report and shall bear the name
of the pathologist or his associate. No person in clinical laboratory shall issue
a report, orally or in writing, whole portions thereof without a directive from
the pathologist or his authorized associate and only to the requesting
physician or his authorized representative except in emergencies when the
results may be released as authorized by the pathologist.
xxxx
Sec. 25. Violations:
25.1 The license to operate a clinical laboratory may be suspended or
revoked by the Undersecretary of Health for Standards and Regulation upon
violation of R.A. 4688 or the rules and regulations issued in pursuance
thereto or the commission of the following acts by the persons owning or
operating a clinical laboratory and the persons under their authority.
(1) Operation of a Clinical Laboratory without a certified pathologist or
qualified licensed physician authorized by the Undersecretary of Health or
without employing a registered medical technologist or a person not
registered as a medical technologist in such a position.
And Section 29(b) of R.A. No. 5527, otherwise known as The Philippine
Medical Technology Act of 1969, reads:
Section 29. Penal Provisions.- Without prejudice to the provision of the
Medical Act of 1959, as amended relating to illegal practice of Medicine, the
following shall be punished by a fine of not less than two thousand pesos nor
more than five thousand pesos, or imprisonment for not less than six months
nor more than two years, or both, in the discretion of the court:
xxxx
(b) Any medical technologist, even if duly registered, who shall practice
medical technology in the Philippines without the necessary supervision of a
qualified pathologist or physician authorized by the Department of Health;
From the foregoing laws and rules, it is clear that a clinical laboratory must be
administered, directed and supervised by a licensed physician authorized by
the Secretary of Health, like a pathologist who is specially trained in methods
of laboratory medicine; that the medical technologist must be under the
supervision of the pathologist or a licensed physician; and that the results of
any examination may be released only to the requesting physician or his
authorized representative upon the direction of the laboratory pathologist.
These rules are intended for the protection of the public by preventing
performance of substandard clinical examinations by laboratories whose
personnel are not properly supervised. The public demands no less than an
effective and efficient performance of clinical laboratory examinations through
compliance with the quality standards set by laws and regulations.
We find that petitioner Garcia failed to comply with these standards.
First, CDC is not administered, directed and supervised by a licensed
physician as required by law, but by Ma. Ruby C. Calderon, a licensed
Medical Technologist.24 In the License to Open and Operate a Clinical
Laboratory for the years 1993 and 1996 issued by Dr. Juan R. Nañagas,
M.D., Undersecretary for Health Facilities, Standards and Regulation,
defendant-appellee Castro was named as the head of CDC. 25 However, in his
Answer with Counterclaim, he stated:
3. By way of affirmative and special defenses, defendant pathologist further
avers and plead as follows:
Defendant pathologist is not the owner of the Community Diagnostic Center
nor an employee of the same nor the employer of its employees. Defendant
pathologist comes to the Community Diagnostic Center when and where a
problem is referred to him. Its employees are licensed under the Medical
Technology Law (Republic Act No. 5527) and are certified by, and registered
with, the Professional Regulation Commission after having passed their
Board Examinations. They are competent within the sphere of their own
profession in so far as conducting laboratory examinations and are allowed to
sign for and in behalf of the clinical laboratory. The defendant pathologist,
and all pathologists in general, are hired by laboratories for purposes of
complying with the rules and regulations and orders issued by the
Department of Health through the Bureau of Research and Laboratories.
Defendant pathologist does not stay that long period of time at the
Community Diagnostic Center but only periodically or whenever a case is
referred to him by the laboratory. Defendant pathologist does not appoint or
select the employees of the laboratory nor does he arrange or approve their
schedules of duty.26
The foregoing provision provides the legal basis for the award of damages to
a party who suffers damage whenever one commits an act in violation of
some legal provision.30 This was incorporated by the Code Commission to
provide relief to a person who suffers damage because another has violated
some legal provision.31

Castro’s infrequent visit to the clinical laboratory barely qualifies as an
effective administrative supervision and control over the activities in the
laboratory. "Supervision and control" means the authority to act directly
whenever a specific function is entrusted by law or regulation to a
subordinate; direct the performance of duty; restrain the commission of acts;
review, approve, revise or modify acts and decisions of subordinate officials
or units.27
Second, Garcia conducted the HBsAG test of respondent Ranida without the
supervision of defendant-appellee Castro, who admitted that:
[He] does not know, and has never known or met, the plaintiff-patient even up
to this time nor has he personally examined any specimen, blood, urine or
any other tissue, from the plaintiff-patient otherwise his own handwritten
signature would have appeared in the result and not merely stamped as
shown in Annex "B" of the Amended Complaint.28
Last, the disputed HBsAG test result was released to respondent Ranida
without the authorization of defendant-appellee Castro. 29
We find the Court of Appeals’ award of moral damages reasonable under the
circumstances bearing in mind the mental trauma suffered by respondent
Ranida who thought she was afflicted by Hepatitis B, making her "unfit or
unsafe for any type of employment."32 Having established her right to moral
damages, we see no reason to disturb the award of exemplary damages and
attorney’s fees. Exemplary damages are imposed, by way of example or
correction for the public good, in addition to moral, temperate, liquidated or
compensatory damages,33 and attorney’s fees may be recovered when, as in
the instant case, exemplary damages are awarded.34
WHEREFORE, the Decision of the Court of Appeals in CA-G.R. CV No.
58668 dated February 27, 2004 finding petitioner Orlando D. Garcia, Jr. guilty
of gross negligence and liable to pay to respondents ₱50,000.00 as moral
damages, ₱50,000.00 as exemplary damages, and ₱25,000.00 as attorney’s
fees, is AFFIRMED.
SO ORDERED.

Garcia may not have intended to cause the consequences which followed
after the release of the HBsAG test result. However, his failure to comply with
the laws and rules promulgated and issued for the protection of public safety
and interest is failure to observe that care which a reasonably prudent health
care provider would observe. Thus, his act or omission constitutes a breach
of duty.

Indubitably, Ranida suffered injury as a direct consequence of Garcia’s failure

to comply with the mandate of the laws and rules aforequoted. She was
terminated from the service for failing the physical examination; suffered
anxiety because of the diagnosis; and was compelled to undergo several
more tests. All these could have been avoided had the proper safeguards
been scrupulously followed in conducting the clinical examination and
releasing the clinical report.

Article 20 of the New Civil Code provides:

Art. 20. Every person who, contrary to law, willfully or negligently causes
damage to another, shall indemnify the latter for the same.
G.R. No. L-39019 January 22, 1988
MANILA ELECTRIC COMPANY and PEDRO YAMBAO, petitioners-
appellants, vs. THE HONORABLE COURT OF APPEALS and ISAAC
CHAVEZ, SR., ISAAC O. CHAVEZ, JR., ROSENDO O. CHAVES, and
JUAN O. CHAVES, respondents-appellees.
YAP, J.:
In an action for recovery of damages for embarassment, humiliation,
wounded feelings and hurt pride, caused to herein private respondents, by
reason of the disconnection of their electrical service by the petitioners, the
then Court of First Instance of Manila, Sixth Judicial District, Branch XXIV,
rendered a decision dated December 13,1967, ordering herein petitioners
jointly and severally to pay private respondents the sum of Ten Thousand
(P10,000.00) Pesos as moral damages, Two Thousand (P2,000.00) Pesos
as exemplary damages and, One Thousand (P1,000.00) Pesos as attorney's
fees, and dismissing petitioners' counterclaim.
On appeal, the Court of Appeals and in toto the trial court's decision. Their
Motion for Reconsideration having been denied, petitioners filed the instant
petition for certiorari.
Petitioner Manila Electric Company (MERALCO) is a public utility corporation
providing electric power for the consumption of the general public in Metro
Manila. Petitioner Pedro Yambao is a bill collector of MERALCO.
Private respondents Isaac Chaves and Juana O. Chaves, husband and wife,
filed the complaint for damages, together with their children, Isaac O.
Chaves, Jr. and Rosendo O. Chaves. Isaac Sr. and Isaac Jr. and Rosendo
were members of the Philippine Bar; Isaac, Sr. and Isaac, Jr. were practicing
lawyers and Rosendo was a Legal Officer at the Agricultural Productivity
Commission. Juana O. Chaves was a public school teacher.
The facts as found by the trial court and adopted by the Court of Appeals are
as follows:
Plaintiff Isaac Chaves became a customer of defendant MERALCO in
the year 1953 when he and his family were residing at No. 211-D Rubi,
Manila. In connection with the contract for electrical service, he
deposited the sum of P5.00 (Exh. "A") with defendant MERALCO on
February 12, 1953. This deposit in the name of plaintiff Isaac Chaves
was retained by MERALCO and made to apply to subsequent contracts
for electrical service entered into after subsequent transfers of the
Chaves family to other residences and up to the time this family went to
reside at the place aforementioned, at No. 2656 Mercedes Street,
Singalong, Manila. ...
At or about the end of March, 1965, defendant Pedro Yambao went to
the residence of plaintiffs and presented two overdue bills, one for
January 11 to February 9,1965, for the sum of P7.90 (Exhibit "C"), and
the other for February 9 to March 10, 1965, for the amount of P7.20
(Exhibit "C"). Juana O. Chaves, however, informed Yambao that these
bills would be paid at the MERALCO main office.
Accordingly, on April 2, 1965, Isaac Chaves went to the defendant's
main office at San Marcelino, Manila, but paid only the bill marked as
Exhibit 'C" leaving the other bill Identified as Exhibit "C-l" unpaid.
Past 2:30 o'clock in the afternoon of April 21,1965, MERALCO caused
the electric service in plaintiff's residence to be discontinued and the
power line cut off.
The next day, April 22, 1965, at about 9:00 a.m., plaintiff Rosendo O.
Chaves went to the MERALCO main office and paid the amount of
P7.20 for the bill marked as Exhibit "C-l", and the sum of P7.00 for the
subsequent bill corresponding to the period from March 10 up to April 8,
1965 (Exhibit "C-2") after his attention was called to the latter account.
Rosendo O. Chaves then sought the help of Atty. Lourdy Torres, one of
the defendants' counsel, and, thereafter, the power line was
reconnected and electric service restored to the Chaves residence at
about 7:00 p.m. of that same day. 1
Petitioners dispute the finding that there was no notice given to herein
respondent. However, since only questions of law may be raised in a petition
for certiorari under Rule 45 of the Revised Rules of Court, petitioners, 'for the
sake of argument and for the purpose of giving focus on the legal issues', do
not take issue with such finding.
Petitioners contend that in the absence of bad faith, they could not be held
liable for moral and exemplary damages as well as attorney's fees. The
failure to give a notice of disconnection to private respondents might have
been a breach of duty or breach of contract, but by itself does not constitute
bad faith or fraud; it must be shown that such a failure was motivated by in or
done with fraudulent intent.Petitioners also maintain that ' private
respondents were in arrears in the payment of their electricity bills when their
electric service was connected, no moral damages may be recovered by
them under the 'clean hands' doctrine enunciated in Mabutas vs. Calapan
Electric Company, CA-G.R. No. L-9683-R, May 26, 1964.
In its decision, the respondent Court of Appeals held that MERALCO's right
to disconnect the electric service of a delinquent customer "is an absolute
one, subject only to the requirement that defendant MERALCO should give
the customer a written notice of disconnection 48 hours in advance." This
requirement is embodied in Section 97 of the Revised Order No. 1 of the
Public Service Commission which provides as follows:
Section 97. Payment of bills. — A public service, may require that bills
for service be paid within a specified time after rendition. When the
billing period covers a month or more, the minimum time allowed will be
ten days and upon expiration of the specified time, service may be
discontinued for the non-payment of bills, provided that a 48 hours'
written notice of such disconnection has been given the customer:
Provided, however, that disconnections of service shall not be made on
Sundays and official holidays and never after 2 p.m. of any working day:
Provided, further, that if at the moment the disconnection is to be made
the customer tenders payment of the unpaid bill to the agent or
employee of the operator who is to effect the disconnection, the said
agent or employee shall be obliged to accept tender of payment and
issue a temporary receipt for the amount and shall desist from
disconnecting the service. 2
The respondent court stressed the importance and necessity of the 48-hour
advance written notification before a disconnection of service may be
effected. Said the court:
... It sets in motion the disconnection of an electrical service
of the customer by giving the notice, determining the
expiration date thereof, and executing the disconnection. It,
therefore, behooves the defendant MERALCO that before it
disconnects a customer's electrical service, there should be
sufficient evidence that the requirements for the
disconnection had been duly complied with, otherwise, the
poor consumer can be subjected to the whims and caprices
of the defendant, by the mere pretension that the written
notice had been duly served upon the customer. 3
We find no reversible error in the decision appealed from. One can not deny
the vital role which a public utility such as MERALCO, having a monopoly of
the supply of electrical power in Metro Manila and some nearby
municipalities, plays in the life of people living in such areas. Electricity has
become a necessity to most people in these areas justifying the exercise by
the State of its regulatory power over the business of supplying electrical
service to the public, in which petitioner MERALCO is engaged. Thus, the
state may regulate, as it has done through Section 97 of the Revised Order
No. 1 of the Public Service Commission, the conditions under which and the
manner by which a public utility such as MERALCO may effect a
disconnection of service to a delinquent customer. Among others, a prior
written notice to the customer is required before disconnection of the service.
Failure to give such prior notice amounts to a tort, as held by us in a similar
case, 4 where we said:
... petitioner's act in 'disconnecting respondent Ongsip's gas
service without prior notice constitutes breach of contract
amounting to an independent tort. The prematurity of the
action is indicative of an intent to cause additional mental
and moral suffering to private respondent. This is a clear
violation of Article 21 of the Civil Code which provides that
any person who wilfully causes loss or injury to another in a
manner that is contrary to morals, good customs or public
policy shall compensate the latter for damages. This is
reiterated by paragraph 10 of Article 2219 of the Code.
Moreover, the award of moral damages is sanctioned by
Article 2220 which provides that wilfull injury to property may
be a legal ground for awarding moral damages if the court
should find that, under the circumstances, such damages are
justly due. The same rule applies to breaches of contract
where the defendant acted fraudulently or in bad faith.
Likewise, we find no merit in petitioners' contention that being in arrears in
the payment of their bills, the private respondents are not entitled to moral
damages under the doctrine that "he who comes to court in demand of
equity, must come with clean hands." We rejected this argument in the
Manila Gas Corporation case, supra, wherein we held that respondents'
default in the payment of his bills "cannot be utilized by petitioner to defeat or
null the claim for damages. At most, this circumstance can be considered as
a mitigating factor in ascertaining the amount of damages to which
respondent ... is entitled."
Accordingly, we find no grave abuse of discretion committed by respondent
court in affirming the trial court's decision. The petition is hereby DISMISSED
for lack of merit.
SO ORDERED.
G.R. No. 116100 February 9, 1996
SPOUSES CRISTINO and BRIGIDA CUSTODIO and SPOUSES LITO and
MARIA CRISTINA SANTOS, petitioners, vs. COURT OF APPEALS, HEIRS
OF PACIFICO C. MABASA and REGIONAL TRIAL COURT OF PASIG,
METRO MANILA, BRANCH 181, respondents.
DECISION
REGALADO, J.:
This petition for review on certiorari assails the decision of respondent Court
of Appeals in CA-G.R. CV No. 29115, promulgated on November 10, 1993,
which affirmed with modification the decision of the trial court, as well as its
resolution dated July 8, 1994 denying petitioner's motion for reconsideration. 1
On August 26, 1982, Civil Case No. 47466 for the grant of an easement of
right of way was filed by Pacifico Mabasa against Cristino Custodio, Brigida
R. Custodio, Rosalina R. Morato, Lito Santos and Maria Cristina C. Santos
before the Regional Trial Court of Pasig and assigned to Branch 22 thereof. 2
The generative facts of the case, as synthesized by the trial court and
adopted by the Court of Appeals, are as follows:
Perusing the record, this Court finds that the original plaintiff Pacifico
Mabasa died during the pendency of this case and was substituted
by Ofelia Mabasa, his surviving spouse [and children].
The plaintiff owns a parcel of land with a two-door apartment erected
thereon situated at Interior P. Burgos St., Palingon, Tipas, Tagig,
Metro Manila. The plaintiff was able to acquire said property through
a contract of sale with spouses Mamerto Rayos and Teodora
Quintero as vendors last September 1981. Said property may be
described to be surrounded by other immovables pertaining to
defendants herein. Taking P. Burgos Street as the point of reference,
on the left side, going to plaintiff's property, the row of houses will be
as follows: That of defendants Cristino and Brigido Custodio, then
that of Lito and Maria Cristina Santos and then that of Ofelia
Mabasa. On the right side (is) that of defendant Rosalina Morato and
then a Septic Tank (Exhibit "D"). As an access to P. Burgos Street
from plaintiff's property, there are two possible passageways. The
first passageway is approximately one meter wide and is about 20
meters distan(t) from Mabasa's residence to P. Burgos Street. Such
path is passing in between the previously mentioned row of houses.
The second passageway is about 3 meters in width and length from
plaintiff Mabasa's residence to P. Burgos Street; it is about 26
meters. In passing thru said passageway, a less than a meter wide
path through the septic tank and with 5-6 meters in length, has to be
traversed.
When said property was purchased by Mabasa, there were tenants
occupying the remises and who were acknowledged by plaintiff
Mabasa as tenants. However, sometime in February, 1982, one of
said tenants vacated the apartment and when plaintiff Mabasa went
to see the premises, he saw that there had been built an adobe
fence in the first passageway making it narrower in width. Said
adobe fence was first constructed by defendants Santoses along
their property which is also along the first passageway. Defendant
Morato constructed her adobe fence and even extended said fence
in such a way that the entire passageway was enclosed. (Exhibit "1-
Santoses and Custodios, Exh. "D" for plaintiff, Exhs. "1-C", "1-D" and
"1-E") And it was then that the remaining tenants of said apartment
vacated the area. Defendant Ma. Cristina Santos testified that she
constructed said fence because there was an incident when her
daughter was dragged by a bicycle pedalled by a son of one of the
tenants in said apartment along the first passageway. She also
mentioned some other inconveniences of having (at) the front of her
house a pathway such as when some of the tenants were drunk and
would bang their doors and windows. Some of their footwear were
even lost. . . .3 (Emphasis in original text; corrections in parentheses
supplied)
On February 27, 1990, a decision was rendered by the trial court, with this
dispositive part:
Accordingly, judgment is hereby rendered as follows:
1) Ordering defendants Custodios and Santoses to give plaintiff
permanent access ingress and egress, to the public street;
2) Ordering the plaintiff to pay defendants Custodios and Santoses
the sum of Eight Thousand Pesos (P8,000) as indemnity for the
permanent use of the passageway.
The parties to shoulder their respective litigation expenses. 4
Not satisfied therewith, therein plaintiff represented by his heirs, herein
private respondents, went to the Court of Appeals raising the sole issue of
whether or not the lower court erred in not awarding damages in their favor.
On November 10, 1993, as earlier stated, the Court of Appeals rendered its
decision affirming the judgment of the trial court with modification, the
decretal portion of which disposes as follows:
WHEREFORE, the appealed decision of the lower court is hereby
AFFIRMED WITH MODIFICATION only insofar as the herein grant of
damages to plaintiffs-appellants. The Court hereby orders
defendants-appellees to pay plaintiffs-appellants the sum of Sixty
Five Thousand (P65,000) Pesos as Actual Damages, Thirty
Thousand (P30,000) Pesos as Moral Damages, and Ten Thousand
(P10,000) Pesos as Exemplary Damages. The rest of the appealed
decision is affirmed to all respects.5
On July 8, 1994, the Court of Appeals denied petitioner's motion for
reconsideration.6 Petitioners then took the present recourse to us, raising two
issues, namely, whether or not the grant of right of way to herein private
respondents is proper, and whether or not the award of damages is in order.
With respect to the first issue, herein petitioners are already barred from
raising the same. Petitioners did not appeal from the decision of the court a
quo granting private respondents the right of way, hence they are presumed
to be satisfied with the adjudication therein. With the finality of the judgment
of the trial court as to petitioners, the issue of propriety of the grant of right of
way has already been laid to rest.
For failure to appeal the decision of the trial court to the Court of Appeals,
petitioners cannot obtain any affirmative relief other than those granted in the
decision of the trial court. That decision of the court below has become final
as against them and can no longer be reviewed, much less reversed, by this
Court. The rule in this jurisdiction is that whenever an appeal is taken in a
civil case, an appellee who has not himself appealed may not obtain from the
appellate court any affirmative relief other than what was granted in the
decision of the lower court. The appellee can only advance any argument
that he may deem necessary to defeat the appellant's claim or to uphold the
decision that is being disputed, and he can assign errors in his brief if such is
required to strengthen the views expressed by the court a quo. These
assigned errors, in turn, may be considered by the appellate court solely to
maintain the appealed decision on other grounds, but not for the purpose of
reversing or modifying the judgment in the appellee's favor and giving him
other affirmative reliefs.7
However, with respect to the second issue, we agree with petitioners that the
Court of Appeals erred in awarding damages in favor of private respondents.
The award of damages has no substantial legal basis. A reading of the
decision of the Court of Appeals will show that the award of damages was
based solely on the fact that the original plaintiff, Pacifico Mabasa, incurred
losses in the form of unrealized rentals when the tenants vacated the leased
premises by reason of the closure of the passageway.
However, the mere fact that the plaintiff suffered losses does not give rise to
a right to recover damages. To warrant the recovery of damages, there must
be both a right of action for a legal wrong inflicted by the defendant, and
damage resulting to the plaintiff therefrom. Wrong without damage, or
damage without wrong, does not constitute a cause of action, since damages
are merely part of the remedy allowed for the injury caused by a breach or
wrong.8
There is a material distinction between damages and injury. Injury is the
illegal invasion of a legal right; damage is the loss, hurt, or harm which
results from the injury; and damages are the recompense or compensation
awarded for the damage suffered. Thus, there can be damage without injury
in those instances in which the loss or harm was not the result of a violation
of a legal duty. These situations are often called damnum absque injuria.9
In order that a plaintiff may maintain an action for the injuries of which he
complains, he must establish that such injuries resulted from a breach of duty
which the defendant owed to the plaintiff a concurrence of injury to the
plaintiff and legal responsibility by the person causing it. 10 The underlying
basis for the award of tort damages is the premise that an individual was
injured in contemplation of law. Thus, there must first be the breach of some
duty and the imposition of liability for that breach before damages may be
awarded; it is not sufficient to state that there should be tort liability merely
because the plaintiff suffered some pain and suffering. 11
Many accidents occur and many injuries are inflicted by acts or omissions
which cause damage or loss to another but which violate no legal duty to
such other person, and consequently create no cause of action in his favor.
In such cases, the consequences must be borne by the injured person alone.
The law affords no remedy for damages resulting from an act which does not
amount to a legal injury or wrong.12
In other words, in order that the law will give redress for an act causing
damage, that act must be not only hurtful, but wrongful. There must
be damnum et injuria.13 If, as may happen in many cases, a person sustains
actual damage, that is, harm or loss to his person or property, without
sustaining any legal injury, that is, an act or omission which the law does not
deem an injury, the damage is regarded as damnum absque injuria.14
In the case at bar, although there was damage, there was no legal injury.
Contrary to the claim of private respondents, petitioners could not be said to
have violated the principle of abuse of right. In order that the principle of
abuse of right provided in Article 21 of the Civil Code can be applied, it is
essential that the following requisites concur: (1) The defendant should have
acted in a manner that is contrary to morals, good customs or public policy;
(2) The acts should be willful; and (3) There was damage or injury to the
plaintiff.15
The proper exercise of a lawful right cannot constitute a legal wrong for which
an action will lie, 20 although the act may result in damage to another, for no
legal right has been invaded. 21 One may use any lawful means to accomplish
a lawful purpose and though the means adopted may cause damage to
another, no cause of action arises in the latter's favor. An injury or damage
occasioned thereby is damnum absque injuria. The courts can give no
redress for hardship to an individual resulting from action reasonably
calculated to achieve a lawful means. 22

The act of petitioners in constructing a fence within their lot is a valid exercise WHEREFORE, under the compulsion of the foregoing premises, the
of their right as owners, hence not contrary to morals, good customs or public appealed decision of respondent Court of Appeals is hereby REVERSED and
policy. The law recognizes in the owner the right to enjoy and dispose of a SET ASIDE and the judgment of the trial court is correspondingly
thing, without other limitations than those established by law. 16 It is within the REINSTATED.
right of petitioners, as owners, to enclose and fence their property. Article 430
of the Civil Code provides that "(e)very owner may enclose or fence his land
or tenements by means of walls, ditches, live or dead hedges, or by any
other means without detriment to servitudes constituted thereon."

At the time of the construction of the fence, the lot was not subject to any
servitudes. There was no easement of way existing in favor of private
respondents, either by law or by contract. The fact that private respondents
had no existing right over the said passageway is confirmed by the very
decision of the trial court granting a compulsory right of way in their favor
after payment of just compensation. It was only that decision which gave
private respondents the right to use the said passageway after payment of
the compensation and imposed a corresponding duty on petitioners not to
interfere in the exercise of said right.

Hence, prior to said decision, petitioners had an absolute right over their
property and their act of fencing and enclosing the same was an act which
they may lawfully perform in the employment and exercise of said right. To
repeat, whatever injury or damage may have been sustained by private
respondents by reason of the rightful use of the said land by petitioners
is damnum absque injuria.17

A person has a right to the natural use and enjoyment of his own property,
according to his pleasure, for all the purposes to which such property is
usually applied. As a general rule, therefore, there is no cause of action for
acts done by one person upon his own property in a lawful and proper
manner, although such acts incidentally cause damage or an unavoidable
loss to another, as such damage or loss is damnum absque injuria. 18 When
the owner of property makes use thereof in the general and ordinary manner
in which the property is used, such as fencing or enclosing the same as in
this case, nobody can complain of having been injured, because the
incovenience arising from said use can be considered as a mere
consequence of community life. 19
G.R. No. 97336 February 19, 1993
GASHEM SHOOKAT BAKSH, petitioner, vs. HON. COURT OF APPEALS
and MARILOU T. GONZALES, respondents.
DAVIDE, JR., J.:
This is an appeal by certiorari under Rule 45 of the Rules of Court seeking to
review and set aside the Decision 1 of the respondent Court of Appeals in CA-
G.R. CV No. 24256 which affirmed in toto the 16 October 1939 Decision of
Branch 38 (Lingayen) of the Regional Trial Court (RTC) of Pangasinan in
Civil Case No. 16503. Presented is the issue of whether or not damages may
be recovered for a breach of promise to marry on the basis of Article 21 of
the Civil Code of the Philippines.
The antecedents of this case are not complicated:
On 27 October 1987, private respondent, without the assistance of counsel,
filed with the aforesaid trial court a complaint 2 for damages against the
petitioner for the alleged violation of their agreement to get married. She
alleges in said complaint that: she is twenty-two (22) years old, single,
Filipino and a pretty lass of good moral character and reputation duly
respected in her community; petitioner, on the other hand, is an Iranian
citizen residing at the Lozano Apartments, Guilig, Dagupan City, and is an
exchange student taking a medical course at the Lyceum Northwestern
Colleges in Dagupan City; before 20 August 1987, the latter courted and
proposed to marry her; she accepted his love on the condition that they
would get married; they therefore agreed to get married after the end of the
school semester, which was in October of that year; petitioner then visited the
private respondent's parents in Bañaga, Bugallon, Pangasinan to secure
their approval to the marriage; sometime in 20 August 1987, the petitioner
forced her to live with him in the Lozano Apartments; she was a virgin before
she began living with him; a week before the filing of the complaint,
petitioner's attitude towards her started to change; he maltreated and
threatened to kill her; as a result of such maltreatment, she sustained
injuries; during a confrontation with a representative of the barangay captain
of Guilig a day before the filing of the complaint, petitioner repudiated their
marriage agreement and asked her not to live with him anymore and; the
petitioner is already married to someone living in Bacolod City. Private
respondent then prayed for judgment ordering the petitioner to pay her
damages in the amount of not less than P45,000.00, reimbursement for
actual expenses amounting to P600.00, attorney's fees and costs, and
granting her such other relief and remedies as may be just and equitable.
The complaint was docketed as Civil Case No. 16503.
In his Answer with Counterclaim, 3 petitioner admitted only the personal
circumstances of the parties as averred in the complaint and denied the rest
of the allegations either for lack of knowledge or information sufficient to form
a belief as to the truth thereof or because the true facts are those alleged as
his Special and Affirmative Defenses. He thus claimed that he never
proposed marriage to or agreed to be married with the private respondent; he
neither sought the consent and approval of her parents nor forced her to live
in his apartment; he did not maltreat her, but only told her to stop coming to
his place because he discovered that she had deceived him by stealing his
money and passport; and finally, no confrontation took place with a
representative of the barangay captain. Insisting, in his Counterclaim, that the
complaint is baseless and unfounded and that as a result thereof, he was
unnecessarily dragged into court and compelled to incur expenses, and has
suffered mental anxiety and a besmirched reputation, he prayed for an award
of P5,000.00 for miscellaneous expenses and P25,000.00 as moral
damages.
After conducting a pre-trial on 25 January 1988, the trial court issued a Pre-
Trial Order4 embodying the stipulated facts which the parties had agreed
upon, to wit:
1. That the plaintiff is single and resident (sic) of Bañaga,
Bugallon, Pangasinan, while the defendant is single, Iranian
citizen and resident (sic) of Lozano Apartment, Guilig,
Dagupan City since September 1, 1987 up to the present;
2. That the defendant is presently studying at Lyceum
Northwestern, Dagupan City, College of Medicine, second
year medicine proper;
3. That the plaintiff is (sic) an employee at Mabuhay
Luncheonette , Fernandez Avenue, Dagupan City since July,
1986 up to the present and a (sic) high school graduate;
4. That the parties happened to know each other when the
manager of the Mabuhay Luncheonette, Johhny Rabino
introduced the defendant to the plaintiff on August 3, 1986.
After trial on the merits, the lower court, applying Article 21 of the Civil Code,
rendered on 16 October 1989 a decision5 favoring the private respondent.
The petitioner was thus ordered to pay the latter damages and attorney's
fees; the dispositive portion of the decision reads:
 IN THE LIGHT of the foregoing consideration, judgment is hereby
rendered in favor of the plaintiff and against the defendant.
1. Condemning (sic) the defendant to pay the plaintiff the sum of twenty
thousand (P20,000.00) pesos as moral damages.
2. Condemning further the defendant to play the plaintiff the sum of three
thousand (P3,000.00) pesos as atty's fees and two thousand (P2,000.00)
pesos at (sic) litigation expenses and to pay the costs.
3. All other claims are denied.6
The decision is anchored on the trial court's findings and conclusions that (a)
petitioner and private respondent were lovers, (b) private respondent is not a
woman of loose morals or questionable virtue who readily submits to sexual
advances, (c) petitioner, through machinations, deceit and false pretenses,
promised to marry private respondent, d) because of his persuasive promise
to marry her, she allowed herself to be deflowered by him, (e) by reason of
that deceitful promise, private respondent and her parents — in accordance
with Filipino customs and traditions — made some preparations for the
wedding that was to be held at the end of October 1987 by looking for pigs
and chickens, inviting friends and relatives and contracting sponsors, (f)
petitioner did not fulfill his promise to marry her and (g) such acts of the
petitioner, who is a foreigner and who has abused Philippine hospitality, have
offended our sense of morality, good customs, culture and traditions. The trial
court gave full credit to the private respondent's testimony because, inter alia,
she would not have had the temerity and courage to come to court and
expose her honor and reputation to public scrutiny and ridicule if her claim
was false.7
The above findings and conclusions were culled from the detailed summary
of the evidence for the private respondent in the foregoing decision, digested
by the respondent Court as follows:
According to plaintiff, who claimed that she was a virgin at the time and
that she never had a boyfriend before, defendant started courting her
just a few days after they first met. He later proposed marriage to her
several times and she accepted his love as well as his proposal of
marriage on August 20, 1987, on which same day he went with her to
her hometown of Bañaga, Bugallon, Pangasinan, as he wanted to meet
her parents and inform them of their relationship and their intention to
get married. The photographs Exhs. "A" to "E" (and their submarkings)
of defendant with members of plaintiff's family or with plaintiff, were
taken that day. Also on that occasion, defendant told plaintiffs parents
and brothers and sisters that he intended to marry her during the
semestral break in October, 1987, and because plaintiff's parents
thought he was good and trusted him, they agreed to his proposal for
him to marry their daughter, and they likewise allowed him to stay in
their house and sleep with plaintiff during the few days that they were in
Bugallon. When plaintiff and defendant later returned to Dagupan City,
they continued to live together in defendant's apartment. However, in the
early days of October, 1987, defendant would tie plaintiff's hands and
feet while he went to school, and he even gave her medicine at 4 o'clock
in the morning that made her sleep the whole day and night until the
following day. As a result of this live-in relationship, plaintiff became
pregnant, but defendant gave her some medicine to abort the fetus. Still
plaintiff continued to live with defendant and kept reminding him of his
promise to marry her until he told her that he could not do so because
he was already married to a girl in Bacolod City. That was the time
plaintiff left defendant, went home to her parents, and thereafter
consulted a lawyer who accompanied her to the barangay captain in
Dagupan City. Plaintiff, her lawyer, her godmother, and a barangay
tanod sent by the barangay captain went to talk to defendant to still
convince him to marry plaintiff, but defendant insisted that he could not
do so because he was already married to a girl in Bacolod City, although
the truth, as stipulated by the parties at the pre-trial, is that defendant is
still single.
Plaintiff's father, a tricycle driver, also claimed that after defendant had
informed them of his desire to marry Marilou, he already looked for
sponsors for the wedding, started preparing for the reception by looking
for pigs and chickens, and even already invited many relatives and
friends to the forthcoming wedding. 8
Petitioner appealed the trial court's decision to the respondent Court of
Appeals which docketed the case as CA-G.R. CV No. 24256. In his Brief, 9 he
contended that the trial court erred (a) in not dismissing the case for lack of
factual and legal basis and (b) in ordering him to pay moral damages,
attorney's fees, litigation expenses and costs.
On 18 February 1991, respondent Court promulgated the challenged
decision 10 affirming in toto the trial court's ruling of 16 October 1989. In
sustaining the trial court's findings of fact, respondent Court made the
following analysis:
First of all, plaintiff, then only 21 years old when she met defendant
who was already 29 years old at the time, does not appear to be a
girl of loose morals. It is uncontradicted that she was a virgin prior to
her unfortunate experience with defendant and never had boyfriend.
She is, as described by the lower court, a barrio lass "not used and
accustomed to trend of modern urban life", and certainly would (sic)
 not have allowed
"herself to be deflowered by the defendant if there was no persuasive
promise made by the defendant to marry her." In fact, we agree with
the lower court that plaintiff and defendant must have been
sweethearts or so the plaintiff must have thought because of the
deception of defendant, for otherwise, she would not have allowed
herself to be photographed with defendant in public in so (sic) loving
and tender poses as those depicted in the pictures Exhs. "D" and
"E". We cannot believe, therefore, defendant's pretense that plaintiff
was a nobody to him except a waitress at the restaurant where he
usually ate. Defendant in fact admitted that he went to plaintiff's
hometown of Bañaga, Bugallon, Pangasinan, at least thrice; at (sic)
the town fiesta on February 27, 1987 (p. 54, tsn May 18, 1988), at
(sic) a beach party together with the manager and employees of the
Mabuhay Luncheonette on March 3, 1987 (p. 50, tsn id.), and on
April 1, 1987 when he allegedly talked to plaintiff's mother who told
him to marry her daughter (pp. 55-56, tsn id.). Would defendant have
left Dagupan City where he was involved in the serious study of
medicine to go to plaintiff's hometown in Bañaga, Bugallon, unless
there was (sic) some kind of special relationship between them? And
this special relationship must indeed have led to defendant's
insincere proposal of marriage to plaintiff, communicated not only to
her but also to her parents, and (sic) Marites Rabino, the owner of
the restaurant where plaintiff was working and where defendant first
proposed marriage to her, also knew of this love affair and
defendant's proposal of marriage to plaintiff, which she declared was
the reason why plaintiff resigned from her job at the restaurant after
she had accepted defendant's proposal (pp. 6-7, tsn March 7, 1988).
Upon the other hand, appellant does not appear to be a man of good
moral character and must think so low and have so little respect and
regard for Filipino women that he openly admitted that when he
studied in Bacolod City for several years where he finished his B.S.
Biology before he came to Dagupan City to study medicine, he had a
common-law wife in Bacolod City. In other words, he also lived with
another woman in Bacolod City but did not marry that woman, just
like what he did to plaintiff. It is not surprising, then, that he felt so
little compunction or remorse in pretending to love and promising to
marry plaintiff, a young, innocent, trustful country girl, in order to
satisfy his lust on her. 11
and then concluded:
In sum, we are strongly convinced and so hold that it was defendant-
appellant's fraudulent and deceptive protestations of love for and
promise to marry plaintiff that made her surrender her virtue and
womanhood to him and to live with him on the honest and sincere
belief that he would keep said promise, and it was likewise these
(sic) fraud and deception on appellant's part that made plaintiff's
parents agree to their daughter's living-in with him preparatory to
their supposed marriage. And as these acts of appellant are palpably
and undoubtedly against morals, good customs, and public policy,
and are even gravely and deeply derogatory and insulting to our
women, coming as they do from a foreigner who has been enjoying
the hospitality of our people and taking advantage of the opportunity
to study in one of our institutions of learning, defendant-appellant
should indeed be made, under Art. 21 of the Civil Code of the
Philippines, to compensate for the moral damages and injury that he
had caused plaintiff, as the lower court ordered him to do in its
decision in this case. 12
Unfazed by his second defeat, petitioner filed the instant petition on 26 March
1991; he raises therein the single issue of whether or not Article 21 of the
Civil Code applies to the case at bar. 13
It is petitioner's thesis that said Article 21 is not applicable because he had
not committed any moral wrong or injury or violated any good custom or
public policy; he has not professed love or proposed marriage to the private
respondent; and he has never maltreated her. He criticizes the trial court for
liberally invoking Filipino customs, traditions and culture, and ignoring the fact
that since he is a foreigner, he is not conversant with such Filipino customs,
traditions and culture. As an Iranian Moslem, he is not familiar with Catholic
and Christian ways. He stresses that even if he had made a promise to
marry, the subsequent failure to fulfill the same is excusable or tolerable
because of his Moslem upbringing; he then alludes to the Muslim Code which
purportedly allows a Muslim to take four (4) wives and concludes that on the
basis thereof, the trial court erred in ruling that he does not posses good
moral character. Moreover, his controversial "common law life" is now his
legal wife as their marriage had been solemnized in civil ceremonies in the
Iranian Embassy. As to his unlawful cohabitation with the private respondent,
petitioner claims that even if responsibility could be pinned on him for the
live-in relationship, the private respondent should also be faulted for
consenting to an illicit arrangement. Finally, petitioner asseverates that even
if it was to be assumed arguendo that he had professed his love to the
private respondent and had also promised to marry her, such acts would not
be actionable in view of the special circumstances of the case. The mere
breach of promise is not actionable. 14
On 26 August 1991, after the private respondent had filed her Comment to
the petition and the petitioner had filed his Reply thereto, this Court gave due
course to the petition and required the parties to submit their respective
Memoranda, which they subsequently complied with.
As may be gleaned from the foregoing summation of the petitioner's
arguments in support of his thesis, it is clear that questions of fact, which boil
down to the issue of the credibility of witnesses, are also raised. It is the rule
in this jurisdiction that appellate courts will not disturb the trial court's findings
as to the credibility of witnesses, the latter court having heard the witnesses
and having had the opportunity to observe closely their deportment and
manner of testifying, unless the trial court had plainly overlooked facts of
substance or value which, if considered, might affect the result of the case. 15
Petitioner has miserably failed to convince Us that both the appellate and trial
courts had overlooked any fact of substance or values which could alter the
result of the case.
Equally settled is the rule that only questions of law may be raised in a
petition for review on certiorari under Rule 45 of the Rules of Court. It is not
the function of this Court to analyze or weigh all over again the evidence
introduced by the parties before the lower court. There are, however,
recognized exceptions to this rule. Thus, in Medina vs.Asistio, Jr., 16 this
Court took the time, again, to enumerate these exceptions:
xxx xxx xxx
(1) When the conclusion is a finding grounded entirely on speculation,
surmises or conjectures (Joaquin v. Navarro, 93 Phil. 257 [1953]); (2)
When the inference made is manifestly mistaken, absurb or impossible
(Luna v. Linatok, 74 Phil. 15 [1942]); (3) Where there is a grave abuse
of discretion (Buyco v. People, 95 Phil. 453 [1955]); (4) When the
judgment is based on a misapprehension of facts (Cruz v. Sosing,
L-4875, Nov. 27, 1953); (5) When the findings of fact are conflicting
(Casica v. Villaseca, L-9590 Ap. 30, 1957; unrep.) (6) When the Court
of Appeals, in making its findings, went beyond the issues of the case
and the same is contrary to the admissions of both appellate and
appellee (Evangelista v. Alto Surety and Insurance Co., 103 Phil. 401
[1958]);
(7) The findings of the Court of Appeals are contrary to those of the
trial court (Garcia v. Court of Appeals, 33 SCRA 622 [1970]; Sacay v.
Sandiganbayan, 142 SCRA 593 [1986]); (8) When the findings of fact
are conclusions without citation of specific evidence on which they are
based (Ibid.,); (9) When the facts set forth in the petition as well as in
the petitioners main and reply briefs are not disputed by the
respondents (Ibid.,); and (10) The finding of fact of the Court of
Appeals is premised on the supposed absence of evidence and is
contradicted by the evidence on record (Salazar v. Gutierrez, 33 SCRA
242 [1970]).
Petitioner has not endeavored to joint out to Us the existence of any of the
above quoted exceptions in this case. Consequently, the factual findings of
the trial and appellate courts must be respected.
And now to the legal issue.
The existing rule is that a breach of promise to marry per se is not an
actionable wrong. 17 Congress deliberately eliminated from the draft of the
New Civil Code the provisions that would have made it so. The reason
therefor is set forth in the report of the Senate Committees on the Proposed
Civil Code, from which We quote:
The elimination of this chapter is proposed. That breach of
promise to marry is not actionable has been definitely
decided in the case of De Jesus vs. Syquia. 18 The history of
breach of promise suits in the United States and in England
has shown that no other action lends itself more readily to
abuse by designing women and unscrupulous men. It is this
experience which has led to the abolition of rights of action in
the so-called Heart Balm suits in many of the American
states. . . . 19
This notwithstanding, the said Code contains a provision, Article 21, which is
designed to expand the concept of torts or quasi-delict in this jurisdiction by
granting adequate legal remedy for the untold number of moral wrongs which
is impossible for human foresight to specifically enumerate and punish in the
statute books. 20
As the Code Commission itself stated in its Report:
But the Code Commission had gone farther than the sphere of
wrongs defined or determined by positive law. Fully sensible that
there are countless gaps in the statutes, which leave so many victims
of moral wrongs helpless, even though they have actually suffered
material and moral injury, the Commission has deemed it necessary,
in the interest of justice, to incorporate in the proposed Civil Code the
following rule:
Art. 23. Any person who wilfully causes loss
or injury to another in a manner that is
contrary to morals, good customs or public
policy shall compensate the latter for the
damage.
 An example will illustrate the purview of the foregoing norm: "A"
seduces the nineteen-year old daughter of "X". A promise of marriage
either has not been made, or can not be proved. The girl becomes
pregnant. Under the present laws, there is no crime, as the girl is
above nineteen years of age. Neither can any civil action for breach of
promise of marriage be filed. Therefore, though the grievous moral
wrong has been committed, and though the girl and family have
suffered incalculable moral damage, she and her parents cannot bring
action for damages. But under the proposed article, she and her
parents would have such a right of action.
Thus at one stroke, the legislator, if the forgoing rule is approved,
would vouchsafe adequate legal remedy for that untold number of
moral wrongs which it is impossible for human foresight to provide for
specifically in the statutes. 21
Article 2176 of the Civil Code, which defines a quasi-delict thus:
Whoever by act or omission causes damage to another,
there being fault or negligence, is obliged to pay for the
damage done. Such fault or negligence, if there is no pre-
existing contractual relation between the parties, is called
a quasi-delict and is governed by the provisions of this
Chapter.
is limited to negligent acts or omissions and excludes the notion of
willfulness or intent. Quasi-delict, known in Spanish legal treatises
as culpa aquiliana, is a civil law concept while torts is an Anglo-American
or common law concept. Torts is much broader than culpa
aquiliana because it includes not only negligence, but international
criminal acts as well such as assault and battery, false imprisonment and
deceit. In the general scheme of the Philippine legal system envisioned by
the Commission responsible for drafting the New Civil Code, intentional
and malicious acts, with certain exceptions, are to be governed by the
Revised Penal Code while negligent acts or omissions are to be covered
by Article 2176 of the Civil Code. 22 In between these opposite spectrums
are injurious acts which, in the absence of Article 21, would have been
beyond redress. Thus, Article 21 fills that vacuum. It is even postulated
that together with Articles 19 and 20 of the Civil Code, Article 21 has
greatly broadened the scope of the law on civil wrongs; it has become
much more supple and adaptable than the Anglo-American law on torts. 23
In the light of the above laudable purpose of Article 21, We are of the opinion,
and so hold, that where a man's promise to marry is in fact the proximate
cause of the acceptance of his love by a woman and his representation to
fulfill that promise thereafter becomes the proximate cause of the giving of
herself unto him in a sexual congress, proof that he had, in reality, no
intention of marrying her and that the promise was only a subtle scheme or
deceptive device to entice or inveigle her to accept him and to obtain her
consent to the sexual act, could justify the award of damages pursuant to
Article 21 not because of such promise to marry but because of the fraud and
deceit behind it and the willful injury to her honor and reputation which
followed thereafter. It is essential, however, that such injury should have been
committed in a manner contrary to morals, good customs or public policy.
In the instant case, respondent Court found that it was the petitioner's
"fraudulent and deceptive protestations of love for and promise to marry
plaintiff that made her surrender her virtue and womanhood to him and to live
with him on the honest and sincere belief that he would keep said promise,
and it was likewise these fraud and deception on appellant's part that made
plaintiff's parents agree to their daughter's living-in with him preparatory to
their supposed marriage." 24 In short, the private respondent surrendered her
virginity, the cherished possession of every single Filipina, not because of
lust but because of moral seduction — the kind illustrated by the Code
Commission in its example earlier adverted to. The petitioner could not be
held liable for criminal seduction punished under either Article 337 or Article
338 of the Revised Penal Code because the private respondent was above
eighteen (18) years of age at the time of the seduction.
Prior decisions of this Court clearly suggest that Article 21 may be applied in
a breach of promise to marry where the woman is a victim of moral
seduction. Thus, in Hermosisima vs. Court of Appeals,25 this Court denied
recovery of damages to the woman because:
. . . we find ourselves unable to say that petitioner is morally guilty of
seduction, not only because he is approximately ten (10) years
younger than the complainant — who was around thirty-six (36) years
of age, and as highly enlightened as a former high school teacher and
a life insurance agent are supposed to be — when she became
intimate with petitioner, then a mere apprentice pilot, but, also,
because the court of first instance found that, complainant
"surrendered herself" to petitioner because, "overwhelmed by her love"
for him, she "wanted to bind" him by having a fruit of their engagement
even before they had the benefit of clergy.
In Tanjanco vs. Court of Appeals, 26 while this Court likewise hinted at
possible recovery if there had been moral seduction, recovery was eventually
denied because We were not convinced that such seduction existed. The
following enlightening disquisition and conclusion were made in the said
case:
The Court of Appeals seem to have overlooked that the example set
forth in the Code Commission's memorandum refers to a tort upon a
minor who had been seduced. The essential feature is seduction, that in
law is more than mere sexual intercourse, or a breach of a promise of
marriage; it connotes essentially the idea of deceit, enticement, superior
power or abuse of confidence on the part of the seducer to which the
woman has yielded (U.S. vs. Buenaventura, 27 Phil. 121; U.S. vs.
Arlante, 9 Phil. 595).
It has been ruled in the Buenaventura case (supra) that —
To constitute seduction there must in all cases be
some sufficient promise or inducement and the woman
must yield because of the promise or other
inducement. If she consents merely from carnal lust
and the intercourse is from mutual desire, there is no
seduction (43 Cent. Dig. tit. Seduction, par. 56) She
must be induced to depart from the path of virtue by
the use of some species of arts, persuasions and
wiles, which are calculated to have and do have that
effect, and which result in her person to ultimately
submitting her person to the sexual embraces of her
seducer (27 Phil. 123).
And in American Jurisprudence we find:
On the other hand, in an action by the woman, the
enticement, persuasion or deception is the essence of
the injury; and a mere proof of intercourse is
insufficient to warrant a recovery.
Accordingly it is not seduction where the willingness
arises out of sexual desire of curiosity of the female,
and the defendant merely affords her the needed
opportunity for the commission of the act. It has been
emphasized that to allow a recovery in all such cases
would tend to the demoralization of the female sex,
and would be a reward for unchastity by which a class
of adventuresses would be swift to profit. (47 Am. Jur.
662)
xxx xxx xxx
Over and above the partisan allegations, the fact stand out
that for one whole year, from 1958 to 1959, the plaintiff-
appellee, a woman of adult age, maintain intimate sexual
relations with appellant, with repeated acts of intercourse.
Such conduct is incompatible with the idea of seduction.
Plainly there is here voluntariness and mutual passion; for
had the appellant been deceived, had she surrendered
exclusively because of the deceit, artful persuasions and
wiles of the defendant, she would not have again yielded to
his embraces, much less for one year, without exacting early
fulfillment of the alleged promises of marriage, and would
have cut short all sexual relations upon finding that
defendant did not intend to fulfill his defendant did not intend
to fulfill his promise. Hence, we conclude that no case is
made under article 21 of the Civil Code, and no other cause
of action being alleged, no error was committed by the Court
of First Instance in dismissing the complaint. 27
In his annotations on the Civil Code, 28 Associate Justice Edgardo L. Paras,
who recently retired from this Court, opined that in a breach of promise to
marry where there had been carnal knowledge, moral damages may be
recovered:
. . . if there be criminal or moral seduction, but not if the
intercourse was due to mutual lust. (Hermosisima vs. Court
of Appeals,
L-14628, Sept. 30, 1960; Estopa vs. Piansay, Jr., L-14733,
Sept. 30, 1960; Batarra vs. Marcos, 7 Phil. 56 (sic); Beatriz
Galang vs. Court of Appeals, et al., L-17248, Jan. 29, 1962).
(In other words, if the CAUSE be the promise to marry, and
the EFFECT be the carnal knowledge, there is a chance that
there was criminal or moral seduction, hence recovery of
moral damages will prosper. If it be the other way around,
there can be no recovery of moral damages, because here
mutual lust has intervened). . . .
together with "ACTUAL damages, should there be any, such as the
expenses for the wedding presentations (See Domalagon v. Bolifer,
33 Phil. 471).
Senator Arturo M. Tolentino 29 is also of the same persuasion:
It is submitted that the rule in Batarra vs. Marcos, 30 still
subsists, notwithstanding the incorporation of the present
article31 in the Code. The example given by the Code
Commission is correct, if there was seduction, not
necessarily in the legal sense, but in the vulgar sense of
 deception. But when the sexual act is accomplished without
any deceit or qualifying circumstance of abuse of authority or
influence, but the woman, already of age, has knowingly
given herself to a man, it cannot be said that there is an
injury which can be the basis for indemnity.
But so long as there is fraud, which is characterized by
willfulness (sic), the action lies. The court, however, must
weigh the degree of fraud, if it is sufficient to deceive the
woman under the circumstances, because an act which
would deceive a girl sixteen years of age may not constitute
deceit as to an experienced woman thirty years of age. But
so long as there is a wrongful act and a resulting injury, there
should be civil liability, even if the act is not punishable under
the criminal law and there should have been an acquittal or
dismissal of the criminal case for that reason.
We are unable to agree with the petitioner's alternative proposition to the
effect that granting, for argument's sake, that he did promise to marry the
private respondent, the latter is nevertheless also at fault. According to him,
both parties are in pari delicto; hence, pursuant to Article 1412(1) of the Civil
Code and the doctrine laid down in Batarra vs. Marcos, 32 the private
respondent cannot recover damages from the petitioner. The latter even goes
as far as stating that if the private respondent had "sustained any injury or
damage in their relationship, it is primarily because of her own doing, 33 for:
. . . She is also interested in the petitioner as the latter will
become a doctor sooner or later. Take notice that she is a
plain high school graduate and a mere employee . . . (Annex
"C") or a waitress (TSN, p. 51, January 25, 1988) in a
luncheonette and without doubt, is in need of a man who can
give her economic security. Her family is in dire need of
financial assistance. (TSN, pp. 51-53, May 18, 1988). And
this predicament prompted her to accept a proposition that
may have been offered by the petitioner. 34
These statements reveal the true character and motive of the petitioner. It is
clear that he harbors a condescending, if not sarcastic, regard for the private
respondent on account of the latter's ignoble birth, inferior educational
background, poverty and, as perceived by him, dishonorable employment.
Obviously then, from the very beginning, he was not at all moved by good
faith and an honest motive. Marrying with a woman so circumstances could
not have even remotely occurred to him. Thus, his profession of love and
promise to marry were empty words directly intended to fool, dupe, entice,
beguile and deceive the poor woman into believing that indeed, he loved her
and would want her to be his life's partner. His was nothing but pure lust
which he wanted satisfied by a Filipina who honestly believed that by
accepting his proffer of love and proposal of marriage, she would be able to
enjoy a life of ease and security. Petitioner clearly violated the Filipino's
concept of morality and brazenly defied the traditional respect Filipinos have
for their women. It can even be said that the petitioner committed such
deplorable acts in blatant disregard of Article 19 of the Civil Code which
directs every person to act with justice, give everyone his due and observe
honesty and good faith in the exercise of his rights and in the performance of
his obligations.
No foreigner must be allowed to make a mockery of our laws, customs and
traditions.
The pari delicto rule does not apply in this case for while indeed, the private
respondent may not have been impelled by the purest of intentions, she
eventually submitted to the petitioner in sexual congress not out of lust, but
because of moral seduction. In fact, it is apparent that she had qualms of
conscience about the entire episode for as soon as she found out that the
petitioner was not going to marry her after all, she left him. She is not,
therefore, in pari delicto with the petitioner. Pari delicto means "in equal fault;
in a similar offense or crime; equal in guilt or in legal fault." 35At most, it could
be conceded that she is merely in delicto.
Equity often interferes for the relief of the less guilty of the
parties, where his transgression has been brought about by
the imposition of undue influence of the party on whom the
burden of the original wrong principally rests, or where his
consent to the transaction was itself procured by
fraud. 36
In Mangayao vs. Lasud, 37 We declared:
Appellants likewise stress that both parties being at fault,
there should be no action by one against the other (Art.
1412, New Civil Code). This rule, however, has been
interpreted as applicable only where the fault on both sides
is, more or less, equivalent. It does not apply where one
party is literate or intelligent and the other one is not. (c.f.
Bough vs. Cantiveros, 40 Phil. 209).
We should stress, however, that while We find for the private respondent, let
it not be said that this Court condones the deplorable behavior of her parents
in letting her and the petitioner stay together in the same room in their house
after giving approval to their marriage. It is the solemn duty of parents to
protect the honor of their daughters and infuse upon them the higher values
of morality and dignity.

WHEREFORE, finding no reversible error in the challenged decision, the

instant petition is hereby DENIED, with costs against the petitioner.

SO ORDERED.
G.R. No. 143958 July 11, 2003
ALFRED FRITZ FRENZEL, petitioner, vs. EDERLINA P.
CATITO, respondent.
CALLEJO, SR., J.:
Before us is a petition for review of the Decision 1 of the Court of Appeals in
CA-G.R. CV No. 53485 which affirmed the Decision 2 of the Regional Trial
Court of Davao City, Branch 14, in Civil Case No. 17,817 dismissing the
petitioner's complaint, and the resolution of the Court of Appeals denying his
motion for reconsideration of the said decision.
The Antecedents3
As gleaned from the evidence of the petitioner, the case at bar stemmed from
the following factual backdrop:
Petitioner Alfred Fritz Frenzel is an Australian citizen of German descent. He
is an electrical engineer by profession, but worked as a pilot with the New
Guinea Airlines. He arrived in the Philippines in 1974, started engaging in
business in the country two years thereafter, and married Teresita Santos, a
Filipino citizen. In 1981, Alfred and Teresita separated from bed and board
without obtaining a divorce.
Sometime in February 1983, Alfred arrived in Sydney, Australia for a
vacation. He went to King's Cross, a night spot in Sydney, for a massage
where he met Ederlina Catito, a Filipina and a native of Bajada, Davao City.
Unknown to Alfred, she resided for a time in Germany and was married to
Klaus Muller, a German national. She left Germany and tried her luck in
Sydney, Australia, where she found employment as a masseuse in the King's
Cross nightclub. She was fluent in German, and Alfred enjoyed talking with
her. The two saw each other again; this time Ederlina ended up staying in
Alfred's hotel for three days. Alfred gave Ederlina sums of money for her
services.4
Alfred was so enamored with Ederlina that he persuaded her to stop working
at King's Cross, return to the Philippines, and engage in a wholesome
business of her own. He also proposed that they meet in Manila, to which
she assented. Alfred gave her money for her plane fare to the Philippines.
Within two weeks of Ederlina's arrival in Manila, Alfred joined her. Alfred
reiterated his proposal for Ederlina to stay in the Philippines and engage in
business, even offering to finance her business venture. Ederlina was
delighted at the idea and proposed to put up a beauty parlor. Alfred happily
agreed.
Alfred told Ederlina that he was married but that he was eager to divorce his
wife in Australia. Alfred proposed marriage to Ederlina, but she replied that
they should wait a little bit longer.
Ederlina found a building at No. 444 M.H. del Pilar corner Arquiza Street,
Ermita, Manila, owned by one Atty. Jose Hidalgo who offered to convey his
rights over the property for P18,000.00. Alfred and Ederlina accepted the
offer. Ederlina put up a beauty parlor on the property under the business
name Edorial Beauty Salon, and had it registered with the Department of
Trade and Industry under her name. Alfred paid Atty. Hidalgo P20,000.00 for
his right over the property and gave P300,000.00 to Ederlina for the purchase
of equipment and furniture for the parlor. As Ederlina was going to Germany,
she executed a special power of attorney on December 13, 1983 5 appointing
her brother, Aser Catito, as her attorney-in-fact in managing the beauty parlor
business. She stated in the said deed that she was married to Klaus Muller.
Alfred went back to Papua New Guinea to resume his work as a pilot.
When Alfred returned to the Philippines, he visited Ederlina in her Manila
residence and found it unsuitable for her. He decided to purchase a house
and lot owned by Victoria Binuya Steckel in San Francisco del Monte,
Quezon City, covered by Transfer Certificate of Title No. 218429 for
US$20,000.00. Since Alfred knew that as an alien he was disqualified from
owning lands in the Philippines, he agreed that only Ederlina's name would
appear in the deed of sale as the buyer of the property, as well as in the title
covering the same. After all, he was planning to marry Ederlina and he
believed that after their marriage, the two of them would jointly own the
property. On January 23, 1984, a Contract to Sell was entered into between
Victoria Binuya Steckel as the vendor and Ederlina as the sole vendee. Alfred
signed therein as a witness.6 Victoria received from Alfred, for and in behalf
of Ederlina, the amount of US$10,000.00 as partial payment, for which
Victoria issued a receipt.7 When Victoria executed the deed of absolute sale
over the property on March 6, 1984, 8 she received from Alfred, for and in
behalf of Ederlina, the amount of US$10,000.00 as final and full payment.
Victoria likewise issued a receipt for the said amount. 9 After Victoria had
vacated the property, Ederlina moved into her new house. When she left for
Germany to visit Klaus, she had her father Narciso Catito and her two sisters
occupy the property.
Alfred decided to stay in the Philippines for good and live with Ederlina. He
returned to Australia and sold his fiber glass pleasure boat to John Reid for
$7,500.00 on May 4, 1984.10 He also sold his television and video business in
Papua New Guinea for K135,000.00 to Tekeraoi Pty. Ltd. 11 He had his
personal properties shipped to the Philippines and stored at No. 14
Fernandez Street, San Francisco del Monte, Quezon City. The proceeds of
the sale were deposited in Alfred's account with the Hong Kong Shanghai
Banking Corporation (HSBC), Kowloon Branch under Bank Account No. 018-
2-807016.12 When Alfred was in Papua New Guinea selling his other
properties, the bank sent telegraphic letters updating him of his
account.13 Several checks were credited to his HSBC bank account from
Papua New Guinea Banking Corporation, Westpac Bank of Australia and
New Zealand Banking Group Limited and Westpac Bank-PNG-Limited. Alfred
also had a peso savings account with HSBC, Manila, under Savings Account
No. 01-725-183-01.14
Once, when Alfred and Ederlina were in Hong Kong, they opened another
account with HSBC, Kowloon, this time in the name of Ederlina, under
Savings Account No. 018-0-807950. 15 Alfred transferred his deposits in
Savings Account No. 018-2-807016 with the said bank to this new account.
Ederlina also opened a savings account with the Bank of America Kowloon
Main Office under Account No. 30069016.16
On July 28, 1984, while Alfred was in Papua New Guinea, he received a
Letter dated December 7, 1983 from Klaus Muller who was then residing in
Berlin, Germany. Klaus informed Alfred that he and Ederlina had been
married on October 16, 1978 and had a blissful married life until Alfred
intruded therein. Klaus stated that he knew of Alfred and Ederlina's amorous
relationship, and discovered the same sometime in November 1983 when he
arrived in Manila. He also begged Alfred to leave Ederlina alone and to return
her to him, saying that Alfred could not possibly build his future on his
(Klaus') misfortune.17
Alfred had occasion to talk to Sally MacCarron, a close friend of Ederlina. He
inquired if there was any truth to Klaus' statements and Sally confirmed that
Klaus was married to Ederlina. When Alfred confronted Ederlina, she
admitted that she and Klaus were, indeed, married. But she assured Alfred
that she would divorce Klaus. Alfred was appeased. He agreed to continue
the amorous relationship and wait for the outcome of Ederlina's petition for
divorce. After all, he intended to marry her. He retained the services of
Rechtsanwaltin Banzhaf with offices in Berlin, as her counsel who informed
her of the progress of the proceedings. 18 Alfred paid for the services of the
lawyer.
In the meantime, Alfred decided to purchase another house and lot, owned
by Rodolfo Morelos covered by TCT No. 92456 located in Peña Street,
Bajada, Davao City.19 Alfred again agreed to have the deed of sale made out
in the name of Ederlina. On September 7, 1984, Rodolfo Morelos executed a
deed of absolute sale over the said property in favor of Ederlina as the sole
vendee for the amount of P80,000.00. 20 Alfred paid US$12,500.00 for the
property.
Alfred purchased another parcel of land from one Atty. Mardoecheo
Camporedondo, located in Moncado, Babak, Davao, covered by TCT No.
35251. Alfred once more agreed for the name of Ederlina to appear as the
sole vendee in the deed of sale. On December 31, 1984, Atty.
Camporedondo executed a deed of sale over the property for P65,000.00 in
favor of Ederlina as the sole vendee. 21 Alfred, through Ederlina, paid the lot at
the cost of P33,682.00 and US$7,000.00, respectively, for which the vendor
signed receipts.22 On August 14, 1985, TCT No. 47246 was issued to
Ederlina as the sole owner of the said property. 23
Meanwhile, Ederlina deposited on December 27, 1985, the total amount of
US$250,000 with the HSBC Kowloon under Joint Deposit Account No. 018-
462341-145.24
The couple decided to put up a beach resort on a four-hectare land in
Camudmud, Babak, Davao, owned by spouses Enrique and Rosela Serrano.
Alfred purchased the property from the spouses for P90,000.00, and the
latter issued a receipt therefor.25 A draftsman commissioned by the couple
submitted a sketch of the beach resort.26 Beach houses were forthwith
constructed on a portion of the property and were eventually rented out by
Ederlina's father, Narciso Catito. The rentals were collected by Narciso, while
Ederlina kept the proceeds of the sale of copra from the coconut trees in the
property. By this time, Alfred had already spent P200,000.00 for the
purchase, construction and upkeep of the property.
Ederlina often wrote letters to her family informing them of her life with Alfred.
In a Letter dated January 21, 1985, she wrote about how Alfred had financed
the purchases of some real properties, the establishment of her beauty parlor
business, and her petition to divorce Klaus.27
Because Ederlina was preoccupied with her business in Manila, she
executed on July 8, 1985, two special powers of attorney 28 appointing Alfred
as attorney-in-fact to receive in her behalf the title and the deed of sale over
the property sold by the spouses Enrique Serrano.
In the meantime, Ederlina's petition for divorce was denied because Klaus
opposed the same. A second petition filed by her met the same fate. Klaus
wanted half of all the properties owned by Ederlina in the Philippines before
he would agree to a divorce. Worse, Klaus threatened to file a bigamy case
against Ederlina.29
Alfred proposed the creation of a partnership to Ederlina, or as an alternative,
the establishment of a corporation, with Ederlina owning 30% of the equity
thereof. She initially agreed to put up a corporation and contacted Atty.
Armando Dominguez to prepare the necessary documents. Ederlina changed
her mind at the last minute when she was advised to insist on claiming
ownership over the properties acquired by them during their coverture.
Alfred and Ederlina's relationship started deteriorating. Ederlina had not been
able to secure a divorce from Klaus. The latter could charge her for bigamy
and could even involve Alfred, who himself was still married. To avoid
complications, Alfred decided to live separately from Ederlina and cut off all
contacts with her. In one of her letters to Alfred, Ederlina complained that he
had ruined her life. She admitted that the money used for the purchase of the
properties in Davao were his. She offered to convey the properties deeded to
her by Atty. Mardoecheo Camporedondo and Rodolfo Morelos, asking Alfred
to prepare her affidavit for the said purpose and send it to her for her
signature.30 The last straw for Alfred came on September 2, 1985, when
someone smashed the front and rear windshields of Alfred's car and
damaged the windows. Alfred thereafter executed an affidavit-complaint
charging Ederlina and Sally MacCarron with malicious mischief.31
On October 15, 1985, Alfred wrote to Ederlina's father, complaining that
Ederlina had taken all his life savings and because of this, he was virtually
penniless. He further accused the Catito family of acquiring for themselves
the properties he had purchased with his own money. He demanded the
return of all the amounts that Ederlina and her family had "stolen" and turn
over all the properties acquired by him and Ederlina during their coverture. 32
Shortly thereafter, Alfred filed a Complaint33 dated October 28, 1985, against
Ederlina, with the Regional Trial Court of Quezon City, for recovery of real
and personal properties located in Quezon City and Manila. In his complaint,
Alfred alleged, inter alia, that Ederlina, without his knowledge and consent,
managed to transfer funds from their joint account in HSBC Hong Kong, to
her own account with the same bank. Using the said funds, Ederlina was
able to purchase the properties subject of the complaints. He also alleged
that the beauty parlor in Ermita was established with his own funds, and that
the Quezon City property was likewise acquired by him with his personal
funds.34
Ederlina failed to file her answer and was declared in default. Alfred adduced
his evidence ex parte.
In the meantime, on November 7, 1985, Alfred also filed a complaint 35 against
Ederlina with the Regional Trial Court, Davao City, for specific performance,
declaration of ownership of real and personal properties, sum of money, and
damages. He alleged, inter alia, in his complaint:
4. That during the period of their common-law relationship, plaintiff
solely through his own efforts and resources acquired in the
Philippines real and personal properties valued more or less at
P724,000.00; The defendant's common-law wife or live-in partner did
not contribute anything financially to the acquisition of the said real
and personal properties. These properties are as follows:
I. Real Properties
a. TCT No. T-92456 located at Bajada, Davao City,
consisting of 286 square meters, (with residential house)
registered in the name of the original title owner Rodolfo M.
Morelos but already fully paid by plaintiff. Valued at
P342,000.00;
b. TCT No. T-47246 (with residential house) located at
Babak, Samal, Davao, consisting of 600 square meters,
registered in the name of Ederlina Catito, with the Register of
Deeds of Tagum, Davao del Norte valued at P144,000.00;
c. A parcel of agricultural land located at Camudmud, Babak,
Samal, Davao del Norte, consisting of 4.2936 hectares
purchased from Enrique Serrano and Rosela B. Serrano.
Already paid in full by plaintiff. Valued at P228,608.32;
II. Personal Properties:
a. Furniture valued at P10,000.00.
...
5. That defendant made no contribution at all to the acquisition, of
the above-mentioned properties as all the monies (sic) used in
acquiring said properties belonged solely to plaintiff; 36
Alfred prayed that after hearing, judgment be rendered in his favor:
WHEREFORE, in view of the foregoing premises, it is respectfully
prayed that judgment be rendered in favor of plaintiff and against
defendant:
a) Ordering the defendant to execute the corresponding deeds of
transfer and/or conveyances in favor of plaintiff over those real and
personal properties enumerated in Paragraph 4 of this complaint;
b) Ordering the defendant to deliver to the plaintiff all the above real
and personal properties or their money value, which are in
defendant's name and custody because these were acquired solely
with plaintiffs money and resources during the duration of the
common-law relationship between plaintiff and defendant, the
description of which are as follows:
(1) TCT No. T-92456 (with residential house) located at
Bajada, Davao City, consisting of 286 square meters,
registered in the name of the original title owner Rodolfo
Morelos but already fully paid by plaintiff. Valued at
P342,000.00;
(2) TCT No. T-47246 (with residential house) located at
Babak, Samal, Davao, consisting of 600 square meters,
registered in the name of Ederlina Catito, with the Register of
Deeds of Tagum, Davao del Norte, valued at P144,000.00;
(3) A parcel of agricultural land located at Camudmud,
Babak, Samal, Davao del Norte, consisting of 4.2936
hectares purchased from Enrique Serrano and Rosela B.
Serrano. Already fully paid by plaintiff. Valued at
P228,608.32;
c) Declaring the plaintiff to be the sole and absolute owner of the
above-mentioned real and personal properties;
d) Awarding moral damages to plaintiff in an amount deemed
reasonable by the trial court;
e) To reimburse plaintiff the sum of P12,000.00 as attorney's fees for
having compelled the plaintiff to litigate;
f) To reimburse plaintiff the sum of P5,000.00 incurred as litigation
expenses also for having compelled the plaintiff to litigate; and
g) To pay the costs of this suit;
Plaintiff prays other reliefs just and equitable in the premises. 37
In her answer, Ederlina denied all the material allegations in the complaint,
insisting that she acquired the said properties with her personal funds, and as
such, Alfred had no right to the same. She alleged that the deeds of sale, the
receipts, and certificates of titles of the subject properties were all made out
in her name.38 By way of special and affirmative defense, she alleged that
Alfred had no cause of action against her. She interposed counterclaims
against the petitioner.39
In the meantime, the petitioner filed a Complaint dated August 25, 1987,
against the HSBC in the Regional Trial Court of Davao City 40 for recovery of
bank deposits and damages.41 He prayed that after due proceedings,
judgment be rendered in his favor, thus:
WHEREFORE, plaintiff respectfully prays that the Honorable Court
adjudge defendant bank, upon hearing the evidence that the parties
might present, to pay plaintiff:
1. ONE HUNDRED TWENTY SIX THOUSAND TWO HUNDRED
AND THIRTY U.S. DOLLARS AND NINETY EIGHT CENTS
(US$126,230.98) plus legal interests, either of Hong Kong or of the
Philippines, from 20 December 1984 up to the date of execution or
satisfaction of judgment, as actual damages or in restoration of
plaintiffs lost dollar savings;
2. The same amount in (1) above as moral damages;
3. Attorney's fees in the amount equivalent to TWENTY FIVE PER
CENT (25%) of (1) and (2) above;
4. Litigation expenses in the amount equivalent to TEN PER CENT
(10%) of the amount in (1) above; and
5. For such other reliefs as are just and equitable under the
circumstances.42
On April 28, 1986, the RTC of Quezon City rendered its decision in Civil Case
No. Q-46350, in favor of Alfred, the decretal portion of which reads as
follows:
WHEREFORE, premises considered, judgment is hereby rendered
ordering the defendant to perform the following:
(1) To execute a document waiving her claim to the house and lot in
No. 14 Fernandez St., San Francisco Del Monte, Quezon City in
favor of plaintiff or to return to the plaintiff the acquisition cost of the
same in the amount of $20,000.00, or to sell the said property and
turn over the proceeds thereof to the plaintiff;
(2) To deliver to the plaintiff the rights of ownership and management
of the beauty parlor located at 444 Arquiza St., Ermita, Manila,
including the equipment and fixtures therein;
(3) To account for the earnings of rental of the house and lot in No.
14 Fernandez St., San Francisco Del Monte, Quezon City, as well as
the earnings in the beauty parlor at 444 Arquiza St., Ermita, Manila
and turn over one-half of the net earnings of both properties to the
plaintiff;
(4) To surrender or return to the plaintiff the personal properties of
the latter left in the house at San Francisco Del Monte, to wit:
"(1) Mamya automatic camera
(1) 12 inch "Sonny" T.V. set, colored with remote control.
(1) Micro oven
(1) Electric fan (tall, adjustable stand)
(1) Office safe with (2) drawers and safe
(1) Electric Washing Machine
(1) Office desk and chair
(1) Double bed suits
(1) Mirror/dresser
(1) Heavy duty voice/working mechanic
(1) "Sony" Beta-Movie camera
(1) Suitcase with personal belongings
(1) Cardboard box with belongings
(1) Guitar Amplifier
(1) Hanger with men's suit (white)."
To return to the plaintiff, (1) Hi-Fi Stereo equipment left at 444
Arquiza Street, Ermita, Manila, as well as the Fronte Suzuki car.
(4) To account for the monies (sic) deposited with the joint account of
the plaintiff and defendant (Account No. 018-0-807950); and to
restore to the plaintiff all the monies (sic) spent by the defendant
without proper authority;
(5) To pay the amount of P5,000.00 by way of attorney's fees, and
the costs of suit.
SO ORDERED.43
However, after due proceedings in the RTC of Davao City, in Civil Case No.
17,817, the trial court rendered judgment on September 28, 1995 in favor of
Ederlina, the dispositive portion of which reads:
WHEREFORE, the Court cannot give due course to the complaint
and hereby orders its dismissal. The counterclaims of the defendant
are likewise dismissed.
SO ORDERED.44
The trial court ruled that based on documentary evidence, the purchaser of
the three parcels of land subject of the complaint was Ederlina. The court
further stated that even if Alfred was the buyer of the properties; he had no
cause of action against Ederlina for the recovery of the same because as an
alien, he was disqualified from acquiring and owning lands in the Philippines.
The sale of the three parcels of land to the petitioner was null and void ab
initio. Applying the pari delicto doctrine, the petitioner was precluded from
recovering the properties from the respondent.
Alfred appealed the decision to the Court of Appeals 45 in which the petitioner
posited the view that although he prayed in his complaint in the court a
quo that he be declared the owner of the three parcels of land, he had no
intention of owning the same permanently. His principal intention therein was
to be declared the transient owner for the purpose of selling the properties at
public auction, ultimately enabling him to recover the money he had spent for
the purchase thereof.
On March 8, 2000, the CA rendered a decision affirming in toto the decision
of the RTC. The appellate court ruled that the petitioner knowingly violated
the Constitution; hence, was barred from recovering the money used in the
purchase of the three parcels of land. It held that to allow the petitioner to
recover the money used for the purchase of the properties would embolden
aliens to violate the Constitution, and defeat, rather than enhance, the public
policy.46
Hence, the petition at bar.
The petitioner assails the decision of the court contending that:
THE HONORABLE COURT OF APPEALS ERRED IN APPLYING
THE RULE OF IN PARI DELICTO IN THE INSTANT CASE
BECAUSE BY THE FACTS AS NARRATED IN THE DECISION IT IS
APPARENT THAT THE PARTIES ARE NOT EQUALLY GUILTY BUT
RATHER IT WAS THE RESPONDENT WHO EMPLOYED FRAUD
AS WHEN SHE DID NOT INFORM PETITIONER THAT SHE WAS
 ALREADY MARRIED TO ANOTHER GERMAN NATIONAL AND
WITHOUT SUCH FRAUDULENT DESIGN PETITIONER COULD
NOT HAVE PARTED WITH HIS MONEY FOR THE PURCHASE OF
THE PROPERTIES.47
and
THE HONORABLE COURT OF APPEALS ERRED IN NOT
HOLDING THAT THE INTENTION OF THE PETITIONER IS NOT
TO OWN REAL PROPERTIES IN THE PHILIPPINES BUT TO SELL
THEM AT PUBLIC AUCTION TO BE ABLE TO RECOVER HIS
MONEY USED IN PURCHASING THEM.48
Since the assignment of errors are intertwined with each other, the Court
shall resolve the same simultaneously.
The petitioner contends that he purchased the three parcels of land subject
of his complaint because of his desire to marry the respondent, and not to
violate the Philippine Constitution. He was, however, deceived by the
respondent when the latter failed to disclose her previous marriage to Klaus
Muller. It cannot, thus, be said that he and the respondent are "equally
guilty;" as such, the pari delicto doctrine is not applicable to him. He acted in
good faith, on the advice of the respondent's uncle, Atty. Mardoecheo
Camporedondo. There is no evidence on record that he was aware of the
constitutional prohibition against aliens acquiring real property in the
Philippines when he purchased the real properties subject of his complaint
with his own funds. The transactions were not illegal per se but merely
prohibited, and under Article 1416 of the New Civil Code, he is entitled to
recover the money used for the purchase of the properties. At any rate, the
petitioner avers, he filed his complaint in the court a quo merely for the
purpose of having him declared as the owner of the properties, to enable him
to sell the same at public auction. Applying by analogy Republic Act No.
13349 as amended by Rep. Act No. 4381 and Rep. Act No. 4882, the
proceeds of the sale would be remitted to him, by way of refund for the
money he used to purchase the said properties. To bar the petitioner from
recovering the subject properties, or at the very least, the money used for the
purchase thereof, is to allow the respondent to enrich herself at the expense
of the petitioner in violation of Article 22 of the New Civil Code.
The petition is bereft of merit.
Section 14, Article XIV of the 1973 Constitution provides, as follows:
Save in cases of hereditary succession, no private land shall be
transferred or conveyed except to individuals, corporations, or
associations qualified to acquire or hold lands in the public domain. 50
Lands of the public domain, which include private lands, may be transferred
or conveyed only to individuals or entities qualified to acquire or hold private
lands or lands of the public domain. Aliens, whether individuals or
corporations, have been disqualified from acquiring lands of the public
domain. Hence, they have also been disqualified from acquiring private
lands.51
Even if, as claimed by the petitioner, the sales in question were entered into
by him as the real vendee, the said transactions are in violation of the
Constitution; hence, are null and void ab initio.52 A contract that violates the
Constitution and the law, is null and void and vests no rights and creates no
obligations. It produces no legal effect at all. 53 The petitioner, being a party to
an illegal contract, cannot come into a court of law and ask to have his illegal
objective carried out. One who loses his money or property by knowingly
engaging in a contract or transaction which involves his own moral turpitude
may not maintain an action for his losses. To him who moves in deliberation
and premeditation, the law is unyielding. 54 The law will not aid either party to
an illegal contract or agreement; it leaves the parties where it finds
them.55 Under Article 1412 of the New Civil Code, the petitioner cannot have
the subject properties deeded to him or allow him to recover the money he
had spent for the purchase thereof. 56 Equity as a rule will follow the law and
will not permit that to be done indirectly which, because of public policy,
cannot be done directly.57 Where the wrong of one party equals that of the
other, the defendant is in the stronger position . . . it signifies that in such a
situation, neither a court of equity nor a court of law will administer a
remedy.58 The rule is expressed. in the maxims: EX DOLO ORITUR
ACTIO and IN PARI DELICTO POTIOR EST CONDITIO DEFENDENTIS.59
The petitioner cannot feign ignorance of the constitutional proscription, nor
claim that he acted in good faith, let alone assert that he is less guilty than
the respondent. The petitioner is charged with knowledge of the constitutional
prohibition.60 As can be gleaned from the decision of the trial court, the
petitioner was fully aware that he was disqualified from acquiring and owning
lands under Philippine law even before he purchased the properties in
question; and, to skirt the constitutional prohibition, the petitioner had the
deed of sale placed under the respondent's name as the sole vendee
thereof:
Such being the case, the plaintiff is subject to the constitutional
restrictions governing the acquisition of real properties in the
Philippines by aliens.
 From the plaintiff's complaint before the Regional Trial Court, examination that he was all along legally married to Teresita Santos Frenzel,
National Capital Judicial Region, Branch 84, Quezon City in Civil while he was having an amorous relationship with the respondent:
Case No. Q-46350 he alleged:
ATTY. YAP:
x x x "That on account that foreigners are not allowed by the
Philippine laws to acquire real properties in their name as in Q When you were asked to identify yourself on direct
the case of my vendor Miss Victoria Vinuya (sic) although examination you claimed before this Honorable Court that your
married to a foreigner, we agreed and I consented in having status is that of being married, do you confirm that?
the title to subject property placed in defendant's name alone A Yes, sir.
although I paid for the whole price out of my own exclusive Q To whom are you married?
funds." (paragraph IV, Exhibit "W.") A To a Filipina, since 1976.
Q Would you tell us who is that particular person you are
and his testimony before this Court which is hereby quoted: married since 1976?
A Teresita Santos Frenzel.
ATTY. ABARQUEZ: Q Where is she now?
A In Australia.
Q Is this not the person of Teresita Frenzel who became an
Q. In whose name the said house and lot placed, by the way,
Australian citizen?
where is his house and lot located?
A I am not sure, since 1981 we were separated.
A. In 14 Fernandez St., San Francisco, del Monte, Manila.
Q You were only separated, in fact, but not legally separated?
Q. In whose name was the house placed?
A Thru my counsel in Australia I filed a separation case.
A. Ederlina Catito because I was informed being not a Filipino, I
Q As of the present you are not legally divorce[d]?
cannot own the property. (tsn, p. 11, August 27, 1986).
A I am still legally married.62
xxx xxx xxx
COURT:
Q. So you understand that you are a foreigner that you cannot The respondent was herself married to Klaus Muller, a German citizen. Thus,
buy land in the Philippines? the petitioner and the respondent could not lawfully join in wedlock. The
A. That is correct but as she would eventually be my wife that evidence on record shows that the petitioner in fact knew of the respondent's
would be owned by us later on. (tsn, p. 5, September 3, 1986) marriage to another man, but nonetheless purchased the subject properties
xxx xxx xxx under the name of the respondent and paid the purchase prices therefor.
Q. What happened after that? Even if it is assumed gratia arguendi that the respondent and the petitioner
A. She said you foreigner you are using Filipinos to buy were capacitated to marry, the petitioner is still disqualified to own the
property. properties in tandem with the respondent.63
Q. And what did you answer?
A: I said thank you very much for the property I bought because The petitioner cannot find solace in Article 1416 of the New Civil Code which
I gave you a lot of money (tsn., p. 14, ibid). reads:

It is evident that the plaintiff was fully aware that as a non-citizen of the
Philippines, he was disqualified from validly purchasing any land within the
country.61
The petitioner's claim that he acquired the subject properties because of his
desire to marry the respondent, believing that both of them would thereafter
jointly own the said properties, is belied by his own evidence. It is merely an
afterthought to salvage a lost cause. The petitioner admitted on cross-
Art. 1416. When the agreement is not illegal per se but is merely
prohibited, and the prohibition by the law is designed for the
protection of the plaintiff, he may, if public policy is thereby
enhanced, recover what he has paid or delivered.64
The provision applies only to those contracts which are merely prohibited, in
order to benefit private interests. It does not apply to contracts void ab initio.
The sales of three parcels of land in favor of the petitioner who is a foreigner
is illegal per se. The transactions are void ab initio because they were
entered into in violation of the Constitution. Thus, to allow the petitioner to objection that a contract is immoral or illegal as between the plaintiff and the
recover the properties or the money used in the purchase of the parcels of defendant, sounds at all times very ill in the mouth of the defendant. It is not
land would be subversive of public policy. for his sake, however, that the objection is ever allowed; but it is founded in
general principles of policy, which the defendant has the advantage of,
Neither may the petitioner find solace in Rep. Act No. 133, as amended by contrary to the real justice, as between him and the plaintiff."
Rep. Act No. 4882, which reads:
IN LIGHT OF ALL THE FOREGOING, the petition is DISMISSED. The
SEC. 1. Any provision of law to the contrary notwithstanding, private decision of the Court of Appeals is AFFIRMED in toto.
real property may be mortgaged in favor of any individual,
corporation, or association, but the mortgagee or his successor-in- Costs against the petitioner.
interest, if disqualified to acquire or hold lands of the public domain in
the Philippines, shall not take possession of the mortgaged property SO ORDERED.
during the existence of the mortgage and shall not take possession
of mortgaged property except after default and for the sole purpose
of foreclosure, receivership, enforcement or other proceedings and in
no case for a period of more than five years from actual possession
and shall not bid or take part in any sale of such real property in case
of foreclosure: Provided, That said mortgagee or successor-in-
interest may take possession of said property after default in
accordance with the prescribed judicial procedures for foreclosure
and receivership and in no case exceeding five years from actual
possession.65

From the evidence on record, the three parcels of land subject of the
complaint were not mortgaged to the petitioner by the owners thereof but
were sold to the respondent as the vendee, albeit with the use of the
petitioner's personal funds.

Futile, too, is petitioner's reliance on Article 22 of the New Civil Code which
reads:

Art. 22. Every person who through an act of performance by another,

or any other means, acquires or comes into possession of something
at the expense of the latter without just or legal ground, shall return
the same to him.66

The provision is expressed in the maxim: "MEMO CUM ALTERIUS DETER

DETREMENTO PROTEST" (No person should unjustly enrich himself at the
expense of another). An action for recovery of what has been paid without
just cause has been designated as an accion in rem verso.67 This provision
does not apply if, as in this case, the action is proscribed by the Constitution
or by the application of the pari delicto doctrine. 68 It may be unfair and
unjust to bar the petitioner from filing an accion in rem verso over the subject
properties, or from recovering the money he paid for the said properties, but,
as Lord Mansfield stated in the early case of Holman vs. Johnson:69 "The
G.R. No. 178467 April 26, 2017
SPS. CRISTINO & EDNA CARBONELL, Petitioners, vs. METROPOLITAN
BANK AND TRUST COMPANY, Respondent.
DECISION
BERSAMIN, J.:
The petitioners assail the decision promulgated on December 7,
2006, 1 whereby the Court of Appeals (CA) affirmed with modification the
decision rendered on May 22, 19982 by the Regional Trial Court, Branch 157,
in Pasig City (RTC) dismissing the petitioners' complaint in Civil Case No.
65725 for its lack of merit, and awarded attorney's fees under the
respondent's counterclaim.
Antecedents
The petitioners initiated against the respondent Civil Case No. 65725, an
action for damages, alleging that they had experienced emotional shock,
mental anguish, public ridicule, humiliation, insults and embarrassment
during their trip to Thailand because of the respondent's release to them of
five US$ 100 bills that later on turned out to be counterfeit. They claimed that
they had travelled to Bangkok, Thailand after withdrawing US$ l ,000.00 in
US$ 100 notes from their dollar account at the respondent's Pateros branch;
that while in Bangkok, they had exchanged five US$ 100 bills into Baht, but
only four of the US$ 100 bills had been accepted by the foreign exchange
dealer because the fifth one was "no good;" that unconvinced by the reason
for the rejection, they had asked a companion to exchange the same bill at
Norkthon Bank in Bangkok; that the bank teller thereat had then informed
them and their companion that the dollar bill was fake; that the teller had then
confiscated the US$ 100 bill and had threatened to report them to the police
if they insisted in getting the fake dollar bill back; and that they had to settle
for a Foreign Exchange Note receipt.3
The petitioners claimed that later on, they had bought jewelry from a shop
owner by using four of the remaining US$100 bills as payment; that on the
next day, however, they had been confronted by the shop owner at the hotel
lobby because their four US$ 100 bills had turned out to be counterfeit; that
the shop owner had shouted at them: "You Filipinos, you are all cheaters!;"
and that the incident had occurred within the hearing distance of fellow
travelers and several foreigners.
The petitioners continued that upon their return to the Philippines, they had
confronted the manager of the respondent's Pateros branch on the fake
dollar bills, but the latter had insisted that the dollar bills she had released to
them were genuine inasmuch as the bills had come from the head office; that
in order to put the issue to rest, the counsel of the petitioners had submitted
the subject US$ 100 bills to the Bangko Sentral ng Pilipinas (BSP) for
examination; that the BSP had certified that the four US$100 bills were near
perfect genuine notes;4 and that their counsel had explained by letter their
unfortunate experience caused by the respondent's release of the fake US
dollar bills to them, and had demanded moral damages of ₱10 Million and
exemplary damages.5
The petitioners then sent a written notice to the respondent, attaching the
BSP certification and informing the latter that they were giving it five days
within which to comply with their demand, or face court action. 6 In response,
the respondent's counsel wrote to the petitioners on March 1996 expressing
sympathy with them on their experience but stressing that the respondent
could not absolutely guarantee the genuineness of each and every foreign
currency note that passed through its system; that it had also been a victim
like them; and that it had exercised the diligence required in dealing with
foreign currency notes and in the selection and supervision of its employees. 7
Prior to the filing of the suit in the RTC, the petitioners had two meetings with
the respondent's representatives. In the course of the two meetings, the
latter's representatives reiterated their sympathy and regret over the
troublesome experience that the petitioners had encountered, and offered to
reinstate US$500 in their dollar account, and, in addition, to underwrite a
round-trip all-expense-paid trip to Hong Kong, but they were adamant and
staged a walk-out.8
In its judgment rendered on May 22, 1998, 9 the RTC ruled in favor of the
respondent, disposing as follows:
WHEREFORE, in the light of all the foregoing, judgment is hereby rendered:
1. Dismissing plaintiff’s complaint for lack of merit;
2. On the counterclaim, awarding Metrobank the amount of
₱20,000.00 as attorney's fees.
SO ORDERED.10
The petitioners appealed, but the CA ultimately promulgated its assailed
decision on December 7, 2006 affirming the judgment of the RTC with the
modification of deleting the award of attorney's fees, 11 to wit:
As to the award of attorneys fees, we agree with appellants that there is
simply no factual and legal basis thereto.
Unquestionably, appellants filed the present case for the humiliation and
embarrassment they suffered in Bangkok. They instituted the complaint in
their honest belief that they were entitled to damages as a result of appellee's
issuance of counterfeit dollar notes. Such being the case, they should not be
made answerable to attorney's fees. It is not good public policy to put a
premium on the right to litigate where such right is exercised in good faith,
albeit erroneously.
WHEREFORE, the appealed decision is AFFIRMED with modification that
the award of attorney's fees is deleted.
SO ORDERED.
Issues
Hence, this appeal, with the petitioners contending that the CA gravely erred
in affirming the judgment of the RTC. They insist that inasmuch as the
business of banking was imbued with public interest, the respondent's failure
to exercise the degree of diligence required in handling the affairs of its
clients showed that it was liable not just for simple negligence but for
misrepresentation and bad faith amounting to fraud; that the CA erred in
giving weight and relying on the news clippings allegedly showing that the
"supernotes" had deceived even the U.S. Secret Service and Central
Intelligence Agency, for such news were not based on facts. 12
Ruling of the Court
The appeal is partly meritorious.
The General Banking Act of 2000 demands of banks the highest standards of
integrity and performance. As such, the banks are under obligation to treat
the accounts of their depositors with meticulous care. 13 However, the banks'
compliance with this degree of diligence is to be determined in accordance
with the particular circumstances of each case.
The petitioners argue that the respondent was liable for failing to observe the
diligence required from it by not doing an act from which the material damage
had resulted by reason of inexcusable lack of precaution in the performance
of its duties. 14 Hence, the respondent was guilty of gross negligence,
misrepresentation and bad faith amounting to fraud.
The petitioners' argument is unfounded.
Gross negligence connotes want of care in the performance of one's duties; it
is a negligence characterized by the want of even slight care, acting or
omitting to act in a situation where there is duty to act, not inadvertently but
wilfully and intentionally, with a conscious indifference to consequences
insofar as other persons may be affected. It evinces a thoughtless disregard
of consequences without exe1iing any effort to avoid them. 15
In order for gross negligence to exist as to warrant holding the respondent
liable therefor, the petitioners must establish that the latter did not exert any
effort at all to avoid unpleasant consequences, or that it wilfully and
intentionally disregarded the proper protocols or procedure in the handling of
US dollar notes and in selecting and supervising its employees.
The CA and the RTC both found that the respondent had exercised the
diligence required by law in observing the standard operating procedure, in
taking the necessary precautions for handling the US dollar bills in question,
and in selecting and supervising its employees. 16 Such factual findings by
the trial court are entitled to great weight and respect especially after being
affirmed by the appellate court, and could be overturned only upon a showing
of a very good reason to warrant deviating from them.
In this connection, it is significant that the BSP certified that the falsity of the
US dollar notes in question, which were "near perfect genuine notes," could
be detected only with extreme difficulty even with the exercise of due
diligence. Ms. Nanette Malabrigo, BSP's Senior Currency Analyst, testified
that the subject dollar notes were "highly deceptive" inasmuch as the paper
used for them were similar to that used in the printing of the genuine notes.
She observed that the security fibers and the printing were perfect except for
some microscopic defects, and that all lines were clear, sharp and well
defined. 17
Nonetheless, the petitioners contend that the respondent should be liable for
moral and exemplary damages18 on account of their suffering the unfortunate
experience abroad brought about by their use of the fake US dollar bills
withdrawn from the latter.
The contention cannot be upheld.
The relationship existing between the petitioners and the respondent that
resulted from a contract of loan was that of a creditor-debtor. 19 Even if the
law imposed a high standard on the latter as a bank by vi1iue of the fiduciary
nature of its banking business, bad faith or gross negligence amounting to
bad faith was absent. Hence, there simply was no legal basis for holding the
respondent liable for moral and exemplary damages. In breach of contract,
moral damages may be awarded only where the defendant acted fraudulently
or in bad faith. That was not true herein because the respondent was not
shown to have acted fraudulently or in bad faith. This is pursuant to Article
2220 of the Civil Code, to wit:
Article 2220. Willful injury to property may be a legal ground for awarding
moral damages if the court should find that, under the circumstances, such
damages are justly due. The same rule applies to breaches of contract
where defendant acted fraudulently or in bad faith.
With the respondent having established that the characteristics of the subject
dollar notes had made it difficult even for the BSP itself as the country's own
currency note expert to identify the counterfeiting with ease despite adhering
to all the properly laid out standard operating procedure and precautions in
the handling of US dollar bills, holding it liable for damages in favor of the
petitioners would be highly unwarranted in the absence of proof of bad faith,
malice or fraud on its part. That it formally apologized to them and even
offered to reinstate the USD$500.00 in their account as well as to give them
the all-expense-paid round trip ticket to Hong Kong as means to assuage
their inconvenience did not necessarily mean it was liable. In civil cases, an
offer of compromise is not an admission of liability, and is inadmissible as
evidence against the offeror. 20
Even without taking into consideration the news clippings to the effect that
the US Secret Service and Central Intelligence Agency had themselves been
deceived by the 1990 series of the US dollar notes infamously known as the
"supernotes," the record had enough to show in that regard, not the least of
which was the testimony of Ms. Malabrigo as BSP's Senior Currency Analyst
about the highly deceptive nature of the subject US dollar notes and the
possibility for them to pass undetected.
Also, the petitioners' allegation of misrepresentation on the part of the
respondent was factually unsupported.1âwphi1 They had been satisfied with
the services of the respondent for about three years prior to the incident in
question.21 The incident was but an isolated one. Under the law, moral
damages for culpa contractual or breach of contract are recoverable only if
the defendant acted fraudulently or in bad faith, or is found guilty of gross
negligence amounting to bad faith, or in wanton disregard of his contractual
obligations.22 The breach must be wanton, reckless, malicious or in bad faith,
oppressive or abusive.23 In order to maintain their action for damages, the
petitioners must establish that their injury resulted from a breach of duty that
the respondent had owed to them, that is, there must be the concurrence of
injury caused to them as the plaintiffs and legal responsibility on the part of
the respondent. Underlying the award of damages is the premise that an
individual was injured in contemplation of law. In this regard, there must first
be a breach of some duty and the imposition of liability for that breach before
damages may be awarded; and the breach of such duty should be the
proximate cause of the injury. 24 That was not so in this case.
It is true that the petitioners suffered embarrassment and humiliation in
Bangkok. Yet, we should distinguish between damage and injury. In The
Orchard Golf & Country Club, Inc. v. Yu, 25 the Court has fittingly pointed out
the distinction, viz.:
x x x Injury is the illegal invasion of a legal right, damage is the loss, hurt, or
harm which results from the injury; and damages are the recompense or
compensation awarded for the damage suffered. Thus, there can be damage
without injury in those instances in which the loss or harm was not the result
of a violation of a legal duty. These situations are often called dmimum
absque injuria. 26
In every situation of damnum absque injuria, therefore, the injured person
alone bears the consequences because the law affords no remedy for
damages resulting from an act that does not amount to a legal injury or
wrong. For instance, in BP I Express Card Corporation v. Court of
Appeals ,27 the Court turned down the claim for damages of a cardholder
whose credit card had been cancelled after several defaults in
payment, holding therein that there could be damage without injury where the
loss or harm was not the result of a violation of a legal duty towards the
plaintiff. In such situation, the injured person alone should bear the
consequences because the law afforded no remedy for damages resulting
from an act that did not
amount to a legal injury or wrong. 28 Indeed, the lack of malice in the conduct
complained of precluded the recovery of damages.29
Here, although the petitioners suffered humiliation resulting from their
unwitting use of the counterfeit US dollar bills, the respondent, by virtue of its
having observed the proper protocols and procedure in handling the US
dollar bills involved, did not violate any legal duty towards them. Being
neither guilty of negligence nor remiss in its exercise of the degree of
diligence required by law or the nature of its obligation as a banking
institution, the latter
was not liable for damages. Given the situation being one of damnum
absque injuria, they could not be compensated for the damage sustained.

WHEREFORE, the Court AFFIRMS the decision promulgated on December

7, 2006; and ORDERS the petitioners to pay the costs of suit.

SO ORDERED.
G.R. No. 134241 August 11, 2003
DAVID REYES (Substituted by Victoria R. Fabella), petitioner, vs. JOSE LIM,
CHUY CHENG KENG and HARRISON LUMBER, INC., respondents.
CARPIO, J.:
The Case
This is a petition for review on certiorari of the Decision1 dated 12 May 1998 of
the Court of Appeals in CA-G.R. SP No. 46224. The Court of Appeals dismissed
the petition for certiorari assailing the Orders dated 6 March 1997, 3 July 1997
and 3 October 1997 of the Regional Trial Court of Paranaque, Branch 260 2 ("trial
court") in Civil Case No. 95-032.
The Facts
On 23 March 1995, petitioner David Reyes ("Reyes") filed before the trial court a
complaint for annulment of contract and damages against respondents Jose Lim
("Lim"), Chuy Cheng Keng ("Keng") and Harrison Lumber, Inc. ("Harrison
Lumber").
The complaint3 alleged that on 7 November 1994, Reyes as seller and Lim as
buyer entered into a contract to sell ("Contract to Sell") a parcel of land
("Property") located along F.B. Harrison Street, Pasay City. Harrison Lumber
occupied the Property as lessee with a monthly rental of P35,000. The Contract
to Sell provided for the following terms and conditions:
1. The total consideration for the purchase of the aforedescribed parcel
of land together with the perimeter walls found therein is TWENTY
EIGHT MILLION (P28,000,000.00) PESOS payable as follows:
(a) TEN MILLION (P10,000,000.00) PESOS upon signing of this
Contract to Sell;
(b) The balance of EIGHTEEN MILLION (P18,000,000.00) PESOS shall
be paid on or before March 8, 1995 at 9:30 A.M. at a bank to be
designated by the Buyer but upon the complete vacation of all the
tenants or occupants of the property and execution of the Deed of
Absolute Sale. However, if the tenants or occupants have vacated the
premises earlier than March 8, 1995, the VENDOR shall give the
VENDEE at least one week advance notice for the payment of the
balance and execution of the Deed of Absolute Sale.
2. That in the event, the tenants or occupants of the premises subject of
this sale shall not vacate the premises on March 8, 1995 as stated
above, the VENDEE shall withhold the payment of the balance of
P18,000,000.00 and the VENDOR agrees to pay a penalty of Four
percent (4%) per month to the herein VENDEE based on the amount of
the downpayment of TEN MILLION (P10,000,000.00) PESOS until the
complete vacation of the premises by the tenants therein. 4
The complaint claimed that Reyes had informed Harrison Lumber to vacate the
Property before the end of January 1995. Reyes also informed Keng 5 and
Harrison Lumber that if they failed to vacate by 8 March 1995, he would hold
them liable for the penalty of P400,000 a month as provided in the Contract to
Sell. The complaint further alleged that Lim connived with Harrison Lumber not to
vacate the Property until the P400,000 monthly penalty would have accumulated
and equaled the unpaid purchase price of P18,000,000.
On 3 May 1995, Keng and Harrison Lumber filed their Answer 6 denying they
connived with Lim to defraud Reyes. Keng and Harrison Lumber alleged that
Reyes approved their request for an extension of time to vacate the Property due
to their difficulty in finding a new location for their business. Harrison Lumber
claimed that as of March 1995, it had already started transferring some of its
merchandise to its new business location in Malabon. 7
On 31 May 1995, Lim filed his Answer 8 stating that he was ready and willing to
pay the balance of the purchase price on or before 8 March 1995. Lim requested
a meeting with Reyes through the latter’s daughter on the signing of the Deed of
Absolute Sale and the payment of the balance but Reyes kept postponing their
meeting. On 9 March 1995, Reyes offered to return the P10 million down
payment to Lim because Reyes was having problems in removing the lessee
from the Property. Lim rejected Reyes’ offer and proceeded to verify the status of
Reyes’ title to the Property. Lim learned that Reyes had already sold the Property
to Line One Foods Corporation ("Line One") on 1 March 1995 for P16,782,840.
After the registration of the Deed of Absolute Sale, the Register of Deeds issued
to Line One TCT No. 134767 covering the Property. Lim denied conniving with
Keng and Harrison Lumber to defraud Reyes.
On 2 November 1995, Reyes filed a Motion for Leave to File Amended Complaint
due to supervening facts. These included the filing by Lim of a complaint for
estafa against Reyes as well as an action for specific performance and
nullification of sale and title plus damages before another trial court. 9 The trial
court granted the motion in an Order dated 23 November 1995.
In his Amended Answer dated 18 January 1996, 10 Lim prayed for the cancellation
of the Contract to Sell and for the issuance of a writ of preliminary attachment
against Reyes. The trial court denied the prayer for a writ of preliminary
attachment in an Order dated 7 October 1996.
On 6 March 1997, Lim requested in open court that Reyes be ordered to deposit
the P10 million down payment with the cashier of the Regional Trial Court of
Parañaque. The trial court granted this motion.
On 25 March 1997, Reyes filed a Motion to Set Aside the Order dated 6 March
1997 on the ground the Order practically granted the reliefs Lim prayed for in his
Amended Answer.11 The trial court denied Reyes’ motion in an Order 12 dated 3
July 1997. Citing Article 1385 of the Civil Code, the trial court ruled that an action
for rescission could prosper only if the party demanding rescission can return
whatever he may be obliged to restore should the court grant the rescission.
13
The trial court denied Reyes’ Motion for Reconsideration in its Order dated 3
October 1997. In the same order, the trial court directed Reyes to deposit the P10
million down payment with the Clerk of Court on or before 30 October 1997.
On 8 December 1997, Reyes 14 filed a Petition for Certiorari15 with the Court of
Appeals. Reyes prayed that the Orders of the trial court dated 6 March 1997, 3
July 1997 and 3 October 1997 be set aside for having been issued with grave
abuse of discretion amounting to lack of jurisdiction. On 12 May 1998, the Court
of Appeals dismissed the petition for lack of merit.
Hence, this petition for review.
The Ruling of the Court of Appeals
The Court of Appeals ruled the trial court could validly issue the assailed orders
in the exercise of its equity jurisdiction. The court may grant equitable reliefs to
breathe life and force to substantive law such as Article 1385 16of the Civil Code
since the provisional remedies under the Rules of Court do not apply to this case.
The Court of Appeals held the assailed orders merely directed Reyes to deposit
the P10 million to the custody of the trial court to protect the interest of Lim who
paid the amount to Reyes as down payment. This did not mean the money would
be returned automatically to Lim.
The Issues
Reyes raises the following issues:
1. Whether the Court of Appeals erred in holding the trial court could
issue the questioned Orders dated March 6, 1997, July 3, 1997 and
October 3, 1997, requiring petitioner David Reyes to deposit the amount
of Ten Million Pesos (P10,000,000.00) during the pendency of the action,
when deposit is not among the provisional remedies enumerated in Rule
57 to 61 of the 1997 Rules on Civil Procedure.
2. Whether the Court of Appeals erred in finding the trial court could
issue the questioned Orders on grounds of equity when there is an
applicable law on the matter, that is, Rules 57 to 61 of the 1997 Rules on
Civil Procedure.17
The Court’s Ruling
Reyes’ contentions are without merit.
Reyes points out that deposit is not among the provisional remedies enumerated
in the 1997 Rules of Civil Procedure. Reyes stresses the enumeration in the
Rules is exclusive. Not one of the provisional remedies in Rules 57 to
6118 applies to this case. Reyes argues that a court cannot apply equity and
require deposit if the law already prescribes the specific provisional remedies
which do not include deposit. Reyes invokes the principle that equity is "applied
only in the absence of, and never against, statutory law or x x x judicial rules of
procedure."19 Reyes adds the fact that the provisional remedies do not include
deposit is a matter of dura lex sed lex.20
The instant case, however, is precisely one where there is a hiatus in the law and
in the Rules of Court. If left alone, the hiatus will result in unjust enrichment to
Reyes at the expense of Lim. The hiatus may also imperil restitution, which is a
precondition to the rescission of the Contract to Sell that Reyes himself seeks.
This is not a case of equity overruling a positive provision of law or judicial rule
for there is none that governs this particular case. This is a case of silence or
insufficiency of the law and the Rules of Court. In this case, Article 9 of the Civil
Code expressly mandates the courts to make a ruling despite the "silence,
obscurity or insufficiency of the laws." 21 This calls for the application of
equity,22 which "fills the open spaces in the law."23
Thus, the trial court in the exercise of its equity jurisdiction may validly order the
deposit of the P10 million down payment in court. The purpose of the exercise of
equity jurisdiction in this case is to prevent unjust enrichment and to ensure
restitution. Equity jurisdiction aims to do complete justice in cases where a court
of law is unable to adapt its judgments to the special circumstances of a case
because of the inflexibility of its statutory or legal jurisdiction. 24Equity is the
principle by which substantial justice may be attained in cases where the
prescribed or customary forms of ordinary law are inadequate. 25
Reyes is seeking rescission of the Contract to Sell. In his amended answer, Lim
is also seeking cancellation of the Contract to Sell. The trial court then ordered
Reyes to deposit in court the P10 million down payment that Lim made under the
Contract to Sell. Reyes admits receipt of the P10 million down payment but
opposes the order to deposit the amount in court. Reyes contends that prior to a
judgment annulling the Contract to Sell, he has the "right to use, possess and
enjoy"26 the P10 million as its "owner" 27 unless the court orders its preliminary
attachment.28
To subscribe to Reyes’ contention will unjustly enrich Reyes at the expense of
Lim. Reyes sold to Line One the Property even before the balance of P18 million
under the Contract to Sell with Lim became due on 8 March 1995. On 1 March
1995, Reyes signed a Deed of Absolute Sale 29 in favor of Line One. On 3 March
1995, the Register of Deeds issued TCT No. 134767 30 in the name of Line
One.31 Reyes cannot claim ownership of the P10 million down payment because
Reyes had already sold to another buyer the Property for which Lim made the
down payment. In fact, in his Comment32 dated 20 March 1996, Reyes reiterated
his offer to return to Lim the P10 million down payment.
On balance, it is unreasonable and unjust for Reyes to object to the deposit of
the P10 million down payment. The application of equity always involves a
balancing of the equities in a particular case, a matter addressed to the sound
discretion of the court. Here, we find the equities weigh heavily in favor of Lim,
who paid the P10 million down payment in good faith only to discover later that
Reyes had subsequently sold the Property to another buyer.
In Eternal Gardens Memorial Parks Corp. v. IAC,33 this Court held the plaintiff
could not continue to benefit from the property or funds in litigation during the
pendency of the suit at the expense of whomever the court might ultimately
adjudge as the lawful owner. The Court declared:
In the case at bar, a careful analysis of the records will show that petitioner
admitted among others in its complaint in Interpleader that it is still obligated to
pay certain amounts to private respondent; that it claims no interest in such
amounts due and is willing to pay whoever is declared entitled to said amounts. x
xx
Under the circumstances, there appears to be no plausible reason for petitioner’s
objections to the deposit of the amounts in litigation after having asked for the
assistance of the lower court by filing a complaint for interpleader where the
deposit of aforesaid amounts is not only required by the nature of the action but
is a contractual obligation of the petitioner under the Land Development Program
(Rollo, p. 252).
There is also no plausible or justifiable reason for Reyes to object to the deposit
of the P10 million down payment in court. The Contract to Sell can no longer be
enforced because Reyes himself subsequently sold the Property to Line One.
Both Reyes and Lim are now seeking rescission of the Contract to Sell. Under
Article 1385 of the Civil Code, rescission creates the obligation to return the
things that are the object of the contract. Rescission is possible only when the
person demanding rescission can return whatever he may be obliged to restore.
A court of equity will not rescind a contract unless there is restitution, that is, the
parties are restored to the status quo ante. 34
Thus, since Reyes is demanding to rescind the Contract to Sell, he cannot refuse
to deposit the P10 million down payment in court. 35 Such deposit will ensure
restitution of the P10 million to its rightful owner. Lim, on the other hand, has
nothing to refund, as he has not received anything under the Contract to Sell. 36
In Government of the Philippine Islands v. Wagner and Cleland
Wagner,37 the Court ruled the refund of amounts received under a contract is a
precondition to the rescission of the contract. The Court declared:
The Government, having asked for rescission, must restore to the
defendants whatever it has received under the contract. It will only be
just if, as a condition to rescission, the Government be required to refund
to the defendants an amount equal to the purchase price, plus the sums
expended by them in improving the land. (Civil Code, art. 1295.)
The principle that no person may unjustly enrich himself at the expense of
another is embodied in Article 22 38 of the Civil Code. This principle applies not
only to substantive rights but also to procedural remedies. One condition for
invoking this principle is that the aggrieved party has no other action based on
contract, quasi-contract, crime, quasi-delict or any other provision of law. 39 Courts
can extend this condition to the hiatus in the Rules of Court where the aggrieved
party, during the pendency of the case, has no other recourse based on the
provisional remedies of the Rules of Court.
Thus, a court may not permit a seller to retain, pendente lite, money paid by a
buyer if the seller himself seeks rescission of the sale because he has
subsequently sold the same property to another buyer. 40 By seeking rescission, a
seller necessarily offers to return what he has received from the buyer. Such a
seller may not take back his offer if the court deems it equitable, to prevent unjust
enrichment and ensure restitution, to put the money in judicial deposit.
There is unjust enrichment when a person unjustly retains a benefit to the loss of
another, or when a person retains money or property of another against the
fundamental principles of justice, equity and good conscience. 41 In this case, it
was just, equitable and proper for the trial court to order the deposit of the P10
million down payment to prevent unjust enrichment by Reyes at the expense of
Lim.42
WHEREFORE, we AFFIRM the Decision of the Court of Appeals.
SO ORDERED.
G.R. No. L-39999 May 31, 1984
ROY PADILLA, FILOMENO GALDONES, ISMAEL GONZALGO and JOSE
FARLEY BEDENIA, petitioners, vs. COURT OF APPEALS, respondent.
GUTIERREZ, JR., J.:
This is a petition for review on certiorari of a Court of Appeals' decision which
reversed the trial court's judgment of conviction and acquitted the petitioners
of the crime of grave coercion on the ground of reasonable doubt but inspite
of the acquittal ordered them to pay jointly and severally the amount of
P9,000.00 to the complainants as actual damages.
The petitioners were charged under the following information:
The undersigned Fiscal accused ROY PADILLA, FILOMENO
GALDONES, PEPITO BEDENIA, YOLLY RICO, DAVID
BERMUNDO, VILLANOAC, ROBERTO ROSALES,
VILLANIA, ROMEO GARRIDO, JOSE ORTEGA, JR.,
RICARDO CELESTINO, REALINGO alias "KAMLON",
JOHN DOE alias TATO, and FOURTEEN (14) RICARDO
DOES of the crime of GRAVE COERCION, committed as
follows:
That on or about February 8, 1964 at around 9:00 o'clock in
the morning, in the municipality of Jose Panganiban,
province of Camarines Norte, Philippines, and within the
jurisdiction of this Honorable Court, the above- named
accused, Roy Padilla, Filomeno Galdones, Pepito Bedenia,
Yolly Rico, David Bermundo, Villanoac, Roberto Rosales,
Villania, Romeo Garrido, Jose Ortega, Jr., Ricardo Celestino,
Realingo alias Kamlon, John Doe alias Tato, and Fourteen
Richard Does, by confederating and mutually helping one
another, and acting without any authority of law, did then and
there wilfully, unlawfully, and feloniously, by means of
threats, force and violence prevent Antonio Vergara and his
family to close their stall located at the Public Market,
Building No. 3, Jose Panganiban, Camarines Norte, and by
subsequently forcibly opening the door of said stall and
thereafter brutally demolishing and destroying said stall and
the furnitures therein by axes and other massive
instruments, and carrying away the goods, wares and
merchandise, to the damage and prejudice of the said
Antonio Vergara and his family in the amount of P30,000.00
in concept of actual or compensatory and moral damages,
and further the sum of P20,000.00 as exemplary damages.
That in committing the offense, the accused took advantage
of their public positions: Roy Padilla, being the incumbent
municipal mayor, and the rest of the accused being
policemen, except Ricardo Celestino who is a civilian, all of
Jose Panganiban, Camarines Norte, and that it was
committed with evident premeditation.
The Court of First Instance of Camarines Norte, Tenth Judicial District
rendered a decision, the dispositive portion of which states that:
IN VIEW OF THE FOREGOING, the Court finds the accused Roy Padilla,
Filomeno Galdonez, Ismael Gonzalgo and Jose Parley Bedenia guilty
beyond reasonable doubt of the crime of grave coercion, and hereby
imposes upon them to suffer an imprisonment of FIVE (5) months and One
(1) day; to pay a fine of P500.00 each; to pay actual and compensatory
damages in the amount of P10,000.00; moral damages in the amount of
P30,000.00; and another P10,000.00 for exemplary damages, jointly and
severally, and all the accessory penalties provided for by law; and to pay the
proportionate costs of this proceedings.
The accused Federico Realingo alias 'Kamlon', David
Bermundo, Christopher Villanoac, Godofredo Villania,
Romeo Garrido, Roberto Rosales, Ricardo Celestino and
Jose Ortega, are hereby ordered acquitted on grounds of
reasonable doubt for their criminal participation in the crime
charged.
The petitioners appealed the judgment of conviction to the Court of Appeals.
They contended that the trial court's finding of grave coercion was not
supported by the evidence. According to the petitioners, the town mayor had
the power to order the clearance of market premises and the removal of the
complainants' stall because the municipality had enacted municipal
ordinances pursuant to which the market stall was a nuisance per se. The
petitioners stated that the lower court erred in finding that the demolition of
the complainants' stall was a violation of the very directive of the petitioner
Mayor which gave the stall owners seventy two (72) hours to vacate the
market premises. The petitioners questioned the imposition of prison terms of
five months and one day and of accessory penalties provided by law. They
also challenged the order to pay fines of P500.00 each, P10,000.00 actual
and compensatory damages, P30,000.00 moral damages, P10,000.00
exemplary damages, and the costs of the suit.
The dispositive portion of the decision of the respondent Court of Appeals
states:
WHEREFORE, we hereby modify the judgment appealed
from in the sense that the appellants are acquitted on ground
of reasonable doubt. but they are ordered to pay jointly and
severally to complainants the amount of P9,600.00, as actual
damages.
The petitioners filed a motion for reconsideration contending that the acquittal
of the defendants-appellants as to criminal liability results in the extinction of
their civil liability. The Court of Appeals denied the motion holding that:
xxx xxx xxx
... appellants' acquittal was based on reasonable doubt
whether the crime of coercion was committed, not on facts
that no unlawful act was committed; as their taking the law
into their hands, destructing (sic) complainants' properties is
unlawful, and, as evidence on record established that
complainants suffered actual damages, the imposition of
actual damages is correct.
Consequently, the petitioners filed this special civil action, contending that:
I
THE COURT OF APPEALS COMMITTED A GRAVE ERROR
OF LAW OR GRAVELY ABUSED ITS DISCRETION IN
IMPOSING UPON PETITIONERS PAYMENT OF DAMAGES
TO COMPLAINANTS AFTER ACQUITTING PETITIONERS
OF THE CRIME CHARGED FROM WHICH SAID LIABILITY
AROSE.
II
THE COURT OF APPEALS ERRED IN HOLDING IN ITS
RESOLUTION DATED DECEMBER 26, 1974 THAT SINCE
APPELLANTS' ACQUITTAL WAS BASED ON
REASONABLE DOUBT, NOT ON FACTS THAT NO
UNLAWFUL ACT WAS COMMITTED, THE IMPOSITION OF
ACTUAL DAMAGES IS CORRECT.
III
THE COURT OF APPEALS COMMITTED A LEGAL
INCONSISTENCY, IF NOT PLAIN JUDICIAL ERROR, IN
HOLDING IN ITS APPEALED RESOLUTION THAT
PETITIONERS COMMITTED AN UNLAWFUL ACT, THAT IS
TAKING THE LAW INTO THEIR HANDS, DESTRUCTING
(sic) 'COMPLAINANTS' PROPERTIES', AFTER HOLDING
IN ITS MAIN DECISION OF NOVEMBER 6,1974 THAT THE
ACTS FOR WHICH THEY WERE CHARGED DID NOT
CONSTITUTE GRAVE COERCION AND THEY WERE NOT
CHARGED OF ANY OTHER CRIME.
IV
THE COURT OF APPEALS ERRED IN ORDERING THE
PETITIONERS HEREIN, APPELLANTS IN CA-G.R. NO.
13456CR, JOINTLY AND SEVERALLY, TO PAY
COMPLAINANTS P9,600.00 IN SUPPOSED ACTUAL
DAMAGES.
The issue posed in the instant proceeding is whether or not the respondent
court committed a reversible error in requiring the petitioners to pay civil
indemnity to the complainants after acquitting them from the criminal charge.
Petitioners maintain the view that where the civil liability which is included in
the criminal action is that arising from and as a consequence of the criminal
act, and the defendant was acquitted in the criminal case, (no civil liability
arising from the criminal case), no civil liability arising from the criminal
charge could be imposed upon him. They cite precedents to the effect that
the liability of the defendant for the return of the amount received by him may
not be enforced in the criminal case but must be raised in a separate civil
action for the recovery of the said amount (People v. Pantig, 97 Phil. 748;
following the doctrine laid down in Manila Railroad Co. v. Honorable Rodolfo
Baltazar, 49 O.G. 3874; Pueblo contra Abellera, 69 Phil. 623; People v.
Maniago 69 Phil. 496; People v. Miranda, 5 SCRA 1067; Aldaba v. Elepafio
116 Phil. 457). In the case before us, the petitioners were acquitted not
because they did not commit the acts stated in the charge against them.
There is no dispute over the forcible opening of the market stall, its
demolition with axes and other instruments, and the carting away of the
merchandize. The petitioners were acquitted because these acts were
denominated coercion when they properly constituted some other offense
such as threat or malicious mischief.
The respondent Court of Appeals stated in its decision:
 For a complaint to prosper under the foregoing provision, the
violence must be employed against the person, not against
property as what happened in the case at bar. ...
xxx xxx xxx
The next problem is: May the accused be convicted of an
offense other than coercion?
From all appearances, they should have been prosecuted
either for threats or malicious mischief. But the law does not
allow us to render judgment of conviction for either of these
offenses for the reason that they were not indicted for, these
offenses. The information under which they were prosecuted
does not allege the elements of either threats or malicious
mischief. Although the information mentions that the act was
by means of threats', it does not allege the particular threat
made. An accused person is entitled to be informed of the
nature of the acts imputed to him before he can be made to
enter into trial upon a valid information.
We rule that the crime of grave coercion has not been
proved in accordance with law.
While appellants are entitled to acquittal they nevertheless
are liable for the actual damages suffered by the
complainants by reason of the demolition of the stall and loss
of some of their properties. The extinction of the penal action
does not carry with it that of the civil, unless the extinction
proceeds from a declaration in a final judgment that the fact
from which the civil might arise did not exist. (Rule 111, Sec.
3 (c), Rev. Rules of Court; Laperal v. Aliza, 51 OG.R. 1311,
People v. Velez, 44 OG. 1811). In the instant case, the fact
from which the civil might arise, namely, the demolition of the
stall and loss of the properties contained therein; exists, and
this is not denied by the accused. And since there is no
showing that the complainants have reserved or waived their
right to institute a separate civil action, the civil aspect
therein is deemed instituted with the criminal action. (Rule
111, Sec. 1, Rev. Rules of Court).
xxx xxx xxx
Section 1 of Rule 111 of the Rules of Court states the fundamental
proposition that when a criminal action is instituted, the civil action for
recovery of civil liability arising from the offense charged is impliedly instituted
with it. There is no implied institution when the offended party expressly
waives the civil action or reserves his right to institute it separately. (Morte Sr.
v. Alvizo, Jr., 101 SCRA 221).
The extinction of the civil action by reason of acquittal in the criminal case
refers exclusively to civil liability ex delicto founded on Article 100 of the
Revised Penal Code. (Elcano v. Hill, 77 SCRA 98; Virata v. Ochoa, 81 SCRA
472). In other words, the civil liability which is also extinguished upon
acquittal of the accused is the civil liability arising from the act as a crime.
As easily as 1942, the Supreme Court speaking through Justice Jorge
Bocobo in Barredo v. Garcia, et at. 73 Phil. 607 laid down the rule that the
same punishable act or omission can create two kinds of civil liabilities
against the accused and, where provided by law, his employer. 'There is the
civil liability arising from the act as a crime and the liability arising from the
same act as a quasi-delict. Either one of these two types of civil liability may
be enforced against the accused, However, the offended party cannot
recover damages under both types of liability. For instance, in cases of
criminal negligence or crimes due to reckless imprudence, Article 2177 of the
Civil Code provides:
Responsibility for fault or negligence under the preceding
article is entirely separate and distinct from the civil liability
arising from negligence under the Penal Code. But the
plaintiff cannot recover damages twice for the same act or
omission of the defendant.
Section 3 (c) of Rule 111 specifically provides that:
Sec. 3. Other civil actions arising from offenses. — In all
cases not included in the preceding section the following
rules shall be observed:
xxx xxx xxx
xxx xxx xxx
(c) Extinction of the penal action does not carry with it
extinction of the civil, unless the extinction proceeds from a
declaration in a final judgment that the fact from which the
civil might arise did not exist. In other cases, the person
entitled to the civil action may institute it in the Jurisdiction
and in the manner provided by law against the person who
 may be liable for restitution of the thing and reparation or
indemnity for the damage suffered.
The judgment of acquittal extinguishes the liability of the accused for
damages only when it includes a declaration that the facts from which the
civil might arise did not exist. Thus, the civil liability is not extinguished by
acquittal where the acquittal is based on reasonable doubt (PNB v. Catipon,
98 Phil. 286) as only preponderance of evidence is required in civil cases;
where the court expressly declares that the liability of the accused is not
criminal but only civil in nature (De Guzman v. Alvia, 96 Phil. 558; People v.
Pantig, supra) as, for instance, in the felonies of estafa, theft, and malicious
mischief committed by certain relatives who thereby incur only civil liability
(See Art. 332, Revised Penal Code); and, where the civil liability does not
arise from or is not based upon the criminal act of which the accused was
acquitted (Castro v. Collector of Internal Revenue, 4 SCRA 1093; See
Regalado, Remedial Law Compendium, 1983 ed., p. 623). Article 29 of the
Civil Code also provides that:
When the accused in a criminal prosecution is acquitted on
the ground that his guilt has not been proved beyond
reasonable doubt, a civil action for damages for the same act
or omission may be instituted. Such action requires only a
preponderance of evidence. Upon motion of the defendant,
the court may require the plaintiff to file a bond to answer for
damages in case the complaint should be found to be
malicious.
If in a criminal case the judgment of acquittal is based upon
reasonable doubt, the court shall so declare. In the absence
of any declaration to that effect, it may be inferred from the
text of the decision whether or not the acquittal is due to that
ground.
More recently, we held that the acquittal of the defendant in the criminal case
would not constitute an obstacle to the filing of a civil case based on the
same acts which led to the criminal prosecution:
... The finding by the respondent court that he spent said
sum for and in the interest of the Capiz Agricultural and
Fishery School and for his personal benefit is not a
declaration that the fact upon which Civil Case No. V-3339 is
based does not exist. The civil action barred by such a
declaration is the civil liability arising from the offense
charged, which is the one impliedly instituted with the
criminal action. (Section 1, Rule III, Rules of Court.) Such a
declaration would not bar a civil action filed against an
accused who had been acquitted in the criminal case if the
criminal action is predicated on factual or legal
considerations other than the commission of the offense
charged. A person may be acquitted of malversation where,
as in the case at bar, he could show that he did not
misappropriate the public funds in his possession, but he
could be rendered liable to restore said funds or at least to
make a proper accounting thereof if he shall spend the same
for purposes which are not authorized nor intended, and in a
manner not permitted by applicable rules and regulations.
(Republic v. Bello, 120 SCRA 203)
There appear to be no sound reasons to require a separate civil action to still
be filed considering that the facts to be proved in the civil case have already
been established in the criminal proceedings where the accused was
acquitted. Due process has been accorded the accused. He was, in fact,
exonerated of the criminal charged. The constitutional presumption of
innocence called for more vigilant efforts on the part of prosecuting attorneys
and defense counsel, a keener awareness by all witnesses of the serious
implications of perjury, and a more studied consideration by the judge of the
entire records and of applicable statutes and precedents. To require a
separate civil action simply because the accused was acquitted would mean
needless clogging of court dockets and unnecessary duplication of litigation
with all its attendant loss of time, effort, and money on the part of all
concerned.
The trial court found the following facts clearly established by the evidence
adduced by both the prosecution and the defense:
xxx xxx xxx
(9) In the morning of February 8, 1964, then Chief Galdones,
complying with the instructions contained in said
Memorandum No. 32 of the Mayor, and upon seeing that
Antonio Vergara had not vacated the premises in question,
with the aid of his policemen, forced upon the store or stall
and ordered the removal of the goods inside the store of
Vergara, at the same time taking inventory of the goods
taken out, piled them outside in front of the store and had it
cordoned with a rope, and after all the goods were taken out
from the store, ordered the demolition of said stall of Antonio
Vergara. Since then up to the trial of this case, the
whereabouts of the goods taken out from the store nor the
materials of the demolished stall have not been made
known.
The respondent Court of Appeals made a similar finding that:
On the morning of February 8th, because the said Vergaras
had not up to that time complied with the order to vacate, the
co-accused Chief of Police Galdones and some members of
his police force, went to the market and, using ax, crowbars
and hammers, demolished the stall of the Vergaras who
were not present or around, and after having first inventoried
the goods and merchandise found therein, they had them
brought to the municipal building for safekeeping. Inspite of
notice served upon the Vergaras to take possession of the
goods and merchandise thus taken away, the latter refused
to do so.
The loss and damage to the Vergaras as they evaluated
them were:
Cost of stall construction P1,300.00
Value of furniture and
equipment
judgment destroyed 300.00
Value of goods and equipment taken
8,000.00
P9,600.00
It is not disputed that the accused demolished the grocery
stall of the complainants Vergaras and carted away its
contents. The defense that they did so in order to abate what
they considered a nuisance per se is untenable, This finds
no support in law and in fact. The couple has been paying
rentals for the premises to the government which allowed
them to lease the stall. It is, therefore, farfetched to say that
the stall was a nuisance per se which could be summarily
abated.
The petitioners, themselves, do not deny the fact that they caused the
destruction of the complainant's market stall and had its contents carted
away. They state:
On February 8, 1964, despite personal pleas on Vergaras by
the Mayor to vacate the passageways of Market Building No.
3, the Vergaras were still in the premises, so the petitioners
Chief of Police and members of the Police Force of Jose
Panganiban, pursuant to the Mayor' 6 directives, demolished
the store of the Vergaras, made an inventory of the goods
found in said store, and brought these goods to the
municipal building under the custody of the Municipal
Treasurer, ...
The only supposed obstacle is the provision of Article 29 of the Civil Code,
earlier cited, that "when the accused in a criminal prosecution is acquitted on
the ground that his guilt has not been proved beyond reasonable doubt, a
civil action for damages for the same act or omission may be instituted."
According to some scholars, this provision of substantive law calls for a
separate civil action and cannot be modified by a rule of remedial law even in
the interests of economy and simplicity and following the dictates of logic and
common sense.
As stated by retired Judge J. Cezar Sangco:
... if the Court finds the evidence sufficient to sustain the civil
action but inadequate to justify a conviction in the criminal
action, may it render judgment acquitting the accused on
reasonable doubt, but hold him civilly liable nonetheless? An
affirmative answer to this question would be consistent with
the doctrine that the two are distinct and separate actions,
and win (a) dispense with the reinstituting of the same civil
action, or one based on quasi-delict or other independent
civil action, and of presenting the same evidence: (b) save
the injured party unnecessary expenses in the prosecution of
the civil action or enable him to take advantage of the free
services of the fiscal; and (c) otherwise resolve the unsettling
implications of permitting the reinstitution of a separate civil
action whether based on delict, or quasi-delict, or other
independent civil actions.
... But for the court to be able to adjudicate in the manner
here suggested, Art. 29 of the Civil Code should be amended
because it clearly and expressly provides that the civil action
based on the same act or omission may only be instituted in
a separate action, and therefore, may not inferentially be
resolved in the same criminal action. To dismiss the civil
action upon acquittal of the accused and disallow the
reinstitution of any other civil action, would likewise render,
unjustifiably, the acquittal on reasonable doubt without any
significance, and would violate the doctrine that the two
actions are distinct and separate.
 In the light of the foregoing exposition, it seems evident that
there is much sophistry and no pragmatism in the doctrine
that it is inconsistent to award in the same proceedings
damages against the accused after acquitting him on
reasonable doubt. Such doctrine must recognize the distinct
and separate character of the two actions, the nature of an
acquittal on reasonable doubt, the vexatious and oppressive
effects of a reservation or institution of a separate civil
action, and that the injured party is entitled to damages not
because the act or omission is punishable but because he
was damaged or injured thereby (Sangco, Philippine Law on
Torts and Damages, pp. 288-289).
We see no need to amend Article 29 of the Civil Code in order to allow a
court to grant damages despite a judgment of acquittal based on reasonable
doubt. What Article 29 clearly and expressly provides is a remedy for the
plaintiff in case the defendant has been acquitted in a criminal prosecution on
the ground that his guilt has not been proved beyond reasonable doubt. It
merely emphasizes that a civil action for damages is not precluded by an
acquittal for the same criminal act or omission. The Civil Code provision does
not state that the remedy can be availed of only in a separate civil action. A
separate civil case may be filed but there is no statement that such separate
filing is the only and exclusive permissible mode of recovering damages.
There is nothing contrary to the Civil Code provision in the rendition of a
judgment of acquittal and a judgment awarding damages in the same
criminal action. The two can stand side by side. A judgment of acquittal
operates to extinguish the criminal liability. It does not, however, extinguish
the civil liability unless there is clear showing that the act from which civil
liability might arise did not exist.
A different conclusion would be attributing to the Civil Code a trivial
requirement, a provision which imposes an uncalled for burden before one
who has already been the victim of a condemnable, yet non-criminal, act may
be accorded the justice which he seeks.
We further note the rationale behind Art. 29 of the Civil Code in arriving at the
intent of the legislator that they could not possibly have intended to make it
more difficult for the aggrieved party to recover just compensation by making
a separate civil action mandatory and exclusive:
The old rule that the acquittal of the accused in a criminal
case also releases him from civil liability is one of the most
serious flaws in the Philippine legal system. It has given rise
to numberless instances of miscarriage of justice, where the
acquittal was due to a reasonable doubt in the mind of the
court as to the guilt of the accused. The reasoning followed
is that inasmuch as the civil responsibility is derived from the
the criminal offense, when the latter is not proved, civil
liability cannot be demanded.
This is one of those cases where confused thinking leads to
unfortunate and deplorable consequences. Such reasoning
fails to draw a clear line of demarcation between criminal
liability and civil responsibility, and to determine the logical
result of the distinction. The two liabilities are separate and
distinct from each other. One affects the social order and the
other, private rights. One is for the punishment or correction
of the offender while the other is for reparation of damages
suffered by the aggrieved party... it is just and proper that, for
the purposes of the imprisonment of or fine upon the
accused, the offense should be proved beyond reasonable
doubt. But for the purpose of indemnifying the complaining
party, why should the offense also be proved beyond
reasonable doubt? Is not the invasion or violation of every
private right to be proved only by preponderance of
evidence? Is the right of the aggrieved person any less
private because the wrongful act is also punishable by the
criminal law? (Code Commission, pp. 45-46).
A separate civil action may be warranted where additional facts have to be
established or more evidence must be adduced or where the criminal case
has been fully terminated and a separate complaint would be just as
efficacious or even more expedient than a timely remand to the trial court
where the criminal action was decided for further hearings on the civil
aspects of the case. The offended party may, of course, choose to file a
separate action. These do not exist in this case. Considering moreover the
delays suffered by the case in the trial, appellate, and review stages, it would
be unjust to the complainants in this case to require at this time a separate
civil action to be filed.
With this in mind, we therefore hold that the respondent Court of Appeals did
not err in awarding damages despite a judgment of acquittal.
WHEREFORE, we hereby AFFIRM the decision of the respondent Court of
Appeals and dismiss the petition for lack of merit.
SO ORDERED.
G.R. No. 210148 December 8, 2014
ANTONIO L. DALURAYA, Petitioner, vs. MARLA OLIVA, Respondent.
DECISION
PERLAS-BERNABE, J.:
Assailed in this petition for review on certiorari 1 are the Decision2 dated June
28, 2013 and the Resolution 3 dated November 22, 2013 rendered by the
Court of Appeals (CA) in CA-G.R. SP No. 125113 finding petitioner Antonio L.
Daluraya (Daluraya) civilly liable for the death of Marina Arabit Oliva (Marina
Oliva) despite having been acquitted for Reckless Imprudence Resulting in
Homicide on the ground of insufficiency of evidence.
victim, and that there was no clear and competent evidence of how the
incident transpired.10
The MeTC Ruling
In an Order11 dated May 24, 2010, the Metropolitan Trial Court of Quezon
City, Branch 38 (MeTC) granted Daluraya’s demurrer and dismissed the case
for insufficiency of evidence. It found that the testimonies of the prosecution
witnesses were wanting in material details and that they failed to sufficiently
establish that Daluraya committed the crime imputed upon
him.12 Deconstructing the testimonies of the prosecution witnesses
individually, the MeTC found that: (a) Marla merely testified on the damages
sustained by her family but she failed to identify Daluraya as the driver of the
vehicle that hit her mother; (b) Serrano also did not identify

Daluraya as the driver of the said vehicle; (c) Dr. Ortiz merely testified on the
The Facts
autopsy results; and (d) PSI Gomez, while he did investigate the incident,
likewise declared thathe did not witness the same.13
On January 4, 2006, Daluraya was charged in an Information 4 for Reckless
Imprudence Resulting in Homicide in connection with the death 5 of Marina
Marla moved for reconsideration, 14 which the MeTC denied in an
Oliva. Records reveal that sometime in the afternoon of January 3, 2006,
Order15 dated November 4, 2010, clarifying that the grant of Daluraya’s
Marina Oliva was crossing the street when a Nissan Vanette, bearing plate
demurrer had the effect of an acquittal and that reconsideration of its Order
number UPN-172 and traversing EDSA near the Quezon Avenue flyover in
granting Daluraya’s demurrer would violate the latter’s right against double
Quezon City, ran her over. 6 While Marina Oliva was rushed to the hospital to
jeopardy.16 With respect to the civil aspect of the case, the MeTC likewise
receive medical attention,she eventually died, prompting her daughter, herein
denied the same, holding that no civil liability can be awarded absent any
respondent Marla Oliva (Marla), to file a criminal case for Reckless
evidence proving that Daluraya was the person responsible for Marina
Imprudence Resulting in Homicide against Daluraya, the purported driver of
Oliva’s demise.17
the vehicle.7

Aggrieved, Marla appealed18 to the Regional Trial Court of Quezon City,

During the proceedings, the prosecution presented as witness Shem Serrano
(Serrano), an eye-witness to the incident, who testified that on said date, he
saw a woman crossing EDSA heading towards the island near the flyover
and that the latter was bumped by a Nissan Vanette bearing plate number
UPN-172. The prosecution also offered the testimonies of (a) Marla, who
testified as to the civil damages sustained by her family as a result of her
mother’s death; (b) Dr. Paul Ortiz (Dr. Ortiz), who presented his findings on
the autopsy conducted upon the body of Marina Oliva; and (c) Police Senior
Inspector Lauro Gomez (PSI Gomez), who conducted the investigation
following the incident and claimed that Marina Oliva was hit by the vehicle
being driven by Daluraya, albeit he did not witness the incident. 8
After the prosecution rested its case, Daluraya filed an Urgent Motion to
Dismiss (demurrer)9 asserting, inter alia, that he was not positively identified
by any of the prosecution witnesses as the driver of the vehicle that hit the
Branch 76 (RTC), insisting that the MeTC failed to make any finding as to the
civil liability of Daluraya,19 which finding was not precluded by the dismissal of
the criminal aspect of the case.
The RTC Ruling
In a Decision20 dated September 8, 2011, the RTC dismissed the appeal and
affirmed the MeTC’s ruling,declaring that "the act from which the criminal
responsibility may spring did not at all exist."21
Marla filed a motion for reconsideration 22 which, although filed beyond the
reglementary period, was nonetheless accepted. However, the RTC found
the same without merit and thus, sustained the factual findings and rulings of
the MeTC in its Order23 dated May 10, 2012. Dissatisfied, Marla elevated the
case to the CA via petition for review, maintaining that Daluraya must be held
civilly liable.
The CA Ruling
In a Decision24 dated June 28, 2013, the CA granted the petition and
reversed the RTC Decision, ordering Daluraya to pay Marla the amounts of
₱152,547.00 as actual damages, ₱50,000.00 as civil indemnity, and
₱50,000.00 as moral damages.25 In so ruling, the CA held that the MeTC’s
Order showed that Daluraya’s acquittal was based on the fact that the
prosecution failed to prove his guilt beyond reasonable doubt. As such,
Daluraya was not exonerated from civil liability.26
Moreover, the CA considered the following pieces of evidence to support its
finding that Daluraya must be held civilly liable: (a) the inadmissible sworn
statement executed by Daluraya where he admitted that he drove the subject
vehicle which hit Marina Oliva; (b) the conclusion derived from Serrano’s
testimony that the woman he saw crossing the street who was hit by a
Nissan Vanette with plate number UPN-172, and the victim who eventually
died, are one and the same; (c) the Philippine National Police Referral Letter
of one Police Chief Inspector Virgilio Pereda identifying Daluraya as the
suspectin the case of Reckless Imprudence Resulting in Homicide involving
the death of Marina Oliva, and stating that he brought the victim to the
Quezon City General Hospital for treatment but was declared dead on arrival;
and (d) the subject vehicle was registered in the name of Daluraya’s aunt,
Gloria Zilmar,27 who authorized him to claim the vehicle from the MeTC.28
Daluraya filed a motion for reconsideration, 29 which the CA denied in a
Resolution30 dated November 22, 2013,hence, this petition.
The Issue Before the Court
The sole issue advanced for the Court’s resolution is whether or not the CA
was correct in finding Daluraya civilly liable for Marina Oliva’s death despite
his acquittal in the criminal case for Reckless Imprudence Resulting in
Homicide on the ground of insufficiency of evidence.
The Court’s Ruling
The petition is meritorious.
Every person criminally liable for a felony is also civilly liable. The acquittal of
an accused of the crime charged, however, does not necessarily extinguish
his civil liability.31 In Manantan v. CA,32 the Court expounded on the two kinds
of acquittal recognized by our law and their concomitant effects on the civil
liability of the accused, as follows:
Our law recognizes two kinds of acquittal, with different effects on the civil
liability of the accused. First is an acquittal on the ground that the accused is
not the author of the actor omission complained of. This instance closes the
door to civil liability, for a person who has been found to be not the
perpetrator of any act or omission cannot and can never be held liable for
such act or omission. There being no delict, civil liability ex delictois out of the
question, and the civil action, if any, which may be instituted must be based
on grounds other than the delict complained of. This is the situation
contemplated inRule 111 of the Rules of Court. The second instance is an
acquittal based on reasonable doubt on the guilt of the accused. In this case,
even if the guilt of the accused has not been satisfactorily established, he is
not exempt from civil liability which may be proved by preponderance of
evidence only.33
In Dayap v. Sendiong,34 the Court explained further:
The acquittal of the accused does not automatically preclude a judgment
against him on the civil aspect of the case.1âwphi1The extinction of the penal
action does not carry with it the extinction of the civil liability where: (a) the
acquittal is based on reasonable doubt as only preponderance of evidence is
required; (b) the court declares that the liability of the accused is only civil;
and (c) the civil liability of the accused does not arise from or is not based
upon the crime of which the accused is acquitted. However, the civil action
based on delictmay be deemed extinguished if there is a finding on the final
judgment in the criminal action that the act or omission from which the civil
liability may arise did not exist or where the accused did not commit the acts
or omission imputed to him.
Thus, if demurrer is granted and the accused is acquitted by the court, the
accused has the right to adduce evidence on the civil aspect of the case
unless the court also declares that the act or omission from which the civil
liability may arise did not exist. This is because when the accused files a
demurrer to evidence, he has not yet adduced evidence both on the criminal
and civil aspects of the case. The only evidence on record is the evidence for
the prosecution. What the trial court should do is issue an order or partial
judgment granting the demurrer to evidence and acquitting the accused, and
set the case for continuation of trial for the accused to adduce evidence on
the civil aspect of the case and for the private complainant to adduce
evidence by way of rebuttal. Thereafter, the court shall render judgment on
the civil aspect of the case.35
(Emphases supplied)
In case of an acquittal, the Rules of Court requires that the judgment state
"whether the evidence of the prosecution absolutely failed to prove the guilt
of the accused or merely failed to prove his guilt beyond reasonable doubt. In
either case, the judgment shall determine if the act or omission from which
the civil liability might arise did not exist."36

A punctilious examination of the MeTC’s Order, which the RTC sustained, will
show that Daluraya’s acquittal was based on the conclusion that the act or
omission from which the civil liability may arise did not exist, given that the
prosecution was not able to establish that he was the author of the crime
imputed against him. Such conclusion is clear and categorical when the
MeTC declared that "the testimonies of the prosecution witnesses are
wanting in material details and they did not sufficiently establish that the
accused precisely committed the crime charged against him." 37 Furthermore,
when Marla sought reconsideration of the MeTC’s Order acquitting Daluraya,
said court reiterated and firmly clarified that "the prosecution was not able to
establish that the accused was the driver of the Nissan Vanette which
bumped Marina Oliva"38 and that "there is no competent evidence on hand
which proves that the accused was the person responsible for the death of
Marina Oliva."39

Clearly, therefore, the CA erred in construing the findings of the MeTC, as

affirmed by the RTC, that Daluraya’s acquittal was anchored on reasonable
doubt, which would necessarily call for a remand of the case to the court a
quo for the reception of Daluraya’s evidence on the civil
aspect.1âwphi1 Records disclose that Daluraya’s acquittal was based on the
fact that "the act or omission from which the civil liability may arise did not
exist" in view of the failure of the prosecution to sufficiently establish that he
was the author of the crime ascribed against him. Consequently, his civil
liability should be deemed as non-existent by the nature of such acquittal.

WHEREFORE, the petition is GRANTED. The Decision dated June 28, 2013
and the Resolution dated November 22, 2013 of the Court of Appeals in CA-
G.R. SP No. 125113 are hereby REVERSED and SET ASIDE. The Decision
dated September 8,2011 and the Order dated May 10, 2012 of the Regional
Trial Court of Quezon City, Branch 76 are REINSTATED.

SO ORDERED.
G.R. No. 183805 July 3, 2013
JAMES WALTER P. CAPILI, PETITIONER, vs. PEOPLE OF THE
PHILIPPINES AND SHIRLEY TISMO-CAPILI, RESPONDENTS.
DECISION
PERALTA, J.:
Before us is a Petition for Review on Certiorari under Rule 45 of the Rules of
Court seeking the reversal of the Decision 1 dated February 1, 2008 and
Resolution2 dated July 24, 2008 of the Court of Appeals (CA) in CA-G.R. CR
No. 30444.
The factual antecedents are as follows:
On June 28, 2004, petitioner was charged with the crime of bigamy before
the Regional Trial Court (RTC) of Pasig City in an Information which reads:
On or about December 8, 1999, in Pasig City, and within the jurisdiction of
this Honorable Court, the accused being previously united in lawful marriage
with Karla Y. Medina-Capili and without said marriage having been legally
dissolved or annulled, did then and there willfully, unlawfully and feloniously
contract a second marriage with Shirley G. Tismo, to the damage and
prejudice of the latter.
Contrary to law.3
Petitioner thereafter filed a Motion to Suspend Proceedings alleging that: (1)
there is a pending civil case for declaration of nullity of the second marriage
before the RTC of Antipolo City filed by Karla Y. Medina-Capili; (2) in the
event that the marriage is declared null and void, it would exculpate him from
the charge of bigamy; and (3) the pendency of the civil case for the
declaration of nullity of the second marriage serves as a prejudicial question
in the instant criminal case.
Consequently, the arraignment and pre-trial were reset by the RTC of Pasig
City, in view of the filing of the Motion to Suspend Proceedings filed by
petitioner.
In the interim, the RTC of Antipolo City rendered a decision declaring the
voidness or incipient invalidity of the second marriage between petitioner and
private respondent on the ground that a subsequent marriage contracted by
the husband during the lifetime of the legal wife is void from the beginning.
Thereafter, the petitioner accused filed his Manifestation and Motion (to
Dismiss) praying for the dismissal of the criminal case for bigamy filed
against him on the ground that the second marriage between him and private
respondent had already been declared void by the RTC.
In an Order4 dated July 7, 2006, the RTC of Pasig City granted petitioner’s
Manifestation and Motion to Dismiss, to wit:
The motion is anchored on the allegation that this case should be dismissed
as a decision dated December 1, 2004 had already been rendered by the
Regional Trial Court of Antipolo City, Branch 72 in Civil Case No. 01-6043
(entitled: "Karla Medina-Capili versus James Walter P. Capili and Shirley G.
Tismo," a case for declaration of nullity of marriage) nullifying the second
marriage between James Walter P. Capili and Shirley G. Tismo and said
decision is already final.
In the opposition filed by the private prosecutor to the motion, it was stated,
among others, that the issues raised in the civil case are not similar or
intimately related to the issue in this above-captioned case and that the
resolution of the issues in said civil case would not determine whether or not
the criminal action may proceed.
WHEREFORE, after a judicious evaluation of the issue and arguments of the
parties, this Court is of the humble opinion that there is merit on the Motion to
dismiss filed by the accused as it appears that the second marriage between
James Walter P. Capili and Shirley G. Tismo had already been nullified by the
Regional Trial Court, Branch 72 of Antipolo City which has declared "the
voidness, non-existent or incipient invalidity" of the said second marriage. As
such, this Court submits that there is no more bigamy to speak of.
SO ORDERED.
Aggrieved, private respondent filed an appeal before the CA.
Thus, in a Decision5 dated February 1, 2008, the CA reversed and set aside
the RTC’s decision. The fallo reads:
WHEREFORE, premises considered, the Order dated 07 July 2006 of the
Regional Trial Court of Pasig City, Branch 152 in Crim. Case No. 128370 is
REVERSED and SET ASIDE. The case is remanded to the trial court for
further proceedings. No costs.
SO ORDERED.6
Petitioner then filed a Motion for Reconsideration against said decision, but
the same was denied in a Resolution[7] dated July 24, 2008.
Accordingly, petitioner filed the present petition for review on certiorari
alleging that:
THERE IS NO LEGAL BASIS FOR THE COURT OF APPEALS TO
DISREGARD EXISTING JURISPRUDENCE PRONOUNCED BY
THIS HONORABLE SUPREME COURT AND TO REVERSE THE
ORDER DATED JULY 7, 2006 OF THE TRIAL COURT (REGIONAL
TRIAL COURT, PASIG CITY, BRANCH 152) ISSUED IN CRIMINAL
CASE NO. 128370 GRANTING THE MOTION TO DISMISS THE
CASE OF BIGAMY AGAINST PETITIONER, INASMUCH AS THE
ISSUANCE OF THE SAID ORDER IS BASED ON THE FINDINGS
AND/OR FACTS OF THE CASE IN THE DECISION OF THE
REGIONAL TRIAL COURT OF ANTIPOLO CITY, BRANCH 72, IN
CIVIL CASE NO. 01-6043 AND THE CONCLUDING AND
DISPOSITIVE PORTION IN THE SAID DECISION WHICH STATES
THAT, AFTER PERUSAL OF THE EVIDENCE ON RECORD AND
THE TESTIMONIES OF WITNESSES X X X, THE MARRIAGE
BETWEEN PETITIONER JAMES WALTER P. CAPILI AND PRIVATE
RESPONDENT SHIRLEY G. TISMO, IS HEREBY NULL AND VOID.
THE COURT OF APPEALS GRAVELY ERRED AND ABUSED ITS
DISCRETION AMOUNTING TO LACK OF JURISDICTION IN
HOLDING THAT THE DECLARATION OF NULLITY OF MARRIAGE
BETWEEN PETITIONER JAMES WALTER P. CAPILI AND SHIRLEY
G. TISMO BY THE REGIONAL TRIAL COURT OF ANTIPOLO CITY,
BRANCH 72 IN ITS DECISION IN CIVIL CASE NO. 01-6043, IS ON
THE GROUND THAT IT IS BIGAMOUS IN NATURE, DESPITE THE
ABSENCE OF ANY SUCH FINDINGS OR FACTS ON WHICH IT IS
BASED IN VIOLATION OF ARTICLE VIII, SECTION 14 OF THE
1987 CONSTITUTION, AND IN CONCLUDING THAT THE SAID
DECLARATION OF NULLITY OF MARRIAGE IS NOT A GROUND
FOR DISMISSAL OF THE BIGAMY CASE AGAINST THE
PETITIONER, WHICH RULING IS NOT IN ACCORDANCE WITH
THE FACTS OF THE CASE OF THE SAID DECISION AND WHICH
IS CONTRARY TO APPLICABLE LAWS AND ESTABLISHED
JURISPRUDENCE.
THE CASE OF TENEBRO V. COURT OF APPEALS SPEAKS FOR
ITSELF. IT IS AN EXCEPTION TO EXISTING JURISPRUDENCE
INVOLVING DECLARATION OF NULLITY OF MARRIAGE AND IS
APPLICABLE ONLY TO THE SET OF FACTS IN THE SAID CASE,
AND THE GROUND FOR DECLARATION OF NULLITY OF
MARRIAGE IS PSYCHOLOGICAL INCAPACITY, HENCE, THERE IS
NO LEGAL BASIS FOR ABANDONING EXISTING
JURISPRUDENCE AS WHERE IN THE INSTANT CASE THE
GROUND FOR DECLARATION OF NULLITY OF MARRIAGE IS
VIOLATIVE OF ARTICLE 3 IN RELATION TO ARTICLE 4 OF THE
FAMILY CODE.
THE COURT OF APPEALS GRAVELY ERRED IN NOT HOLDING
THAT THE USE BY RESPONDENT SHIRLEY G. TISMO OF THE
SURNAME "CAPILI" IS ILLEGAL INASMUCH AS THE DECISION
OF THE REGIONAL TRIAL COURT OF ANTIPOLO CITY, BRANCH
72 IN CIVIL CASE NO. 01-6043 DECLARING NULL AND VOID THE
MARRIAGE BETWEEN JAMES WALTER P. CAPILI AND SHIRLEY
G. TISMO HAD LONG BECOME FINAL AND UNAPPEALABLE AS
OF THE DATE OF THE SAID DECISION ON DECEMBER 1, 2004
AND DULY RECORDED IN THE RECORDS OF ENTRIES IN THE
CORRESPONDING BOOK IN THE OFFICE OF THE CIVIL
REGISTRAR OF PASIG CITY AND THE NATIONAL STATISTICS
OFFICE.8
In essence, the issue is whether or not the subsequent declaration of nullity
of the second marriage is a ground for dismissal of the criminal case for
bigamy.
We rule in the negative.
Article 349 of the Revised Penal Code defines and penalizes the crime of
bigamy as follows:
Art. 349. Bigamy. – The penalty of prision mayor shall be imposed upon any
person who shall contract a second or subsequent marriage before the
former marriage has been legally dissolved, or before the absent spouse has
been declared presumptively dead by means of a judgment rendered in the
proper proceedings.
The elements of the crime of bigamy, therefore, are: (1) the offender has
been legally married; (2) the marriage has not been legally dissolved or, in
case his or her spouse is absent, the absent spouse could not yet be
presumed dead according to the Civil Code; (3) that he contracts a second or
subsequent marriage; and (4) that the second or subsequent marriage has all
the essential requisites for validity.9
In the present case, it appears that all the elements of the crime of bigamy
were present when the Information was filed on June 28, 2004.
It is undisputed that a second marriage between petitioner and private
respondent was contracted on December 8, 1999 during the subsistence of a
valid first marriage between petitioner and Karla Y. Medina-Capili contracted
on September 3, 1999. Notably, the RTC of Antipolo City itself declared the
bigamous nature of the second marriage between petitioner and private
respondent. Thus, the subsequent judicial declaration of the second marriage
for being bigamous in nature does not bar the prosecution of petitioner for the
crime of bigamy.
Jurisprudence is replete with cases holding that the accused may still be
charged with the crime of bigamy, even if there is a subsequent declaration of
the nullity of the second marriage, so long as the first marriage was still
subsisting when the second marriage was celebrated.
10
In Jarillo v. People, the Court affirmed the accused’s conviction for bigamy
ruling that the crime of bigamy is consummated on the celebration of the
subsequent marriage without the previous one having been judicially
declared null and void, viz.:
In like manner, the Court recently upheld the ruling in the aforementioned
case and ruled that what makes a person criminally liable for bigamy is when
he contracts a second or subsequent marriage during the subsistence of a
valid first marriage. It further held that the parties to the marriage should not
be permitted to judge for themselves its nullity, for the same must be
submitted to the judgment of competent courts and only when the nullity of
the marriage is so declared can it be held as void, and so long as there is no
such declaration the presumption is that the marriage exists. Therefore, he
who contracts a second marriage before the judicial declaration of the first
marriage assumes the risk of being prosecuted for bigamy. 12
Finally, it is a settled rule that the criminal culpability attaches to the offender
upon the commission of the offense, and from that instant, liability appends to
him until extinguished as provided by law. 13 It is clear then that the crime of
bigamy was committed by petitioner from the time he contracted the second
marriage with private respondent. Thus, the finality of the judicial declaration
of nullity of petitioner’s second marriage does not impede the filing of a
criminal charge for bigamy against him.
WHEREFORE, premises considered, the petition is DENIED. The Decision
dated February 1, 2008 and Resolution dated July 24, 2008 of the Court of
Appeals in CA-G.R. CR No. 30444 are hereby AFFIRMED.
SO ORDERED.

The subsequent judicial declaration of the nullity of the first marriage was
immaterial because prior to the declaration of nullity, the crime had already
been consummated. Moreover, petitioner’s assertion would only delay the
prosecution of bigamy cases considering that an accused could simply file a
petition to declare his previous marriage void and invoke the pendency of
that action as a prejudicial question in the criminal case. We cannot allow
that.

The outcome of the civil case for annulment of petitioner’s marriage to

[private complainant] had no bearing upon the determination of petitioner’s
innocence or guilt in the criminal case for bigamy, because all that is required
for the charge of bigamy to prosper is that the first marriage be subsisting at
the time the second marriage is contracted.

Thus, under the law, a marriage, even one which is void or voidable, shall be
deemed valid until declared otherwise in a judicial proceeding. In this case,
even if petitioner eventually obtained a declaration that his first marriage was
void ab initio, the point is, both the first and the second marriage were
subsisting before the first marriage was annulled.11
G.R. No. L-48157 March 16, 1988
RICARDO QUIAMBAO, petitioner, vs. HON. ADRIANO OSORIO, ZENAIDA
GAZA BUENSUCERO, JUSTINA GAZA BERNARDO, and FELIPE GAZA,
respondents-appellees, LAND AUTHORITY, intervenor-appellant.
FERNAN, J.:
This case was certified to Us by the Court of Appeals as one involving pure
questions of law pursuant to Section 3, Rule 50 of the Revised Rules of
Court.
The antecedents are as follows: In a complaint for forcible entry filed by
herein private respondents Zenaida Gaza Buensucero, Justina Gaza
Bernardo and Felipe Gaza against herein petitioner Ricardo Quiambao
before the then Municipal Court of Malabon, Rizal, docketed therein as Civil
Case No. 2526, it was alleged that private respondents were the legitimate
possessors of a 30,835 sq. m. lot known as Lot No. 4, Block 12, Bca 2039 of
the Longos Estate situated at Barrio Longos, Malabon Rizal, by virtue of the
Agreement to Sell No. 3482 executed in their favor by the former Land
Tenure Administration [which later became the Land Authority, then the
Department of Agrarian Reform]; that under cover of darkness, petitioner
surreptitiously and by force, intimidation, strategy and stealth, entered into a
400 sq. m. portion thereof, placed bamboo posts "staka" over said portion
and thereafter began the construction of a house thereon; and that these acts
of petitioner, which were unlawful per se, entitled private respondents to a
writ of preliminary injunction and to the ejectment of petitioner from the lot in
question.
Petitioner filed a motion to dismiss the complaint, and upon denial thereof,
filed his Answer to the complaint, specifically denying the material allegations
therein and averring that the Agreement upon which private respondents
base their prior possession over the questioned lot had already been
cancelled by the Land Authority in an Order signed by its Governor, Conrado
Estrella. By way of affirmative defense and as a ground for dismissing the
case, petitioner alleged the pendency of L.A. Case No. 968, an administrative
case before the Office of the Land Authority between the same parties and
involving the same piece of land. In said administrative case, petitioner
disputed private respondents' right of possession over the property in
question by reason of the latter's default in the installment payments for the
purchase of said lot. Petitioner asserted that his administrative case was
determinative of private respondents' right to eject petitioner from the lot in
question; hence a prejudicial question which bars a judicial action until after
its termination.
After hearing, the municipal court denied the motion to dismiss contained in
petitioner's affirmative defenses. It ruled that inasmuch as the issue involved
in the case was the recovery of physical possession, the court had
jurisdiction to try and hear the case.
Dissatisfied with this ruling, petitioner filed before the then Court of First
Instance of Rizal, Branch XII, Caloocan City in Civil Case No. C-1576 a
petition for certiorari with injunction against public respondent Judge Adriano
Osorio of the Municipal Court of Malabon and private respondents, praying
for the issuance of a writ of preliminary injunction ordering respondent judge
to suspend the hearing in the ejectment case until after the resolution of said
petition. As prayed for, the then CFI of Rizal issued a restraining order
enjoining further proceedings in the ejectment case.
In his answer, respondent municipal judge submitted himself to the sound
discretion of the CFI in the disposition of the petition for certiorari. Private
respondents, on the other hand, filed a motion to dismiss the petition,
maintaining that the administrative case did not constitute a prejudicial
question as it involved the question of ownership, unlike the ejectment case
which involved merely the question of possession.
Meanwhile, the Land Authority filed an Urgent Motion for Leave to Intervene
in Civil Case No. C-1576 alleging the pendency of an administrative case
between the same parties on the same subject matter in L.A. Case No. 968
and praying that the petition for certiorari be granted, the ejectment complaint
be dismissed and the Office of the Land Authority be allowed to decide the
matter exclusively.
Finding the issue involved in the ejectment case to be one of prior
possession, the CFI dismissed the petition for certiorari and lifted the
restraining order previously issued. Petitioner's motion for reconsideration of
the dismissal order, adopted in toto by Intervenor Land Authority was denied
for lack of merit. Hence, this appeal filed by petitioner Quiambao and
intervenor Land Authority with the Court of Appeals, and certified to Us as
aforesaid.
The instant controversy boils down to the sole question of whether or not the
administrative case between the private parties involving the lot subject
matter of the ejectment case constitutes a prejudicial question which would
operate as a bar to said ejectment case.
A prejudicial question is understood in law to be that which arises in a case
the resolution of which is a logical antecedent of the issue involved in said
case and the cognizance of which pertains to another tribunal. 1 The doctrine
of prejudicial question comes into play generally in a situation where civil and
criminal actions are pending and the issues involved in both cases are similar
or so closely related that an issue must be pre-emptively resolved in the civil
case before the criminal action can proceed. Thus, the existence of a
prejudicial question in a civil case is alleged in the criminal case to cause the
suspension of the latter pending final determination of the former.
The essential elements of a prejudicial question as provided under Section 5,
Rule 111 of the Revised Rules of Court are: [a] the civil action involves an
issue similar or intimately related to the issue in the criminal action; and [b]
the resolution of such issue determines whether or not the criminal action
may proceed.
The actions involved in the case at bar being respectively civil and
administrative in character, it is obvious that technically, there is no prejudicial
question to speak of. Equally apparent, however, is the intimate correlation
between said two [2] proceedings, stemming from the fact that the right of
private respondents to eject petitioner from the disputed portion depends
primarily on the resolution of the pending administrative case. For while it
may be true that private respondents had prior possession of the lot in
question, at the time of the institution of the ejectment case, such right of
possession had been terminated, or at the very least, suspended by the
cancellation by the Land Authority of the Agreement to Sell executed in their
favor. Whether or not private respondents can continue to exercise their right
of possession is but a necessary, logical consequence of the issue involved
in the pending administrative case assailing the validity of the cancellation of
the Agreement to Sell and the subsequent award of the disputed portion to
petitioner. If the cancellation of the Agreement to Sell and the subsequent
award to petitioner are voided, then private respondents would have every
right to eject petitioner from the disputed area. Otherwise, private
respondent's light of possession is lost and so would their right to eject
petitioner from said portion.
Faced with these distinct possibilities, the more prudent course for the trial
court to have taken is to hold the ejectment proceedings in abeyance until
after a determination of the administrative case. Indeed, logic and
pragmatism, if not jurisprudence, dictate such move. To allow the parties to
undergo trial notwithstanding the possibility of petitioner's right of possession
being upheld in the pending administrative case is to needlessly require not
only the parties but the court as well to expend time, effort and money in
what may turn out to be a sheer exercise in futility. Thus, 1 Am Jur 2d tells us:
The court in which an action is pending may, in the exercise of a sound
discretion, upon proper application for a stay of that action, hold the
action in abeyance to abide the outcome of another pending in another
court, especially where the parties and the issues are the same, for
there is power inherent in every court to control the disposition of causes
on its dockets with economy of time and effort for itself, for counsel, and
for litigants. Where the rights parties to the second action cannot be
properly determined until the questions raised in the first action are
settled the second action should be stayed.2
While this rule is properly applicable to instances involving two [2] court
actions, the existence in the instant case of the same considerations of
Identity of parties and issues, economy of time and effort for the court, the
counsels and the parties as well as the need to resolve the parties' right of
possession before the ejectment case may be properly determined, justifies
the rule's analogous application to the case at bar.
Fortich-Celdran, et al. vs. Celdran, et al., 19 SCRA 502, provides another
analogous situation. In sustaining the assailed order of the then Court of First
Instance of Misamis Oriental ordering the suspension of the criminal case for
falsification of public document against several persons, among them the
subscribing officer Santiago Catane until the civil case involving the issue of
the genuineness of the alleged forged document shall have been decided,
this Court cited as a reason therefor its own action on the administrative
charges against said Santiago Catane, as follows:
It should be mentioned here also that an administrative case filed in this
Court against Santiago Catane upon the same charge was held by Us in
abeyance, thus:
"As it appears that the genuineness of the document allegedly
forged by respondent attorneys in Administrative Case No. 77
[Richard Ignacio Celdran vs. Santiago Catane, etc., et al.] is
necessarily involved in Civil Case No. R-3397 of the Cebu Court of
First Instance, action on the herein complaint is withheld until that
litigation has finally been decided. Complainant Celdran shall
inform the Court about such decision."3
If a pending civil case may be considered to be in the nature of a prejudicial
question to an administrative case, We see no reason why the reverse may
not be so considered in the proper case, such as in the petition at bar. Finally,
events occuring during the pendency of this petition attest to the wisdom of
the conclusion herein reached. For in the Manifestation filed by counsel for
petitioner, it was stated that the intervenor Land Authority which later became
the Department of Agrarian Reform had promulgated a decision in the
administrative case, L.A. Case No. 968 affiriming the cancellation of
Agreement to Sell No. 3482 issued in favor of private respondents. With this
development, the folly of allowing the ejectment case to proceed is too
evident to need further elaboration.
WHEREFORE, the instant petition is hereby GRANTED. Civil Case No. 2526
of the then Municipal Court of Malabon, Rizal is hereby ordered DISMISSED.
No Costs. SO ORDERED.
G.R. No. 112381 March 20, 1995
ISABELO APA, MANUEL APA and LEONILO JACALAN, petitioners,
vs. HON. RUMOLDO R. FERNANDEZ, HON. CELSO V. ESPINOSA, and
SPS. FELIXBERTO TIGOL, JR. and ROSITA TAGHOY
TIGOL, respondents.
MENDOZA, J.:
This is a special civil action of certiorari to set aside orders of respondent
Judge Rumoldo R. Fernandez of the Regional Trial Court, Branch 54, at
Lapu-Lapu City, denying petitioners oral motion for the suspension of their
arraignment in Criminal Case No. 012489, entitled: "People of the Philippines
v. Isabelo Apa; Manuel Apa and Leonilo Jacalan," as well as their motion for
reconsideration.
Criminal Case No. 012489 is a prosecution for violation of P.D. 772 otherwise
known as the Anti-Squatting Law. The information alleges:
That on February 1990, or prior thereto, in Agus, Lapulapu
City, Philippines and within the jurisdiction of this Honorable
Court, the above-named accused [herein petitioners Isabelo
Apa, Manuel Apa and Dionisio Jacalan], conspiring,
confederating and mutually helping with one another, without
the knowledge and consent of the owner, ROSITA TIGOL,
did then and there wilfully, unlawfully and feloniously take
advantage of the absence or tolerance of the said owner by
occupying or possessing a portion of her real property, Lot
No. 3635-B of Opon Cadastre, covered by Transfer
Certificate of Title No. 13250, situated in Agus Lapulapu City,
whereon they constructed their respective residential houses
against the will of Rosita Tigol, which acts of the said
accused have deprived the latter of the use of a portion of
her land, to her damage and prejudice because despite
repeated demands the said accused failed and refused, as
they still fail and refuse to vacate the premises above-
mentioned.
Petitioners moved for the suspension of their arraignment on the ground that
there was a prejudicial question pending resolution in another case being
tried in Branch 27 of the same court. The case, docketed as Civil Case No.
2247-L and entitled "Anselmo Taghoy and Vicente Apa versus Felixberto
Tigol, Jr. and Rosita T. Tigol, et al.," concerns the ownership of Lot No. 3635-
B.1 In that case, petitioners seek a declaration of the nullity of TCT No. 13250
of Rosita T. Tigol and the partition of the lot in question among them and
private respondent Rosita T. Tigol as heirs of Filomeno and Rita Taghoy. The
case had been filed in 1990 by petitioners, three years before May 27, 1993
when the criminal case for squatting was filed against them.
On August 25, 1993, the trial court denied the petitioners' motion and
proceeded with their arraignment. Petitioners, therefore, had to enter their
plea (not guilty) to the charge.
On September 2, 1993, petitioners filed a motion for reconsideration but their
motion was denied by the court in its order dated September 21, 1993.
Hence, this petition.
The only issue in this case is whether the question of ownership of Lot No.
3635-B, which was pending, in Civil Case No. 2247-L, is a prejudicial
question justifying suspension of the proceedings in the criminal case against
petitioners.
We hold that it is.
A prejudicial question is a question which is based on a fact distinct and
separate from the crime but so intimately connected with it that its resolution
is determinative of the guilt or innocence of the accused. To justify
suspension of the criminal action, it must appear not only that the civil case
involves facts intimately related to those upon which the criminal prosecution
is based but also that the decision of the issue or issues raised in the civil
case would be decisive of the guilt or innocence of the accused. 2 Rule 111,
§5 provides:
Sec. 6. Elements of prejudicial question. — The two (2)
essential elements of a prejudicial questions are: (a) the civil
action involves an issue similar or intimately related to the
issue raised in the criminal action; and (b) the resolution of
such issue determines whether or not the criminal action
may proceed.
In the criminal case, the question is whether petitioners occupied a piece of
land not belonging to them but to private respondent and against the latter's
will. As already noted, the information alleges that "without the knowledge
and consent of the owner, ROSITA TIGOL" petitioners occupied or took
possession of a portion of "her property" by building their houses thereon and
"deprived [her] of the use of portion of her land to her damage and prejudice.
Now the ownership of the land in question, known as Lot 3635-B of the Opon
cadastre covered by TCT No. 13250, is the issue in Civil Case 2247-L now
pending in Branch 27 of the RTC at Lapulapu City. The resolution, therefore,
of this question would necessarily be determinative of petitioners criminal
liability for squatting.

In fact it appears that on February 23, 1994, the court trying the civil case
rendered a decision nullifying TCT No. 13250 of private respondent and her
husband and declared the lot in question to be owned in common by the
spouses and the petitioners as inheritance from their parents Filomeno and
Rita Taghoy. While private respondents claim that the decision in that case is
not yet final because they have filed a motion for new trial, the point is that
whatever may be the ultimate resolution of the question of ownership, such
resolution will be determinative of the guilt or innocence of petitioners in the
criminal case. Surely, if petitioners are co-owners of the lot in question, they
cannot be found guilty of squatting because they are as much entitled to the
use and occupation of the land as are the private respondent Rosita T. Tigol
and her family.3

Private respondents argues that even the owner of a piece of a land can be
ejected from his property since the only issue in such a case is the right to its
physical possession. Consequently, they contend, he can also be prosecuted
under the Anti-Squatting Law.

The contention misses the case is the essential point that the owner of a
piece of land can be ejected only if for some reason, e.g., he has let his
property to the plaintiff, he has given up its temporary possession. But in the
case at bar, no such agreement is asserted by private respondent. Rather
private respondent claims the right to possession based on her claim of
ownership. Ownership is thus the pivotal question. Since this is the question
in the civil case, the proceedings in the criminal case must in the meantime
be suspended.

WHEREFORE, the petition is GRANTED and respondent judge is ordered to

SUSPEND the proceedings in Criminal Case No. 012489 until the question of
ownership in Civil Case No. 2247-L has been resolved with finality and
thereafter proceed with the trial of the criminal case if the civil case is decided
and terminated adversely against petitioners. Otherwise he should dismiss
the criminal case.

SO ORDERED.
G.R. No. 137567 June 20, 2000
MEYNARDO L. BELTRAN, petitioner, vs. PEOPLE OF THE PHILIPPINES,
and HON. JUDGE FLORENTINO TUAZON, JR., being the Judge of the
RTC, Brach 139, Makati City, respondents.
BUENA, J.:
This petition for review, filed under Rule 45 of the 1997 Rules of Civil
Procedure, seeks to review and set aside the Order dated January 28, 1999
issued by Judge Florentino A. Tuazon, Jr. of the Regional Trial Court of
Makati City, Branch 139 in Special Civil Case No. 98-3056, entitled
"Meynardo Beltran vs. People of the Philippines and Hon. Judge Alden
Cervantes of the Metropolitan Trial Court of Makati City, Branch 61." The said
Order denied petitioner's prayer for the issuance of a writ of preliminary
injunction to enjoin Judge Cervantes from proceeding with the trial of
Criminal Case No. 236176, a concubinage case against petitioner on the
ground that the pending petition for declaration of nullity of marriage filed by
petitioner against his wife constitutes a prejudicial question.
The antecedent facts of the case are undisputed:
Petitioner Meynardo Beltran and wife Charmaine E. Felix were married on
June 16, 1973 at the Immaculate Concepcion Parish Church in Cubao,
Quezon City.1
On February 7, 1997, after twenty-four years of marriage and four
children,2 petitioner filed a petition for nullity of marriage on the ground of
psychological incapacity under Article 36 of the Family Code before Branch
87 of the Regional Trial Court of Quezon City. The case was docketed as
Civil Case No. Q-97-30192.3
In her Answer to the said petition, petitioner's wife Charmaine Felix alleged
that it was petitioner who abandoned the conjugal home and lived with a
certain woman named Milagros Salting.4 Charmaine subsequently filed a
criminal complaint for concubinage5 under Article 334 of the Revised Penal
Code against petitioner and his paramour before the City Prosecutor's Office
of Makati who, in a Resolution dated September 16, 1997, found probable
cause and ordered the filing of an Information 6 against them. The case,
docketed as Criminal Case No. 236176, was filed before the Metropolitan
Trial Court of Makati City, Branch 61.1awphi1
On March 20, 1998, petitioner, in order to forestall the issuance of a warrant
for his arrest, filed a Motion to Defer Proceedings Including the Issuance of
the Warrant of Arrest in the criminal case. Petitioner argued that the
pendency of the civil case for declaration of nullity of his marriage posed a
prejudicial question to the determination of the criminal case. Judge Alden
Vasquez Cervantes denied the foregoing motion in the Order 7 dated August
31, 1998. Petitioner's motion for reconsideration of the said Order of denial
was likewise denied in an Order dated December 9, 1998.
In view of the denial of his motion to defer the proceedings in the
concubinage case, petitioner went to the Regional Trial Court of Makati City,
Branch 139 on certiorari, questioning the Orders dated August 31, 1998 and
December 9, 1998 issued by Judge Cervantes and praying for the issuance
of a writ of preliminary injunction. 8 In an Order9 dated January 28, 1999, the
Regional Trial Court of Makati denied the petition for certiorari. Said Court
subsequently issued another Order 10 dated February 23, 1999, denying his
motion for reconsideration of the dismissal of his petition.
Undaunted, petitioner filed the instant petition for review.
Petitioner contends that the pendency of the petition for declaration of nullity
of his marriage based on psychological incapacity under Article 36 of the
Family Code is a prejudicial question that should merit the suspension of the
criminal case for concubinage filed against him by his wife.
Petitioner also contends that there is a possibility that two conflicting
decisions might result from the civil case for annulment of marriage and the
criminal case for concubinage. In the civil case, the trial court might declare
the marriage as valid by dismissing petitioner's complaint but in the criminal
case, the trial court might acquit petitioner because the evidence shows that
his marriage is void on ground of psychological incapacity. Petitioner submits
that the possible conflict of the courts' ruling regarding petitioner's marriage
can be avoided, if the criminal case will be suspended, until the court rules on
the validity of marriage; that if petitioner's marriage is declared void by
reason of psychological incapacity then by reason of the arguments
submitted in the subject petition, his marriage has never existed; and that,
accordingly, petitioner could not be convicted in the criminal case because he
was never before a married man.
Petitioner's contentions are untenable.
The rationale behind the principle of prejudicial question is to avoid two
conflicting decisions. It has two essential elements: (a) the civil action
involves an issue similar or intimately related to the issue raised in the
criminal action; and (b) the resolution of such issue determines whether or
not the criminal action may proceed. 11
The pendency of the case for declaration of nullity of petitioner's marriage is
not a prejudicial question to the concubinage case. For a civil case to be
considered prejudicial to a criminal action as to cause the suspension of the
latter pending the final determination of the civil case, it must appear not only
that the said civil case involves the same facts upon which the criminal
prosecution would be based, but also that in the resolution of the issue or
issues raised in the aforesaid civil action, the guilt or innocence of the
accused would necessarily be determined.
Art. 40 of the Family Code provides:
The absolute nullity of a previous marriage may be invoked for
purposes of remarriage on the basis solely of a final judgment
declaring such previous marriage void.
12
In Domingo vs. Court of Appeals, this Court ruled that the import of said
provision is that for purposes of remarriage, the only legally acceptable basis
for declaring a previous marriage an absolute nullity is a final judgment
declaring such previous marriage void, whereas, for purposes of other than
remarriage, other evidence is acceptable. The pertinent portions of said
Decision read:
. . . Undoubtedly, one can conceive of other instances where a party
might well invoke the absolute nullity of a previous marriage for
purposes other than remarriage, such as in case of an action for
liquidation, partition, distribution and separation of property between
the erstwhile spouses, as well as an action for the custody and
support of their common children and the delivery of the latters'
presumptive legitimes. In such cases, evidence needs must be
adduced, testimonial or documentary, to prove the existence of
grounds rendering such a previous marriage an absolute nullity.
These needs not be limited solely to an earlier final judgment of a
court declaring such previous marriage void.
Analogous to this case is that of Landicho vs. Relova 1 cited in Donato
vs. Luna 14 where this Court held that:
. . . Assuming that the first marriage was null and void on the ground
alleged by petitioner, that fact would not be material to the outcome
of the criminal case. Parties to the marriage should not be permitted
to judge for themselves its nullity, for the same must be submitted to
the judgment of the competent courts and only when the nullity of the
marriage is so declared can it be held as void, and so long as there
is no such declaration the presumption is that the marriage exists.
Therefore, he who contracts a second marriage before the judicial
declaration of nullity of the first marriage assumes the risk of being
prosecuted for bigamy.
Thus, in the case at bar it must also be held that parties to the marriage
should not be permitted to judge for themselves its nullity, for the same must
be submitted to the judgment of the competent courts and only when the
nullity of the marriage is so declared can it be held as void, and so long as
there is no such declaration the presumption is that the marriage exists for all
intents and purposes. Therefore, he who cohabits with a woman not his wife
before the judicial declaration of nullity of the marriage assumes the risk of
being prosecuted for concubinage. The lower court therefore, has not erred
in affirming the Orders of the judge of the Metropolitan Trial Court ruling that
pendency of a civil action for nullity of marriage does not pose a prejudicial
question in a criminal case for concubinage.
WHEREFORE, for lack of merit, the instant petition is DISMISSED.
SO ORDERED.

So that in a case for concubinage, the accused, like the herein petitioner
need not present a final judgment declaring his marriage void for he can
adduce evidence in the criminal case of the nullity of his marriage other than
proof of a final judgment declaring his marriage void.

With regard to petitioner's argument that he could be acquitted of the charge

of concubinage should his marriage be declared null and void, suffice it to
state that even a subsequent pronouncement that his marriage is void from
the beginning is not a defense.
G.R. No. 148595 July 12, 2004
SPOUSES ANTONIO S. PAHANG and LOLITA T. PAHANG, petitioners, vs.
HON. AUGUSTINE A. VESTIL, Presiding Judge of Regional Trial Court-
Branch 56, Mandaue City, DEPUTY SHERIFF, Regional Trial Court-Branch
56 and METROPOLITAN BANK and TRUST COMPANY, respondents.
DECISION
CALLEJO, SR., J.:
Before us is a petition for review on certiorari filed by the Spouses Antonio and
Lolita Pahang, for the nullification of the Decision 1 and Resolution2 of the Court of
Appeals in CA-G.R. SP No. 59157.
The Antecedents
On January 5, 1996, the petitioners, Spouses Antonio and Lolita Pahang,
received a short-term loan of one million five hundred thousand pesos
(P1,500,000.00) from the respondent Metropolitan Bank & Trust Company
payable on December 27, 1996. The loan was covered by Non-Negotiable
Promissory Note No. 1906013 and was, likewise, secured by a real estate
mortgage on a parcel of land covered by Transfer Certificate of Title (TCT) No.
29607.4 As the petitioners failed to pay the loan, the interest and the penalties
due thereon, the respondent foreclosed the real estate mortgage extrajudicially.
As a consequence, the mortgaged property was sold at public auction on
January 8, 1998 to the respondent bank as the highest bidder. A certificate of
sale was executed by Pasnonito D. Antiporda as Ex-Officio Sheriff in favor of the
respondent on January 14, 1998 and was registered with the Register of Deeds
of Mandaue City on January 27, 1998.
On December 29, 1998, the respondent wrote the petitioners that the one-year
redemption period of the property would expire on January 27, 1999. 5 Instead of
redeeming the property, the petitioners filed, on January 19, 1999, a complaint for
annulment of extrajudicial sale against the respondent bank and the Sheriff in the
Regional Trial Court of Cebu (Mandaue City), Branch 56, docketed as Civil Case
No. MAN-3454.6 Therein, the petitioners alleged that the respondent bloated their
obligation of P1,500,000.00 to P2,403,770.73 by including excessive past due
interest, penalty charges, attorney’s fees and sheriff’s expense. They claimed
that such exorbitant charges were made to frustrate their chance to pay the loan,
and to ensure that the respondent bank would be the highest bidder during the
auction sale. They also asserted that the respondent failed to remit to the Sheriff
the purchase price of the property and was, likewise, guilty of fraud, collusion,
breach of trust or misconduct in the conduct of the auction sale of their property.
Besides praying for injunctive relief, the petitioners prayed for the following
alternative reliefs:
3. After trial on the merits, and after determination of plaintiffs’ true
obligation with defendant bank, to declare the foreclosure on the subject
property as null and void, and to allow the plaintiffs to pay the same; as
alternative prayer, to allow the plaintiffs to redeem the subject real
property based on the amount determined and established as true and
exact obligation of plaintiffs to defendant bank. 7
After the expiration of the one-year redemption period, the respondent
consolidated its ownership over the foreclosed property. Consequently, TCT No.
44668 was issued by the Register of Deeds in its name. On July 23, 1999, the
respondent filed a Petition for Writ of Possession before the RTC of Mandaue
City (Branch 56), docketed as LRC Case No. 3.8
The petitioners, citing the ruling of this Court in Belisario v. The Intermediate
Appellate Court,9 opposed the petition on the ground that the core issue in their
complaint in Civil Case No. MAN-3454 constituted a prejudicial question, which
warranted a suspension of the proceedings before the court. The petitioners
averred that the filing of their complaint within the period to redeem the
foreclosed property was equivalent to an offer to redeem the same, and had the
effect of preserving such right. They also asserted that the respondent acted in
bad faith in procuring the title over the property despite the pendency of their
complaint in Civil Case No. MAN-3454.
On March 28, 2000, the RTC of Mandaue City, Branch 56, rendered a decision in
LRC Case No. 3 granting the petition and ordering the issuance of a writ of
possession in favor of the respondent.10
Citing the case of Javelosa v. Court of Appeals,11 and Gawaran v. Court of
Appeals,12 the RTC ruled that since the petitioners failed to redeem the property
within one year from the foreclosure, the respondent was entitled to a writ of
possession as a necessary consequence of the readjudication of ownership and
the corresponding issuance of the original certificate. 13 The petitioners filed a
motion for reconsideration of the decision, but the court issued an order denying
the motion, stating that it was merely its ministerial function to issue a writ of
possession.14
The petitioners filed a petition for certiorari before the Court of Appeals, docketed
as CA-G.R. SP No. 59157 for the nullification of the March 28, 2000 Decision and
the May 19, 2000 Order of the RTC. Thepetitioners alleged that the RTC
committed a grave abuse of its discretion amounting to excess or lack of
jurisdiction in granting the petition of the respondent bank for a writ of possession
in LRC Case No. 3 instead of suspending the proceedings therein based on the
ruling of this Court in Belisario vs. The Intermediate Appellate Court.15
The Ruling of the Court of Appeals
Finding that the RTC did not act with grave abuse of discretion in ordering the
issuance of the writ of possession, the CA rendered a decision on March 2, 2001,
dismissing the petition.16 Citing the rulings of this Court in Vda. de Jacob v. Court
of Appeals17 and Navarra v. Court of Appeals,18 the CA explained that the
pendency of a separate proceeding questioning the validity of the mortgage and
the extrajudicial foreclosure thereof cannot bar the issuance of a writ of
possession in favor of the purchaser at public auction. The appellate court ruled
that after a title on the property has been consolidated in the mortgagee, the
issuance of a writ of possession becomes a ministerial act of the trial court.
Furthermore, the right of the respondent bank to possess the property was based
on its right of ownership as a purchaser of the properties in the foreclosure sale.
The CA explained that the ruling in the Belisariocase was inapplicable because it
involved a complaint to enforce the repurchase of the foreclosed property within
the period of redemption, whereas, the complaint filed by the petitioners in Civil
Case No. MAN-3454 was for the annulment of the mortgage or extrajudicial sale
which was not equivalent to an offer to redeem the property.19
The Present Petition
The motion for reconsideration of the petitioners of the decision, having been
denied by the appellate court, the petitioners filed this instant petition, assigning
the following errors:
1. THE HONORABLE COURT OF APPEALS ERRED IN FINDING
PETITIONERS’ RIGHT OF REDEMPTION OVER THEIR
FORECLOSED PROPERTY AS HAVING EXPIRED ON JANUARY 26,
1999, IN THE LIGHT OF THEIR PENDING COMPLAINT TO ANNUL
THE FORECLOSURE FILED BEFORE THE EXPIRATION OF THE
ONE-YEAR REDEMPTION PERIOD, ON THE GROUND OF FRAUD,
AND CONSIDERING FURTHER THEIR SPECIFIC PRAYER THEREOF
FOR DETERMINATION OF THEIR TRUE OBLIGATION WITH PRIVATE
RESPONDENT, AND TO ALLOW THEM TO PAY THE SAME AND/OR
TO REDEEM THEIR FORECLOSED PROPERTY.20
2. PETITIONERS’ COMPLAINT FOR ANNULMENT OF THE
FORECLOSURE OF THEIR PROPERTY WITH A PRAYER FOR
TEMPORARY RESTRAINING ORDER AND INJUNCTION TO STOP
THE ISSUANCE OF A DEFINITE DEED OF SALE AND
CONSOLIDATION OF TITLE OF THEIR PROPERTY IN FAVOR OF
PRIVATE RESPONDENT, WHILE GIVING PREFERENCE AND ACTING
WITH DISPATCH ON PRIVATE RESPONDENT’S PETITION FOR
ISSUANCE OF WRIT OF POSSESSION ON THE SAME PROPERTY,
BY GRANTING THE WRIT OF POSSESSION THEREON THEREBY
RENDERING MOOT AND ACADEMIC PETITIONERS’ PRAYERS IN
THEIR COMPLAINT FOR ANNULMENT OF FORECLOSURE. 21
3. THE HONORABLE COURT OF APPEALS ERRED IN FINDING THE
DECISION OF THIS HONORABLE SUPREME COURT IN THE CASE
OF BELISARIO VS. THE INTERMEDIATE APPELLATE COURT, G.R.
NO. L-73503, WHEREBY "THE FILING OF THE COMPLAINT TO
ENFORCE REPURCHASE WITHIN THE PERIOD FOR REDEMPTION
IS EQUIVALENT TO AN OFFER TO REDEEM AND HAS THE EFFECT
OF PRESERVING THE RIGHT OF REDEMPTION" INAPPLICABLE TO
THE CASE OF PETITIONERS.22
4. THE HONORABLE COURT OF APPEALS ERRED IN NOT
APPRECIATING THE FACT THAT THE ISSUE OR ISSUES JOINED IN
THE COMPLAINT FOR ANNULMENT BEFORE RESPONDENT JUDGE
DOCKETED AS CIVIL CASE NO. MAN-4353 (sic) IS A PREJUDICIAL
QUESTION TO THE ISSUE RAISED IN THE PETITION FOR WRIT OF
POSSESSION IN LRC CASE NO. 3.23
5. THE HONORABLE COURT OF APPEALS ERRED IN HAVING
FAILED TO CONSIDER THE VALID CAUSES OF ACTION OF
PETITIONERS IN THEIR COMPLAINT FOR ANNULMENT IN CIVIL
CASE NO. MAN-4354 (sic).24
The threshold issues are as follows: (a) whether or not the complaint of the
petitioners in Civil Case No. MAN-3454 for annulment of extrajudicial sale is a
prejudicial question to the petition of the respondent bank for the issuance of a
writ of possession in LRC Case No. 3; and, (b) whether or not the RTC
committed a grave abuse of its discretion amounting to excess or lack of
jurisdiction in granting the petition of the respondent in LRC Case No. 3 and in
issuing the writ of possession in its favor.
The issues being interrelated, the Court shall resolve the same simultaneously.
The petitioners contend that their complaint in Civil Case No. MAN-3454 and the
respondent’s petition for a writ of possession in LRC Case No. 3 were raffled to
Branch 56 of the RTC. Although their complaint in Civil Case No. MAN-3454 was
for the nullification of the extrajudicial sale at public auction on the ground of
fraud, they also prayed, as an alternative remedy, that they be allowed to redeem
the property based on the amount to be determined by the court after trial.
Hence, they assert, the filing of their complaint before the expiry of the
redemption period to enforce their right of redemption was equivalent to a formal
offer to redeem the property and had the effect of preserving their right of
redemption. They argue that the RTC should have suspended the proceedings in
LRC Case No. 3 pending the final resolution of Civil Case No. MAN-3454 so as
not to render moot and academic the latter case, conformably with the ruling of
the Court in Belisario vs. The Intermediate Appellate Court,25 after all, the two
cases were pending before the same court. The petitioners, thus, aver that the
trial court committed grave abuse of discretion amounting to excess or lack of
jurisdiction in granting the petition of the respondent bank for a writ of possession
in LRC Case No. 3. They, likewise, aver that the Court of Appeals erred when it
affirmed the decision of the trial court and declared, thus:
 Further, as to the applicability of the case of Belisario vs. Intermediate
Appellate Court (G.R. No. L-73503, Aug. 30, 1988, 165 SCRA 101, 108),
suffice it to say, that the cause of action therein was to enforce the
repurchase of the foreclosed property within the period of redemption,
which the Supreme Court held that it has the effect of preserving the
right of redemption. Whereas, Civil Case No. MAN-3454 filed by the
petitioners is for the annulment of mortgage or extrajudicial sale, which is
not in effect an offer to redeem. Verily, the pendency of said civil case
does not preserve the right of redemption of the petitioners after the
period of redemption.26
The Court’s Ruling
The contentions of the petitioners have no merit.
A prejudicial question is one that arises in a case the resolution of which is a
logical antecedent of the issue involved therein, and the cognizance of which
pertains to another tribunal. It generally comes into play in a situation where a
civil action and a criminal action are both pending and there exists in the former
an issue that must be preemptively resolved before the criminal action may
proceed, because howsoever the issue raised in the civil action is resolved would
be determinative juris et de jure of the guilt or innocence of the accused in the
criminal case. The rationale behind the principle of prejudicial question is to avoid
two conflicting decisions.27
In the present case, the complaint of the petitioners for Annulment of Extrajudicial
Sale is a civil action and the respondent’s petition for the issuance of a writ of
possession of Lot No. 3-A, Block 1, Psd-07-021410, TCT No. 44668 is but an
incident in the land registration case and, therefore, no prejudicial question can
arise from the existence of the two actions. 28 A similar issue was raised in Manalo
vs. Court of Appeals,29 where we held that:
At any rate, it taxes our imagination why the questions raised in Case
No. 98-0868 must be considered determinative of Case No. 9011. The
basic issue in the former is whether the respondent, as the purchaser in
the extrajudicial foreclosure proceedings, may be compelled to have the
property repurchased or resold to a mortgagor’s successor-in-interest
(petitioner); while that in the latter is merely whether the respondent, as
the purchaser in the extrajudicial foreclosure proceedings, is entitled to a
writ of possession after the statutory period for redemption has expired.
The two cases, assuming both are pending, can proceed separately and
take their own direction independent of each other. 30
The focal issue in Civil Case No. MAN-3454 was whether the extrajudicial
foreclosure of the real estate mortgage executed by the petitioners in favor of the
respondent bank and the sale of their property at public auction
for P2,403,770.73 are null and void, whereas, the issue in LRC Case No. 3 was
whether the respondent bank was entitled to the possession of the property after
the statutory period for redemption had lapsed and title was issued .
Our ruling in Belisario has no application in this case because in the said case,
no prejudicial question was involved. We merely held therein that the filing of an
action to enforce redemption within the period of redemption is equivalent to a
formal offer to redeem, and should the Court allow the redemption, the
redemptioner should then pay the amount already determined. In fine, the filing of
an action by the redemptioner to enforce his right to redeem does not suspend
the running of the statutory period to redeem the property, nor bar the purchaser
at public auction from procuring a writ of possession after the statutory period of
redemption had lapsed, without prejudice to the final outcome of such complaint
to enforce the right of redemption.31
The remedy of the petitioners from the assailed decision of the RTC in LRC Case
No. 3 was to appeal by writ of error to the Court of Appeals. 32 However, instead of
appealing by writ of error, the petitioners filed their petition for certiorari. Certiorari
is not proper where the aggrieved party has a plain, speedy and adequate
remedy at law. Moreover, the error of the trial court in granting the respondent
bank a writ of possession, if at all, was an error of judgment correctible only by an
ordinary appeal.
It bears stressing that the proceedings in a petition and/or motion for the
issuance of a writ of possession, after the lapse of the statutory period for
redemption, is summary in nature.33 The trial court is mandated to issue a writ of
possession upon a finding of the lapse of the statutory period for redemption
without the redemptioner having redeemed the property. It cannot be validly
argued that the trial court abused its discretion when it merely complied with its
ministerial duty to issue the said writ of possession. 34
IN LIGHT OF ALL THE FOREGOING, the petition is DENIED DUE COURSE.
The assailed decision of the Court of Appeals in CA-G.R. SP No. 59157 is
AFFIRMED.
Cost against the petitioners.
SO ORDERED.