UNIVERSITY OF THE EAST vs. ROMEO A. JADER, GR No. 132344. February 17, 2000.

UNIVERSITY OF THE EAST, petitioner, VS. ROMEO A. JADER, respondent GR No. 132344. February 17, 2000. FACTS: Romeo Jader, a law student of the University of the East, failed to take his regular examination in Practice Court I in his first semester of his last school year. However, he was able to remove the incomplete mark when the Dean of his college approved his application to take a removal examination. In the 2nd semester, his name appeared in the tentative list of candidates for graduation for the Decree of Bachelor of Laws and in the invitation for the 35th Investiture and Commencement Ceremonies, the plaintiffs name appeared. Thus, he attended the investiture ceremonies and graduated. On April to September 1998, he took a leave of absence from his work and enrolled at the prebar review class in Far Eastern University. To his dismay upon knowing that he incurred a deficiency, he dropped his review class and was not able to take the bar examinations. He then filed a suit against UE praying for moral and exemplary damages arising from the latters negligence. The trial court ruled in his favor and was granted for actual damages. The Court of Appeals affirmed the trial courts decision with modification. The CA awarded moral damages. On account of suffering moral shock, mental anguish, serious anxiety, besmirched reputation, wounded feelings and sleepless nights and ultimately for not having to take the bar exam. ISSUE: Whether or not Romeo Jader can validly claim for moral damages. RULING: In view of the foregoing issue, the Supreme Court emphatically enunciated that moral damages cannot be awarded to Romeo Jader. It cannot believe that he suffered shock, trauma, and pain. Along this vein, the Supreme Court held Jader negligent. It opined that as a student, he should have been responsible enough to ensure that all his affairs, especially those appertaining to his academics, are in order. If respondent was indeed humiliated by his failure to take the bar, he brought this upon himself by not verifying if he has satisfied all the requirements. While the Court held the University of the East negligent and therefore liable for actual damages in favor of Jader, the latter was also held liable for negligence thereby no moral damages can be awarded in his favor. The decision was affirmed with modification.

G.R. No. 171365

October 6, 2010

ERMELINDA C. MANALOTO, AURORA J. CIFRA, FLORDELIZA J. ARCILLA, LOURDES J. CATALAN, ETHELINDA J. HOLT, BIENVENIDO R. JONGCO, ARTEMIO R. JONGCO, JR. and JOEL JONGCO, Petitioners, vs. ISMAEL VELOSO III, Respondent. DECISION LEONARDO-DE CASTRO, J.: Before Us is a Petition for Review on Certiorari of the Decision1 dated January 31, 2006 of the Court Appeals in CA-G.R. CV No. 82610, which affirmed with modification the Resolution2 dated September 2, 2003 of Branch 227 of the Regional Trial Court (RTCBranch 227) of Quezon City in Civil Case No. Q-02-48341. We partly reproduce below the facts of the case as culled by the Court of Appeals from the records: This case is an off-shoot of an unlawful detainer case filed by [herein petitioners] Ermelinda C. Manaloto, Aurora J. Cifra, Flordeliza J. Arcilla, Lourdes J. Catalan, Ethelinda J. Holt, Bienvenido R. Jongco, Artemio R. Jongco, Jr. and Joel Jongco against [herein respondent]. In said complaint for unlawful detainer, it was alleged that they are the lessors of a residential house located at No. 42 Big Horseshoe Drive, Horseshoe Village, Quezon City [subject property] which was leased to [respondent] at a monthly rental of P17,000.00. The action was instituted on the ground of [respondent's] failure to pay rentals from May 23, 1997 to December 22, 1998 despite repeated demands. [Respondent] denied the nonpayment of rentals and alleged that he made an advance payment ofP825,000.00 when he paid for the repairs done on the leased property. After trial, the Metropolitan Trial Court (MeTC) decided in favor of [petitioners] by ordering [respondent] to (a) vacate the premises at No. 42 Big Horseshoe Drive, Horseshoe Village, Quezon City; (b) pay [petitioners] the sum of P306,000.00 corresponding to the rentals due from May 23, 1997 to November 22, 1998, and the sum ofP17,000.00 a month thereafter until [respondent] vacates the premises; and (c) pay [petitioners] the sum ofP5,000.00 as attorney's fees. On appeal to the Regional Trial Court (RTC) [Branch 88, Quezon City], the MeTC decision was reversed. [Respondent] was ordered to pay arrearages from May 23, 1997 up to the date of the decision but he was also given an option to choose between staying in the leased property or vacating the same, subject to the reimbursement by [petitioners] of onehalf of the value of the improvements which it found to be in the amount ofP120,000.00. [Respondent] was also given the right to remove said improvements pursuant to Article 1678 of the Civil Code, should [petitioners] refuse to pay P60,000.00. When both parties moved for the reconsideration of the RTC decision, the RTC issued an Order dated February 23, 2001 modifying its previous ruling by increasing the value of the improvements from P120,000.00 toP800,000.00. After successive appeals to the Court of Appeals and the Supreme Court, the decision of the RTC dated November 29, 2000 which reversed the decision of the MeTC, became final and executory.3 Whilst respondent's appeal of the Metropolitan Trial Court (MeTC) judgment in the unlawful detainer case was pending before the RTC-Branch 88, respondent filed before the RTCBranch 227 on November 26, 2002 a Complaint for Breach of Contract and Damages4 against the petitioners, docketed as Civil Case No. Q-02-48341. The said complaint alleged two causes of action. The first cause of action was for damages because

the respondent supposedly suffered embarrassment and humiliation when petitioners distributed copies of the above-mentioned MeTC decision in the unlawful detainer case to the homeowners of Horseshoe Village while respondent's appeal was still pending before the Quezon City RTC-Branch 88. The second cause of action was for breach of contract since petitioners, as lessors, failed to make continuing repairs on the subject property to preserve and keep it tenantable. Thus, respondent sought the following from the court a quo: PRAYER WHEREFORE, premises considered, it is respectfully prayed that after hearing the court render a decision against the [herein petitioners] and in favor of the [herein respondent] by 1. Ordering [petitioners] to pay [respondent] the following amounts: a) P1,500,000.00 as moral damages and consequential damages; b) P500,000.00 as exemplary damages; c) P425,000.00 representing the difference of the expenses of the improvements of P825,000.00 andP400,000.00 pursuant to Art. 1678 of the Civil Code; d) P594,000.00 representing interest for three (3) years from 1998 to 2000 on the P825,000.00 advanced by the [respondent] at the rate of 24% per annum; e) P250,000.00 as compensation for the [respondent's] labor and efforts in overseeing and attending the needs of contractors the repair/renovation of the leased premises; f) P250,000.00, plus 20% of all recoveries from [petitioners] and P2,500.00 per hearing as attorney's fees; g) Cost of suit. [Respondent] further prays for such other reliefs and remedies which are just and equitable under the premises.5 The petitioners filed an Omnibus Motion6 on February 18, 2003 praying for, among other reliefs, the dismissal of respondent's complaint in Civil Case No. Q-02-48341. Petitioners argued that respondent had no cause of action against them because the MeTC decision in the unlawful detainer case was a matter of public record and its disclosure to the public violated no law or any legal right of the respondent. Moreover, petitioners averred that the respondent's present Complaint for Breach of Contract and Damages was barred by prior judgment since it was a mere replication of respondent's Answer with Compulsory Counterclaim in the unlawful detainer case before the MeTC. The said unlawful detainer case was already judicially decided with finality. On September 2, 2003, the RTC-Branch 227 issued a Resolution dismissing respondent's complaint in Civil Case No. Q-02-48341 for violating the rule against splitting of cause of action, lack of jurisdiction, and failure to disclose the pendency of a related case. The RTCBranch 227 adjudged that Civil Case No. Q-02-48341 involved the same facts, parties, and causes of action as those in the unlawful detainer case, and the MeTC had already properly taken cognizance of the latter case. Respondent received a copy of the RTC-Branch 227 decision in Civil Case No. Q-02-48341 on September 26, 2003. He filed a Motion for Reconsideration7 of said judgment on October 10, 2003, which RTC-Branch 227 denied in an Order8 dated December 30, 2003.

Respondent received a copy of the RTC-Branch 227 order denying his Motion for Reconsideration on February 20, 2004, and he filed his Notice of Appeal9 on March 1, 2004. However, the RTC-Branch 227, in an Order10dated March 23, 2004, dismissed respondent's appeal for being filed out of time. Respondent received a copy of the RTC-Branch 27 order dismissing his appeal on April 30, 2004 and he filed a Motion for Reconsideration11 of the same on May 3, 2004. The RTCBranch 227, in another Order12 dated May 31, 2004, granted respondent's latest motion because it was "convinced that it is but appropriate and fair to both parties that this matter of whether or not the Appeal was filed on time, be resolved by the appellate court rather than by this Court." The RTC-Branch 227 then ordered that the records of the case be forwarded as soon as possible to the Court of Appeals for further proceedings. The Court of Appeals, in a Resolution13 dated February 8, 2005, resolved to give due course to respondent's appeal. Said appeal was docketed as CA-G.R. CV No. 82610. On January 31, 2006, the Court of Appeals rendered its Decision in CA-G.R. CV No. 82610. The Court of Appeals fully agreed with the RTC-Branch 227 in dismissing respondent's second cause of action (i.e., breach of contract) in Civil Case No. Q-02-48341. The appellate court, however, held that RTC-Branch 227 should have proceeded with the trial on the merits of the first cause of action (i.e., damages) in Civil Case No. Q-02-48341, because "[a]lthough [herein respondent] may have stated the same factual antecedents that transpired in the unlawful detainer case, such allegations were necessary to give an overview of the facts leading to the institution of another case between the parties before the RTC acting in its original jurisdiction."14 The Court of Appeals then went on to find that petitioners were indeed liable to respondent for damages: No doubt, distributing the copies was primarily intended to embarrass [herein respondent] in the community he mingled in. We are not unmindful of the fact that court decisions are public documents and the general public is allowed access thereto to make inquiries thereon or to secure a copy thereof. Nevertheless, under the circumstances of this case, although court decisions are public documents, distribution of the same during the pendency of an appeal was clearly intended to cause [respondent] some form of harassment and/or humiliation so that [respondent] would be ostracized by his neighbors. The appeal may have delayed the attainment of finality of the determination of the rights of the parties and the execution in the unlawful detainer case but it did not justify [herein petitioners'] pre-emption of the outcome of the appeal. By distributing copies of the MeTC decision, [petitioners] appeared to have assumed that the MeTC decision would simply be affirmed and therefore they tried to cause the early ouster of [respondent] thinking that a humiliated [respondent] would scurry out of the leased premises. Clearly, there was evident bad faith intended to mock [respondent's] right to appeal which is a statutory remedy to correct errors which might have been committed by the lower court. Thus, moral damages may be awarded since [petitioners] acted in bad faith. Bad faith does not simply connote bad judgment or negligence, it imports a dishonest purpose or some moral obliquity and conscious doing of a wrong, a breach of known duty through some motive or interest or ill will that partakes of the nature of fraud. However, an award of moral damages would require certain conditions to be met, to wit: (1) first, there must be an injury, whether physical, mental or psychological, clearly sustained by the claimant; (2) second, there must be culpable act or omission factually established; (3) third, the wrongful act or omission of the defendant is the proximate cause of the injury sustained by the claimant; and (4) fourth, the award of damages is predicated on any of the cases stated in Article 2219 of the Civil Code. But it must again be stressed that moral damages are emphatically not intended to enrich a plaintiff at the expense of the defendant. When awarded, moral damages must not be palpably and scandalously excessive as to indicate that it was the result of passion,

prejudice or corruption on the part of the trial court judge. For this reason, this Court finds an award of P30,000.00 moral damages sufficient under the circumstances. On the other hand, to warrant the award of exemplary damages, the wrongful act must be accompanied by bad faith, and an award of damages would be allowed only if the guilty party acted in a wanton, fraudulent, reckless or malevolent manner. Accordingly, exemplary damages in the amount of P10,000.00 is appropriate.15 In the end, the Court of Appeals decreed: WHEREFORE, the decision of the Regional Trial Court is AFFIRMED with the MODIFICATION that the case is dismissed only as to the second cause of action. As to the first cause of action, [herein petitioners] are ordered to pay [herein respondent] moral damages of P30,000.00 and exemplary damages of P10,000.00.16 Hence, the instant Petition for Review. Petitioners assert that respondent's appeal of the RTC-Branch 227 Resolution dated September 2, 2003, which dismissed the latter's complaint in Civil Case No. Q-02-48341, was filed out of time. Respondent received a copy of the said resolution on September 26, 2003, and he only had 15 days from such date to file his appeal, or until October 11, 2003. Respondent, instead, filed a Motion for Reconsideration of the resolution on October 10, 2003, which left him with only one more day to file his appeal. The RTC-Branch 227 subsequently denied respondent's Motion for Reconsideration in an Order dated December 30, 2003, which the respondent received on February 20, 2004. Respondent only had until the following day, February 21, 2004, to file the appeal. However, respondent filed his Notice of Appeal only on March 1, 2004. Hence, petitioners conclude that the dismissal of respondent's complaint in Civil Case No. Q-02-48341 already attained finality. Petitioners argue in the alternative that the award of damages in respondent's favor has no factual and legal bases. They contend that the Court of Appeals erred in awarding moral and exemplary damages to respondent based on the bare and unproven allegations in the latter's complaint and without the benefit of any hearing or trial. While the appellate court declared that RTC-Branch 227 should have proceeded with the trial on the merits involving the action for damages, it surprisingly went ahead and ruled on petitioners' liability for said damages even without trial. Even assuming for the sake of argument that respondent's allegations in his complaint are true, he still has no cause of action for damages against petitioners, for the disclosure of a court decision, which is part of public record, did not cause any legal and compensable injury to respondent. Respondent, on the other hand, maintains that his appeal of the September 2, 2003 Resolution of the RTC-Branch 227 to the Court of Appeals was timely filed and that the same was aptly given due course. In addition, respondent asserts that the appellate court was correct in holding petitioners liable for damages even without any hearing or trial since petitioners, in filing their omnibus motion praying for the dismissal of respondent's complaint on the ground of "no cause of action," were deemed to have hypothetically admitted as true the allegations in said complaint. The petition is partly meritorious. We note, at the outset, that the propriety of the dismissal by the RTC-Branch 227 of respondent's second cause of action against petitioners (e.g., for breach of contract) was no longer disputed by the parties. Thus, the present appeal pertains only to respondent's first cause of action (e.g., for damages), and in connection therewith, we are called upon to resolve the following issues: (1) whether respondent timely filed his appeal of the Resolution dated September 2, 2003 of the RTC-Branch 227 before the Court of Appeals; and (2) whether respondent is entitled to the award of moral and exemplary damages. We answer the first issue on the timeliness of respondent's appeal affirmatively.

Jurisprudence has settled the "fresh period rule," according to which, an ordinary appeal from the RTC to the Court of Appeals, under Section 3 of Rule 41 of the Rules of Court, shall be taken within fifteen (15) days either from receipt of the original judgment of the trial court or from receipt of the final order of the trial court dismissing or denying the motion for new trial or motion for reconsideration. In Sumiran v. Damaso, 17 we presented a survey of the cases applying the fresh period rule: As early as 2005, the Court categorically declared in Neypes v. Court of Appeals that by virtue of the power of the Supreme Court to amend, repeal and create new procedural rules in all courts, the Court is allowing a fresh period of 15 days within which to file a notice of appeal in the RTC, counted from receipt of the order dismissing or denying a motion for new trial or motion for reconsideration. This would standardize the appeal periods provided in the Rules and do away with the confusion as to when the 15-day appeal period should be counted. Thus, the Court stated: To recapitulate, a party-litigant may either file his notice of appeal within 15 days from receipt of the Regional Trial Court's decision or file it within 15 days from receipt of the order (the "final order") denying his motion for new trial or motion for reconsideration. Obviously, the new 15-day period may be availed of only if either motion is filed; otherwise, the decision becomes final and executory after the lapse of the original appeal period provided in Rule 41, Section 3. The foregoing ruling of the Court was reiterated in Makati Insurance Co., Inc. v. Reyes, to wit: Propitious to petitioner is Neypes v. Court of Appeals, promulgated on 14 September 2005 while the present Petition was already pending before us. x x x. xxxx With the advent of the "fresh period rule" parties who availed themselves of the remedy of motion for reconsideration are now allowed to file a notice of appeal within fifteen days from the denial of that motion. The "fresh period rule" is not inconsistent with Rule 41, Section 3 of the Revised Rules of Court which states that the appeal shall be taken "within fifteen (15) days from notice of judgment or final order appealed from." The use of the disjunctive word "or" signifies disassociation and independence of one thing from another. It should, as a rule, be construed in the sense which it ordinarily implies. Hence, the use of "or" in the above provision supposes that the notice of appeal may be filed within 15 days from the notice of judgment or within 15 days from notice of the "final order," x x x. xxxx The "fresh period rule" finally eradicates the confusion as to when the 15-day appeal period should be counted - from receipt of notice of judgment or from receipt of notice of "final order" appealed from. Taking our bearings from Neypes, in Sumaway v. Urban Bank, Inc., we set aside the denial of a notice of appeal which was purportedly filed five days late. With the fresh period rule, the 15-day period within which to file the notice of appeal was counted from notice of the denial of the therein petitioner's motion for reconsideration. We followed suit in Elbia v. Ceniza, wherein we applied the principle granting a fresh period of 15 days within which to file the notice of appeal, counted from receipt of the order dismissing a motion for new trial or motion for reconsideration or any final order or resolution.

Thereafter, in First Aqua Sugar Traders, Inc. v. Bank of the Philippine Islands, we held that a party-litigant may now file his notice of appeal either within fifteen days from receipt of the original decision or within fifteen days from the receipt of the order denying the motion for reconsideration. In De los Santos v. Vda. de Mangubat, we applied the same principle of "fresh period rule," expostulating that procedural law refers to the adjective law which prescribes rules and forms of procedure in order that courts may be able to administer justice. Procedural laws do not come within the legal conception of a retroactive law, or the general rule against the retroactive operation of statutes. The "fresh period rule" is irrefragably procedural, prescribing the manner in which the appropriate period for appeal is to be computed or determined and, therefore, can be made applicable to actions pending upon its effectivity, such as the present case, without danger of violating anyone else's rights. 18 (Emphases supplied.) Also in Sumiran, we recognized the retroactive application of the fresh period rule to cases pending and undetermined upon its effectivity: The retroactivity of the Neypes rule in cases where the period for appeal had lapsed prior to the date of promulgation of Neypes on September 14, 2005, was clearly explained by the Court in Fil-Estate Properties, Inc. v. Homena-Valencia, stating thus: The determinative issue is whether the "fresh period" rule announced in Neypes could retroactively apply in cases where the period for appeal had lapsed prior to 14 September 2005 when Neypes was promulgated. That question may be answered with the guidance of the general rule that procedural laws may be given retroactive effect to actions pending and undetermined at the time of their passage, there being no vested rights in the rules of procedure. Amendments to procedural rules are procedural or remedial in character as they do not create new or remove vested rights, but only operate in furtherance of the remedy or confirmation of rights already existing.19(Emphases supplied.) In the case before us, respondent received a copy of the Resolution dated September 2, 2003 of the RTC-Branch 227 dismissing his complaint in Civil Case No. Q-02-48341 on September 26, 2003. Fourteen days thereafter, on October 10, 2003, respondent filed a Motion for Reconsideration of said resolution. The RTC-Branch 227 denied respondent's Motion for Reconsideration in an Order dated December 30, 2003, which the respondent received on February 20, 2004. On March 1, 2004, just after nine days from receipt of the order denying his Motion for Reconsideration, respondent already filed his Notice of Appeal. Clearly, under the fresh period rule, respondent was able to file his appeal well-within the prescriptive period of 15 days, and the Court of Appeals did not err in giving due course to said appeal in CA-G.R. CV No. 82610. We likewise agree with the Court of Appeals that the RTC-Branch 227 should not have dismissed respondent's complaint for damages on the ground of failure to state a cause of action. According to Rule 2, Section 2 of the Rules of Court, a cause of action is the act or omission by which a party violates a right of another. When the ground for dismissal is that the complaint states no cause of action, such fact can be determined only from the facts alleged in the complaint and from no other, and the court cannot consider other matters aliunde. The test, therefore, is whether, assuming the allegations of fact in the complaint to be true, a valid judgment could be rendered in accordance with the prayer stated therein.20 Respondent made the following allegations in support of his claim for damages against petitioners: FIRST CAUSE OF ACTION

28. After the promulgation of the Metropolitan Trial Court of its Decision dated August 3, 1999, ordering the [herein respondent] and all person claiming rights under him to (a) Vacate the leased premises; (b) pay the [herein petitioners] the sum of P306,000.00 as unpaid rentals from May 23, 1997 to November 22, 1998; and (c) pay the sum of P5,000.00 as attorneys fees; But while said Decision was still pending appeal with the Regional Trial Court, the [petitioners], through [petitioner] Manaloto, already distributed copies of said Decision to some of the homeowners of Horseshoe Village, who personally know the [respondent]. This act is a direct assault or character assassination on the part of the [respondent] because as stated in the said decision, [respondent] has been staying in the premises but did not or refused to pay his monthly rentals for a long period of time when in truth and in fact was untrue. 29. That from the time the said decision was distributed to said members homeowners, the [respondent] became the subject of conversation or talk of the town and by virtue of which [respondent's] good name within the community or society where he belongs was greatly damaged; his reputation was besmirched; [respondent] suffered sleepless night and serious anxiety. [Respondent], who is the grandson of the late Senator Jose Veloso and Congressman Ismael Veloso, was deprived of political career and to start with was to run as candidate for Barangay Chairman within their area which was being offered to him by the homeowners but this offer has started to fade and ultimately totally vanished after the distribution of said Decision. Damages to his good names and reputations and other damages which he suffered as a consequence thereof, may be reasonably compensated for at least P1,500,000.00 as moral and consequential damages. 30. In order to deter [petitioners] and others from doing as abovementioned, [petitioners] should likewise be assessed exemplary damages in the amount of P500,000.00.21 A cause of action (for damages) exists if the following elements are present: (1) a right in favor of the plaintiff by whatever means and under whatever law it arises or is created; (2) an obligation on the part of the named defendant to respect or not to violate such right; and (3) an act or omission on the part of such defendant violative of the right of the plaintiff or constituting a breach of the obligation of defendant to the plaintiff for which the latter may maintain an action for recovery of damages.22 We find that all three elements exist in the case at bar. Respondent may not have specifically identified each element, but it may be sufficiently determined from the allegations in his complaint. First, respondent filed the complaint to protect his good character, name, and reputation. Every man has a right to build, keep, and be favored with a good name. This right is protected by law with the recognition of slander and libel as actionable wrongs, whether as criminal offenses or tortuous conduct.23 Second, petitioners are obliged to respect respondent's good name even though they are opposing parties in the unlawful detainer case. As Article 19 of the Civil Code requires, "[e]very 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." A violation of such principle constitutes an abuse of rights, a tortuous conduct. We expounded in Sea Commercial Company, Inc. v. Court of Appeals24 that: The principle of abuse of rights stated in the above article, departs from the classical theory that "he who uses a right injures no one." The modern tendency is to depart from the classical and traditional theory, and to grant indemnity for damages in cases where there is an abuse of rights, even when the act is not illicit.

Article 19 was intended to expand the concept of torts by granting adequate legal remedy for the untold number of moral wrongs which is impossible for human foresight to provide specifically in statutory law. If mere fault or negligence in one's acts can make him liable for damages for injury caused thereby, with more reason should abuse or bad faith make him liable. The absence of good faith is essential to abuse of right. Good faith is an honest intention to abstain from taking any unconscientious advantage of another, even through the forms or technicalities of the law, together with an absence of all information or belief of fact which would render the transaction unconscientious. In business relations, it means good faith as understood by men of affairs. While Article 19 may have been intended as a mere declaration of principle, the "cardinal law on human conduct" expressed in said article has given rise to certain rules, e.g. that where a person exercises his rights but does so arbitrarily or unjustly or performs his duties in a manner that is not in keeping with honesty and good faith, he opens himself to liability. The elements of an abuse of rights under Article 19 are: (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. 25 Petitioners are also expected to respect respondent's "dignity, personality, privacy and peace of mind" under Article 26 of the Civil Code, which provides: ART. 26. Every person shall respect the dignity, personality, privacy and peace of mind of his neighbors and other persons. The following and similar acts, though they may not constitute a criminal offense, shall produce a cause of action for damages, prevention and other relief: (1) Prying into the privacy of another's residence; (2) Meddling with or disturbing the private life or family relations of another; (3) Intriguing to cause another to be alienated from his friends; (4) Vexing or humiliating another on account of his religious beliefs, lowly station in life, place of birth, physical defect, or other personal condition. Thus, Article 2219(10) of the Civil Code allows the recovery of moral damages for acts and actions referred to in Article 26, among other provisions, of the Civil Code. In Concepcion v. Court of Appeals,26 we explained that: The philosophy behind Art. 26 underscores the necessity for its inclusion in our civil law. The Code Commission stressed in no uncertain terms that the human personality must be exalted. The sacredness of human personality is a concomitant consideration of every plan for human amelioration. The touchstone of every system of law, of the culture and civilization of every country, is how far it dignifies man. If the statutes insufficiently protect a person from being unjustly humiliated, in short, if human personality is not exalted - then the laws are indeed defective. Thus, under this article, the rights of persons are amply protected, and damages are provided for violations of a person's dignity, personality, privacy and peace of mind. It is petitioner's position that the act imputed to him does not constitute any of those enumerated in Arts. 26 and 2219. In this respect, the law is clear. The violations mentioned in the codal provisions are not exclusive but are merely examples and do not preclude other similar or analogous acts. Damages therefore are allowable for actions against a person's dignity, such as profane, insulting, humiliating, scandalous or abusive language. Under Art. 2217 of the Civil Code, moral damages which include physical suffering, mental anguish, fright, serious anxiety, besmirched reputation, wounded feelings, moral shock, social humiliation, and similar injury, although incapable of pecuniary computation, may be recovered if they are the proximate result of the defendant's wrongful act or omission. 27

And third, respondent alleged that the distribution by petitioners to Horseshoe Village homeowners of copies of the MeTC decision in the unlawful detainer case, which was adverse to respondent and still on appeal before the RTC-Branch 88, had no apparent lawful or just purpose except to humiliate respondent or assault his character. As a result, respondent suffered damages - becoming the talk of the town and being deprived of his political career.
1avv phi 1

Petitioners reason that respondent has no cause of action against them since the MeTC decision in the unlawful detainer case was part of public records. It is already settled that the public has a right to see and copy judicial records and documents.28 However, this is not a case of the public seeking and being denied access to judicial records and documents. The controversy is rooted in the dissemination by petitioners of the MeTC judgment against respondent to Horseshoe Village homeowners, who were not involved at all in the unlawful detainer case, thus, purportedly affecting negatively respondent's good name and reputation among said homeowners. The unlawful detainer case was a private dispute between petitioners and respondent, and the MeTC decision against respondent was then still pending appeal before the RTC-Branch 88, rendering suspect petitioners' intentions for distributing copies of said MeTC decision to non-parties in the case. While petitioners were free to copy and distribute such copies of the MeTC judgment to the public, the question is whether they did so with the intent of humiliating respondent and destroying the latter's good name and reputation in the community. Nevertheless, we further declare that the Court of Appeals erred in already awarding moral and exemplary damages in respondent's favor when the parties have not yet had the chance to present any evidence before the RTC-Branch 227. In civil cases, he who alleges a fact has the burden of proving it by a preponderance of evidence. It is incumbent upon the party claiming affirmative relief from the court to convincingly prove its claim. Bare allegations, unsubstantiated by evidence are not equivalent to proof under our Rules. In short, mere allegations are not evidence.29 At this point, the finding of the Court of Appeals of bad faith and malice on the part of petitioners has no factual basis. Good faith is presumed and he who alleges bad faith has the duty to prove the same. Good faith refers to the state of the 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. Bad faith, on the other hand, does not simply connote bad judgment to simple negligence. It imports a dishonest purpose or some moral obliquity and conscious doing of a wrong, a breach of known duty due to some motive 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.30 We cannot subscribe to respondent's argument that there is no more need for the presentation of evidence by the parties since petitioners, in moving for the dismissal of respondent's complaint for damages, hypothetically admitted respondent's allegations. The hypothetical admission of respondent's allegations in the complaint only goes so far as determining whether said complaint should be dismissed on the ground of failure to state a cause of action. A finding that the complaint sufficiently states a cause of action does not necessarily mean that the complaint is meritorious; it shall only result in the reinstatement of the complaint and the hearing of the case for presentation of evidence by the parties. WHEREFORE, in view of all the foregoing, the petition is PARTIALLY GRANTED. The Decision dated January 31, 2006 of the Court of Appeals in CA-G.R. CV No. 82610 is AFFIRMED WITH MODIFICATIONS. The award of moral and exemplary damages made by the Court of Appeals in favor of respondent Ismael Veloso III is DELETED. The complaint of respondent Ismael Veloso III in Civil Case No. Q-02-48341 is hereby REINSTATED before Branch 227 of the Regional Trial Court of Quezon City only in so far as the first cause of

action is concerned. The said court is DIRECTED to hear and dispose of the case with dispatch. SO ORDERED.

G.R. No. 171365

October 6, 2010

ERMELINDA C. MANALOTO, AURORA J. CIFRA, FLORDELIZA J. ARCILLA, LOURDES J. CATALAN, ETHELINDA J. HOLT, BIENVENIDO R. JONGCO, ARTEMIO R. JONGCO, JR. and JOEL JONGCO, Petitioners, vs. ISMAEL VELOSO III, Respondent. DECISION Before Us is a Petition for Review on Certiorari of the Decision1 dated January 31, 2006 of the Court Appeals in CA-G.R. CV No. 82610, which affirmed with modification the Resolution2 dated September 2, 2003 of Branch 227 of the Regional Trial Court (RTCBranch 227) of Quezon City in Civil Case No. Q-02-48341. We partly reproduce below the facts of the case as culled by the Court of Appeals from the records: This case is an off-shoot of an unlawful detainer case filed by [herein petitioners] Ermelinda C. Manaloto, Aurora J. Cifra, Flordeliza J. Arcilla, Lourdes J. Catalan, Ethelinda J. Holt, Bienvenido R. Jongco, Artemio R. Jongco, Jr. and Joel Jongco against [herein respondent]. In said complaint for unlawful detainer, it was alleged that they are the lessors of a residential house located at No. 42 Big Horseshoe Drive, Horseshoe Village, Quezon City [subject property] which was leased to [respondent] at a monthly rental of P17,000.00. The action was instituted on the ground of [respondent's] failure to pay rentals from May 23, 1997 to December 22, 1998 despite repeated demands. [Respondent] denied the nonpayment of rentals and alleged that he made an advance payment ofP825,000.00 when he paid for the repairs done on the leased property. After trial, the Metropolitan Trial Court (MeTC) decided in favor of [petitioners] by ordering [respondent] to (a) vacate the premises at No. 42 Big Horseshoe Drive, Horseshoe Village, Quezon City; (b) pay [petitioners] the sum of P306,000.00 corresponding to the rentals due from May 23, 1997 to November 22, 1998, and the sum ofP17,000.00 a month thereafter until [respondent] vacates the premises; and (c) pay [petitioners] the sum ofP5,000.00 as attorney's fees. On appeal to the Regional Trial Court (RTC) [Branch 88, Quezon City], the MeTC decision was reversed. [Respondent] was ordered to pay arrearages from May 23, 1997 up to the date of the decision but he was also given an option to choose between staying in the leased property or vacating the same, subject to the reimbursement by [petitioners] of onehalf of the value of the improvements which it found to be in the amount ofP120,000.00. [Respondent] was also given the right to remove said improvements pursuant to Article 1678 of the Civil Code, should [petitioners] refuse to pay P60,000.00. When both parties moved for the reconsideration of the RTC decision, the RTC issued an Order dated February 23, 2001 modifying its previous ruling by increasing the value of the improvements from P120,000.00 toP800,000.00. After successive appeals to the Court of Appeals and the Supreme Court, the decision of the RTC dated November 29, 2000 which reversed the decision of the MeTC, became final and executory.3 Whilst respondent's appeal of the Metropolitan Trial Court (MeTC) judgment in the unlawful detainer case was pending before the RTC-Branch 88, respondent filed before the RTCBranch 227 on November 26, 2002 a Complaint for Breach of Contract and Damages4 against the petitioners, docketed as Civil Case No. Q-02-48341. The said complaint alleged two causes of action. The first cause of action was for damages because the respondent supposedly suffered embarrassment and humiliation when petitioners distributed copies of the above-mentioned MeTC decision in the unlawful detainer case to

the homeowners of Horseshoe Village while respondent's appeal was still pending before the Quezon City RTC-Branch 88. The second cause of action was for breach of contract since petitioners, as lessors, failed to make continuing repairs on the subject property to preserve and keep it tenantable. Thus, respondent sought the following from the court a quo: PRAYER WHEREFORE, premises considered, it is respectfully prayed that after hearing the court render a decision against the [herein petitioners] and in favor of the [herein respondent] by 1. Ordering [petitioners] to pay [respondent] the following amounts: a) P1,500,000.00 as moral damages and consequential damages; b) P500,000.00 as exemplary damages; c) P425,000.00 representing the difference of the expenses of the improvements of P825,000.00 andP400,000.00 pursuant to Art. 1678 of the Civil Code; d) P594,000.00 representing interest for three (3) years from 1998 to 2000 on the P825,000.00 advanced by the [respondent] at the rate of 24% per annum; e) P250,000.00 as compensation for the [respondent's] labor and efforts in overseeing and attending the needs of contractors the repair/renovation of the leased premises; f) P250,000.00, plus 20% of all recoveries from [petitioners] and P2,500.00 per hearing as attorney's fees; g) Cost of suit. [Respondent] further prays for such other reliefs and remedies which are just and equitable under the premises.5 The petitioners filed an Omnibus Motion6 on February 18, 2003 praying for, among other reliefs, the dismissal of respondent's complaint in Civil Case No. Q-02-48341. Petitioners argued that respondent had no cause of action against them because the MeTC decision in the unlawful detainer case was a matter of public record and its disclosure to the public violated no law or any legal right of the respondent. Moreover, petitioners averred that the respondent's present Complaint for Breach of Contract and Damages was barred by prior judgment since it was a mere replication of respondent's Answer with Compulsory Counterclaim in the unlawful detainer case before the MeTC. The said unlawful detainer case was already judicially decided with finality. On September 2, 2003, the RTC-Branch 227 issued a Resolution dismissing respondent's complaint in Civil Case No. Q-02-48341 for violating the rule against splitting of cause of action, lack of jurisdiction, and failure to disclose the pendency of a related case. The RTCBranch 227 adjudged that Civil Case No. Q-02-48341 involved the same facts, parties, and causes of action as those in the unlawful detainer case, and the MeTC had already properly taken cognizance of the latter case. Respondent received a copy of the RTC-Branch 227 decision in Civil Case No. Q-02-48341 on September 26, 2003. He filed a Motion for Reconsideration7 of said judgment on October 10, 2003, which RTC-Branch 227 denied in an Order8 dated December 30, 2003. Respondent received a copy of the RTC-Branch 227 order denying his Motion for Reconsideration on February 20, 2004, and he filed his Notice of Appeal9 on March 1, 2004.

However, the RTC-Branch 227, in an Order10dated March 23, 2004, dismissed respondent's appeal for being filed out of time. Respondent received a copy of the RTC-Branch 27 order dismissing his appeal on April 30, 2004 and he filed a Motion for Reconsideration11 of the same on May 3, 2004. The RTCBranch 227, in another Order12 dated May 31, 2004, granted respondent's latest motion because it was "convinced that it is but appropriate and fair to both parties that this matter of whether or not the Appeal was filed on time, be resolved by the appellate court rather than by this Court." The RTC-Branch 227 then ordered that the records of the case be forwarded as soon as possible to the Court of Appeals for further proceedings. The Court of Appeals, in a Resolution13 dated February 8, 2005, resolved to give due course to respondent's appeal. Said appeal was docketed as CA-G.R. CV No. 82610. On January 31, 2006, the Court of Appeals rendered its Decision in CA-G.R. CV No. 82610. The Court of Appeals fully agreed with the RTC-Branch 227 in dismissing respondent's second cause of action (i.e., breach of contract) in Civil Case No. Q-02-48341. The appellate court, however, held that RTC-Branch 227 should have proceeded with the trial on the merits of the first cause of action (i.e., damages) in Civil Case No. Q-02-48341, because "[a]lthough [herein respondent] may have stated the same factual antecedents that transpired in the unlawful detainer case, such allegations were necessary to give an overview of the facts leading to the institution of another case between the parties before the RTC acting in its original jurisdiction."14 The Court of Appeals then went on to find that petitioners were indeed liable to respondent for damages: No doubt, distributing the copies was primarily intended to embarrass [herein respondent] in the community he mingled in. We are not unmindful of the fact that court decisions are public documents and the general public is allowed access thereto to make inquiries thereon or to secure a copy thereof. Nevertheless, under the circumstances of this case, although court decisions are public documents, distribution of the same during the pendency of an appeal was clearly intended to cause [respondent] some form of harassment and/or humiliation so that [respondent] would be ostracized by his neighbors. The appeal may have delayed the attainment of finality of the determination of the rights of the parties and the execution in the unlawful detainer case but it did not justify [herein petitioners'] pre-emption of the outcome of the appeal. By distributing copies of the MeTC decision, [petitioners] appeared to have assumed that the MeTC decision would simply be affirmed and therefore they tried to cause the early ouster of [respondent] thinking that a humiliated [respondent] would scurry out of the leased premises. Clearly, there was evident bad faith intended to mock [respondent's] right to appeal which is a statutory remedy to correct errors which might have been committed by the lower court. Thus, moral damages may be awarded since [petitioners] acted in bad faith. Bad faith does not simply connote bad judgment or negligence, it imports a dishonest purpose or some moral obliquity and conscious doing of a wrong, a breach of known duty through some motive or interest or ill will that partakes of the nature of fraud. However, an award of moral damages would require certain conditions to be met, to wit: (1) first, there must be an injury, whether physical, mental or psychological, clearly sustained by the claimant; (2) second, there must be culpable act or omission factually established; (3) third, the wrongful act or omission of the defendant is the proximate cause of the injury sustained by the claimant; and (4) fourth, the award of damages is predicated on any of the cases stated in Article 2219 of the Civil Code. But it must again be stressed that moral damages are emphatically not intended to enrich a plaintiff at the expense of the defendant. When awarded, moral damages must not be palpably and scandalously excessive as to indicate that it was the result of passion, prejudice or corruption on the part of the trial court judge. For this reason, this Court finds an award of P30,000.00 moral damages sufficient under the circumstances.

On the other hand, to warrant the award of exemplary damages, the wrongful act must be accompanied by bad faith, and an award of damages would be allowed only if the guilty party acted in a wanton, fraudulent, reckless or malevolent manner. Accordingly, exemplary damages in the amount of P10,000.00 is appropriate.15 In the end, the Court of Appeals decreed: WHEREFORE, the decision of the Regional Trial Court is AFFIRMED with the MODIFICATION that the case is dismissed only as to the second cause of action. As to the first cause of action, [herein petitioners] are ordered to pay [herein respondent] moral damages of P30,000.00 and exemplary damages of P10,000.00.16 Hence, the instant Petition for Review. Petitioners assert that respondent's appeal of the RTC-Branch 227 Resolution dated September 2, 2003, which dismissed the latter's complaint in Civil Case No. Q-02-48341, was filed out of time. Respondent received a copy of the said resolution on September 26, 2003, and he only had 15 days from such date to file his appeal, or until October 11, 2003. Respondent, instead, filed a Motion for Reconsideration of the resolution on October 10, 2003, which left him with only one more day to file his appeal. The RTC-Branch 227 subsequently denied respondent's Motion for Reconsideration in an Order dated December 30, 2003, which the respondent received on February 20, 2004. Respondent only had until the following day, February 21, 2004, to file the appeal. However, respondent filed his Notice of Appeal only on March 1, 2004. Hence, petitioners conclude that the dismissal of respondent's complaint in Civil Case No. Q-02-48341 already attained finality. Petitioners argue in the alternative that the award of damages in respondent's favor has no factual and legal bases. They contend that the Court of Appeals erred in awarding moral and exemplary damages to respondent based on the bare and unproven allegations in the latter's complaint and without the benefit of any hearing or trial. While the appellate court declared that RTC-Branch 227 should have proceeded with the trial on the merits involving the action for damages, it surprisingly went ahead and ruled on petitioners' liability for said damages even without trial. Even assuming for the sake of argument that respondent's allegations in his complaint are true, he still has no cause of action for damages against petitioners, for the disclosure of a court decision, which is part of public record, did not cause any legal and compensable injury to respondent. Respondent, on the other hand, maintains that his appeal of the September 2, 2003 Resolution of the RTC-Branch 227 to the Court of Appeals was timely filed and that the same was aptly given due course. In addition, respondent asserts that the appellate court was correct in holding petitioners liable for damages even without any hearing or trial since petitioners, in filing their omnibus motion praying for the dismissal of respondent's complaint on the ground of "no cause of action," were deemed to have hypothetically admitted as true the allegations in said complaint. The petition is partly meritorious. We note, at the outset, that the propriety of the dismissal by the RTC-Branch 227 of respondent's second cause of action against petitioners (e.g., for breach of contract) was no longer disputed by the parties. Thus, the present appeal pertains only to respondent's first cause of action (e.g., for damages), and in connection therewith, we are called upon to resolve the following issues: (1) whether respondent timely filed his appeal of the Resolution dated September 2, 2003 of the RTC-Branch 227 before the Court of Appeals; and (2) whether respondent is entitled to the award of moral and exemplary damages. We answer the first issue on the timeliness of respondent's appeal affirmatively. Jurisprudence has settled the "fresh period rule," according to which, an ordinary appeal from the RTC to the Court of Appeals, under Section 3 of Rule 41 of the Rules of Court,

shall be taken within fifteen (15) days either from receipt of the original judgment of the trial court or from receipt of the final order of the trial court dismissing or denying the motion for new trial or motion for reconsideration. In Sumiran v. Damaso, 17 we presented a survey of the cases applying the fresh period rule: As early as 2005, the Court categorically declared in Neypes v. Court of Appeals that by virtue of the power of the Supreme Court to amend, repeal and create new procedural rules in all courts, the Court is allowing a fresh period of 15 days within which to file a notice of appeal in the RTC, counted from receipt of the order dismissing or denying a motion for new trial or motion for reconsideration. This would standardize the appeal periods provided in the Rules and do away with the confusion as to when the 15-day appeal period should be counted. Thus, the Court stated: To recapitulate, a party-litigant may either file his notice of appeal within 15 days from receipt of the Regional Trial Court's decision or file it within 15 days from receipt of the order (the "final order") denying his motion for new trial or motion for reconsideration. Obviously, the new 15-day period may be availed of only if either motion is filed; otherwise, the decision becomes final and executory after the lapse of the original appeal period provided in Rule 41, Section 3. The foregoing ruling of the Court was reiterated in Makati Insurance Co., Inc. v. Reyes, to wit: Propitious to petitioner is Neypes v. Court of Appeals, promulgated on 14 September 2005 while the present Petition was already pending before us. x x x. xxxx With the advent of the "fresh period rule" parties who availed themselves of the remedy of motion for reconsideration are now allowed to file a notice of appeal within fifteen days from the denial of that motion. The "fresh period rule" is not inconsistent with Rule 41, Section 3 of the Revised Rules of Court which states that the appeal shall be taken "within fifteen (15) days from notice of judgment or final order appealed from." The use of the disjunctive word "or" signifies disassociation and independence of one thing from another. It should, as a rule, be construed in the sense which it ordinarily implies. Hence, the use of "or" in the above provision supposes that the notice of appeal may be filed within 15 days from the notice of judgment or within 15 days from notice of the "final order," x x x. xxxx The "fresh period rule" finally eradicates the confusion as to when the 15-day appeal period should be counted - from receipt of notice of judgment or from receipt of notice of "final order" appealed from. Taking our bearings from Neypes, in Sumaway v. Urban Bank, Inc., we set aside the denial of a notice of appeal which was purportedly filed five days late. With the fresh period rule, the 15-day period within which to file the notice of appeal was counted from notice of the denial of the therein petitioner's motion for reconsideration. We followed suit in Elbia v. Ceniza, wherein we applied the principle granting a fresh period of 15 days within which to file the notice of appeal, counted from receipt of the order dismissing a motion for new trial or motion for reconsideration or any final order or resolution. Thereafter, in First Aqua Sugar Traders, Inc. v. Bank of the Philippine Islands, we held that a party-litigant may now file his notice of appeal either within fifteen days from receipt of the

original decision or within fifteen days from the receipt of the order denying the motion for reconsideration. In De los Santos v. Vda. de Mangubat, we applied the same principle of "fresh period rule," expostulating that procedural law refers to the adjective law which prescribes rules and forms of procedure in order that courts may be able to administer justice. Procedural laws do not come within the legal conception of a retroactive law, or the general rule against the retroactive operation of statutes. The "fresh period rule" is irrefragably procedural, prescribing the manner in which the appropriate period for appeal is to be computed or determined and, therefore, can be made applicable to actions pending upon its effectivity, such as the present case, without danger of violating anyone else's rights. 18 (Emphases supplied.) Also in Sumiran, we recognized the retroactive application of the fresh period rule to cases pending and undetermined upon its effectivity: The retroactivity of the Neypes rule in cases where the period for appeal had lapsed prior to the date of promulgation of Neypes on September 14, 2005, was clearly explained by the Court in Fil-Estate Properties, Inc. v. Homena-Valencia, stating thus: The determinative issue is whether the "fresh period" rule announced in Neypes could retroactively apply in cases where the period for appeal had lapsed prior to 14 September 2005 when Neypes was promulgated. That question may be answered with the guidance of the general rule that procedural laws may be given retroactive effect to actions pending and undetermined at the time of their passage, there being no vested rights in the rules of procedure. Amendments to procedural rules are procedural or remedial in character as they do not create new or remove vested rights, but only operate in furtherance of the remedy or confirmation of rights already existing.19(Emphases supplied.) In the case before us, respondent received a copy of the Resolution dated September 2, 2003 of the RTC-Branch 227 dismissing his complaint in Civil Case No. Q-02-48341 on September 26, 2003. Fourteen days thereafter, on October 10, 2003, respondent filed a Motion for Reconsideration of said resolution. The RTC-Branch 227 denied respondent's Motion for Reconsideration in an Order dated December 30, 2003, which the respondent received on February 20, 2004. On March 1, 2004, just after nine days from receipt of the order denying his Motion for Reconsideration, respondent already filed his Notice of Appeal. Clearly, under the fresh period rule, respondent was able to file his appeal well-within the prescriptive period of 15 days, and the Court of Appeals did not err in giving due course to said appeal in CA-G.R. CV No. 82610. We likewise agree with the Court of Appeals that the RTC-Branch 227 should not have dismissed respondent's complaint for damages on the ground of failure to state a cause of action. According to Rule 2, Section 2 of the Rules of Court, a cause of action is the act or omission by which a party violates a right of another. When the ground for dismissal is that the complaint states no cause of action, such fact can be determined only from the facts alleged in the complaint and from no other, and the court cannot consider other matters aliunde. The test, therefore, is whether, assuming the allegations of fact in the complaint to be true, a valid judgment could be rendered in accordance with the prayer stated therein.20 Respondent made the following allegations in support of his claim for damages against petitioners: FIRST CAUSE OF ACTION

28. After the promulgation of the Metropolitan Trial Court of its Decision dated August 3, 1999, ordering the [herein respondent] and all person claiming rights under him to (a) Vacate the leased premises; (b) pay the [herein petitioners] the sum of P306,000.00 as unpaid rentals from May 23, 1997 to November 22, 1998; and (c) pay the sum of P5,000.00 as attorneys fees; But while said Decision was still pending appeal with the Regional Trial Court, the [petitioners], through [petitioner] Manaloto, already distributed copies of said Decision to some of the homeowners of Horseshoe Village, who personally know the [respondent]. This act is a direct assault or character assassination on the part of the [respondent] because as stated in the said decision, [respondent] has been staying in the premises but did not or refused to pay his monthly rentals for a long period of time when in truth and in fact was untrue. 29. That from the time the said decision was distributed to said members homeowners, the [respondent] became the subject of conversation or talk of the town and by virtue of which [respondent's] good name within the community or society where he belongs was greatly damaged; his reputation was besmirched; [respondent] suffered sleepless night and serious anxiety. [Respondent], who is the grandson of the late Senator Jose Veloso and Congressman Ismael Veloso, was deprived of political career and to start with was to run as candidate for Barangay Chairman within their area which was being offered to him by the homeowners but this offer has started to fade and ultimately totally vanished after the distribution of said Decision. Damages to his good names and reputations and other damages which he suffered as a consequence thereof, may be reasonably compensated for at least P1,500,000.00 as moral and consequential damages. 30. In order to deter [petitioners] and others from doing as abovementioned, [petitioners] should likewise be assessed exemplary damages in the amount of P500,000.00.21 A cause of action (for damages) exists if the following elements are present: (1) a right in favor of the plaintiff by whatever means and under whatever law it arises or is created; (2) an obligation on the part of the named defendant to respect or not to violate such right; and (3) an act or omission on the part of such defendant violative of the right of the plaintiff or constituting a breach of the obligation of defendant to the plaintiff for which the latter may maintain an action for recovery of damages.22 We find that all three elements exist in the case at bar. Respondent may not have specifically identified each element, but it may be sufficiently determined from the allegations in his complaint. First, respondent filed the complaint to protect his good character, name, and reputation. Every man has a right to build, keep, and be favored with a good name. This right is protected by law with the recognition of slander and libel as actionable wrongs, whether as criminal offenses or tortuous conduct.23 Second, petitioners are obliged to respect respondent's good name even though they are opposing parties in the unlawful detainer case. As Article 19 of the Civil Code requires, "[e]very 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." A violation of such principle constitutes an abuse of rights, a tortuous conduct. We expounded in Sea Commercial Company, Inc. v. Court of Appeals24 that: The principle of abuse of rights stated in the above article, departs from the classical theory that "he who uses a right injures no one." The modern tendency is to depart from the classical and traditional theory, and to grant indemnity for damages in cases where there is an abuse of rights, even when the act is not illicit.

Article 19 was intended to expand the concept of torts by granting adequate legal remedy for the untold number of moral wrongs which is impossible for human foresight to provide specifically in statutory law. If mere fault or negligence in one's acts can make him liable for damages for injury caused thereby, with more reason should abuse or bad faith make him liable. The absence of good faith is essential to abuse of right. Good faith is an honest intention to abstain from taking any unconscientious advantage of another, even through the forms or technicalities of the law, together with an absence of all information or belief of fact which would render the transaction unconscientious. In business relations, it means good faith as understood by men of affairs. While Article 19 may have been intended as a mere declaration of principle, the "cardinal law on human conduct" expressed in said article has given rise to certain rules, e.g. that where a person exercises his rights but does so arbitrarily or unjustly or performs his duties in a manner that is not in keeping with honesty and good faith, he opens himself to liability. The elements of an abuse of rights under Article 19 are: (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. 25 Petitioners are also expected to respect respondent's "dignity, personality, privacy and peace of mind" under Article 26 of the Civil Code, which provides: ART. 26. Every person shall respect the dignity, personality, privacy and peace of mind of his neighbors and other persons. The following and similar acts, though they may not constitute a criminal offense, shall produce a cause of action for damages, prevention and other relief: (1) Prying into the privacy of another's residence; (2) Meddling with or disturbing the private life or family relations of another; (3) Intriguing to cause another to be alienated from his friends; (4) Vexing or humiliating another on account of his religious beliefs, lowly station in life, place of birth, physical defect, or other personal condition. Thus, Article 2219(10) of the Civil Code allows the recovery of moral damages for acts and actions referred to in Article 26, among other provisions, of the Civil Code. In Concepcion v. Court of Appeals,26 we explained that: The philosophy behind Art. 26 underscores the necessity for its inclusion in our civil law. The Code Commission stressed in no uncertain terms that the human personality must be exalted. The sacredness of human personality is a concomitant consideration of every plan for human amelioration. The touchstone of every system of law, of the culture and civilization of every country, is how far it dignifies man. If the statutes insufficiently protect a person from being unjustly humiliated, in short, if human personality is not exalted - then the laws are indeed defective. Thus, under this article, the rights of persons are amply protected, and damages are provided for violations of a person's dignity, personality, privacy and peace of mind. It is petitioner's position that the act imputed to him does not constitute any of those enumerated in Arts. 26 and 2219. In this respect, the law is clear. The violations mentioned in the codal provisions are not exclusive but are merely examples and do not preclude other similar or analogous acts. Damages therefore are allowable for actions against a person's dignity, such as profane, insulting, humiliating, scandalous or abusive language. Under Art. 2217 of the Civil Code, moral damages which include physical suffering, mental anguish, fright, serious anxiety, besmirched reputation, wounded feelings, moral shock, social humiliation, and similar injury, although incapable of pecuniary computation, may be recovered if they are the proximate result of the defendant's wrongful act or omission.27

And third, respondent alleged that the distribution by petitioners to Horseshoe Village homeowners of copies of the MeTC decision in the unlawful detainer case, which was adverse to respondent and still on appeal before the RTC-Branch 88, had no apparent lawful or just purpose except to humiliate respondent or assault his character. As a result, respondent suffered damages - becoming the talk of the town and being deprived of his political career.
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Petitioners reason that respondent has no cause of action against them since the MeTC decision in the unlawful detainer case was part of public records. It is already settled that the public has a right to see and copy judicial records and documents.28 However, this is not a case of the public seeking and being denied access to judicial records and documents. The controversy is rooted in the dissemination by petitioners of the MeTC judgment against respondent to Horseshoe Village homeowners, who were not involved at all in the unlawful detainer case, thus, purportedly affecting negatively respondent's good name and reputation among said homeowners. The unlawful detainer case was a private dispute between petitioners and respondent, and the MeTC decision against respondent was then still pending appeal before the RTC-Branch 88, rendering suspect petitioners' intentions for distributing copies of said MeTC decision to non-parties in the case. While petitioners were free to copy and distribute such copies of the MeTC judgment to the public, the question is whether they did so with the intent of humiliating respondent and destroying the latter's good name and reputation in the community. Nevertheless, we further declare that the Court of Appeals erred in already awarding moral and exemplary damages in respondent's favor when the parties have not yet had the chance to present any evidence before the RTC-Branch 227. In civil cases, he who alleges a fact has the burden of proving it by a preponderance of evidence. It is incumbent upon the party claiming affirmative relief from the court to convincingly prove its claim. Bare allegations, unsubstantiated by evidence are not equivalent to proof under our Rules. In short, mere allegations are not evidence.29 At this point, the finding of the Court of Appeals of bad faith and malice on the part of petitioners has no factual basis. Good faith is presumed and he who alleges bad faith has the duty to prove the same. Good faith refers to the state of the 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. Bad faith, on the other hand, does not simply connote bad judgment to simple negligence. It imports a dishonest purpose or some moral obliquity and conscious doing of a wrong, a breach of known duty due to some motive 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.30 We cannot subscribe to respondent's argument that there is no more need for the presentation of evidence by the parties since petitioners, in moving for the dismissal of respondent's complaint for damages, hypothetically admitted respondent's allegations. The hypothetical admission of respondent's allegations in the complaint only goes so far as determining whether said complaint should be dismissed on the ground of failure to state a cause of action. A finding that the complaint sufficiently states a cause of action does not necessarily mean that the complaint is meritorious; it shall only result in the reinstatement of the complaint and the hearing of the case for presentation of evidence by the parties. WHEREFORE, in view of all the foregoing, the petition is PARTIALLY GRANTED. The Decision dated January 31, 2006 of the Court of Appeals in CA-G.R. CV No. 82610 is AFFIRMED WITH MODIFICATIONS. The award of moral and exemplary damages made by the Court of Appeals in favor of respondent Ismael Veloso III is DELETED. The complaint of respondent Ismael Veloso III in Civil Case No. Q-02-48341 is hereby REINSTATED before Branch 227 of the Regional Trial Court of Quezon City only in so far as the first cause of

action is concerned. The said court is DIRECTED to hear and dispose of the case with dispatch. SO ORDERED. G.R. No. 132344 February 17, 2000

UNIVERSITY OF THE EAST, petitioner, vs. ROMEO A. JADER, respondent. YNARES-SANTIAGO, J.: May an educational institution be held liable for damages for misleading a student into believing that the latter had satisfied all the requirements for graduation when such is not the case? This is the issue in the instant petition for review premised on the following undisputed facts as summarized by the trial court and adopted by the Court of Appeals (CA),1 to wit: Plaintiff was enrolled in the defendants' College of Law from 1984 up to 1988. In the first semester of his last year (School year 1987-1988), he failed to take the regular final examination in Practice Court I for which he was given an incomplete grade (Exhibits "2", also Exhibit "H"). He enrolled for the second semester as fourth year law student (Exhibit "A") and on February 1, 1988 he filed an application for the removal of the incomplete grade given him by Professor Carlos Ortega (Exhibits "H2", also Exhibit "2") which was approved by Dean Celedonio Tiongson after payment of the required fee. He took the examination on March 28, 1988. On May 30, 1988, Professor Carlos Ortega submitted his grade. It was a grade of five (5). (Exhibits "H4", also Exhibits "2-L", "2-N").
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In the meantime, the Dean and the Faculty Members of the College of Law met to deliberate on who among the fourth year students should be allowed to graduate. The plaintiff's name appeared in the Tentative List of Candidates for graduation for the Degree of Bachelor of Laws (LL.B) as of Second Semester (1987-1988) with the following annotation: JADER ROMEO A. Def. Conflict of Laws x-1-87-88, Practice Court I Inc., 1-87-88 C-1 to submit transcript with S.O. (Exhibits "3", "3-C-1", "3-C-2"). The 35th Investitures & Commencement Ceremonies for the candidates of Bachelor of Laws was scheduled on the 16th of April 1988 at 3:00 o'clock in the afternoon, and in the invitation for that occasion the name of the plaintiff appeared as one of the candidates. (Exhibits "B", "B-6", "B-6-A"). At the foot of the list of the names of the candidates there appeared however the following annotation: This is a tentative list Degrees will be conferred upon these candidates who satisfactorily complete requirements as stated in the University Bulletin and as approved of the Department of Education, Culture and Sports (Exhibit "B7-A"). The plaintiff attended the investiture ceremonies at F. dela Cruz Quadrangle, U.E., Recto Campus, during the program of which he went up the stage when his name was called, escorted by her (sic) mother and his eldest brother who assisted in placing the Hood, and his Tassel was turned from left to right, and he was thereafter handed by Dean Celedonio a rolled white sheet of paper symbolical of the Law Diploma. His relatives took pictures of the occasion (Exhibits "C" to "C-6", "D-3" to "D-11").

He tendered a blow-out that evening which was attended by neighbors, friends and relatives who wished him good luck in the forthcoming bar examination. There were pictures taken too during the blow-out (Exhibits "D" to "D-1"). He thereafter prepared himself for the bar examination. He took a leave of absence without pay from his job from April 20, 1988 to September 30, 1988 (Exhibit "G") and enrolled at the pre-bar review class in Far Eastern University. (Exhibits "F" to "F-2"). Having learned of the deficiency he dropped his review class and was not able to take the bar examination.2 Consequently, respondent sued petitioner for damages alleging that he suffered moral shock, mental anguish, serious anxiety, besmirched reputation, wounded feelings and sleepless nights when he was not able to take the 1988 bar examinations arising from the latter's negligence. He prayed for an award of moral and exemplary damages, unrealized income, attorney's fees, and costs of suit. In its answer with counterclaim, petitioner denied liability arguing mainly that it never led respondent to believe that he completed the requirements for a Bachelor of Laws degree when his name was included in the tentative list of graduating students. After trial, the lower court rendered judgment as follows: WHEREFORE, in view of the foregoing judgment is hereby rendered in favor of the plaintiff and against the defendant ordering the latter to pay plaintiff the sum of THIRTY FIVE THOUSAND FOUR HUNDRED SEVENTY PESOS (P35,470.00) with legal rate of interest from the filing of the complaint until fully paid, the amount of FIVE THOUSAND PESOS (P5,000.00) as attorney's fees and the cost of suit. Defendant's counterclaim is, for lack of merit, hereby dismissed. SO ORDERED.3 which on appeal by both parties was affirmed by the Court of Appeals (CA) with modification. The dispositive portion of the CA decision reads: WHEREFORE, in the light of the foregoing, the lower Court's Decision is hereby AFFIRMED with the MODIFICATION that defendant-appellee, in addition to the sum adjudged by the lower court in favor of plaintiff-appellant, is also ORDERED to pay plaintiff-appellant the amount of FIFTY THOUSAND (P50,000.00) PESOS for moral damages. Costs against defendant-appellee. SO ORDERED.4 Upon the denial of its motion for reconsideration, petitioner UE elevated the case to this Court on a petition for review under Rule 45 of the Rules of Court, arguing that it has no liability to respondent Romeo A. Jader, considering that the proximate and immediate cause of the alleged damages incurred by the latter arose out of his own negligence in not verifying from the professor concerned the result of his removal exam. The petition lacks merit. When a student is enrolled in any educational or learning institution, a contract of education is entered into between said institution and the student. The professors, teachers or instructors hired by the school are considered merely as agents and administrators tasked to perform the school's commitment under the contract. Since the contracting parties are the school and the student, the latter is not duty-bound to deal with the former's agents, such as the professors with respect to the status or result of his grades, although nothing prevents either professors or students from sharing with each other such information. The Court takes judicial notice of the traditional practice in educational institutions wherein the professor directly furnishes his/her students their grades. It is the contractual obligation of

the school to timely inform and furnish sufficient notice and information to each and every student as to whether he or she had already complied with all the requirements for the conferment of a degree or whether they would be included among those who will graduate. Although commencement exercises are but a formal ceremony, it nonetheless is not an ordinary occasion, since such ceremony is the educational institution's way of announcing to the whole world that the students included in the list of those who will be conferred a degree during the baccalaureate ceremony have satisfied all the requirements for such degree. Prior or subsequent to the ceremony, the school has the obligation to promptly inform the student of any problem involving the latter's grades and performance and also most importantly, of the procedures for remedying the same. Petitioner, in belatedly informing respondent of the result of the removal examination, particularly at a time when he had already commenced preparing for the bar exams, cannot be said to have acted in good faith. Absence of good faith must be sufficiently established for a successful prosecution by the aggrieved party in a suit for abuse of right under Article 19 of the Civil Code. Good faith connotes an honest intention to abstain from taking undue advantage of another, even though the forms and technicalities of the law, together with the absence of all information or belief of facts, would render the transaction unconscientious.5 It is the school that has access to those information and it is only the school that can compel its professors to act and comply with its rules, regulations and policies with respect to the computation and the prompt submission of grades. Students do not exercise control, much less influence, over the way an educational institution should run its affairs, particularly in disciplining its professors and teachers and ensuring their compliance with the school's rules and orders. Being the party that hired them, it is the school that exercises general supervision and exclusive control over the professors with respect to the submission of reports involving the students' standing. Exclusive control means that no other person or entity had any control over the instrumentality which caused the damage or injury.6 The college dean is the senior officer responsible for the operation of an academic program, enforcement of rules and regulations, and the supervision of faculty and student services.7 He must see to it that his own professors and teachers, regardless of their status or position outside of the university, must comply with the rules set by the latter. The negligent act of a professor who fails to observe the rules of the school, for instance by not promptly submitting a student's grade, is not only imputable to the professor but is an act of the school, being his employer. Considering further, that the institution of learning involved herein is a university which is engaged in legal education, it should have practiced what it inculcates in its students, more specifically the principle of good dealings enshrined in Articles 19 and 20 of the Civil Code which states: 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, wilfully or negligently causes damage to another, shall indemnify the latter for the same. Art. 19 was intended to expand the concept of torts by granting adequate legal remedy for the untold number of moral wrongs which is impossible for human foresight to provide specifically in statutory law.8 In civilized society, men must be able to assume that others will do them no intended injury that others will commit no internal aggressions upon them; that their fellowmen, when they act affirmatively will do so with due care which the ordinary understanding and moral sense of the community exacts and that those with whom they deal in the general course of society will act in good faith. The ultimate thing in the theory of liability is justifiable reliance under conditions of civilized society. 9 Schools and professors cannot just take students for granted and be indifferent to them, for without the latter, the former are useless.

Educational institutions are duty-bound to inform the students of their academic status and not wait for the latter to inquire from the former. The conscious indifference of a person to the rights or welfare of the person/persons who may be affected by his act or omission can support a claim for damages.10 Want of care to the conscious disregard of civil obligations coupled with a conscious knowledge of the cause naturally calculated to produce them would make the erring party liable.11 Petitioner ought to have known that time was of the essence in the performance of its obligation to inform respondent of his grade. It cannot feign ignorance that respondent will not prepare himself for the bar exams since that is precisely the immediate concern after graduation of an LL.B. graduate. It failed to act seasonably. Petitioner cannot just give out its student's grades at any time because a student has to comply with certain deadlines set by the Supreme Court on the submission of requirements for taking the bar. Petitioner's liability arose from its failure to promptly inform respondent of the result of an examination and in misleading the latter into believing that he had satisfied all requirements for the course. Worth quoting is the following disquisition of the respondent court: It is apparent from the testimony of Dean Tiongson that defendant-appellee University had been informed during the deliberation that the professor in Practice Court I gave plaintiff-appellant a failing grade. Yet, defendant-appellee still did not inform plaintiff-appellant of his failure to complete the requirements for the degree nor did they remove his name from the tentative list of candidates for graduation. Worse, defendant-appellee university, despite the knowledge that plaintiff-appellant failed in Practice Court I, again included plaintiff-appellant's name in the "tentative list of candidates for graduation which was prepared after the deliberation and which became the basis for the commencement rites program. Dean Tiongson reasons out that plaintiff-appellant's name was allowed to remain in the tentative list of candidates for graduation in the hope that the latter would still be able to remedy the situation in the remaining few days before graduation day. Dean Tiongson, however, did not explain how plaintiff appellant Jader could have done something to complete his deficiency if defendant-appellee university did not exert any effort to inform plaintiff-appellant of his failing grade in Practice Court I.12 Petitioner cannot pass on its blame to the professors to justify its own negligence that led to the delayed relay of information to respondent. When one of two innocent parties must suffer, he through whose agency the loss occurred must bear it. 13 The modern tendency is to grant indemnity for damages in cases where there is abuse of right, even when the act is not illicit.14 If mere fault or negligence in one's acts can make him liable for damages for injury caused thereby, with more reason should abuse or bad faith make him liable. A person should 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.15 However, while petitioner was guilty of negligence and thus liable to respondent for the latter's actual damages, we hold that respondent should not have been awarded moral damages. We do not agree with the Court of Appeals' findings that respondent suffered shock, trauma and pain when he was informed that he could not graduate and will not be allowed to take the bar examinations. At the very least, it behooved on respondent to verify for himself whether he has completed all necessary requirements to be eligible for the bar examinations. As a senior law student, respondent should have been responsible enough to ensure that all his affairs, specifically those pertaining to his academic achievement, are in order. Given these considerations, we fail to see how respondent could have suffered untold embarrassment in attending the graduation rites, enrolling in the bar review classes and not being able to take the bar exams. If respondent was indeed humiliated by his failure to take the bar, he brought this upon himself by not verifying if he has satisfied all the requirements including his school records, before preparing himself for the bar examination. Certainly, taking the bar examinations does not only entail a mental preparation on the subjects thereof; there are also prerequisites of documentation and submission of requirements which the prospective examinee must meet.

WHEREFORE, the assailed decision of the Court of Appeals is AFFIRMED with MODIFICATION. Petitioner is ORDERED to PAY respondent the sum of Thirty-five Thousand Four Hundred Seventy Pesos (P35,470.00), with legal interest of 6% per annum computed from the date of filing of the complaint until fully paid; the amount of Five Thousand Pesos (P5,000.00) as attorney's fees; and the costs of the suit. The award of moral damages is DELEIED.
1wphi1.nt

SO ORDERED.

G.R. No. 146322

December 6, 2006

ERNESTO RAMAS UYPITCHING and RAMAS UYPITCHING SONS, INC., petitioners, vs. ERNESTO QUIAMCO, respondent.

DECISION

CORONA, J.: Honeste vivere, non alterum laedere et jus suum cuique tribuere. To live virtuously, not to injure others and to give everyone his due. These supreme norms of justice are the underlying principles of law and order in society. We reaffirm them in this petition for review on certiorari assailing the July 26, 2000 decision1 and October 18, 2000 resolution of the Court of Appeals (CA) in CA-G.R. CV No. 47571. In 1982, respondent Ernesto C. Quiamco was approached by Juan Davalan, 2 Josefino Gabutero and Raul Generoso to amicably settle the civil aspect of a criminal case for robbery3 filed by Quiamco against them. They surrendered to him a red Honda XL-100 motorcycle and a photocopy of its certificate of registration. Respondent asked for the original certificate of registration but the three accused never came to see him again. Meanwhile, the motorcycle was parked in an open space inside respondents business establishment, Avesco-AVNE Enterprises, where it was visible and accessible to the public. It turned out that, in October 1981, the motorcycle had been sold on installment basis to Gabutero by petitioner Ramas Uypitching Sons, Inc., a family-owned corporation managed by petitioner Atty. Ernesto Ramas Uypitching. To secure its payment, the motorcycle was mortgaged to petitioner corporation.4 When Gabutero could no longer pay the installments, Davalan assumed the obligation and continued the payments. In September 1982, however, Davalan stopped paying the remaining installments and told petitioner corporations collector, Wilfredo Verao, that the motorcycle had allegedly been "taken by respondents men." Nine years later, on January 26, 1991, petitioner Uypitching, accompanied by policemen,5 went to Avesco-AVNE Enterprises to recover the motorcycle. The leader of the police team, P/Lt. Arturo Vendiola, talked to the clerk in charge and asked for respondent. While P/Lt. Vendiola and the clerk were talking, petitioner Uypitching paced back and forth inside the establishment uttering "Quiamco is a thief of a motorcycle." On learning that respondent was not in Avesco-AVNE Enterprises, the policemen left to look for respondent in his residence while petitioner Uypitching stayed in the establishment to take photographs of the motorcycle. Unable to find respondent, the policemen went back to Avesco-AVNE Enterprises and, on petitioner Uypitchings instruction and over the clerks objection, took the motorcycle. On February 18, 1991, petitioner Uypitching filed a criminal complaint for qualified theft and/or violation of the Anti-Fencing Law6 against respondent in the Office of the City Prosecutor of Dumaguete City.7 Respondent moved for dismissal because the complaint did not charge an offense as he had neither stolen nor bought the motorcycle. The Office of the City Prosecutor dismissed the complaint8 and denied petitioner Uypitchings subsequent motion for reconsideration. Respondent filed an action for damages against petitioners in the RTC of Dumaguete City, Negros Oriental, Branch 37.9 He sought to hold the petitioners liable for the following: (1) unlawful taking of the motorcycle; (2) utterance of a defamatory remark (that respondent

was a thief) and (3) precipitate filing of a baseless and malicious complaint. These acts humiliated and embarrassed the respondent and injured his reputation and integrity. On July 30, 1994, the trial court rendered a decision10 finding that petitioner Uypitching was motivated with malice and ill will when he called respondent a thief, took the motorcycle in an abusive manner and filed a baseless complaint for qualified theft and/or violation of the Anti-Fencing Law. Petitioners acts were found to be contrary to Articles 1 911 and 2012 of the Civil Code. Hence, the trial court held petitioners liable to respondent for P500,000 moral damages, P200,000 exemplary damages and P50,000 attorneys fees plus costs. Petitioners appealed the RTC decision but the CA affirmed the trial courts decision with modification, reducing the award of moral and exemplary damages to P300,000 and P100,000, respectively.13 Petitioners sought reconsideration but it was denied. Thus, this petition. In their petition and memorandum, petitioners submit that the sole (allegedly) issue to be resolved here is whether the filing of a complaint for qualified theft and/or violation of the Anti-Fencing Law in the Office of the City Prosecutor warranted the award of moral damages, exemplary damages, attorneys fees and costs in favor of respondent. Petitioners suggestion is misleading. They were held liable for damages not only for instituting a groundless complaint against respondent but also for making a slanderous remark and for taking the motorcycle from respondents establishment in an abusive manner. Correctness of the Findings of the RTC and CA As they never questioned the findings of the RTC and CA that malice and ill will attended not only the public imputation of a crime to respondent14 but also the taking of the motorcycle, petitioners were deemed to have accepted the correctness of such findings. This alone was sufficient to hold petitioners liable for damages to respondent. Nevertheless, to address petitioners concern, we also find that the trial and appellate courts correctly ruled that the filing of the complaint was tainted with malice and bad faith. Petitioners themselves in fact described their action as a "precipitate act."15 Petitioners were bent on portraying respondent as a thief. In this connection, we quote with approval the following findings of the RTC, as adopted by the CA: x x x There was malice or ill-will [in filing the complaint before the City Prosecutors Office] because Atty. Ernesto Ramas Uypitching knew or ought to have known as he is a lawyer, that there was no probable cause at all for filing a criminal complaint for qualified theft and fencing activity against [respondent]. Atty. Uypitching had no personal knowledge that [respondent] stole the motorcycle in question. He was merely told by his bill collector ([i.e.] the bill collector of Ramas Uypitching Sons, Inc.)[,] Wilfredo Verao[,] that Juan Dabalan will [no longer] pay the remaining installment(s) for the motorcycle because the motorcycle was taken by the men of [respondent]. It must be noted that the term used by Wilfredo Verao in informing Atty. Ernesto Ramas Uypitching of the refusal of Juan Dabalan to pay for the remaining installment was []taken[], not []unlawfully taken[] or stolen. Yet, despite the double hearsay, Atty. Ernesto Ramas Uypitching not only executed the [complaint-affidavit] wherein he named [respondent] as the suspect of the stolen motorcycle but also charged [respondent] of qualified theft and fencing activity before the City [Prosecutors] Office of Dumaguete. The absence of probable cause necessarily signifies the presence of malice. What is deplorable in all these is that Juan Dabalan, the owner of the motorcycle, did not accuse [respondent] or the latters men of stealing the motorcycle[,] much less bother[ed] to file a case for qualified theft before the authorities. That Atty. Uypitchings act in charging [respondent] with qualified theft and fencing activity is tainted with malice is also shown by his answer to the question of Cupid Gonzaga 16 [during one of their

conversations] - "why should you still file a complaint? You have already recovered the motorcycle"[:] "Aron motagam ang kawatan ug motor." ("To teach a lesson to the thief of motorcycle.")17 Moreover, the existence of malice, ill will or bad faith is a factual matter. As a rule, findings of fact of the trial court, when affirmed by the appellate court, are conclusive on this Court. We see no compelling reason to reverse the findings of the RTC and the CA. Petitioners Abused Their Right of Recovery as Mortgagee(s) Petitioners claim that they should not be held liable for petitioner corporations exercise of its right as seller-mortgagee to recover the mortgaged vehicle preliminary to the enforcement of its right to foreclose on the mortgage in case of default. They are clearly mistaken. True, a mortgagee may take steps to recover the mortgaged property to enable it to enforce or protect its foreclosure right thereon. There is, however, a well-defined procedure for the recovery of possession of mortgaged property: if a mortgagee is unable to obtain possession of a mortgaged property for its sale on foreclosure, he must bring a civil action either to recover such possession as a preliminary step to the sale, or to obtain judicial foreclosure.18 Petitioner corporation failed to bring the proper civil action necessary to acquire legal possession of the motorcycle. Instead, petitioner Uypitching descende d on respondents establishment with his policemen and ordered the seizure of the motorcycle without a search warrant or court order. Worse, in the course of the illegal seizure of the motorcycle, petitioner Uypitching even mouthed a slanderous statement. No doubt, petitioner corporation, acting through its co-petitioner Uypitching, blatantly disregarded the lawful procedure for the enforcement of its right, to the prejudice of respondent. Petitioners acts violated the law as well as public morals, and tra nsgressed the proper norms of human relations. The basic principle of human relations, embodied in Article 19 of the Civil Code, provides: Art. 19. Every person must in the exercise of his rights and in the performance of his duties, act with justice, give every one his due, and observe honesty and good faith. Article 19, also known as the "principle of abuse of right," prescribes that a person should not use his right unjustly or contrary to honesty and good faith, otherwise he opens himself to liability.19 It seeks to preclude the use of, or the tendency to use, a legal right (or duty) as a means to unjust ends. There is an abuse of right when it is exercised solely to prejudice or injure another.20 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.21 Otherwise, liability for damages to the injured party will attach. In this case, the manner by which the motorcycle was taken at petitioners instance was not only attended by bad faith but also contrary to the procedure laid down by law. Considered in conjunction with the defamatory statement, petitioners exercise of the right to recover the mortgaged vehicle was utterly prejudicial and injurious to respondent. On the other hand, the precipitate act of filing an unfounded complaint could not in any way be considered to be in accordance with the purpose for which the right to prosecute a crime was established. Thus, the totality of petitioners actions showed a calculated design to embarrass, humiliate and publicly ridicule respondent. Petitioners acted in an excessively harsh fashion to the prejudice of respondent. Contrary to law, petitioners willfully caused damage to respondent. Hence, they should indemnify him.22

WHEREFORE, the petition is hereby DENIED. The July 26, 2000 decision and October 18, 2000 resolution of the Court of Appeals in CA-G.R. CV No. 47571 are AFFIRMED. Triple costs against petitioners, considering that petitioner Ernesto Ramas Uypitching is a lawyer and an officer of the court, for his improper behavior. SO ORDERED.

G.R. No. L-19671

November 29, 1965

PASTOR B. TENCHAVEZ, plaintiff-appellant, vs. VICENTA F. ESCAO, ET AL., defendants-appellees. I. V. Binamira & F. B. Barria for plaintiff-appellant. Jalandoni & Jarnir for defendants-appellees. REYES, J.B.L., J.: Direct appeal, on factual and legal questions, from the judgment of the Court of First Instance of Cebu, in its Civil Case No. R-4177, denying the claim of the plaintiff-appellant, Pastor B. Tenchavez, for legal separation and one million pesos in damages against his wife and parents-in-law, the defendants-appellees, Vicente, Mamerto and Mena,1 all surnamed "Escao," respectively.2 The facts, supported by the evidence of record, are the following: Missing her late afternoon classes on 24 February 1948 in the University of San Carlos, Cebu City, where she was then enrolled as a second year student of commerce, Vicenta Escao, 27 years of age (scion of a well-to-do and socially prominent Filipino family of Spanish ancestry and a "sheltered colegiala"), exchanged marriage vows with Pastor Tenchavez, 32 years of age, an engineer, ex-army officer and of undistinguished stock, without the knowledge of her parents, before a Catholic chaplain, Lt. Moises Lavares, in the house of one Juan Alburo in the said city. The marriage was the culmination of a previous love affair and was duly registered with the local civil register. Vicenta's letters to Pastor, and his to her, before the marriage, indicate that the couple were deeply in love. Together with a friend, Pacita Noel, their matchmaker and go-between, they had planned out their marital future whereby Pacita would be the governess of their firstborn; they started saving money in a piggy bank. A few weeks before their secret marriage, their engagement was broken; Vicenta returned the engagement ring and accepted another suitor, Joseling Lao. Her love for Pastor beckoned; she pleaded for his return, and they reconciled. This time they planned to get married and then elope. To facilitate the elopement, Vicenta had brought some of her clothes to the room of Pacita Noel in St. Mary's Hall, which was their usual trysting place. Although planned for the midnight following their marriage, the elopement did not, however, materialize because when Vicente went back to her classes after the marriage, her mother, who got wind of the intended nuptials, was already waiting for her at the college. Vicenta was taken home where she admitted that she had already married Pastor. Mamerto and Mena Escao were surprised, because Pastor never asked for the hand of Vicente, and were disgusted because of the great scandal that the clandestine marriage would provoke (t.s.n., vol. III, pp. 1105-06). The following morning, the Escao spouses sought priestly advice. Father Reynes suggested a recelebration to validate what he believed to be an invalid marriage, from the standpoint of the Church, due to the lack of authority from the Archbishop or the parish priest for the officiating chaplain to celebrate the marriage. The recelebration did not take place, because on 26 February 1948 Mamerto Escao was handed by a maid, whose name he claims he does not remember, a letter purportedly coming from San Carlos college students and disclosing an amorous relationship between Pastor Tenchavez and Pacita Noel; Vicenta translated the letter to her father, and thereafter would not agree to a new marriage. Vicenta and Pastor met that day in the house of Mrs. Pilar Mendezona. Thereafter, Vicenta continued living with her parents while Pastor returned to his job in Manila. Her letter of 22 March 1948 (Exh. "M"), while still solicitous of her husband's welfare, was not as endearing as her previous letters when their love was aflame.

Vicenta was bred in Catholic ways but is of a changeable disposition, and Pastor knew it. She fondly accepted her being called a "jellyfish." She was not prevented by her parents from communicating with Pastor (Exh. "1-Escao"), but her letters became less frequent as the days passed. As of June, 1948 the newlyweds were already estranged (Exh. "2Escao"). Vicenta had gone to Jimenez, Misamis Occidental, to escape from the scandal that her marriage stirred in Cebu society. There, a lawyer filed for her a petition, drafted by then Senator Emmanuel Pelaez, to annul her marriage. She did not sign the petition (Exh. "B-5"). The case was dismissed without prejudice because of her non-appearance at the hearing (Exh. "B-4"). On 24 June 1950, without informing her husband, she applied for a passport, indicating in her application that she was single, that her purpose was to study, and she was domiciled in Cebu City, and that she intended to return after two years. The application was approved, and she left for the United States. On 22 August 1950, she filed a verified complaint for divorce against the herein plaintiff in the Second Judicial District Court of the State of Nevada in and for the County of Washoe, on the ground of "extreme cruelty, entirely mental in character." On 21 October 1950, a decree of divorce, "final and absolute", was issued in open court by the said tribunal. In 1951 Mamerto and Mena Escao filed a petition with the Archbishop of Cebu to annul their daughter's marriage to Pastor (Exh. "D"). On 10 September 1954, Vicenta sought papal dispensation of her marriage (Exh. "D"-2). On 13 September 1954, Vicenta married an American, Russell Leo Moran, in Nevada. She now lives with him in California, and, by him, has begotten children. She acquired American citizenship on 8 August 1958. But on 30 July 1955, Tenchavez had initiated the proceedings at bar by a complaint in the Court of First Instance of Cebu, and amended on 31 May 1956, against Vicenta F. Escao, her parents, Mamerto and Mena Escao, whom he charged with having dissuaded and discouraged Vicenta from joining her husband, and alienating her affections, and against the Roman Catholic Church, for having, through its Diocesan Tribunal, decreed the annulment of the marriage, and asked for legal separation and one million pesos in damages. Vicenta claimed a valid divorce from plaintiff and an equally valid marriage to her present husband, Russell Leo Moran; while her parents denied that they had in any way influenced their daughter's acts, and counterclaimed for moral damages. The appealed judgment did not decree a legal separation, but freed the plaintiff from supporting his wife and to acquire property to the exclusion of his wife. It allowed the counterclaim of Mamerto Escao and Mena Escao for moral and exemplary damages and attorney's fees against the plaintiff-appellant, to the extent of P45,000.00, and plaintiff resorted directly to this Court. The appellant ascribes, as errors of the trial court, the following: 1. In not declaring legal separation; in not holding defendant Vicenta F. Escao liable for damages and in dismissing the complaint;. 2. In not holding the defendant parents Mamerto Escano and the heirs of Doa Mena Escao liable for damages;. 3 In holding the plaintiff liable for and requiring him to pay the damages to the defendant parents on their counterclaims; and. 4. In dismissing the complaint and in denying the relief sought by the plaintiff. That on 24 February 1948 the plaintiff-appellant, Pastor Tenchavez, and the defendantappellee, Vicenta Escao, were validly married to each other, from the standpoint of our civil law, is clearly established by the record before us. Both parties were then above the

age of majority, and otherwise qualified; and both consented to the marriage, which was performed by a Catholic priest (army chaplain Lavares) in the presence of competent witnesses. It is nowhere shown that said priest was not duly authorized under civil law to solemnize marriages. The chaplain's alleged lack of ecclesiastical authorization from the parish priest and the Ordinary, as required by Canon law, is irrelevant in our civil law, not only because of the separation of Church and State but also because Act 3613 of the Philippine Legislature (which was the marriage law in force at the time) expressly provided that SEC. 1. Essential requisites. Essential requisites for marriage are the legal capacity of the contracting parties and consent. (Emphasis supplied) The actual authority of the solemnizing officer was thus only a formal requirement, and, therefore, not essential to give the marriage civil effects, 3 and this is emphasized by section 27 of said marriage act, which provided the following: SEC. 27. Failure to comply with formal requirements. No marriage shall be declared invalid because of the absence of one or several of the formal requirements of this Act if, when it was performed, the spouses or one of them believed in good faith that the person who solemnized the marriage was actually empowered to do so, and that the marriage was perfectly legal. The good faith of all the parties to the marriage (and hence the validity of their marriage) will be presumed until the contrary is positively proved (Lao vs. Dee Tim, 45 Phil. 739, 745; Francisco vs. Jason, 60 Phil. 442, 448). It is well to note here that in the case at bar, doubts as to the authority of the solemnizing priest arose only after the marriage, when Vicenta's parents consulted Father Reynes and the archbishop of Cebu. Moreover, the very act of Vicenta in abandoning her original action for annulment and subsequently suing for divorce implies an admission that her marriage to plaintiff was valid and binding. Defendant Vicenta Escao argues that when she contracted the marriage she was under the undue influence of Pacita Noel, whom she charges to have been in conspiracy with appellant Tenchavez. Even granting, for argument's sake, the truth of that contention, and assuming that Vicenta's consent was vitiated by fraud and undue influence, such vices did not render her marriage ab initio void, but merely voidable, and the marriage remained valid until annulled by a competent civil court. This was never done, and admittedly, Vicenta's suit for annulment in the Court of First Instance of Misamis was dismissed for nonprosecution. It is equally clear from the record that the valid marriage between Pastor Tenchavez and Vicenta Escao remained subsisting and undissolved under Philippine law, notwithstanding the decree of absolute divorce that the wife sought and obtained on 21 October 1950 from the Second Judicial District Court of Washoe County, State of Nevada, on grounds of "extreme cruelty, entirely mental in character." At the time the divorce decree was issued, Vicenta Escao, like her husband, was still a Filipino citizen.4 She was then subject to Philippine law, and Article 15 of the Civil Code of the Philippines (Rep. Act No. 386), already in force at the time, expressly provided: Laws relating to family rights and duties or to the status, condition and legal capacity of persons are binding upon the citizens of the Philippines, even though living abroad. The Civil Code of the Philippines, now in force, does not admit absolute divorce, quo ad vinculo matrimonii; and in fact does not even use that term, to further emphasize its restrictive policy on the matter, in contrast to the preceding legislation that admitted absolute divorce on grounds of adultery of the wife or concubinage of the husband (Act 2710). Instead of divorce, the present Civil Code only provides for legal separation (Title IV,

Book 1, Arts. 97 to 108), and, even in that case, it expressly prescribes that "the marriage bonds shall not be severed" (Art. 106, subpar. 1). For the Philippine courts to recognize and give recognition or effect to a foreign decree of absolute divorce betiveen Filipino citizens could be a patent violation of the declared public policy of the state, specially in view of the third paragraph of Article 17 of the Civil Code that prescribes the following: Prohibitive laws concerning persons, their acts or property, and those which have for their object public order, policy and good customs, shall not be rendered ineffective by laws or judgments promulgated, or by determinations or conventions agreed upon in a foreign country. Even more, the grant of effectivity in this jurisdiction to such foreign divorce decrees would, in effect, give rise to an irritating and scandalous discrimination in favor of wealthy citizens, to the detriment of those members of our polity whose means do not permit them to sojourn abroad and obtain absolute divorces outside the Philippines. From this point of view, it is irrelevant that appellant Pastor Tenchavez should have appeared in the Nevada divorce court. Primarily because the policy of our law cannot be nullified by acts of private parties (Civil Code,Art. 17, jam quot.); and additionally, because the mere appearance of a non-resident consort cannot confer jurisdiction where the court originally had none (Area vs. Javier, 95 Phil. 579). From the preceding facts and considerations, there flows as a necessary consequence that in this jurisdiction Vicenta Escao's divorce and second marriage are not entitled to recognition as valid; for her previous union to plaintiff Tenchavez must be declared to be existent and undissolved. It follows, likewise, that her refusal to perform her wifely duties, and her denial of consortium and her desertion of her husband constitute in law a wrong caused through her fault, for which the husband is entitled to the corresponding indemnity (Civil Code, Art. 2176). Neither an unsubstantiated charge of deceit nor an anonymous letter charging immorality against the husband constitute, contrary to her claim, adequate excuse. Wherefore, her marriage and cohabitation with Russell Leo Moran is technically "intercourse with a person not her husband" from the standpoint of Philippine Law, and entitles plaintiff-appellant Tenchavez to a decree of "legal separation under our law, on the basis of adultery" (Revised Penal Code, Art. 333). The foregoing conclusions as to the untoward effect of a marriage after an invalid divorce are in accord with the previous doctrines and rulings of this court on the subject, particularly those that were rendered under our laws prior to the approval of the absolute divorce act (Act 2710 of the Philippine Legislature). As a matter of legal history, our statutes did not recognize divorces a vinculo before 1917, when Act 2710 became effective; and the present Civil Code of the Philippines, in disregarding absolute divorces, in effect merely reverted to the policies on the subject prevailing before Act 2710. The rulings, therefore, under the Civil Code of 1889, prior to the Act above-mentioned, are now, fully applicable. Of these, the decision in Ramirez vs. Gmur, 42 Phil. 855, is of particular interest. Said this Court in that case: As the divorce granted by the French Court must be ignored, it results that the marriage of Dr. Mory and Leona Castro, celebrated in London in 1905, could not legalize their relations; and the circumstance that they afterwards passed for husband and wife in Switzerland until her death is wholly without legal significance. The claims of the very children to participate in the estate of Samuel Bishop must therefore be rejected. The right to inherit is limited to legitimate, legitimated and acknowledged natural children. The children of adulterous relations are wholly excluded. The word "descendants" as used in Article 941 of the Civil Code cannot be interpreted to include illegitimates born of adulterous relations. (Emphasis supplied)

Except for the fact that the successional rights of the children, begotten from Vicenta's marriage to Leo Moran after the invalid divorce, are not involved in the case at bar, the Gmur case is authority for the proposition that such union is adulterous in this jurisdiction, and, therefore, justifies an action for legal separation on the part of the innocent consort of the first marriage, that stands undissolved in Philippine law. In not so declaring, the trial court committed error. True it is that our ruling gives rise to anomalous situations where the status of a person (whether divorced or not) would depend on the territory where the question arises. Anomalies of this kind are not new in the Philippines, and the answer to them was given in Barretto vs. Gonzales, 58 Phil. 667: The hardship of the existing divorce laws in the Philippine Islands are well known to the members of the Legislature. It is the duty of the Courts to enforce the laws of divorce as written by Legislature if they are constitutional. Courts have no right to say that such laws are too strict or too liberal. (p. 72) The appellant's first assignment of error is, therefore, sustained. However, the plaintiff-appellant's charge that his wife's parents, Dr. Mamerto Escao and his wife, the late Doa Mena Escao, alienated the affections of their daughter and influenced her conduct toward her husband are not supported by credible evidence. The testimony of Pastor Tenchavez about the Escao's animosity toward him strikes us to be merely conjecture and exaggeration, and are belied by Pastor's own letters written before this suit was begun (Exh. "2-Escao" and "Vicenta," Rec. on App., pp. 270-274). In these letters he expressly apologized to the defendants for "misjudging them" and for the "great unhappiness" caused by his "impulsive blunders" and "sinful pride," "effrontery and audacity" [sic]. Plaintiff was admitted to the Escao house to visit and court Vicenta, and the record shows nothing to prove that he would not have been accepted to marry Vicente had he openly asked for her hand, as good manners and breeding demanded. Even after learning of the clandestine marriage, and despite their shock at such unexpected event, the parents of Vicenta proposed and arranged that the marriage be recelebrated in strict conformity with the canons of their religion upon advice that the previous one was canonically defective. If no recelebration of the marriage ceremony was had it was not due to defendants Mamerto Escao and his wife, but to the refusal of Vicenta to proceed with it. That the spouses Escao did not seek to compel or induce their daughter to assent to the recelebration but respected her decision, or that they abided by her resolve, does not constitute in law an alienation of affections. Neither does the fact that Vicenta's parents sent her money while she was in the United States; for it was natural that they should not wish their daughter to live in penury even if they did not concur in her decision to divorce Tenchavez (27 Am. Jur. 130-132). There is no evidence that the parents of Vicenta, out of improper motives, aided and abetted her original suit for annulment, or her subsequent divorce; she appears to have acted independently, and being of age, she was entitled to judge what was best for her and ask that her decisions be respected. Her parents, in so doing, certainly cannot be charged with alienation of affections in the absence of malice or unworthy motives, which have not been shown, good faith being always presumed until the contrary is proved. SEC. 529. Liability of Parents, Guardians or Kin. The law distinguishes between the right of a parent to interest himself in the marital affairs of his child and the absence of rights in a stranger to intermeddle in such affairs. However, such distinction between the liability of parents and that of strangers is only in regard to what will justify interference. A parent isliable for alienation of affections resulting from his own malicious conduct, as where he wrongfully entices his son or daughter to leave his or her spouse, but he is not liable unless he acts maliciously, without justification and from unworthy motives. He is not liable where he acts and advises his child in good faith with respect to his child's marital relations in the interest of his child as he sees it, the marriage of his child not terminating his right and liberty to

interest himself in, and be extremely solicitous for, his child's welfare and happiness, even where his conduct and advice suggest or result in the separation of the spouses or the obtaining of a divorce or annulment, or where he acts under mistake or misinformation, or where his advice or interference are indiscreet or unfortunate, although it has been held that the parent is liable for consequences resulting from recklessness. He may in good faith take his child into his home and afford him or her protection and support, so long as he has not maliciously enticed his child away, or does not maliciously entice or cause him or her to stay away, from his or her spouse. This rule has more frequently been applied in the case of advice given to a married daughter, but it is equally applicable in the case of advice given to a son. Plaintiff Tenchavez, in falsely charging Vicenta's aged parents with racial or social discrimination and with having exerted efforts and pressured her to seek annulment and divorce, unquestionably caused them unrest and anxiety, entitling them to recover damages. While this suit may not have been impelled by actual malice, the charges were certainly reckless in the face of the proven facts and circumstances. Court actions are not established for parties to give vent to their prejudices or spleen. In the assessment of the moral damages recoverable by appellant Pastor Tenchavez from defendant Vicente Escao, it is proper to take into account, against his patently unreasonable claim for a million pesos in damages, that (a) the marriage was celebrated in secret, and its failure was not characterized by publicity or undue humiliation on appellant's part; (b) that the parties never lived together; and (c) that there is evidence that appellant had originally agreed to the annulment of the marriage, although such a promise was legally invalid, being against public policy (cf. Art. 88, Civ. Code). While appellant is unable to remarry under our law, this fact is a consequence of the indissoluble character of the union that appellant entered into voluntarily and with open eyes rather than of her divorce and her second marriage. All told, we are of the opinion that appellant should recover P25,000 only by way of moral damages and attorney's fees. With regard to the P45,000 damages awarded to the defendants, Dr. Mamerto Escao and Mena Escao, by the court below, we opine that the same are excessive. While the filing of this unfounded suit must have wounded said defendants' feelings and caused them anxiety, the same could in no way have seriously injured their reputation, or otherwise prejudiced them, lawsuits having become a common occurrence in present society. What is important, and has been correctly established in the decision of the court below, is that said defendants were not guilty of any improper conduct in the whole deplorable affair. This Court, therefore, reduces the damages awarded to P5,000 only. Summing up, the Court rules: (1) That a foreign divorce between Filipino citizens, sought and decreed after the effectivity of the present Civil Code (Rep. Act 386), is not entitled to recognition as valid in this jurisdiction; and neither is the marriage contracted with another party by the divorced consort, subsequently to the foreign decree of divorce, entitled to validity in the country; (2) That the remarriage of divorced wife and her co-habitation with a person other than the lawful husband entitle the latter to a decree of legal separation conformably to Philippine law; (3) That the desertion and securing of an invalid divorce decree by one consort entitles the other to recover damages; (4) That an action for alienation of affections against the parents of one consort does not lie in the absence of proof of malice or unworthy motives on their part. WHEREFORE, the decision under appeal is hereby modified as follows;

(1) Adjudging plaintiff-appellant Pastor Tenchavez entitled to a decree of legal separation from defendant Vicenta F. Escao; (2) Sentencing defendant-appellee Vicenta Escao to pay plaintiff-appellant Tenchavez the amount of P25,000 for damages and attorneys' fees; (3) Sentencing appellant Pastor Tenchavez to pay the appellee, Mamerto Escao and the estate of his wife, the deceased Mena Escao, P5,000 by way of damages and attorneys' fees. Neither party to recover costs.

G.R. No. L-24803 May 26, 1977 PEDRO ELCANO and PATRICIA ELCANO, in their capacity as Ascendants of Agapito Elcano, deceased,plaintiffs-appellants, vs. REGINALD HILL, minor, and MARVIN HILL, as father and Natural Guardian of said minor, defendants-appellees. Cruz & Avecilla for appellants. Marvin R. Hill & Associates for appellees.

BARREDO, J.: Appeal from the order of the Court of First Instance of Quezon City dated January 29, 1965 in Civil Case No. Q-8102, Pedro Elcano et al. vs. Reginald Hill et al. dismissing, upon motion to dismiss of defendants, the complaint of plaintiffs for recovery of damages from defendant Reginald Hill, a minor, married at the time of the occurrence, and his father, the defendant Marvin Hill, with whom he was living and getting subsistence, for the killing by Reginald of the son of the plaintiffs, named Agapito Elcano, of which, when criminally prosecuted, the said accused was acquitted on the ground that his act was not criminal, because of "lack of intent to kill, coupled with mistake." Actually, the motion to dismiss based on the following grounds: 1. The present action is not only against but a violation of section 1, Rule 107, which is now Rule III, of the Revised Rules of Court; 2. The action is barred by a prior judgment which is now final and or in resadjudicata; 3. The complaint had no cause of action against defendant Marvin Hill, because he was relieved as guardian of the other defendant through emancipation by marriage. (P. 23, Record [p. 4, Record on Appeal.]) was first denied by the trial court. It was only upon motion for reconsideration of the defendants of such denial, reiterating the above grounds that the following order was issued: Considering the motion for reconsideration filed by the defendants on January 14, 1965 and after thoroughly examining the arguments therein contained, the Court finds the same to be meritorious and well-founded. WHEREFORE, the Order of this Court on December 8, 1964 is hereby reconsidered by ordering the dismissal of the above entitled case. SO ORDERED. Quezon City, Philippines, January 29, 1965. (p. 40, Record [p. 21, Record on Appeal.) Hence, this appeal where plaintiffs-appellants, the spouses Elcano, are presenting for Our resolution the following assignment of errors:

THE LOWER COURT ERRED IN DISMISSING THE CASE BY UPHOLDING THE CLAIM OF DEFENDANTS THAT I THE PRESENT ACTION IS NOT ONLY AGAINST BUT ALSO A VIOLATION OF SECTION 1, RULE 107, NOW RULE 111, OF THE REVISED RULES OF COURT, AND THAT SECTION 3(c) OF RULE 111, RULES OF COURT IS APPLICABLE; II THE ACTION IS BARRED BY A PRIOR JUDGMENT WHICH IS NOW FINAL OR RES-ADJUDICTA; III THE PRINCIPLES OF QUASI-DELICTS, ARTICLES 2176 TO 2194 OF THE CIVIL CODE, ARE INAPPLICABLE IN THE INSTANT CASE; and IV THAT THE COMPLAINT STATES NO CAUSE OF ACTION AGAINST DEFENDANT MARVIN HILL BECAUSE HE WAS RELIEVED AS GUARDIAN OF THE OTHER DEFENDANT THROUGH EMANCIPATION BY MARRIAGE. (page 4, Record.) It appears that for the killing of the son, Agapito, of plaintiffs-appellants, defendant- appellee Reginald Hill was prosecuted criminally in Criminal Case No. 5102 of the Court of First Instance of Quezon City. After due trial, he was acquitted on the ground that his act was not criminal because of "lack of intent to kill, coupled with mistake." Parenthetically, none of the parties has favored Us with a copy of the decision of acquittal, presumably because appellants do not dispute that such indeed was the basis stated in the court's decision. And so, when appellants filed their complaint against appellees Reginald and his father, Atty. Marvin Hill, on account of the death of their son, the appellees filed the motion to dismiss above-referred to. As We view the foregoing background of this case, the two decisive issues presented for Our resolution are: 1. Is the present civil action for damages barred by the acquittal of Reginald in the criminal case wherein the action for civil liability, was not reversed? 2. May Article 2180 (2nd and last paragraphs) of the Civil Code he applied against Atty. Hill, notwithstanding the undisputed fact that at the time of the occurrence complained of. Reginald, though a minor, living with and getting subsistenee from his father, was already legally married? The first issue presents no more problem than the need for a reiteration and further clarification of the dual character, criminal and civil, of fault or negligence as a source of obligation which was firmly established in this jurisdiction in Barredo vs. Garcia, 73 Phil. 607. In that case, this Court postulated, on the basis of a scholarly dissertation by Justice Bocobo on the nature of culpa aquiliana in relation to culpa criminal or delito and mere culpa or fault, with pertinent citation of decisions of the Supreme Court of Spain, the works of recognized civilians, and earlier jurisprudence of our own, that the same given act can result in civil liability not only under the Penal Code but also under the Civil Code. Thus, the opinion holds:

The, above case is pertinent because it shows that the same act machinist. come under both the Penal Code and the Civil Code. In that case, the action of the agent killeth unjustified and fraudulent and therefore could have been the subject of a criminal action. And yet, it was held to be also a proper subject of a civil action under article 1902 of the Civil Code. It is also to be noted that it was the employer and not the employee who was 1 being sued. (pp. 615-616, 73 Phil.). It will be noticed that the defendant in the above case could have been prosecuted in a criminal case because his negligence causing the death of the child was punishable by the Penal Code. Here is therefore a clear instance of the same act of negligence being a proper subject matter either of a criminal action with its consequent civil liability arising from a crime or of an entirely separate and independent civil action for fault or negligence under article 1902 of the Civil Code. Thus, in this jurisdiction, the separate individuality of a cuasi-delito or culpa aquiliana, under the Civil Code has been fully and clearly recognized, even with regard to a negligent act for which the wrongdoer could have been prosecuted and convicted in a criminal case and for which, after such a conviction, he 2 could have been sued for this civil liability arising from his crime. (p. 617, 73 Phil.) It is most significant that in the case just cited, this Court specifically applied article 1902 of the Civil Code. It is thus that although J. V. House could have been criminally prosecuted for reckless or simple negligence and not only punished but also made civilly liable because of his criminal negligence, nevertheless this Court awarded damages in an independent civil action for fault or negligence under article 1902 of the Civil Code. (p. 3 618, 73 Phil.)

The legal provisions, authors, and cases already invoked should ordinarily be sufficient to dispose of this case. But inasmuch as we are announcing doctrines that have been little understood, in the past, it might not he inappropriate to indicate their foundations. Firstly, the Revised Penal Code in articles 365 punishes not only reckless but also simple negligence. If we were to hold that articles 1902 to 1910 of the Civil Code refer only to fault or negligence not punished by law, accordingly to the literal import of article 1093 of the Civil Code, the legal institution of culpa aquiliana would have very little scope and application in actual life. Death or injury to persons and damage to property- through any degree of negligence even the slightest - would have to be Idemnified only through the principle of civil liability arising from a crime. In such a state of affairs, what sphere would remain for cuasi-delito or culpa aquiliana? We are loath to impute to the lawmaker any intention to bring about a situation so absurd and anomalous. Nor are we, in the interpretation of the laws, disposed to uphold the letter that killeth rather than the spirit that giveth life. We will not use the literal meaning of the law to smother and render almost lifeless a principle of such ancient origin and such full-grown development as culpa aquiliana or cuasi-delito, which is conserved and made enduring in articles 1902 to 1910 of the Spanish Civil Code. Secondary, to find the accused guilty in a criminal case, proof of guilt beyond reasonable doubt is required, while in a civil case, preponderance of evidence is sufficient to make the defendant pay in damages. There are numerous cases of criminal negligence which can not be shown beyond reasonable doubt, but can be proved by a preponderance of evidence. In such cases, the defendant can and should be made responsible in a civil action under articles 1902 to 1910 of the Civil Code. Otherwise. there would be many instances of unvindicated civil wrongs. "Ubi jus Idemnified remedium." (p. 620,73 Phil.) Fourthly, because of the broad sweep of the provisions of both the Penal Code and the Civil Code on this subject, which has given rise to the overlapping or concurrence of spheres already discussed, and for lack of understanding of the character and efficacy of the action for culpa aquiliana, there has grown up a common practice to seek damages only by virtue of the civil responsibility arising from a crime, forgetting that there is another

remedy, which is by invoking articles 1902-1910 of the Civil Code. Although this habitual method is allowed by, our laws, it has nevertheless rendered practically useless and nugatory the more expeditious and effective remedy based on culpa aquiliana or culpa extra-contractual. In the present case, we are asked to help perpetuate this usual course. But we believe it is high time we pointed out to the harms done by such practice and to restore the principle of responsibility for fault or negligence under articles 1902 et seq. of the Civil Code to its full rigor. It is high time we caused the stream of quasidelict or culpa aquiliana to flow on its own natural channel, so that its waters may no longer be diverted into that of a crime under the Penal Code. This will, it is believed, make for the better safeguarding or private rights because it realtor, an ancient and additional remedy, and for the further reason that an independent civil action, not depending on the issues, limitations and results of a criminal prosecution, and entirely directed by the party wronged or his counsel, is more likely to secure adequate and efficacious redress. (p. 621, 73 Phil.) Contrary to an immediate impression one might get upon a reading of the foregoing excerpts from the opinion in Garcia that the concurrence of the Penal Code and the Civil Code therein referred to contemplate only acts of negligence and not intentional voluntary acts - deeper reflection would reveal that the thrust of the pronouncements therein is not so limited, but that in fact it actually extends to fault or culpa. This can be seen in the reference made therein to the Sentence of the Supreme Court of Spain of February 14, 1919, supra, which involved a case of fraud or estafa, not a negligent act. Indeed, Article 1093 of the Civil Code of Spain, in force here at the time of Garcia, provided textually that obligations "which are derived from acts or omissions in which fault or negligence, not punishable by law, intervene shall be the subject of Chapter II, Title XV of this book (which refers to quasidelicts.)" And it is precisely the underline qualification, "not punishable by law", that Justice Bocobo emphasized could lead to an ultimo construction or interpretation of the letter of the law that "killeth, rather than the spirit that giveth lift- hence, the ruling that "(W)e will not use the literal meaning of the law to smother and render almost lifeless a principle of such ancient origin and such full-grown development as culpa aquiliana orquasi-delito, which is conserved and made enduring in articles 1902 to 1910 of the Spanish Civil Code." And so, because Justice Bacobo was Chairman of the Code Commission that drafted the original text of the new Civil Code, it is to be noted that the said Code, which was enacted after the Garcia doctrine, no longer uses the term, 11 not punishable by law," thereby making it clear that the concept of culpa aquiliana includes acts which are criminal in character or in violation of the penal law, whether voluntary or matter. Thus, the corresponding provisions to said Article 1093 in the new code, which is Article 1162, simply says, "Obligations derived from quasi-delicto shall be governed by the provisions of Chapter 2, Title XVII of this Book, (on quasi-delicts) and by special laws." More precisely, a new provision, Article 2177 of the new code provides: ART. 2177. 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. According to the Code Commission: "The foregoing provision (Article 2177) through at first sight startling, is not so novel or extraordinary when we consider the exact nature of criminal and civil negligence. The former is a violation of the criminal law, while the latter is a "culpa aquiliana" or quasi-delict, of ancient origin, having always had its own foundation and individuality, separate from criminal negligence. Such distinction between criminal negligence and "culpa extracontractual" or "cuasi-delito" has been sustained by decision of the Supreme Court of Spain and maintained as clear, sound and perfectly tenable by Maura, an outstanding Spanish jurist. Therefore, under the proposed Article 2177, acquittal from an accusation of criminal negligence, whether on reasonable doubt or not, shall not be a bar to a subsequent civil action, not for civil liability arising from criminal negligence, but

for damages due to a quasi-delict or 'culpa aquiliana'. But said article forestalls a double recovery.", (Report of the Code) Commission, p. 162.) Although, again, this Article 2177 does seem to literally refer to only acts of negligence, the same argument of Justice Bacobo about construction that upholds "the spirit that giveth liftrather than that which is literal that killeth the intent of the lawmaker should be observed in applying the same. And considering that the preliminary chapter on human relations of the new Civil Code definitely establishes the separability and independence of liability in a civil action for acts criminal in character (under Articles 29 to 32) from the civil responsibility arising from crime fixed by Article 100 of the Revised Penal Code, and, in a sense, the Rules of Court, under Sections 2 and 3 (c), Rule 111, contemplate also the same separability, it is "more congruent with the spirit of law, equity and justice, and more in harmony with modern progress"- to borrow the felicitous relevant language in Rakes vs. Atlantic. Gulf and Pacific Co., 7 Phil. 359, to hold, as We do hold, that Article 2176, where it refers to "fault or negligencia covers not only acts "not punishable by law" but also acts criminal in character, whether intentional and voluntary or negligent. Consequently, a separate civil action lies against the offender in a criminal act, whether or not he is criminally prosecuted and found guilty or acquitted, provided that the offended party is not allowed, if he is actually charged also criminally, to recover damages on both scores, and would be entitled in such eventuality only to the bigger award of the two, assuming the awards made in the two cases vary. In other words, the extinction of civil liability referred to in Par. (e) of Section 3, Rule 111, refers exclusively to civil liability founded on Article 100 of the Revised Penal Code, whereas the civil liability for the same act considered as a quasi-delict only and not as a crime is not estinguished even by a declaration in the criminal case that the criminal act charged has not happened or has not been committed by the accused. Briefly stated, We here hold, in reiteration of Garcia, thatculpa aquiliana includes voluntary and negligent acts which may be punishable by law. 4 It results, therefore, that the acquittal of Reginal Hill in the criminal case has not extinguished his liability for quasi-delict, hence that acquittal is not a bar to the instant action against him. Coming now to the second issue about the effect of Reginald's emancipation by marriage on the possible civil liability of Atty. Hill, his father, it is also Our considered opinion that the conclusion of appellees that Atty. Hill is already free from responsibility cannot be upheld. While it is true that parental authority is terminated upon emancipation of the child (Article 327, Civil Code), and under Article 397, emancipation takes place "by the marriage of the minor (child)", it is, however, also clear that pursuant to Article 399, emancipation by marriage of the minor is not really full or absolute. Thus "(E)mancipation by marriage or by voluntary concession shall terminate parental authority over the child's person. It shall enable the minor to administer his property as though he were of age, but he cannot borrow money or alienate or encumber real property without the consent of his father or mother, or guardian. He can sue and be sued in court only with the assistance of his father, mother or guardian." Now under Article 2180, "(T)he obligation imposed by article 2176 is demandable not only for one's own acts or omissions, but also for those of persons for whom one is responsible. The father and, in case of his death or incapacity, the mother, are responsible. The father and, in case of his death or incapacity, the mother, are responsible for the damages caused by the minor children who live in their company." In the instant case, it is not controverted that Reginald, although married, was living with his father and getting subsistence from him at the time of the occurrence in question. Factually, therefore, Reginald was still subservient to and dependent on his father, a situation which is not unusual. It must be borne in mind that, according to Manresa, the reason behind the joint and solidary liability of presuncion with their offending child under Article 2180 is that is the obligation of the parent to supervise their minor children in order to prevent them from causing damage to third persons. 5 On the other hand, the clear implication of Article 399, in

providing that a minor emancipated by marriage may not, nevertheless, sue or be sued without the assistance of the parents, is that such emancipation does not carry with it freedom to enter into transactions or do any act that can give rise to judicial litigation. (See Manresa, Id., Vol. II, pp. 766-767, 776.) And surely, killing someone else invites judicial action. Otherwise stated, the marriage of a minor child does not relieve the parents of the duty to see to it that the child, while still a minor, does not give answerable for the borrowings of money and alienation or encumbering of real property which cannot be done by their minor married child without their consent. (Art. 399; Manresa, supra.) Accordingly, in Our considered view, Article 2180 applies to Atty. Hill notwithstanding the emancipation by marriage of Reginald. However, inasmuch as it is evident that Reginald is now of age, as a matter of equity, the liability of Atty. Hill has become milling, subsidiary to that of his son. WHEREFORE, the order appealed from is reversed and the trial court is ordered to proceed in accordance with the foregoing opinion. Costs against appellees.

G.R. No. 165732

December 14, 2006

SAFEGUARD SECURITY AGENCY, INC., and ADMER PAJARILLO, petitioners, vs. LAURO TANGCO, VAL TANGCO, VERN LARRY TANGCO, VAN LAURO TANGCO, VON LARRIE TANGCO, VIEN LARI TANGCO and VIVIEN LAURIZ TANGCO, respondent.

DECISION

AUSTRIA-MARTINEZ, J.: Before us is a petition for review on certiorari filed by Safeguard Security Agency, Inc. (Safeguard) and Admer Pajarillo (Pajarillo) assailing the Decision1 dated July 16, 2004 and the Resolution2 dated October 20, 2004 issued by the Court of Appeals (CA) in CA-G.R. CV No. 77462. On November 3, 1997, at about 2:50 p.m., Evangeline Tangco (Evangeline) went to Ecology Bank, Katipunan Branch, Quezon City, to renew her time deposit per advise of the bank's cashier as she would sign a specimen card. Evangeline, a duly licensed firearm holder with corresponding permit to carry the same outside her residence, approached security guard Pajarillo, who was stationed outside the bank, and pulled out her firearm from her bag to deposit the same for safekeeping. Suddenly, Pajarillo shot Evangeline with his service shotgun hitting her in the abdomen instantly causing her death. Lauro Tangco, Evangeline's husband, together with his six minor children (respondents) filed with the Regional Trial Court (RTC) of Quezon City, a criminal case of Homicide against Pajarillo, docketed as Criminal Case No. 0-97-73806 and assigned to Branch 78. Respondents reserved their right to file a separate civil action in the said criminal case. The RTC of Quezon City subsequently convicted Pajarillo of Homicide in its Decision dated January 19, 2000.3 On appeal to the CA, the RTC decision was affirmed with modification as to the penalty in a Decision4dated July 31, 2000. Entry of Judgment was made on August 25, 2001. Meanwhile, on January 14, 1998, respondents filed with RTC, Branch 273, Marikina City, a complaint5 for damages against Pajarillo for negligently shooting Evangeline and against Safeguard for failing to observe the diligence of a good father of a family to prevent the damage committed by its security guard. Respondents prayed for actual, moral and exemplary damages and attorney's fees. In their Answer,6 petitioners denied the material allegations in the complaint and alleged that Safeguard exercised the diligence of a good father of a family in the selection and supervision of Pajarillo; that Evangeline's death was not due to Pajarillo's negligence as the latter acted only in self-defense. Petitioners set up a compulsory counterclaim for moral damages and attorney's fees. Trial thereafter ensued. On January 10, 2003, the RTC rendered its Decision,7 the dispositive portion of which reads: WHEREFORE, judgment is hereby rendered in favor of the plaintiffs, the heirs of Evangeline Tangco, and against defendants Admer Pajarillo and Safeguard Security Agency, Inc. ordering said defendants to pay the plaintiffs, jointly and severally, the following:

1. ONE HUNDRED FIFTY SEVEN THOUSAND FOUR HUNDRED THIRTY PESOS (P157,430.00), as actual damages 2. FIFTY THOUSAND PESOS (P50,000.00) as death indemnity; 3. ONE MILLION PESOS (P1,000,000.00), as moral damages; 4. THREE HUNDRED THOUSAND PESOS (P300,000.00), as exemplary damages; 5. THIRTY THOUSAND PESOS (P30,000.00), as attorney's fees; and 6. costs of suit. For lack of merit, defendants' counterclaim is hereby DISMISSED. SO ORDERED. 8 The RTC found respondents to be entitled to damages. It rejected Pajarillo's claim that he merely acted in self-defense. It gave no credence to Pajarillo's bare claim that Evangeline was seen roaming around the area prior to the shooting incident since Pajarillo had not made such report to the head office and the police authorities. The RTC further ruled that being the guard on duty, the situation demanded that he should have exercised proper prudence and necessary care by asking Evangeline for him to ascertain the matter instead of shooting her instantly; that Pajarillo had already been convicted of Homicide in Criminal Case No. 0-97-73806; and that he also failed to proffer proof negating liability in the instant case. The RTC also found Safeguard as employer of Pajarillo to be jointly and severally liable with Pajarillo. It ruled that while it may be conceded that Safeguard had perhaps exercised care in the selection of its employees, particularly of Pajarillo, there was no sufficient evidence to show that Safeguard exercised the diligence of a good father of a family in the supervision of its employee; that Safeguard's evidence simply showed that it required its guards to attend trainings and seminars which is not the supervision contemplated under the law; that supervision includes not only the issuance of regulations and instructions designed for the protection of persons and property, for the guidance of their servants and employees, but also the duty to see to it that such regulations and instructions are faithfully complied with. Petitioners appealed the RTC decision to the CA. On July 16, 2004, the CA issued its assailed Decision, the dispositive portion of which reads: IN VIEW OF ALL THE FOREGOING, the appealed decision is hereby AFFIRMED, with the modification that Safeguard Security Agency, Inc.'s civil liability in this case is only subsidiary under Art. 103 of the Revised Penal Code. No pronouncement as to costs.9 In finding that Safeguard is only subsidiarily liable, the CA held that the applicable provisions are not Article 2180 in relation to Article 2176 of the Civil Code, on quasi-delicts, but the provisions on civil liability arising from felonies under the Revised Penal Code; that since Pajarillo had been found guilty of Homicide in a final and executory judgment and is said to be serving sentence in Muntinlupa, he must be adjudged civilly liable under the provisions of Article 100 of the Revised Penal Code since the civil liability recoverable in the criminal action is one solely dependent upon conviction, because said liability arises from the offense charged and no other; that this is also the civil liability that is deemed extinguished with the extinction of the penal liability with a pronouncement that the fact from which the civil action might proceed does not exist; that unlike in civil liability arising from quasi-delict, the defense of diligence of a good father of a family in the employment and supervision of employees is inapplicable and irrelevant in civil liabilities based on

crimes or ex-delicto; that Article 103 of the Revised Penal Code provides that the liability of an employer for the civil liability of their employees is only subsidiary, not joint or solidary. Petitioners filed their Motion for Reconsideration which the CA denied in a Resolution dated October 20, 2004. Hence, the instant Petition for Review on Certiorari with the following assignment of errors, to wit: The Honorable Court of Appeals gravely erred in finding petitioner Pajarillo liable to respondents for the payment of damages and other money claims. The Honorable Court of Appeals gravely erred when it applied Article 103 of the Revised Penal Code in holding petitioner Safeguard solidarily [sic] liable with petitioner Pajarillo for the payment of damages and other money claims. The Honorable Court of Appeals gravely erred in failing to find that petitioner Safeguard Security Agency, Inc. exercised due diligence in the selection and supervision of its employees, hence, should be excused from any liability.10 The issues for resolution are whether (1) Pajarillo is guilty of negligence in shooting Evangeline; and (2) Safeguard should be held solidarily liable for the damages awarded to respondents. Safeguard insists that the claim for damages by respondents is based on culpa aquiliana under Article 217611 of the Civil Code, in which case, its liability is jointly and severally with Pajarillo. However, since it has established that it had exercised due diligence in the selection and supervision of Pajarillo, it should be exonerated from civil liability. We will first resolve whether the CA correctly held that respondents, in filing a separate civil action against petitioners are limited to the recovery of damages arising from a crime or delict, in which case the liability of Safeguard as employer under Articles 102 and 103 of the Revised Penal Code12 is subsidiary and the defense of due diligence in the selection and supervision of employee is not available to it. The CA erred in ruling that the liability of Safeguard is only subsidiary. The law at the time the complaint for damages was filed is Rule 111 of the 1985 Rules on Criminal Procedure, as amended, to wit: SECTION 1. Institution of criminal and civil actions. - When a criminal action is instituted, the civil action for the recovery of civil liability is impliedly instituted with the criminal action, unless the offended party waives the civil action, reserves his right to institute it separately, or institutes the civil action prior to the criminal action. Such civil action includes recovery of indemnity under the Revised Penal Code, and damages under Articles 32, 33, 34, and 2176 of the Civil Code of the Philippines arising from the same act or omission of the accused. Respondents reserved the right to file a separate civil action and in fact filed the same on January 14, 1998. The CA found that the source of damages in the instant case must be the crime of homicide, for which he had already been found guilty of and serving sentence thereof, thus must be governed by the Revised Penal Code. We do not agree.

An act or omission causing damage to another may give rise to two separate civil liabilities on the part of the offender, i.e., (1) civil liability ex delicto, under Article 100 of the Revised Penal Code; and (2) independent civil liabilities, such as those (a) not arising from an act or omission complained of as a felony, e.g., culpa contractual or obligations arising from law under Article 31 of the Civil Code, intentional torts under Articles 32 and 34, and culpa aquiliana under Article 2176 of the Civil Code; or (b) where the injured party is granted a right to file an action independent and distinct from the criminal action under Article 33 of the Civil Code. Either of these liabilities may be enforced against the offender subject to the caveat under Article 2177 of the Civil Code that the offended party cannot recover damages twice for the same act or omission or under both causes.13 It is important to determine the nature of respondents' cause of action. The nature of a cause of action is determined by the facts alleged in the complaint as constituting the cause of action.14 The purpose of an action or suit and the law to govern it is to be determined not by the claim of the party filing the action, made in his argument or brief, but rather by the complaint itself, its allegations and prayer for relief.15 The pertinent portions of the complaint read: 7. That Defendant Admer A. Pajarillo was the guard assigned and posted in the Ecology Bank Katipunan Branch, Quezon City, who was employed and under employment of Safeguard Security Agency, Inc. hence there is employer-employee relationship between co-defendants. The Safeguard Security Agency, Inc. failed to observe the diligence of a good father of a family to prevent damage to herein plaintiffs. 8. That defendant Admer Pajarillo upon seeing Evangeline Tangco, who brought her firearm out of her bag, suddenly without exercising necessary caution/care, and in idiotic manner, with the use of his shotgun, fired and burst bullets upon Evangeline M. Tangco, killing her instantly. x x x xxxx 16. That defendants, being employer and the employee are jointly and severally liable for the death of Evangeline M. Tangco.16 Thus, a reading of respondents' complaint shows that the latter are invoking their right to recover damages against Safeguard for their vicarious responsibility for the injury caused by Pajarillo's act of shooting and killing Evangeline under Article 2176, Civil Code which provides: ARTICLE 2176. 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 quasidelict and is governed by the provisions of this Chapter. The scope of Article 2176 is not limited to acts or omissions resulting from negligence. In Dulay v. Court of Appeals,17 we held: x x x Well-entrenched is the doctrine that Article 2176 covers not only acts committed with negligence, but also acts which are voluntary and intentional. As far back as the definitive case of Elcano v. Hill (77 SCRA 98 [1977]), this Court already held that: "x x x Article 2176, where it refers to "fault or negligence," covers not only acts "not punishable by law" but also acts criminal in character, whether intentional and voluntary or negligent.Consequently, a separate civil action lies against the offender in a criminal act, whether or not he is criminally prosecuted and

found guilty or acquitted, provided that the offended party is not allowed, if he is actually charged also criminally, to recover damages on both scores, and would be entitled in such eventuality only to the bigger award of the two, assuming the awards made in the two cases vary. In other words, the extinction of civil liability referred to in Par. (e) of Section 3, Rule 111, refers exclusively to civil liability founded on Article 100 of the Revised Penal Code, whereas the civil liability for the same act considered as quasi-delict only and not as a crime is not extinguished even by a declaration in the criminal case that the criminal act charged has not happened or has not been committed by the accused. Briefly stated, We here hold, in reiteration of Garcia, that culpa aquiliana includes voluntary and negligent acts which may be punishable by law." (Emphasis supplied) The civil action filed by respondents was not derived from the criminal liability of Pajarillo in the criminal case but one based on culpa aquiliana or quasi-delict which is separate and distinct from the civil liability arising from crime.18 The source of the obligation sought to be enforced in the civil case is a quasi-delict not an act or omission punishable by law. In Bermudez v. Melencio-Herrera,19 where the issue involved was whether the civil action filed by plaintiff-appellants is founded on crime or on quasi-delict, we held: x x x The trial court treated the case as an action based on a crime in view of the reservation made by the offended party in the criminal case (Criminal Case No. 92944), also pending before the court, to file a separate civil action. Said the trial court: It would appear that plaintiffs instituted this action on the assumption that defendant Pontino's negligence in the accident of May 10, 1969 constituted a quasi-delict. The Court cannot accept the validity of that assumption. In Criminal Case No. 92944 of this Court, plaintiffs had already appeared as complainants. While that case was pending, the offended parties reserved the right to institute a separate civil action. If, in a criminal case, the right to file a separate civil action for damages is reserved, such civil action is to be based on crime and not on tort. That was the ruling in Joaquin vs. Aniceto, L-18719, Oct. 31, 1964. We do not agree. The doctrine in the case cited by the trial court is inapplicable to the instant case x x x. xxxx In cases of negligence, the injured party or his heirs has the choice between an action to enforce the civil liability arising from crime under Article 100 of the Revised Penal Code and an action for quasi-delict under Article 2176-2194 of the Civil Code. If a party chooses the latter, he may hold the employer solidarily liable for the negligent act of his employee, subject to the employer's defense of exercise of the diligence of a good father of the family. In the case at bar, the action filed by appellant was an action for damages based on quasi-delict. The fact that appellants reserved their right in the criminal case to file an independent civil action did not preclude them from choosing to file a civil action for quasi-delict.20 (Emphasis supplied) Although the judgment in the criminal case finding Pajarillo guilty of Homicide is already final and executory, such judgment has no relevance or importance to this case. 21 It would have been entirely different if respondents' cause of action was for damages arising from a delict, in which case the CA is correct in finding Safeguard to be only subsidiary liable pursuant to Article 103 of the Revised Penal Code.22 As clearly shown by the allegations in the complaint, respondents' cause of action is based on quasi-delict. Under Article 2180 of the Civil Code, when the injury is caused by the

negligence of the employee, there instantly arises a presumption of law that there was negligence on the part of the master or the employer either in the selection of the servant or employee, or in the supervision over him after selection or both. The liability of the employer under Article 2180 is direct and immediate. Therefore, it is incumbent upon petitioners to prove that they exercised the diligence of a good father of a family in the selection and supervision of their employee. We must first resolve the issue of whether Pajarillo was negligent in shooting Evangeline. The issue of negligence is factual in nature. Whether a person is negligent or not is a question of fact, which, as a general rule, we cannot pass upon in a petition for review on certiorari, as our jurisdiction is limited to reviewing errors of law.23 Generally, factual findings of the trial court, affirmed by the CA, are final and conclusive and may not be reviewed on appeal. The established exceptions are: (1) when the inference made is manifestly mistaken, absurd or impossible; (2) when there is grave abuse of discretion; (3) when the findings are grounded entirely on speculations, surmises or conjectures; (4) when the judgment of the CA is based on misapprehension of facts; (5) when the findings of fact are conflicting; (6) when the CA, in making its findings, went beyond the issues of the case and the same is contrary to the admissions of both appellant and appellee; (7) when the findings of fact are conclusions without citation of specific evidence on which they are based; (8) when the CA manifestly overlooked certain relevant facts not disputed by the parties and which, if properly considered, would justify a different conclusion; and (9) when the findings of fact of the CA are premised on the absence of evidence and are contradicted by the evidence on record. [24] A thorough review of the records of the case fails to show any cogent reason for us to deviate from the factual finding of the trial court and affirmed by the CA that petitioner Pajarillo was guilty of negligence in shooting Evangeline. Respondents' evidence established that Evangeline's purpose in going to the bank was to renew her time deposit.25 On the other hand, Pajarillo claims that Evangeline drew a gun from her bag and aimed the same at him, thus, acting instinctively, he shot her in selfdefense. Pajarillo testified that when Evangeline aimed the gun at him at a distance of about one meter or one arm's length26 he stepped backward, loaded the chamber of his gun and shot her.27 It is however unimaginable that petitioner Pajarillo could still make such movements if indeed the gun was already pointed at him. Any movement could have prompted Evangeline to pull the trigger to shoot him. Petitioner Pajarillo would like to justify his action in shooting Evangeline on his mere apprehension that Evangeline will stage a bank robbery. However, such claim is befuddled by his own testimony. Pajarillo testified that prior to the incident, he saw Evangeline roaming under the fly over which was about 10 meters away from the bank28 and saw her talking to a man thereat;29 that she left the man under the fly-over, crossed the street and approached the bank. However, except for the bare testimony of Pajarillo, the records do not show that indeed Evangeline was seen roaming near the vicinity of the bank and acting suspiciously prior to the shooting incident. In fact, there is no evidence that Pajarillo called the attention of his head guard or the bank's branch manager regarding his concerns or that he reported the same to the police authorities whose outpost is just about 15 meters from the bank. Moreover, if Evangeline was already roaming the vicinity of the bank, she could have already apprised herself that Pajarillo, who was posted outside the bank, was armed with a shotgun; that there were two guards inside the bank30 manning the entrance door. Thus, it is quite incredible that if she really had a companion, she would leave him under the fly-over which is 10 meters far from the bank and stage a bank robbery all by herself without a backup. In fact, she would have known, after surveying the area, that aiming her gun at Pajarillo would not ensure entrance to the bank as there were guards manning the entrance door.

Evidence, to be believed, must not only proceed from the mouth of a credible witness, but it must be credible in itself such as the common experience and observation of mankind can approve as probable under the circumstances. We have no test of the truth of human testimony, except its conformity to our knowledge, observation and experience. Whatever is repugnant to these belongs to the miraculous and is outside judicial cognizance. 31 That Evangeline just wanted to deposit her gun before entering the bank and was actually in the act of pulling her gun from her bag when petitioner Pajarillo recklessly shot her, finds support from the contentions raised in petitioners' petition for review where they argued that when Evangeline approached the bank, she was seen pulling a gun from inside her bag and petitioner Pajarillo who was suddenly beset by fear and perceived the act as a dangerous threat, shot and killed the deceased out of pure instinct; 32 that the act of drawing a gun is a threatening act, regardless of whether or not the gun was intended to be used against petitioner Pajarillo;33 that the fear that was created in the mind of petitioner Pajarillo as he saw Evangeline Tangco drawing a gun from her purse was suddenly very real and the former merely reacted out of pure self-preservation.34 Considering that unlawful aggression on the part of Evangeline is absent, Pajarillo's claim of self-defense cannot be accepted specially when such claim was uncorroborated by any separate competent evidence other than his testimony which was even doubtful. Pajarillo's apprehension that Evangeline will shoot him to stage a bank robbery has no basis at all. It is therefore clear that the alleged threat of bank robbery was just a figment of Pajarillo's imagination which caused such unfounded unlawful aggression on his part. Petitioners argue that Evangeline was guilty of contributory negligence. Although she was a licensed firearm holder, she had no business bringing the gun in such establishment where people would react instinctively upon seeing the gun; that had Evangeline been prudent, she could have warned Pajarillo before drawing the gun and did not conduct herself with suspicion by roaming outside the vicinity of the bank; that she should not have held the gun with the nozzle pointed at Pajarillo who mistook the act as hold up or robbery. We are not persuaded. As we have earlier held, Pajarillo failed to substantiate his claim that Evangeline was seen roaming outside the vicinity of the bank and acting suspiciously prior to the shooting incident. Evangeline's death was merely due to Pajarillo's negligence in shooting her on his imagined threat that Evangeline will rob the bank. Safeguard contends that it cannot be jointly held liable since it had adequately shown that it had exercised the diligence required in the selection and supervision of its employees. It claims that it had required the guards to undergo the necessary training and to submit the requisite qualifications and credentials which even the RTC found to have been complied with; that the RTC erroneously found that it did not exercise the diligence required in the supervision of its employee. Safeguard further claims that it conducts monitoring of the activities of its personnel, wherein supervisors are assigned to routinely check the activities of the security guards which include among others, whether or not they are in their proper post and with proper equipment, as well as regular evaluations of the employees' performances; that the fact that Pajarillo loaded his firearm contrary to Safeguard's operating procedure is not sufficient basis to say that Safeguard had failed its duty of proper supervision; that it was likewise error to say that Safeguard was negligent in seeing to it that the procedures and policies were not properly implemented by reason of one unfortunate event. We are not convinced. Article 2180 of the Civil Code provides: Art. 2180. The obligation imposed by Article 2176 is demandable not only for one's own acts or omissions, but also for those of persons for whom one is responsible.

xxxx Employers shall be liable for the damages caused by their employees and household helpers acting within the scope of their assigned tasks, even though the former are not engaged in any business or industry. xxxx The responsibility treated of in this article shall cease when the persons herein mentioned prove that they observed all the diligence of a good father of a family to prevent damage. As the employer of Pajarillo, Safeguard is primarily and solidarily liable for the quasidelict committed by the former. Safeguard is presumed to be negligent in the selection and supervision of his employee by operation of law. This presumption may be overcome only by satisfactorily showing that the employer exercised the care and the diligence of a good father of a family in the selection and the supervision of its employee. In the selection of prospective employees, employers are required to examine them as to their qualifications, experience, and service records.35 On the other hand, due diligence in the supervision of employees includes the formulation of suitable rules and regulations for the guidance of employees and the issuance of proper instructions intended for the protection of the public and persons with whom the employer has relations through his or its employees and the imposition of necessary disciplinary measures upon employees in case of breach or as may be warranted to ensure the performance of acts indispensable to the business of and beneficial to their employer. To this, we add that actual implementation and monitoring of consistent compliance with said rules should be the constant concern of the employer, acting through dependable supervisors who should regularly report on their supervisory functions.36 To establish these factors in a trial involving the issue of vicarious liability, employers must submit concrete proof, including documentary evidence. We agree with the RTC's finding that Safeguard had exercised the diligence in the selection of Pajarillo since the record shows that Pajarillo underwent a psychological and neuropsychiatric evaluation conducted by the St. Martin de Porres Center where no psychoses ideations were noted, submitted a certification on the Pre-licensing training course for security guards, as well as police and NBI clearances. The RTC did not err in ruling that Safeguard fell short of the diligence required in the supervision of its employee, particularly Pajarillo. In this case, while Safeguard presented Capt. James Camero, its Director for Operations, who testified on the issuance of company rules and regulations, such as the Guidelines of Guards Who Will Be Assigned To Banks,37 Weapons Training,38 Safeguard Training Center Marksmanship Training Lesson Plan,39Disciplinary/Corrective Sanctions,40 it had also been established during Camero's cross-examination that Pajarillo was not aware of such rules and regulations.41 Notwithstanding Camero's clarification on his re-direct examination that these company rules and regulations are lesson plans as a basis of guidelines of the instructors during classroom instructions and not necessary to give students copy of the same, 42 the records do not show that Pajarillo had attended such classroom instructions. The records also failed to show that there was adequate training and continuous evaluation of the security guard's performance. Pajarillo had only attended an in-service training on March 1, 1997 conducted by Toyota Sta. Rosa, his first assignment as security guard of Safeguard, which was in collaboration with Safeguard. It was established that the concept of such training was purely on security of equipments to be guarded and protection of the life of the employees.43 It had not been established that after Pajarillo's training in Toyota, Safeguard had ever conducted further training of Pajarillo when he was later assigned to guard a bank which has a different nature of business with that of Toyota. In fact, Pajarillo testified that being on

duty in a bank is different from being on duty in a factory since a bank is a very sensitive area.44 Moreover, considering his reactions to Evangeline's act of just depositing her firearm for safekeeping, i.e., of immediately shooting her, confirms that there was no training or seminar given on how to handle bank clients and on human psychology. Furthermore, while Safeguard would like to show that there were inspectors who go around the bank two times a day to see the daily performance of the security guards assigned therein, there was no record ever presented of such daily inspections. In fact, if there was really such inspection made, the alleged suspicious act of Evangeline could have been taken noticed and reported. Turning now to the award of damages, we find that the award of actual damages in the amount P157,430.00 which were the expenses incurred by respondents in connection with the burial of Evangeline were supported by receipts. The award of P50,000.00 as civil indemnity for the death of Evangeline is likewise in order. As to the award of moral damages, Article 2206 of the Civil Code provides that the spouse, legitimate children and illegitimate descendants and ascendants of the deceased may demand moral damages for mental anguish by reason of the death of the deceased. Moral damages are awarded to enable the injured party to obtain means, diversions or amusements that will serve to alleviate the moral suffering he/she has undergone, by reason of the defendant's culpable action. Its award is aimed at restoration, as much as possible, of the spiritual status quo ante;thus it must be proportionate to the suffering inflicted.45 The intensity of the pain experienced by the relatives of the victim is proportionate to the intensity of affection for him and bears no relation whatsoever with the wealth or means of the offender.46 In this case, respondents testified as to their moral suffering caused by Evangeline's death was so sudden causing respondent Lauro to lose a wife and a mother to six children who were all minors at the time of her death. InPeople v. Teehankee, Jr.,47 we awarded one million pesos as moral damages to the heirs of a seventeen-year-old girl who was murdered. In Metro Manila Transit Corporation v. Court of Appeals,48 we likewise awarded the amount of one million pesos as moral damages to the parents of a third year high school student and who was also their youngest child who died in a vehicular accident since the girl's death left a void in their lives. Hence, we hold that the respondents are also entitled to the amount of one million pesos as Evangeline's death left a void in the lives of her husband and minor children as they were deprived of her love and care by her untimely demise. We likewise uphold the award of exemplary damages in the amount of P300,000.00. Under Article 2229 of the Civil Code, exemplary damages are imposed by way of example or correction for the public good, in addition to moral, temperate, liquidated or compensatory damages.49 It is awarded as a deterrent to socially deleterious actions. Inquasi-delict, exemplary damages may be granted if the defendant acted with gross negligence. 50 Pursuant to Article 2208 of the Civil Code, attorney's fees may be recovered when, as in the instant case, exemplary damages are awarded. Hence, we affirm the award of attorney's fees in the amount of P30,000.00. WHEREFORE, the petition for review is DENIED. The Decision dated July 16, 2004 of the Court of Appeals isAFFIRMED with MODIFICATION that the civil liability of petitioner Safeguard Security Agency, Inc. is SOLIDARYand PRIMARY under Article 2180 of the Civil Code. SO ORDERED.

G.R. No. 173227

January 20, 2009

SEBASTIAN SIGA-AN, Petitioner, vs. ALICIA VILLANUEVA, Respondent. DECISION CHICO-NAZARIO, J.: Before Us is a Petition1 for Review on Certiorari under Rule 45 of the Rules of Court seeking to set aside the Decision,2 dated 16 December 2005, and Resolution,3 dated 19 June 2006 of the Court of Appeals in CA-G.R. CV No. 71814, which affirmed in toto the Decision,4 dated 26 January 2001, of the Las Pinas City Regional Trial Court, Branch 255, in Civil Case No. LP-98-0068. The facts gathered from the records are as follows: On 30 March 1998, respondent Alicia Villanueva filed a complaint 5 for sum of money against petitioner Sebastian Siga-an before the Las Pinas City Regional Trial Court (RTC), Branch 255, docketed as Civil Case No. LP-98-0068. Respondent alleged that she was a businesswoman engaged in supplying office materials and equipments to the Philippine Navy Office (PNO) located at Fort Bonifacio, Taguig City, while petitioner was a military officer and comptroller of the PNO from 1991 to 1996. Respondent claimed that sometime in 1992, petitioner approached her inside the PNO and offered to loan her the amount of P540,000.00. Since she needed capital for her business transactions with the PNO, she accepted petitioners proposal. The loan agreement was not reduced in writing. Also, there was no stipulation as to the payment of interest for the loan.6 On 31 August 1993, respondent issued a check worth P500,000.00 to petitioner as partial payment of the loan. On 31 October 1993, she issued another check in the amount of P200,000.00 to petitioner as payment of the remaining balance of the loan. Petitioner told her that since she paid a total amount of P700,000.00 for theP540,000.00 worth of loan, the excess amount of P160,000.00 would be applied as interest for the loan. Not satisfied with the amount applied as interest, petitioner pestered her to pay additional interest. Petitioner threatened to block or disapprove her transactions with the PNO if she would not comply with his demand. As all her transactions with the PNO were subject to the approval of petitioner as comptroller of the PNO, and fearing that petitioner might block or unduly influence the payment of her vouchers in the PNO, she conceded. Thus, she paid additional amounts in cash and checks as interests for the loan. She asked petitioner for receipt for the payments but petitioner told her that it was not necessary as there was mutual trust and confidence between them. According to her computation, the total amount she paid to petitioner for the loan and interest accumulated toP1,200,000.00.7 Thereafter, respondent consulted a lawyer regarding the propriety of paying interest on the loan despite absence of agreement to that effect. Her lawyer told her that petitioner could not validly collect interest on the loan because there was no agreement between her and petitioner regarding payment of interest. Since she paid petitioner a total amount of P1,200,000.00 for the P540,000.00 worth of loan, and upon being advised by her lawyer that she made overpayment to petitioner, she sent a demand letter to petitioner asking for the return of the excess amount of P660,000.00. Petitioner, despite receipt of the demand letter, ignored her claim for reimbursement.8 Respondent prayed that the RTC render judgment ordering petitioner to pay respondent (1) P660,000.00 plus legal interest from the time of demand; (2) P300,000.00 as moral damages; (3) P50,000.00 as exemplary damages; and (4) an amount equivalent to 25% of P660,000.00 as attorneys fees.9

In his answer10 to the complaint, petitioner denied that he offered a loan to respondent. He averred that in 1992, respondent approached and asked him if he could grant her a loan, as she needed money to finance her business venture with the PNO. At first, he was reluctant to deal with respondent, because the latter had a spotty record as a supplier of the PNO. However, since respondent was an acquaintance of his officemate, he agreed to grant her a loan. Respondent paid the loan in full.11 Subsequently, respondent again asked him to give her a loan. As respondent had been able to pay the previous loan in full, he agreed to grant her another loan. Later, respondent requested him to restructure the payment of the loan because she could not give full payment on the due date. He acceded to her request. Thereafter, respondent pleaded for another restructuring of the payment of the loan. This time he rejected her plea. Thus, respondent proposed to execute a promissory note wherein she would acknowledge her obligation to him, inclusive of interest, and that she would issue several postdated checks to guarantee the payment of her obligation. Upon his approval of respondents request for restructuring of the loan, respondent executed a promissory note dated 12 September 1994 wherein she admitted having borrowed an amount of P1,240,000.00, inclusive of interest, from petitioner and that she would pay said amount in March 1995. Respondent also issued to him six postdated checks amounting to P1,240,000.00 as guarantee of compliance with her obligation. Subsequently, he presented the six checks for encashment but only one check was honored. He demanded that respondent settle her obligation, but the latter failed to do so. Hence, he filed criminal cases for Violation of the Bouncing Checks Law (Batas Pambansa Blg. 22) against respondent. The cases were assigned to the Metropolitan Trial Court of Makati City, Branch 65 (MeTC).12 Petitioner insisted that there was no overpayment because respondent admitted in the latters promissory note that her monetary obligation as of 12 September 1994 amounted to P1,240,000.00 inclusive of interests. He argued that respondent was already estopped from complaining that she should not have paid any interest, because she was given several times to settle her obligation but failed to do so. He maintained that to rule in favor of respondent is tantamount to concluding that the loan was given interest-free. Based on the foregoing averments, he asked the RTC to dismiss respondents complaint. After trial, the RTC rendered a Decision on 26 January 2001 holding that respondent made an overpayment of her loan obligation to petitioner and that the latter should refund the excess amount to the former. It ratiocinated that respondents obligation was only to pay the loaned amount of P540,000.00, and that the alleged interests due should not be included in the computation of respondents total monetary debt because there was no agreement between them regarding payment of interest. It concluded that since respondent made an excess payment to petitioner in the amount of P660,000.00 through mistake, petitioner should return the said amount to respondent pursuant to the principle of solutio indebiti.13 The RTC also ruled that petitioner should pay moral damages for the sleepless nights and wounded feelings experienced by respondent. Further, petitioner should pay exemplary damages by way of example or correction for the public good, plus attorneys fees and costs of suit. The dispositive portion of the RTC Decision reads: WHEREFORE, in view of the foregoing evidence and in the light of the provisions of law and jurisprudence on the matter, judgment is hereby rendered in favor of the plaintiff and against the defendant as follows: (1) Ordering defendant to pay plaintiff the amount of P660,000.00 plus legal interest of 12% per annum computed from 3 March 1998 until the amount is paid in full; (2) Ordering defendant to pay plaintiff the amount of P300,000.00 as moral damages;

(3) Ordering defendant to pay plaintiff the amount of P50,000.00 as exemplary damages; (4) Ordering defendant to pay plaintiff the amount equivalent to 25% of P660,000.00 as attorneys fees; and (5) Ordering defendant to pay the costs of suit.14 Petitioner appealed to the Court of Appeals. On 16 December 2005, the appellate court promulgated its Decision affirming in toto the RTC Decision, thus: WHEREFORE, the foregoing considered, the instant appeal is hereby DENIED and the assailed decision [is] AFFIRMED in toto.15 Petitioner filed a motion for reconsideration of the appellate courts decision but this was denied.16 Hence, petitioner lodged the instant petition before us assigning the following errors: I. THE RTC AND THE COURT OF APPEALS ERRED IN RULING THAT NO INTEREST WAS DUE TO PETITIONER; II. THE RTC AND THE COURT OF APPEALS ERRED IN APPLYING THE PRINCIPLE OF SOLUTIO INDEBITI.17 Interest is a compensation fixed by the parties for the use or forbearance of money. This is referred to as monetary interest. Interest may also be imposed by law or by courts as penalty or indemnity for damages. This is called compensatory interest.18 The right to interest arises only by virtue of a contract or by virtue of damages for delay or failure to pay the principal loan on which interest is demanded.19 Article 1956 of the Civil Code, which refers to monetary interest, 20 specifically mandates that no interest shall be due unless it has been expressly stipulated in writing. As can be gleaned from the foregoing provision, payment of monetary interest is allowed only if: (1) there was an express stipulation for the payment of interest; and (2) the agreement for the payment of interest was reduced in writing. The concurrence of the two conditions is required for the payment of monetary interest. Thus, we have held that collection of interest without any stipulation therefor in writing is prohibited by law.21 It appears that petitioner and respondent did not agree on the payment of interest for the loan. Neither was there convincing proof of written agreement between the two regarding the payment of interest. Respondent testified that although she accepted petitioners offer of loan amounting to P540,000.00, there was, nonetheless, no verbal or written agreement for her to pay interest on the loan.22 Petitioner presented a handwritten promissory note dated 12 September 199423 wherein respondent purportedly admitted owing petitioner "capital and interest." Respondent, however, explained that it was petitioner who made a promissory note and she was told to copy it in her own handwriting; that all her transactions with the PNO were subject to the approval of petitioner as comptroller of the PNO; that petitioner threatened to disapprove her transactions with the PNO if she would not pay interest; that being unaware of the law on interest and fearing that petitioner would make good of his threats if she would not obey his instruction to copy the promissory note, she copied the promissory note in her own handwriting; and that such was the same promissory note presented by petitioner as alleged proof of their written agreement on interest.24 Petitioner did not rebut the foregoing testimony. It is evident that respondent did not really consent to the payment of interest for

the loan and that she was merely tricked and coerced by petitioner to pay interest. Hence, it cannot be gainfully said that such promissory note pertains to an express stipulation of interest or written agreement of interest on the loan between petitioner and respondent. Petitioner, nevertheless, claims that both the RTC and the Court of Appeals found that he and respondent agreed on the payment of 7% rate of interest on the loan; that the agreed 7% rate of interest was duly admitted by respondent in her testimony in the Batas Pambansa Blg. 22 cases he filed against respondent; that despite such judicial admission by respondent, the RTC and the Court of Appeals, citing Article 1956 of the Civil Code, still held that no interest was due him since the agreement on interest was not reduced in writing; that the application of Article 1956 of the Civil Code should not be absolute, and an exception to the application of such provision should be made when the borrower admits that a specific rate of interest was agreed upon as in the present case; and that it would be unfair to allow respondent to pay only the loan when the latter very well knew and even admitted in the Batas Pambansa Blg. 22 cases that there was an agreed 7% rate of interest on the loan.25 We have carefully examined the RTC Decision and found that the RTC did not make a ruling therein that petitioner and respondent agreed on the payment of interest at the rate of 7% for the loan. The RTC clearly stated that although petitioner and respondent entered into a valid oral contract of loan amounting to P540,000.00, they, nonetheless, never intended the payment of interest thereon.26 While the Court of Appeals mentioned in its Decision that it concurred in the RTCs ruling that petitioner and respondent agreed on a certain rate of interest as regards the loan, we consider this as merely an inadvertence because, as earlier elucidated, both the RTC and the Court of Appeals ruled that petitioner is not entitled to the payment of interest on the loan. The rule is that factual findings of the trial court deserve great weight and respect especially when affirmed by the appellate court.27 We found no compelling reason to disturb the ruling of both courts. Petitioners reliance on respondents alleged admission in the Batas Pam bansa Blg. 22 cases that they had agreed on the payment of interest at the rate of 7% deserves scant consideration. In the said case, respondent merely testified that after paying the total amount of loan, petitioner ordered her to pay interest.28 Respondent did not categorically declare in the same case that she and respondent made an express stipulation in writing as regards payment of interest at the rate of 7%. As earlier discussed, monetary interest is due only if there was anexpress stipulation in writing for the payment of interest. There are instances in which an interest may be imposed even in the absence of express stipulation, verbal or written, regarding payment of interest. Article 2209 of the Civil Code states that if the obligation consists in the payment of a sum of money, and the debtor incurs delay, a legal interest of 12% per annum may be imposed as indemnity for damages if no stipulation on the payment of interest was agreed upon. Likewise, Article 2212 of the Civil Code provides that interest due shall earn legal interest from the time it is judicially demanded, although the obligation may be silent on this point. All the same, the interest under these two instances may be imposed only as a penalty or damages for breach of contractual obligations. It cannot be charged as a compensation for the use or forbearance of money. In other words, the two instances apply only to compensatory interest and not to monetary interest.29 The case at bar involves petitioners claim for monetary interest. Further, said compensatory interest is not chargeable in the instant case because it was not duly proven that respondent defaulted in paying the loan. Also, as earlier found, no interest was due on the loan because there was no written agreement as regards payment of interest. Apropos the second assigned error, petitioner argues that the principle of solutio indebiti does not apply to the instant case. Thus, he cannot be compelled to return the alleged excess amount paid by respondent as interest.30

Under Article 1960 of the Civil Code, if the borrower of loan pays interest when there has been no stipulation therefor, the provisions of the Civil Code concerning solutio indebiti shall be applied. Article 2154 of the Civil Code explains the principle of solutio indebiti. Said provision provides that if something is received when there is no right to demand it, and it was unduly delivered through mistake, the obligation to return it arises. In such a case, a creditor-debtor relationship is created under a quasi-contract whereby the payor becomes the creditor who then has the right to demand the return of payment made by mistake, and the person who has no right to receive such payment becomes obligated to return the same. The quasi-contract of solutio indebiti harks back to the ancient principle that no one shall enrich himself unjustly at the expense of another.31 The principle of solutio indebitiapplies where (1) a payment is made when there exists no binding relation between the payor, who has no duty to pay, and the person who received the payment; and (2) the payment is made through mistake, and not through liberality or some other cause. 32 We have held that the principle of solutio indebiti applies in case of erroneous payment of undue interest.33 It was duly established that respondent paid interest to petitioner. Respondent was under no duty to make such payment because there was no express stipulation in writing to that effect. There was no binding relation between petitioner and respondent as regards the payment of interest. The payment was clearly a mistake. Since petitioner received something when there was no right to demand it, he has an obligation to return it. We shall now determine the propriety of the monetary award and damages imposed by the RTC and the Court of Appeals. Records show that respondent received a loan amounting to P540,000.00 from petitioner.34 Respondent issued two checks with a total worth of P700,000.00 in favor of petitioner as payment of the loan.35 These checks were subsequently encashed by petitioner.36 Obviously, there was an excess of P160,000.00 in the payment for the loan. Petitioner claims that the excess of P160,000.00 serves as interest on the loan to which he was entitled. Aside from issuing the said two checks, respondent also paid cash in the total amount of P175,000.00 to petitioner as interest.37 Although no receipts reflecting the same were presented because petitioner refused to issue such to respondent, petitioner, nonetheless, admitted in his Reply-Affidavit38 in the Batas Pambansa Blg. 22 cases that respondent paid him a total amount of P175,000.00 cash in addition to the two checks. Section 26 Rule 130 of the Rules of Evidence provides that the declaration of a party as to a relevant fact may be given in evidence against him. Aside from the amounts of P160,000.00 and P175,000.00 paid as interest, no other proof of additional payment as interest was presented by respondent. Since we have previously found that petitioner is not entitled to payment of interest and that the principle of solutio indebiti applies to the instant case, petitioner should return to respondent the excess amount of P160,000.00 and P175,000.00 or the total amount of P335,000.00. Accordingly, the reimbursable amount to respondent fixed by the RTC and the Court of Appeals should be reduced fromP660,000.00 to P335,000.00. As earlier stated, petitioner filed five (5) criminal cases for violation of Batas Pambansa Blg. 22 against respondent. In the said cases, the MeTC found respondent guilty of violating Batas Pambansa Blg. 22 for issuing five dishonored checks to petitioner. Nonetheless, respondents conviction therein does not affect our ruling in the instant case. The two checks, subject matter of this case, totaling P700,000.00 which respondent claimed as payment of the P540,000.00 worth of loan, were not among the five checks found to be dishonored or bounced in the five criminal cases. Further, the MeTC found that respondent made an overpayment of the loan by reason of the interest which the latter paid to petitioner.39 Article 2217 of the Civil Code provides that moral damages may be recovered if the party underwent physical suffering, mental anguish, fright, serious anxiety, besmirched reputation, wounded feelings, moral shock, social humiliation and similar injury. Respondent testified that she experienced sleepless nights and wounded feelings when petitioner

refused to return the amount paid as interest despite her repeated demands. Hence, the award of moral damages is justified. However, its corresponding amount of P300,000.00, as fixed by the RTC and the Court of Appeals, is exorbitant and should be equitably reduced. Article 2216 of the Civil Code instructs that assessment of damages is left to the discretion of the court according to the circumstances of each case. This discretion is limited by the principle that the amount awarded should not be palpably excessive as to indicate that it was the result of prejudice or corruption on the part of the trial court. 40 To our mind, the amount of P150,000.00 as moral damages is fair, reasonable, and proportionate to the injury suffered by respondent. Article 2232 of the Civil Code states that in a quasi-contract, such as solutio indebiti, exemplary damages may be imposed if the defendant acted in an oppressive manner. Petitioner acted oppressively when he pestered respondent to pay interest and threatened to block her transactions with the PNO if she would not pay interest. This forced respondent to pay interest despite lack of agreement thereto. Thus, the award of exemplary damages is appropriate. The amount of P50,000.00 imposed as exemplary damages by the RTC and the Court is fitting so as to deter petitioner and other lenders from committing similar and other serious wrongdoings.41 Jurisprudence instructs that in awarding attorneys fees, the trial court must state the factual, legal or equitable justification for awarding the same.42 In the case under consideration, the RTC stated in its Decision that the award of attorneys fees equivalent to 25% of the amount paid as interest by respondent to petitioner is reasonable and moderate considering the extent of work rendered by respondents lawyer in the instant case and the fact that it dragged on for several years.43 Further, respondent testified that she agreed to compensate her lawyer handling the instant case such amount.44 The award, therefore, of attorneys fees and its amount equivalent to 25% of the amount paid as interest by respondent to petitioner is proper. Finally, the RTC and the Court of Appeals imposed a 12% rate of legal interest on the amount refundable to respondent computed from 3 March 1998 until its full payment. This is erroneous. We held in Eastern Shipping Lines, Inc. v. Court of Appeals,45 that when an obligation, not constituting a loan or forbearance of money is breached, an interest on the amount of damages awarded may be imposed at the rate of 6% per annum. We further declared that when the judgment of the court awarding a sum of money becomes final and executory, the rate of legal interest, whether it is a loan/forbearance of money or not, shall be 12% per annum from such finality until its satisfaction, this interim period being deemed equivalent to a forbearance of credit. In the present case, petitioners obligation arose from a quasi-contract of solutio indebiti and not from a loan or forbearance of money. Thus, an interest of 6% per annum should be imposed on the amount to be refunded as well as on the damages awarded and on the attorneys fees, to be computed from the time of the extra-judicial demand on 3 March 1998,46 up to the finality of this Decision. In addition, the interest shall become 12% per annum from the finality of this Decision up to its satisfaction. WHEREFORE, the Decision of the Court of Appeals in CA-G.R. CV No. 71814, dated 16 December 2005, is hereby AFFIRMED with the following MODIFICATIONS: (1) the amount of P660,000.00 as refundable amount of interest is reduced to THREE HUNDRED THIRTY FIVE THOUSAND PESOS (P335,000.00); (2) the amount ofP300,000.00 imposed as moral damages is reduced to ONE HUNDRED FIFTY THOUSAND PESOS (P150,000.00); (3) an interest of 6% per annum is imposed on the P335,000.00, on the damages awarded and on the attorneys fees to be computed from the time of the extra-judicial demand on 3 March 1998 up to the finality of this Decision; and (4) an interest of 12% per annum is also imposed from the finality of this Decision up to its satisfaction. Costs against petitioner. SO ORDERED.