1

FIRST DIVISION
[G.R. No. 122191. October 8, 1998]
SAUDI ARABIAN AIRLINES, petitioner, vs. COURT OF APPEALS, MILAGROS P.
MORADA and HON. RODOLFO A. ORTIZ, in his capacity as Presiding Judge
of Branch 89, Regional Trial Court of Quezon City, respondents.
D E C I S I O N
QUISUMBING, J .:
This petition for certiorari pursuant to Rule 45 of the Rules of Court seeks to annul and
set aside the Resolution
[1]
dated September 27, 1995 and the Decision
[2]
dated April 10,
1996 of the Court of Appeals
[3]
in CA-G.R. SP No. 36533,
[4]
and the Orders
[5]
dated August
29, 1994
[6]
and February 2, 1995
[7]
that were issued by the trial court in Civil Case No. Q-93-
18394.
[8]

The pertinent antecedent facts which gave rise to the instant petition, as stated in the
questioned Decision
[9]
, are as follows:
On January 21, 1988 defendant SAUDIA hired plaintiff as a Flight Attendant for
its airlines based in Jeddah, Saudi Arabia. x x x
On April 27, 1990, while on a lay-over in Jakarta, Indonesia, plaintiff went to a
disco dance with fellow crew members Thamer Al-Gazzawi and Allah Al-
Gazzawi, both Saudi nationals. Because it was almost morning when they
returned to their hotels, they agreed to have breakfast together at the room of
Thamer. When they were in te (sic) room, Allah left on some pretext. Shortly
after he did, Thamer attempted to rape plaintiff. Fortunately, a roomboy and
several security personnel heard her cries for help and rescued her. Later, the
Indonesian police came and arrested Thamer and Allah Al-Gazzawi, the latter as
an accomplice.
When plaintiff returned to Jeddah a few days later, several SAUDIA officials
interrogated her about the Jakarta incident. They then requested her to go back
to Jakarta to help arrange the release of Thamer and Allah. In Jakarta, SAUDIA
Legal Officer Sirah Akkad and base manager Baharini negotiated with the police
for the immediate release of the detained crew members but did not succeed
because plaintiff refused to cooperate. She was afraid that she might be tricked
into something she did not want because of her inability to understand the local
dialect. She also declined to sign a blank paper and a document written in the
local dialect. Eventually, SAUDIA allowed plaintiff to return to Jeddah but barred
her from the Jakarta flights.
Plaintiff learned that, through the intercession of the Saudi Arabian government,
the Indonesian authorities agreed to deport Thamer and Allah after two weeks of
detention. Eventually, they were again put in service by defendant SAUDI
(sic). In September 1990, defendant SAUDIA transferred plaintiff to Manila.
On January 14, 1992, just when plaintiff thought that the Jakarta incident was
already behind her, her superiors requested her to see Mr. Ali Meniewy, Chief
Legal Officer of SAUDIA, in Jeddah, Saudi Arabia. When she saw him, he
brought her to the police station where the police took her passport and
questioned her about the Jakarta incident. Miniewy simply stood by as the police
put pressure on her to make a statement dropping the case against Thamer and
Allah. Not until she agreed to do so did the police return her passport and
allowed her to catch the afternoon flight out of Jeddah.
One year and a half later or on June 16, 1993, in Riyadh, Saudi Arabia, a few
minutes before the departure of her flight to Manila, plaintiff was not allowed to
board the plane and instead ordered to take a later flight to Jeddah to see Mr.
Miniewy, the Chief Legal Officer of SAUDIA. When she did, a certain Khalid of
the SAUDIA office brought her to a Saudi court where she was asked to sign a
document written in Arabic. They told her that this was necessary to close the
case against Thamer and Allah. As it turned out, plaintiff signed a notice to her to
appear before the court on June 27, 1993. Plaintiff then returned to Manila.
Shortly afterwards, defendant SAUDIA summoned plaintiff to report to Jeddah
once again and see Miniewy on June 27, 1993 for further investigation. Plaintiff
did so after receiving assurance from SAUDIAs Manila manager, Aslam Saleemi,
that the investigation was routinary and that it posed no danger to her.
In Jeddah, a SAUDIA legal officer brought plaintiff to the same Saudi court on
June 27, 1993. Nothing happened then but on June 28, 1993, a Saudi judge
interrogated plaintiff through an interpreter about the Jakarta incident. After one
hour of interrogation, they let her go. At the airport, however, just as her plane
was about to take off, a SAUDIA officer told her that the airline had forbidden her
to take flight. At the Inflight Service Office where she was told to go, the
secretary of Mr. Yahya Saddick took away her passport and told her to remain in
Jeddah, at the crew quarters, until further orders.
On July 3, 1993 a SAUDIA legal officer again escorted plaintiff to the same court
where the judge, to her astonishment and shock, rendered a decision, translated
to her in English, sentencing her to five months imprisonment and to 286
lashes. Only then did she realize that the Saudi court had tried her, together with
Thamer and Allah, for what happened in Jakarta. The court found plaintiff guilty
of (1) adultery; (2) going to a disco, dancing and listening to the music in violation
of Islamic laws; and (3) socializing with the male crew, in contravention of Islamic
tradition.
[10]

Facing conviction, private respondent sought the help of her employer, petitioner
SAUDIA. Unfortunately, she was denied any assistance. She then asked the Philippine
Embassy in Jeddah to help her while her case is on appeal. Meanwhile, to pay for her
upkeep, she worked on the domestic flight of SAUDIA, while Thamer and Allah continued to
serve in the international flights.
[11]

2

Because she was wrongfully convicted, the Prince of Makkah dismissed the case
against her and allowed her to leave Saudi Arabia. Shortly before her return to
Manila,
[12]
she was terminated from the service by SAUDIA, without her being informed of
the cause.
On November 23, 1993, Morada filed a Complaint
[13]
for damages against SAUDIA,
and Khaled Al-Balawi (Al- Balawi), its country manager.
On January 19, 1994, SAUDIA filed an Omnibus Motion To Dismiss
[14]
which raised
the following grounds, to wit: (1) that the Complaint states no cause of action against
Saudia; (2) that defendant Al-Balawi is not a real party in interest; (3) that the claim or
demand set forth in the Complaint has been waived, abandoned or otherwise extinguished;
and (4) that the trial court has no jurisdiction to try the case.
On February 10, 1994, Morada filed her Opposition (To Motion to Dismiss)
[15]
Saudia
filed a reply
[16]
thereto on March 3, 1994.
On June 23, 1994, Morada filed an Amended Complaint
[17]
wherein Al-Balawi was
dropped as party defendant. On August 11, 1994, Saudia filed its Manifestation and Motion
to Dismiss Amended Complaint
[18]
.
The trial court issued an Order
[19]
dated August 29, 1994 denying the Motion to
Dismiss Amended Complaint filed by Saudia.
From the Order of respondent Judge
[20]
denying the Motion to Dismiss, SAUDIA filed
on September 20, 1994, its Motion for Reconsideration
[21]
of the Order dated August 29,
1994. It alleged that the trial court has no jurisdiction to hear and try the case on the basis
of Article 21 of the Civil Code, since the proper law applicable is the law of the Kingdom of
Saudi Arabia. On October 14, 1994, Morada filed her Opposition
[22]
(To Defendants Motion
for Reconsideration).
In the Reply
[23]
filed with the trial court on October 24, 1994, SAUDIA alleged that
since its Motion for Reconsideration raised lack of jurisdiction as its cause of action, the
Omnibus Motion Rule does not apply, even if that ground is raised for the first time on
appeal. Additionally, SAUDIA alleged that the Philippines does not have any substantial
interest in the prosecution of the instant case, and hence, without jurisdiction to adjudicate
the same.
Respondent Judge subsequently issued another Order
[24]
dated February 2, 1995,
denying SAUDIAs Motion for Reconsideration. The pertinent portion of the assailed Order
reads as follows:
Acting on the Motion for Reconsideration of defendant Saudi Arabian Airlines
filed, thru counsel, on September 20, 1994, and the Opposition thereto of the
plaintiff filed, thru counsel, on October 14, 1994, as well as the Reply therewith
of defendant Saudi Arabian Airlines filed, thru counsel, on October 24, 1994,
considering that a perusal of the plaintiffs Amended Complaint, which is one for
the recovery of actual, moral and exemplary damages plus attorneys fees, upon
the basis of the applicable Philippine law, Article 21 of the New Civil Code of the
Philippines, is, clearly, within the jurisdiction of this Court as regards the subject
matter, and there being nothing new of substance which might cause the
reversal or modification of the order sought to be reconsidered, the motion for
reconsideration of the defendant, is DENIED.
SO ORDERED.
[25]

Consequently, on February 20, 1995, SAUDIA filed its Petition for Certiorari and
Prohibition with Prayer for Issuance of Writ of Preliminary Injunction and/or Temporary
Restraining Order
[26]
with the Court of Appeals.
Respondent Court of Appeals promulgated a Resolution with Temporary Restraining
Order
[27]
dated February 23, 1995, prohibiting the respondent Judge from further conducting
any proceeding, unless otherwise directed, in the interim.
In another Resolution
[28]
promulgated on September 27, 1995, now assailed, the
appellate court denied SAUDIAs Petition for the Issuance of a Writ of Preliminary Injunction
dated February 18, 1995, to wit:
The Petition for the Issuance of a Writ of Preliminary Injunction is hereby
DENIED, after considering the Answer, with Prayer to Deny Writ of Preliminary
Injunction (Rollo, p. 135) the Reply and Rejoinder, it appearing that herein
petitioner is not clearly entitled thereto (Unciano Paramedical College, et. Al.,
v. Court of Appeals, et. Al., 100335, April 7, 1993, Second Division).
SO ORDERED.
On October 20, 1995, SAUDIA filed with this Honorable Court the instant Petition
[29]
for
Review with Prayer for Temporary Restraining Order dated October 13, 1995.
However, during the pendency of the instant Petition, respondent Court of Appeals
rendered the Decision
[30]
dated April 10, 1996, now also assailed. It ruled that the
Philippines is an appropriate forum considering that the Amended Complaints basis for
recovery of damages is Article 21 of the Civil Code, and thus, clearly within the jurisdiction
of respondent Court. It further held that certiorari is not the proper remedy in a denial of a
Motion to Dismiss, inasmuch as the petitioner should have proceeded to trial, and in case of
an adverse ruling, find recourse in an appeal.
On May 7, 1996, SAUDIA filed its Supplemental Petition for Review with Prayer for
Temporary Restraining Order
[31]
dated April 30, 1996, given due course by this Court. After
both parties submitted their Memoranda,
[32]
the instant case is now deemed submitted for
decision.
Petitioner SAUDIA raised the following issues:
I
The trial court has no jurisdiction to hear and try Civil Case No. Q-93-18394 based on
Article 21 of the New Civil Code since the proper law applicable is the law of the Kingdom of
Saudi Arabia inasmuch as this case involves what is known in private international law as a
conflicts problem. Otherwise, the Republic of the Philippines will sit in judgment of the acts
done by another sovereign state which is abhorred.
II.
Leave of court before filing a supplemental pleading is not a jurisdictional
requirement. Besides, the matter as to absence of leave of court is now moot and
academic when this Honorable Court required the respondents to comment on petitioners
3

April 30, 1996 Supplemental Petition For Review With Prayer For A Temporary Restraining
Order Within Ten (10) Days From Notice Thereof. Further, the Revised Rules of Court
should be construed with liberality pursuant to Section 2, Rule 1 thereof.
III.
Petitioner received on April 22, 1996 the April 10, 1996 decision in CA-G.R. SP NO. 36533
entitled Saudi Arabian Airlines v. Hon. Rodolfo A. Ortiz, et al. and filed its April 30, 1996
Supplemental Petition For Review With Prayer For A Temporary Restraining Order on May
7, 1996 at 10:29 a.m. or within the 15-day reglementary period as provided for under
Section 1, Rule 45 of the Revised Rules of Court. Therefore, the decision in CA-G.R. SP
NO. 36533 has not yet become final and executory and this Honorable Court can take
cognizance of this case.
[33]

From the foregoing factual and procedural antecedents, the following issues emerge
for our resolution:
I.
WHETHER RESPONDENT APPELLATE COURT ERRED IN HOLDING THAT
THE REGIONAL TRIAL COURT OF QUEZON CITY HAS JURISDICTION TO
HEAR AND TRY CIVIL CASE NO. Q-93-18394 ENTITLED MILAGROS P.
MORADA V. SAUDI ARABIAN AIRLINES.
II.
WHETHER RESPONDENT APPELLATE COURT ERRED IN RULING THAT IN
THE CASE PHILIPPINE LAW SHOULD GOVERN.
Petitioner SAUDIA claims that before us is a conflict of laws that must be settled at the
outset. It maintains that private respondents claim for alleged abuse of rights occurred in
the Kingdom of Saudi Arabia. It alleges that the existence of a foreign element qualifies the
instant case for the application of the law of the Kingdom of Saudi Arabia, by virtue of
the lex loci delicti commissi rule.
[34]

On the other hand, private respondent contends that since her Amended Complaint is
based on Articles 19
[35]
and 21
[36]
of the Civil Code, then the instant case is properly a
matter of domestic law.
[37]

Under the factual antecedents obtaining in this case, there is no dispute that the
interplay of events occurred in two states, the Philippines and Saudi Arabia.
As stated by private respondent in her Amended Complaint
[38]
dated June 23, 1994:
2. Defendant SAUDI ARABIAN AIRLINES or SAUDIA is a foreign airlines
corporation doing business in the Philippines. It may be served with summons
and other court processes at Travel Wide Associated Sales (Phils.), Inc.,
3
rd
Floor, Cougar Building, 114 Valero St., Salcedo Village, Makati, Metro
Manila.
x x x x x x x x x
6. Plaintiff learned that, through the intercession of the Saudi Arabian
government, the Indonesian authorities agreed to deport Thamer and Allah after
two weeks of detention. Eventually, they were again put in service by defendant
SAUDIA. In September 1990, defendant SAUDIA transferred plaintiff to Manila.
7. On January 14, 1992, just when plaintiff thought that the Jakarta incident
was already behind her, her superiors requested her to see MR. Ali Meniewy,
Chief Legal Officer of SAUDIA, in Jeddah, Saudi Arabia. When she saw him, he
brought her to the police station where the police took her passport and
questioned her about the Jakarta incident. Miniewy simply stood by as the
police put pressure on her to make a statement dropping the case against
Thamer and Allah. Not until she agreed to do so did the police return her
passport and allowed her to catch the afternoon flight out of Jeddah.
8. One year and a half later or on June 16, 1993, in Riyadh, Saudi Arabia, a
few minutes before the departure of her flight to Manila, plaintiff was not allowed
to board the plane and instead ordered to take a later flight to Jeddah to see Mr.
Meniewy, the Chief Legal Officer of SAUDIA. When she did, a certain Khalid of
the SAUDIA office brought her to a Saudi court where she was asked to sign a
document written in Arabic. They told her that this was necessary to close the
case against Thamer and Allah. As it turned out, plaintiff signed a notice to her
to appear before the court on June 27, 1993. Plaintiff then returned to Manila.
9. Shortly afterwards, defendant SAUDIA summoned plaintiff to report to
Jeddah once again and see Miniewy on June 27, 1993 for further
investigation. Plaintiff did so after receiving assurance from SAUDIAs Manila
manager, Aslam Saleemi, that the investigation was routinary and that it posed
no danger to her.
10. In Jeddah, a SAUDIA legal officer brought plaintiff to the same Saudi court
on June 27, 1993. Nothing happened then but on June 28, 1993, a Saudi judge
interrogated plaintiff through an interpreter about the Jakarta incident. After one
hour of interrogation, they let her go. At the airport, however, just as her plane
was about to take off, a SAUDIA officer told her that the airline had forbidden her
to take that flight. At the Inflight Service Office where she was told to go, the
secretary of Mr. Yahya Saddick took away her passport and told her to remain in
Jeddah, at the crew quarters, until further orders.
11. On July 3, 1993 a SAUDIA legal officer again escorted plaintiff to the same
court where the judge, to her astonishment and shock, rendered a decision,
translated to her in English, sentencing her to five months imprisonment and to
286 lashes. Only then did she realize that the Saudi court had tried her,
together with Thamer and Allah, for what happened in Jakarta. The court found
plaintiff guilty of (1) adultery; (2) going to a disco, dancing, and listening to the
music in violation of Islamic laws; (3) socializing with the male crew, in
contravention of Islamic tradition.
12. Because SAUDIA refused to lend her a hand in the case, plaintiff sought
the help of the Philippine Embassy in Jeddah. The latter helped her pursue an
appeal from the decision of the court. To pay for her upkeep, she worked on the
domestic flights of defendant SAUDIA while, ironically, Thamer and Allah freely
served the international flights.
[39]

4

Where the factual antecedents satisfactorily establish the existence of a foreign
element, we agree with petitioner that the problem herein could present a conflicts case.
A factual situation that cuts across territorial lines and is affected by the diverse laws of
two or more states is said to contain a foreign element. The presence of a foreign element
is inevitable since social and economic affairs of individuals and associations are rarely
confined to the geographic limits of their birth or conception.
[40]

The forms in which this foreign element may appear are many.
[41]
The foreign element
may simply consist in the fact that one of the parties to a contract is an alien or has a foreign
domicile, or that a contract between nationals of one State involves properties situated in
another State. In other cases, the foreign element may assume a complex form.
[42]

In the instant case, the foreign element consisted in the fact that private respondent
Morada is a resident Philippine national, and that petitioner SAUDIA is a resident foreign
corporation. Also, by virtue of the employment of Morada with the petitioner Saudia as a
flight stewardess, events did transpire during her many occasions of travel across national
borders, particularly from Manila, Philippines to Jeddah, Saudi Arabia, and vice versa, that
caused a conflicts situation to arise.
We thus find private respondents assertion that the case is purely domestic,
imprecise. A conflicts problem presents itself here, and the question of
jurisdiction
[43]
confronts the court a quo.
After a careful study of the private respondents Amended Complaint,
[44]
and the
Comment thereon, we note that she aptly predicated her cause of action on Articles 19 and
21 of the New Civil Code.
On one hand, Article 19 of the New 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 everyone his due and observe honesty and
good faith.
On the other hand, Article 21 of the New Civil Code provides:
Art. 21. Any person who willfully causes loss or injury to another in a manner
that is contrary to morals, good customs or public policy shall compensate the
latter for damages.
Thus, in Philippine National Bank (PNB) vs. Court of Appeals,
[45]
this Court held that:
The aforecited provisions on human relations were intended to expand the
concept of torts in this jurisdiction by granting adequate legal remedy for the
untold number of moral wrongs which is impossible for human foresight to
specifically provide in the statutes.
Although Article 19 merely declares a principle of law, Article 21 gives flesh to its
provisions. Thus, we agree with private respondents assertion that violations of Articles 19
and 21 are actionable, with judicially enforceable remedies in the municipal forum.
Based on the allegations
[46]
in the Amended Complaint, read in the light of the Rules of
Court on jurisdiction
[47]
we find that the Regional Trial Court (RTC) of Quezon City
possesses jurisdiction over the subject matter of the suit.
[48]
Its authority to try and hear the
case is provided for under Section 1 of Republic Act No. 7691, to wit:
Section 1. Section 19 of Batas Pambansa Blg. 129, otherwise known as the
Judiciary Reorganization Act of 1980, is hereby amended to read as follows:
SEC. 19. Jurisdiction in Civil Cases. Regional Trial Courts shall exercise exclusive
jurisdiction:
x x x x x x x x x
(8) In all other cases in which demand, exclusive of interest, damages of whatever kind,
attorneys fees, litigation expenses, and costs or the value of the property in controversy
exceeds One hundred thousand pesos (P100,000.00) or, in such other cases in Metro
Manila, where the demand, exclusive of the above-mentioned items exceeds Two hundred
Thousand pesos (P200,000.00). (Emphasis ours)
x x x x x x x x x
And following Section 2 (b), Rule 4 of the Revised Rules of Courtthe venue, Quezon
City, is appropriate:
SEC. 2 Venue in Courts of First Instance. [Now Regional Trial Court]
(a) x x x x x x x x x
(b) Personal actions. All other actions may be commenced and tried where
the defendant or any of the defendants resides or may be found, or where the
plaintiff or any of the plaintiff resides, at the election of the plaintiff.
Pragmatic considerations, including the convenience of the parties, also weigh heavily
in favor of the RTC Quezon City assuming jurisdiction. Paramount is the private interest of
the litigant. Enforceability of a judgment if one is obtained is quite obvious. Relative
advantages and obstacles to a fair trial are equally important. Plaintiff may not, by choice of
an inconvenient forum, vex, harass, or oppress the defendant, e.g. by inflicting upon him
needless expense or disturbance. But unless the balance is strongly in favor of the
defendant, the plaintiffs choice of forum should rarely be disturbed.
[49]

Weighing the relative claims of the parties, the court a quo found it best to hear the
case in the Philippines. Had it refused to take cognizance of the case, it would be forcing
plaintiff (private respondent now) to seek remedial action elsewhere, i.e. in the Kingdom of
Saudi Arabia where she no longer maintains substantial connections. That would have
caused a fundamental unfairness to her.
Moreover, by hearing the case in the Philippines no unnecessary difficulties and
inconvenience have been shown by either of the parties. The choice of forum of the plaintiff
(now private respondent) should be upheld.
5

Similarly, the trial court also possesses jurisdiction over the persons of the parties
herein. By filing her Complaint and Amended Complaint with the trial court, private
respondent has voluntary submitted herself to the jurisdiction of the court.
The records show that petitioner SAUDIA has filed several motions
[50]
praying for the
dismissal of Moradas Amended Complaint. SAUDIA also filed an Answer In Ex Abundante
Cautelam dated February 20, 1995. What is very patent and explicit from the motions filed,
is that SAUDIA prayed for other reliefs under the premises. Undeniably, petitioner SAUDIA
has effectively submitted to the trial courts jurisdiction by praying for the dismissal of the
Amended Complaint on grounds other than lack of jurisdiction.
As held by this Court in Republic vs. Ker and Company, Ltd.:
[51]

We observe that the motion to dismiss filed on April 14, 1962, aside from
disputing the lower courts jurisdiction over defendants person, prayed for
dismissal of the complaint on the ground that plaintiffs cause of action has
prescribed. By interposing such second ground in its motion to dismiss, Ker and
Co., Ltd. availed of an affirmative defense on the basis of which it prayed the
court to resolve controversy in its favor. For the court to validly decide the said
plea of defendant Ker & Co., Ltd., it necessarily had to acquire jurisdiction upon
the latters person, who, being the proponent of the affirmative defense, should
be deemed to have abandoned its special appearance and voluntarily submitted
itself to the jurisdiction of the court.
Similarly, the case of De Midgely vs. Ferandos, held that:
When the appearance is by motion for the purpose of objecting to the
jurisdiction of the court over the person, it must be for the sole and separate
purpose of objecting to the jurisdiction of the court. If his motion is for any other
purpose than to object to the jurisdiction of the court over his person, he thereby
submits himself to the jurisdiction of the court. A special appearance by motion
made for the purpose of objecting to the jurisdiction of the court over the person
will be held to be a general appearance, if the party in said motion should, for
example, ask for a dismissal of the action upon the further ground that the court
had no jurisdiction over the subject matter.
[52]

Clearly, petitioner had submitted to the jurisdiction of the Regional Trial Court of
Quezon City. Thus, we find that the trial court has jurisdiction over the case and that its
exercise thereof, justified.
As to the choice of applicable law, we note that choice-of-law problems seek to answer
two important questions: (1) What legal system should control a given situation where
some of the significant facts occurred in two or more states; and (2) to what extent should
the chosen legal system regulate the situation.
[53]

Several theories have been propounded in order to identify the legal system that
should ultimately control. Although ideally, all choice-of-law theories should intrinsically
advance both notions of justice and predictability, they do not always do so. The forum is
then faced with the problem of deciding which of these two important values should be
stressed.
[54]

Before a choice can be made, it is necessary for us to determine under what category
a certain set of facts or rules fall. This process is known as characterization, or the
doctrine of qualification. It is the process of deciding whether or not the facts relate to the
kind of question specified in a conflicts rule.
[55]
The purpose of characterization is to
enable the forum to select the proper law.
[56]

Our starting point of analysis here is not a legal relation, but a factual situation, event,
or operative fact.
[57]
An essential element of conflict rules is the indication of a test or
connecting factor or point of contact. Choice-of-law rules invariably consist of a factual
relationship (such as property right, contract claim) and a connecting factor or point of
contact, such as the situs of the res, the place of celebration, the place of performance, or
the place of wrongdoing.
[58]

Note that one or more circumstances may be present to serve as the possible test for
the determination of the applicable law.
[59]
These test factors or points of contact or
connecting factors could be any of the following:
(1) The nationality of a person, his domicile, his residence, his place of sojourn,
or his origin;
(2) the seat of a legal or juridical person, such as a corporation;
(3) the situs of a thing, that is, the place where a thing is, or is deemed to be
situated. In particular, the lex situs is decisive when real rights are involved;
(4) the place where an act has been done, the locus actus, such as the
place where a contract has been made, a marriage celebrated, a will signed
or a tort committed. The lex loci actus is particularly important in
contracts and torts;
(5) the place where an act is intended to come into effect, e.g., the place of
performance of contractual duties, or the place where a power of attorney is to
be exercised;
(6) the intention of the contracting parties as to the law that should govern their
agreement, the lex loci intentionis;
(7) the place where judicial or administrative proceedings are instituted or
done. The lex forithe law of the forumis particularly important because, as
we have seen earlier, matters of procedure not going to the substance of the
claim involved are governed by it; and because the lex fori applies whenever the
content of the otherwise applicable foreign law is excluded from application in a
given case for the reason that it falls under one of the exceptions to the
applications of foreign law; and
(8) the flag of a ship, which in many cases is decisive of practically all legal
relationships of the ship and of its master or owner as such. It also covers
contractual relationships particularly contracts of
affreightment.
[60]
(Underscoring ours.)
After a careful study of the pleadings on record, including allegations in the Amended
Complaint deemed submitted for purposes of the motion to dismiss, we are convinced that
there is reasonable basis for private respondents assertion that although she was already
working in Manila, petitioner brought her to Jeddah on the pretense that she would merely
testify in an investigation of the charges she made against the two SAUDIA crew members
6

for the attack on her person while they were in Jakarta. As it turned out, she was the one
made to face trial for very serious charges, including adultery and violation of Islamic laws
and tradition.
There is likewise logical basis on record for the claim that the handing over or
turning over of the person of private respondent to Jeddah officials, petitioner may have
acted beyond its duties as employer. Petitioners purported act contributed to and amplified
or even proximately caused additional humiliation, misery and suffering of private
respondent. Petitioner thereby allegedly facilitated the arrest, detention and prosecution of
private respondent under the guise of petitioners authority as employer, taking advantage
of the trust, confidence and faith she reposed upon it. As purportedly found by the Prince of
Makkah, the alleged conviction and imprisonment of private respondent was wrongful. But
these capped the injury or harm allegedly inflicted upon her person and reputation, for which
petitioner could be liable as claimed, to provide compensation or redress for the wrongs
done, once duly proven.
Considering that the complaint in the court a quo is one involving torts, the connecting
factor or point of contact could be the place or places where the tortious conduct or lex
loci actus occurred. And applying the torts principle in a conflicts case, we find that the
Philippines could be said as a situs of the tort (the place where the alleged tortious conduct
took place). This is because it is in the Philippines where petitioner allegedly deceived
private respondent, a Filipina residing and working here. According to her, she had
honestly believed that petitioner would, in the exercise of its rights and in the performance of
its duties, act with justice, give her her due and observe honesty and good faith. Instead,
petitioner failed to protect her, she claimed. That certain acts or parts of the injury allegedly
occurred in another country is of no moment. For in our view what is important here is the
place where the over-all harm or the fatality of the alleged injury to the person, reputation,
social standing and human rights of complainant, had lodged, according to the plaintiff
below (herein private respondent). All told, it is not without basis to identify the Philippines
as the situs of the alleged tort.
Moreover, with the widespread criticism of the traditional rule of lex loci delicti
commissi, modern theories and rules on tort liability
[61]
have been advanced to offer fresh
judicial approaches to arrive at just results. In keeping abreast with the modern theories on
tort liability, we find here an occasion to apply the State of the most significant relationship
rule, which in our view should be appropriate to apply now, given the factual context of this
case.
In applying said principle to determine the State which has the most significant
relationship, the following contacts are to be taken into account and evaluated according to
their relative importance with respect to the particular issue: (a) the place where the injury
occurred; (b) the place where the conduct causing the injury occurred; (c) the domicile,
residence, nationality, place of incorporation and place of business of the parties, and (d)
the place where the relationship, if any, between the parties is centered.
[62]

As already discussed, there is basis for the claim that over-all injury occurred and
lodged in the Philippines. There is likewise no question that private respondent is a resident
Filipina national, working with petitioner, a resident foreign corporation engaged here in the
business of international air carriage. Thus, the relationship between the parties was
centered here, although it should be stressed that this suit is not based on mere labor law
violations. From the record, the claim that the Philippines has the most significant contact
with the matter in this dispute,
[63]
raised by private respondent as plaintiff below against
defendant (herein petitioner), in our view, has been properly established.
Prescinding from this premise that the Philippines is the situs of the tort complaint of
and the place having the most interest in the problem, we find, by way of recapitulation,
that the Philippine law on tort liability should have paramount application to and control in
the resolution of the legal issues arising out of this case. Further, we hold that the
respondent Regional Trial Court has jurisdiction over the parties and the subject matter of
the complaint; the appropriate venue is in Quezon City, which could properly apply
Philippine law. Moreover, we find untenable petitioners insistence that [s]ince private
respondent instituted this suit, she has the burden of pleading and proving the applicable
Saudi law on the matter.
[64]
As aptly said by private respondent, she has no obligation to
plead and prove the law of the Kingdom of Saudi Arabia since her cause of action is based
on Articles 19 and 21 of the Civil Code of the Philippines. In her Amended Complaint and
subsequent pleadings she never alleged that Saudi law should govern this case.
[65]
And as
correctly held by the respondent appellate court, considering that it was the petitioner who
was invoking the applicability of the law of Saudi Arabia, thus the burden was on it
[petitioner] to plead and to establish what the law of Saudi Arabia is.
[66]

Lastly, no error could be imputed to the respondent appellate court in upholding the
trial courts denial of defendants (herein petitioners) motion to dismiss the case. Not only
was jurisdiction in order and venue properly laid, but appeal after trial was obviously
available, and the expeditious trial itself indicated by the nature of the case at
hand. Indubitably, the Philippines is the state intimately concerned with the ultimate
outcome of the case below not just for the benefit of all the litigants, but also for the
vindication of the countrys system of law and justice in a transnational setting. With these
guidelines in mind, the trial court must proceed to try and adjudge the case in the light of
relevant Philippine law, with due consideration of the foreign element or elements
involved. Nothing said herein, of course, should be construed as prejudging the results of
the case in any manner whatsoever.
WHEREFORE, the instant petition for certiorari is hereby DISMISSED. Civil Case No.
Q-93-18394 entitled Milagros P. Morada vs. Saudi Arabia Airlines is hereby REMANDED
to Regional Trial Court of Quezon City, Branch 89 for further proceedings.
SO ORDERED.

7

Republic of the Philippines
SUPREME COURT
Manila
THIRD DIVISION
G.R. No. 81262 August 25, 1989
GLOBE MACKAY CABLE AND RADIO CORP., and HERBERT C. HENDRY, petitioners,
vs.
THE HONORABLE COURT OF APPEALS and RESTITUTO M. TOBIAS, respondents.
Atencia & Arias Law Offices for petitioners.
Romulo C. Felizmena for private respondent.

CORTES, J .:
Private respondent Restituto M. Tobias was employed by petitioner Globe Mackay Cable
and Radio Corporation (GLOBE MACKAY) in a dual capacity as a purchasing agent and
administrative assistant to the engineering operations manager. In 1972, GLOBE MACKAY
discovered fictitious purchases and other fraudulent transactions for which it lost several
thousands of pesos.
According to private respondent it was he who actually discovered the anomalies and
reported them on November 10, 1972 to his immediate superior Eduardo T. Ferraren and to
petitioner Herbert C. Hendry who was then the Executive Vice-President and General
Manager of GLOBE MACKAY.
On November 11, 1972, one day after private respondent Tobias made the report, petitioner
Hendry confronted him by stating that he was the number one suspect, and ordered him to
take a one week forced leave, not to communicate with the office, to leave his table drawers
open, and to leave the office keys.
On November 20, 1972, when private respondent Tobias returned to work after the forced
leave, petitioner Hendry went up to him and called him a "crook" and a "swindler." Tobias
was then ordered to take a lie detector test. He was also instructed to submit specimen of
his handwriting, signature, and initials for examination by the police investigators to
determine his complicity in the anomalies.
On December 6,1972, the Manila police investigators submitted a laboratory crime report
(Exh. "A") clearing private respondent of participation in the anomalies.
Not satisfied with the police report, petitioners hired a private investigator, retired Col. Jose
G. Fernandez, who on December 10, 1972, submitted a report (Exh. "2") finding Tobias
guilty. This report however expressly stated that further investigation was still to be
conducted.
Nevertheless, on December 12, 1972, petitioner Hendry issued a memorandum suspending
Tobias from work preparatory to the filing of criminal charges against him.
On December 19,1972, Lt. Dioscoro V. Tagle, Metro Manila Police Chief Document
Examiner, after investigating other documents pertaining to the alleged anomalous
transactions, submitted a second laboratory crime report (Exh. "B") reiterating his previous
finding that the handwritings, signatures, and initials appearing in the checks and other
documents involved in the fraudulent transactions were not those of Tobias. The lie detector
tests conducted on Tobias also yielded negative results.
Notwithstanding the two police reports exculpating Tobias from the anomalies and the fact
that the report of the private investigator, was, by its own terms, not yet complete,
petitioners filed with the City Fiscal of Manila a complaint for estafa through falsification of
commercial documents, later amended to just estafa. Subsequently five other criminal
complaints were filed against Tobias, four of which were for estafa through Falsification of
commercial document while the fifth was for of Article 290 of' the Revised Penal Code
(Discovering Secrets Through Seizure of Correspondence).lwph1.t Two of these
complaints were refiled with the Judge Advocate General's Office, which however,
remanded them to the fiscal's office. All of the six criminal complaints were dismissed by the
fiscal. Petitioners appealed four of the fiscal's resolutions dismissing the criminal complaints
with the Secretary of Justice, who, however, affirmed their dismissal.
In the meantime, on January 17, 1973, Tobias received a notice (Exh. "F") from petitioners
that his employment has been terminated effective December 13, 1972. Whereupon, Tobias
filed a complaint for illegal dismissal. The labor arbiter dismissed the complaint. On appeal,
the National Labor Relations Commission (NLRC) reversed the labor arbiter's decision.
However, the Secretary of Labor, acting on petitioners' appeal from the NLRC ruling,
reinstated the labor arbiter's decision. Tobias appealed the Secretary of Labor's order with
the Office of the President. During the pendency of the appeal with said office, petitioners
and private respondent Tobias entered into a compromise agreement regarding the latter's
complaint for illegal dismissal.
Unemployed, Tobias sought employment with the Republic Telephone Company
(RETELCO). However, petitioner Hendry, without being asked by RETELCO, wrote a letter
to the latter stating that Tobias was dismissed by GLOBE MACKAY due to dishonesty.
Private respondent Tobias filed a civil case for damages anchored on alleged unlawful,
malicious, oppressive, and abusive acts of petitioners. Petitioner Hendry, claiming illness,
did not testify during the hearings. The Regional Trial Court (RTC) of Manila, Branch IX,
through Judge Manuel T. Reyes rendered judgment in favor of private respondent by
ordering petitioners to pay him eighty thousand pesos (P80,000.00) as actual damages, two
hundred thousand pesos (P200,000.00) as moral damages, twenty thousand pesos
(P20,000.00) as exemplary damages, thirty thousand pesos (P30,000.00) as attorney's
8

fees, and costs. Petitioners appealed the RTC decision to the Court of Appeals. On the
other hand, Tobias appealed as to the amount of damages. However, the Court of Appeals,
an a decision dated August 31, 1987 affirmed the RTC decision in toto. Petitioners' motion
for reconsideration having been denied, the instant petition for review on certiorari was filed.
The main issue in this case is whether or not petitioners are liable for damages to private
respondent.
Petitioners contend that they could not be made liable for damages in the lawful exercise of
their right to dismiss private respondent.
On the other hand, private respondent contends that because of petitioners' abusive
manner in dismissing him as well as for the inhuman treatment he got from them, the
Petitioners must indemnify him for the damage that he had suffered.
One of the more notable innovations of the New Civil Code is the codification of "some basic
principles that are to be observed for the rightful relationship between human beings and for
the stability of the social order." [REPORT ON THE CODE COMMISSION ON THE
PROPOSED CIVIL CODE OF THE PHILIPPINES, p. 39]. The framers of the Code, seeking
to remedy the defect of the old Code which merely stated the effects of the law, but failed to
draw out its spirit, incorporated certain fundamental precepts which were "designed to
indicate certain norms that spring from the fountain of good conscience" and which were
also meant to serve as "guides for human conduct [that] should run as golden threads
through society, to the end that law may approach its supreme ideal, which is the sway and
dominance of justice" (Id.) Foremost among these principles is that pronounced in Article 19
which provides:
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.
This article, known to contain what is commonly referred to as the principle of abuse of
rights, sets certain standards which must be observed not only in the exercise of one's
rights but also in the performance of one's duties. These standards are the following: to act
with justice; to give everyone his due; and to observe honesty and good faith. The law,
therefore, recognizes a primordial limitation on all rights; that in their exercise, the norms of
human conduct set forth in Article 19 must be observed. A right, though by itself legal
because recognized or granted by law as such, may nevertheless become the source of
some illegality. When a right is exercised in a manner which does not conform with the
norms enshrined in Article 19 and results in damage to another, a legal wrong is thereby
committed for which the wrongdoer must be held responsible. But while Article 19 lays down
a rule of conduct for the government of human relations and for the maintenance of social
order, it does not provide a remedy for its violation. Generally, an action for damages under
either Article 20 or Article 21 would be proper.
Article 20, which pertains to damage arising from a violation of law, provides that:
Art. 20. Every person who contrary to law, wilfully or negligently causes
damage to another, shall indemnify the latter for the same.
However, in the case at bar, petitioners claim that they did not violate any provision of law
since they were merely exercising their legal right to dismiss private respondent. This does
not, however, leave private respondent with no relief because Article 21 of the Civil Code
provides that:
Art. 21. Any person who wilfully causes loss or injury to another in a
manner that is contrary to morals, good customs or public policy shall
compensate the latter for the damage.
This article, adopted to remedy the "countless gaps in the statutes, which leave so many
victims of moral wrongs helpless, even though they have actually suffered material and
moral injury" [Id.] should "vouchsafe adequate legal remedy for that untold number of moral
wrongs which it is impossible for human foresight to provide for specifically in the statutes"
[Id. it p. 40; See also PNB v. CA, G.R. No. L-27155, May 18,1978, 83 SCRA 237, 247].
In determining whether or not the principle of abuse of rights may be invoked, there is no
rigid test which can be applied. While the Court has not hesitated to apply Article 19
whether the legal and factual circumstances called for its application [See for e.g., Velayo v.
Shell Co. of the Phil., Ltd., 100 Phil. 186 (1956); PNB v. CA, supra;Grand Union
Supermarket, Inc. v. Espino, Jr., G.R. No. L-48250, December 28, 1979, 94 SCRA 953;
PAL v. CA, G.R. No. L-46558, July 31,1981,106 SCRA 391; United General Industries, Inc,
v. Paler G.R. No. L-30205, March 15,1982,112 SCRA 404; Rubio v. CA, G.R. No. 50911,
August 21, 1987, 153 SCRA 183] the question of whether or not the principle of abuse of
rights has been violated resulting in damages under Article 20 or Article 21 or other
applicable provision of law, depends on the circumstances of each case. And in the instant
case, the Court, after examining the record and considering certain significant
circumstances, finds that all petitioners have indeed abused the right that they invoke,
causing damage to private respondent and for which the latter must now be indemnified.
The trial court made a finding that notwithstanding the fact that it was private respondent
Tobias who reported the possible existence of anomalous transactions, petitioner Hendry
"showed belligerence and told plaintiff (private respondent herein) that he was the number
one suspect and to take a one week vacation leave, not to communicate with the office, to
leave his table drawers open, and to leave his keys to said defendant (petitioner Hendry)"
[RTC Decision, p. 2; Rollo, p. 232]. This, petitioners do not dispute. But regardless of
whether or not it was private respondent Tobias who reported the anomalies to petitioners,
the latter's reaction towards the former upon uncovering the anomalies was less than civil.
An employer who harbors suspicions that an employee has committed dishonesty might be
justified in taking the appropriate action such as ordering an investigation and directing the
employee to go on a leave. Firmness and the resolve to uncover the truth would also be
expected from such employer. But the high-handed treatment accorded Tobias by
petitioners was certainly uncalled for. And this reprehensible attitude of petitioners was to
continue when private respondent returned to work on November 20, 1972 after his one
week forced leave. Upon reporting for work, Tobias was confronted by Hendry who said.
"Tobby, you are the crook and swindler in this company." Considering that the first report
9

made by the police investigators was submitted only on December 10, 1972 [See Exh. A]
the statement made by petitioner Hendry was baseless. The imputation of guilt without
basis and the pattern of harassment during the investigations of Tobias transgress the
standards of human conduct set forth in Article 19 of the Civil Code. The Court has already
ruled that the right of the employer to dismiss an employee should not be confused with the
manner in which the right is exercised and the effects flowing therefrom. If the dismissal is
done abusively, then the employer is liable for damages to the employee [Quisaba v. Sta.
Ines-Melale Veneer and Plywood Inc., G.R. No. L-38088, August 30, 1974, 58 SCRA
771; See also Philippine Refining Co., Inc. v. Garcia, G.R. No. L-21871, September
27,1966, 18 SCRA 107] Under the circumstances of the instant case, the petitioners clearly
failed to exercise in a legitimate manner their right to dismiss Tobias, giving the latter the
right to recover damages under Article 19 in relation to Article 21 of the Civil Code.
But petitioners were not content with just dismissing Tobias. Several other tortious acts
were committed by petitioners against Tobias after the latter's termination from work.
Towards the latter part of January, 1973, after the filing of the first of six criminal complaints
against Tobias, the latter talked to Hendry to protest the actions taken against him. In
response, Hendry cut short Tobias' protestations by telling him to just confess or else the
company would file a hundred more cases against him until he landed in jail. Hendry added
that, "You Filipinos cannot be trusted." The threat unmasked petitioner's bad faith in the
various actions taken against Tobias. On the other hand, the scornful remark about Filipinos
as well as Hendry's earlier statements about Tobias being a "crook" and "swindler" are clear
violations of 'Tobias' personal dignity [See Article 26, Civil Code].
The next tortious act committed by petitioners was the writing of a letter to RETELCO
sometime in October 1974, stating that Tobias had been dismissed by GLOBE MACKAY
due to dishonesty. Because of the letter, Tobias failed to gain employment with RETELCO
and as a result of which, Tobias remained unemployed for a longer period of time. For this
further damage suffered by Tobias, petitioners must likewise be held liable for damages
consistent with Article 2176 of the Civil Code. Petitioners, however, contend that they have
a "moral, if not legal, duty to forewarn other employers of the kind of employee the plaintiff
(private respondent herein) was." [Petition, p. 14; Rollo, p. 15]. Petitioners further claim that
"it is the accepted moral and societal obligation of every man to advise or warn his
fellowmen of any threat or danger to the latter's life, honor or property. And this includes
warning one's brethren of the possible dangers involved in dealing with, or accepting into
confidence, a man whose honesty and integrity is suspect" [Id.]. These arguments, rather
than justify petitioners' act, reveal a seeming obsession to prevent Tobias from getting a job,
even after almost two years from the time Tobias was dismissed.
Finally, there is the matter of the filing by petitioners of six criminal complaints against
Tobias. Petitioners contend that there is no case against them for malicious prosecution and
that they cannot be "penalized for exercising their right and prerogative of seeking justice by
filing criminal complaints against an employee who was their principal suspect in the
commission of forgeries and in the perpetration of anomalous transactions which defrauded
them of substantial sums of money" [Petition, p. 10, Rollo, p. 11].
While sound principles of justice and public policy dictate that persons shall have free resort
to the courts for redress of wrongs and vindication of their rights [Buenaventura v. Sto.
Domingo, 103 Phil. 239 (1958)], the right to institute criminal prosecutions can not be
exercised maliciously and in bad faith [Ventura v. Bernabe, G.R. No. L-26760, April 30,
1971, 38 SCRA 5871.] Hence, in Yutuk V. Manila Electric Co., G.R. No. L-13016, May 31,
1961, 2 SCRA 337, the Court held that the right to file criminal complaints should not be
used as a weapon to force an alleged debtor to pay an indebtedness. To do so would be a
clear perversion of the function of the criminal processes and of the courts of justice. And
in Hawpia CA, G.R. No. L-20047, June 30, 1967. 20 SCRA 536 the Court upheld the
judgment against the petitioner for actual and moral damages and attorney's fees after
making a finding that petitioner, with persistence, filed at least six criminal complaints
against respondent, all of which were dismissed.
To constitute malicious prosecution, there must be proof that the prosecution was prompted
by a design to vex and humiliate a person and that it was initiated deliberately by the
defendant knowing that the charges were false and groundless [Manila Gas Corporation v.
CA, G.R. No. L-44190, October 30,1980, 100 SCRA 602]. Concededly, the filing of a suit by
itself, does not render a person liable for malicious prosecution [Inhelder Corporation v. CA,
G.R. No. 52358, May 301983122 SCRA 576]. The mere dismissal by the fiscal of the
criminal complaint is not a ground for an award of damages for malicious prosecution if
there is no competent evidence to show that the complainant had acted in bad faith [Sison
v. David, G.R. No. L-11268, January 28,1961, 1 SCRA 60].
In the instant case, however, the trial court made a finding that petitioners acted in bad faith
in filing the criminal complaints against Tobias, observing that:
x x x
Defendants (petitioners herein) filed with the Fiscal's Office of Manila a
total of six (6) criminal cases, five (5) of which were for estafa thru
falsification of commercial document and one for violation of Art. 290 of
the Revised Penal Code "discovering secrets thru seizure of
correspondence," and all were dismissed for insufficiency or lack of
evidence." The dismissal of four (4) of the cases was appealed to the
Ministry of Justice, but said Ministry invariably sustained the dismissal of
the cases. As above adverted to, two of these cases were refiled with the
Judge Advocate General's Office of the Armed Forces of the Philippines
to railroad plaintiffs arrest and detention in the military stockade, but this
was frustrated by a presidential decree transferring criminal cases
involving civilians to the civil courts.
x x x
To be sure, when despite the two (2) police reports embodying the
findings of Lt. Dioscoro Tagle, Chief Document Examiner of the Manila
Police Department, clearing plaintiff of participation or involvement in the
fraudulent transactions complained of, despite the negative results of the
lie detector tests which defendants compelled plaintiff to undergo, and
although the police investigation was "still under follow-up and a
supplementary report will be submitted after all the evidence has been
gathered," defendants hastily filed six (6) criminal cases with the city
10

Fiscal's Office of Manila, five (5) for estafa thru falsification of commercial
document and one (1) for violation of Art. 290 of the Revised Penal Code,
so much so that as was to be expected, all six (6) cases were dismissed,
with one of the investigating fiscals, Asst. Fiscal de Guia, commenting in
one case that, "Indeed, the haphazard way this case was investigated is
evident. Evident likewise is the flurry and haste in the filing of this case
against respondent Tobias," there can be no mistaking that defendants
would not but be motivated by malicious and unlawful intent to harass,
oppress, and cause damage to plaintiff.
x x x
[RTC Decision, pp. 5-6; Rollo, pp. 235-236].
In addition to the observations made by the trial court, the Court finds it significant that the
criminal complaints were filed during the pendency of the illegal dismissal case filed by
Tobias against petitioners. This explains the haste in which the complaints were filed, which
the trial court earlier noted. But petitioners, to prove their good faith, point to the fact that
only six complaints were filed against Tobias when they could have allegedly filed one
hundred cases, considering the number of anomalous transactions committed against
GLOBE MACKAY. However, petitioners' good faith is belied by the threat made by Hendry
after the filing of the first complaint that one hundred more cases would be filed against
Tobias. In effect, the possible filing of one hundred more cases was made to hang like the
sword of Damocles over the head of Tobias. In fine, considering the haste in which the
criminal complaints were filed, the fact that they were filed during the pendency of the illegal
dismissal case against petitioners, the threat made by Hendry, the fact that the cases were
filed notwithstanding the two police reports exculpating Tobias from involvement in the
anomalies committed against GLOBE MACKAY, coupled by the eventual dismissal of all the
cases, the Court is led into no other conclusion than that petitioners were motivated by
malicious intent in filing the six criminal complaints against Tobias.
Petitioners next contend that the award of damages was excessive. In the complaint filed
against petitioners, Tobias prayed for the following: one hundred thousand pesos
(P100,000.00) as actual damages; fifty thousand pesos (P50,000.00) as exemplary
damages; eight hundred thousand pesos (P800,000.00) as moral damages; fifty thousand
pesos (P50,000.00) as attorney's fees; and costs. The trial court, after making a
computation of the damages incurred by Tobias [See RTC Decision, pp. 7-8; Rollo, pp. 154-
1551, awarded him the following: eighty thousand pesos (P80,000.00) as actual damages;
two hundred thousand pesos (P200,000.00) as moral damages; twenty thousand pesos
(P20,000.00) as exemplary damages; thirty thousand pesos (P30,000.00) as attorney's
fees; and, costs. It must be underscored that petitioners have been guilty of committing
several actionable tortious acts, i.e., the abusive manner in which they dismissed Tobias
from work including the baseless imputation of guilt and the harassment during the
investigations; the defamatory language heaped on Tobias as well as the scornful remark
on Filipinos; the poison letter sent to RETELCO which resulted in Tobias' loss of possible
employment; and, the malicious filing of the criminal complaints. Considering the extent of
the damage wrought on Tobias, the Court finds that, contrary to petitioners' contention, the
amount of damages awarded to Tobias was reasonable under the circumstances.
Yet, petitioners still insist that the award of damages was improper, invoking the principle of
damnum absqueinjuria. It is argued that "[t]he only probable actual damage that plaintiff
(private respondent herein) could have suffered was a direct result of his having been
dismissed from his employment, which was a valid and legal act of the defendants-
appellants (petitioners herein).lwph1.t " [Petition, p. 17; Rollo, p. 18].
According to the principle of damnum absque injuria, damage or loss which does not
constitute a violation of a legal right or amount to a legal wrong is not actionable [Escano v.
CA, G.R. No. L-47207, September 25, 1980, 100 SCRA 197; See also Gilchrist v. Cuddy 29
Phil, 542 (1915); The Board of Liquidators v. Kalaw, G.R. No. L-18805, August 14, 1967, 20
SCRA 987]. This principle finds no application in this case. It bears repeating that even
granting that petitioners might have had the right to dismiss Tobias from work, the abusive
manner in which that right was exercised amounted to a legal wrong for which petitioners
must now be held liable. Moreover, the damage incurred by Tobias was not only in
connection with the abusive manner in which he was dismissed but was also the result of
several other quasi-delictual acts committed by petitioners.
Petitioners next question the award of moral damages. However, the Court has already
ruled in Wassmer v. Velez, G.R. No. L-20089, December 26, 1964, 12 SCRA 648, 653, that
[p]er express provision of Article 2219 (10) of the New Civil Code, moral damages are
recoverable in the cases mentioned in Article 21 of said Code." Hence, the Court of Appeals
committed no error in awarding moral damages to Tobias.
Lastly, the award of exemplary damages is impugned by petitioners. Although Article 2231
of the Civil Code provides that "[i]n quasi-delicts, exemplary damages may be granted if the
defendant acted with gross negligence," the Court, in Zulueta v. Pan American World
Airways, Inc., G.R. No. L- 28589, January 8, 1973, 49 SCRA 1, ruled that if gross
negligence warrants the award of exemplary damages, with more reason is its imposition
justified when the act performed is deliberate, malicious and tainted with bad faith. As in
the Zuluetacase, the nature of the wrongful acts shown to have been committed by
petitioners against Tobias is sufficient basis for the award of exemplary damages to the
latter.
WHEREFORE, the petition is hereby DENIED and the decision of the Court of Appeals in
CA-G.R. CV No. 09055 is AFFIRMED.
SO ORDERED.

11

THIRD DIVISION
[G.R. No. 140420. February 15 , 2001]
SERGIO AMONOY, petitioner, vs. Spouses JOSE GUTIERREZ and ANGELA
FORNILDA, respondents.
D E C I S I O N
PANGANIBAN, J .:
Damnum absque injuria. Under this principle, the legitimate exercise of a persons
rights, even if it causes loss to another, does not automatically result in an actionable
injury. The law does not prescribe a remedy for the loss. This principle does not, however,
apply when there is an abuse of a persons right, or when the exercise of this right is
suspended or extinguished pursuant to a court order. Indeed, in the availment of ones
rights, one must act with justice, give others their due, and observe honesty and good faith.
The Case

Before us is a Petition for Review under Rule 45 of the Rules of Court, assailing the
April 21, 1999 Decision
[1]
of the Court of Appeals (CA) in CA-GR CV No. 41451, which set
aside the judgment
[2]
of the Regional Trial Court (RTC) of Tanay, Rizal. The RTC had
earlier dismissed the Complaint for damages filed by herein respondents against
petitioner. The dispositive portion of the challenged CA Decision reads as follows:
WHEREFORE, the appealed Decision is SET ASIDE, and in its stead judgment is rendered
ordering the defendant-appellee Sergio Amonoy to pay the plaintiffs-appellants Bruno and
Bernardina Gutierrez as actual damages the sum of [t]wo [h]undred [f]ifty [t]housand [p]esos
(P250,000.00).
[3]

Likewise assailed is the October 19, 1999 CA Resolution,
[4]
which denied the Motion
for Reconsideration.
The Facts

The appellate court narrated the factual antecedents of this case as follows:
This case had its roots in Special Proceedings No. 3103 of Branch I of the CFI of Pasig,
Rizal, for the settlement of the estate of the deceased Julio Cantolos, involving six (6)
parcels of land situated in Tanay, Rizal. Amonoy was the counsel of therein Francisca
Catolos, Agnes Catolos, Asuncion Pasamba and Alfonso Formilda. On 12 January 1965,
the Project of Partition submitted was approved and x x x two (2) of the said lots were
adjudicated to Asuncion Pasamba and Alfonso Formilda. The attorneys fees charged by
Amonoy was P27,600.00 and on 20 January 1965 Asuncion Pasamba and Alfonso
Formilda executed a deed of real estate mortgage on the said two (2) lots adjudicated to
them, in favor of Amonoy to secure the payment of his attorneys fees. But it was only on 6
August 1969 after the taxes had been paid, the claims settled and the properties
adjudicated, that the estate was declared closed and terminated.
Asuncion Pasamba died on 24 February 1969 while Alfonso Fornilda passed away on 2
July 1969. Among the heirs of the latter was his daughter, plaintiff-appellant Angela
Gutierrez.
Because his attorneys fees thus secured by the two lots were not paid, on 21 January
1970 Amonoy filed for their foreclosure in Civil Case No. 12726 entitledSergio Amonoy vs.
Heirs of Asuncion Pasamba and Heirs of Alfonso Fornilda before the CFI of Pasig, Rizal,
and this was assigned to Branch VIII. The heirs opposed, contending that the attorneys
fees charged [were] unconscionable and that the agreed sum was only P11,695.92. But on
28 September 1972 judgment was rendered in favor of Amonoy requiring the heirs to pay
within 90 days the P27,600.00 secured by the mortgage, P11,880.00 as value of the
harvests, and P9,645.00 as another round of attorneys fees. Failing in that, the two (2) lots
would be sold at public auction.
They failed to pay. On 6 February 1973, the said lots were foreclosed and on 23 March
1973 the auction sale was held where Amonoy was the highest bidder at P23,760.00. On 2
May 1973 his bid was judicially confirmed. A deficiency was claimed and to satisfy it
another execution sale was conducted, and again the highest bidder was Amonoy at
P12,137.50.
Included in those sold was the lot on which the Gutierrez spouses had their house.
More than a year after the Decision in Civil Case No. 12726 was rendered, the said
decedents heirs filed on 19 December 1973 before the CFI of Pasig, Rizal[,] Civil Case No.
18731 entitled Maria Penano, et al vs. Sergio Amonoy, et al, a suit for the annulment
thereof. The case was dismissed by the CFI on 7 November 1977, and this was affirmed by
the Court of Appeals on 22 July 1981.
Thereafter, the CFI on 25 July 1985 issued a Writ of Possession and pursuant to which a
notice to vacate was made on 26 August 1985. On Amonoys motion of 24 April 1986, the
Orders of 25 April 1986 and 6 May 1986 were issued for the demolition of structures in the
said lots, including the house of the Gutierrez spouses.
On 27 September 1985 the petition entitled David Fornilda, et al vs Branch 164 RTC IVth
Pasig, Deputy Sheriff Joaquin Antonil and Atty. Sergio Amonoy, G.R. No. L-72306, was filed
before the Supreme Court. Among the petitioners was the plaintiff-appellant Angela
12

Gutierrez. On a twin Musiyun (Mahigpit na Musiyon Para Papanagutin Kaugnay ng
Paglalapastangan, and Musiyung Makahingi ng Utos sa Pagpapapigil ng Pagpapagiba at
Pananagutin sa Paglalapastangan) with full titles as fanciful and elongated as
their Petisyung (Petisyung Makapagsuri Taglay and Pagpigil ng Utos), a temporary
restraining order was granted on 2 June 1986 enjoining the demolition of the petitioners
houses.
Then on 5 October 1988 a Decision was rendered in the said G.R. No. L-72306 disposing
that:
WHEREFORE, Certiorari is granted; the Order of respondent Trial Court, dated 25 July
1985, granting a Writ of Possession, as well as its Orders, dated 25 April 1986 and 16 May
1986, directing and authorizing respondent Sheriff to demolish the houses of petitioners
Angela and Leocadia Fornilda are hereby set aside, and the Temporary Restraining Order
heretofore issued, is made permanent. The six (6) parcels of land herein controverted are
hereby ordered returned to petitioners unless some of them have been conveyed to
innocent third persons.
[5]

But by the time the Supreme Court promulgated the above-mentioned Decision,
respondents house had already been destroyed, supposedly in accordance with a Writ of
Demolition ordered by the lower court.
Thus, a Complaint for damages in connection with the destruction of their house was
filed by respondents against petitioner before the RTC on December 15, 1989.
In its January 27, 1993 Decision, the RTC dismissed respondents suit. On appeal,
the CA set aside the lower courts ruling and ordered petitioner to pay
respondents P250,000 as actual damages. Petitioner then filed a Motion for
Reconsideration, which was also denied.
Hence, this recourse.
[6]

The Issue

In his Memorandum,
[7]
petitioner submits this lone issue for our consideration:
Whether or not the Court of Appeals was correct in deciding that the petitioner [was]
liable to the respondents for damages
[8]

The Courts Ruling

The Petition has no merit.
Main Issue: Petitioners Liability

Well-settled is the maxim that damage resulting from the legitimate exercise of a
persons rights is a loss without injury -- damnum absque injuria -- for which the law gives
no remedy.
[9]
In other words, one who merely exercises ones rights does no actionable
injury and cannot be held liable for damages.
Petitioner invokes this legal precept in arguing that he is not liable for the demolition of
respondents house. He maintains that he was merely acting in accordance with the Writ of
Demolition ordered by the RTC.
We reject this submission. Damnum absque injuria finds no application to this case.
True, petitioner commenced the demolition of respondents house on May 30, 1986
under the authority of a Writ of Demolition issued by the RTC. But the records show that a
Temporary Restraining Order (TRO), enjoining the demolition of respondents house, was
issued by the Supreme Court on June 2, 1986. The CA also found, based on the Certificate
of Service of the Supreme Court process server, that a copy of the TRO was served on
petitioner himself on June 4, 1986.
Petitioner, however, did not heed the TRO of this Court. We agree with the CA that he
unlawfully pursued the demolition of respondents house well until the middle of 1987. This
is clear from Respondent Angela Gutierrezs testimony. The appellate court quoted the
following pertinent portion thereof:
[10]

Q. On May 30, 1986, were they able to destroy your house?
A. Not all, a certain portion only
x x x x x x x x x
Q. Was your house completely demolished?
A. No, sir.
Q. How about the following day?
A. It was completely demolished
x x x x x x x x x
Q. Until when[,] Mrs. Witness?
A. Until 1987.
Q. About what month of 1987?
A. Middle of the year.
Q. Can you tell the Honorable Court who completed the demolition?
A. The men of Fiscal Amonoy.
[11]

13

The foregoing disproves the claim of petitioner that the demolition, which allegedly
commenced only on May 30, 1986, was completed the following day. It likewise belies his
allegation that the demolitions had already ceased when he received notice of the TRO.
Although the acts of petitioner may have been legally justified at the outset, their
continuation after the issuance of the TRO amounted to an insidious abuse of his
right. Indubitably, his actions were tainted with bad faith. Had he not insisted on completing
the demolition, respondents would not have suffered the loss that engendered the suit
before the RTC. Verily, his acts constituted not only an abuse of a right, but an invalid
exercise of a right that had been suspended when he received the TRO from this Court on
June 4, 1986. By then, he was no longer entitled to proceed with the demolition.
A commentator on this topic explains:
The exercise of a right ends when the right disappears, and it disappears when it is
abused, especially to the prejudice of others. The mask of a right without the spirit of justice
which gives it life, is repugnant to the modern concept of social law. It cannot be said that a
person exercises a right when he unnecessarily prejudices another x x x. Over and above
the specific precepts of positive law are the supreme norms of justice x x x; and he who
violates them violates the law. For this reason, it is not permissible to abuse our rights to
prejudice others.
[12]

Likewise, in Albenson Enterprises Corp. v. CA,
[13]
the Court discussed the concept of
abuse of rights as follows:
Article 19, known to contain what is commonly referred to as the principle of abuse of
rights, sets certain standards which may be observed not only in the exercise of ones rights
but also in the performance of ones duties. These standards are the following: to act with
justice; to give everyone his due; and to observe honesty and good faith. The law,
therefore, recognizes the primordial limitation on all rights: that in their exercise, the norms
of human conduct set forth in Article 19 must be observed. A right, though by itself legal
because recognized or granted by law as such, may nevertheless become the source of
some illegality. When a right is exercised in a manner which does not conform with norms
enshrined in Article 19 and results in damage to another, a legal wrong is thereby
committed for which the wrongdoer must be held responsible x x x.
Clearly then, the demolition of respondents house by petitioner, despite his receipt of
the TRO, was not only an abuse but also an unlawful exercise of such right. In insisting on
his alleged right, he wantonly violated this Courts Order and wittingly caused the
destruction of respondents house.
Obviously, petitioner cannot invoke damnum absque injuria, a principle premised on
the valid exercise of a right.
[14]
Anything less or beyond such exercise will not give rise to the
legal protection that the principle accords. And when damage or prejudice to another is
occasioned thereby, liability cannot be obscured, much less abated.
In the ultimate analysis, petitioners liability is premised on the obligation to repair or to
make whole the damage caused to another by reason of ones act or omission, whether
done intentionally or negligently and whether or not punishable by law.
[15]

WHEREFORE, the Petition is DENIED and the appealed Decision AFFIRMED. Costs
against petitioner.
SO ORDERED.

14

Republic of the Philippines
SUPREME COURT
Manila
FIRST DIVISION

G.R. No. 96126 August 10, 1992
ESTERIA F. GARCIANO, petitioner,
vs.
THE HON. COURT OF APPEALS, EMERITO LABAJO, LUNISITA MARODA, LALIANA
DIONES, CANONISA PANINSORO, DIONISIO ROSAL, REMEDIOS GALUSO,
FLORDELUNA PETALCORIN, MELCHIZEDECH LOON, NORBERTA MARODA and
JOSEPH WIERTZ, respondents.
Basilio E. Duaban for petitioner.
Julius Z. Neri for private respondent.

GRIO-AQUINO, J .:
This is a petition for review of the decision of the Court of Appeals dismissing the complaint
for damages filed by the petitioner against the private respondents.
The petitioner was hired to teach during the 1981-82 school year in the Immaculate
Concepcion Institute in the Island of Camotes. On January 13, 1982, or before the school
year ended, she applied for an indefinite leave of absence because her daughter was taking
her to Austria where her daughter was employed (Exh. B). The application was
recommended for approval by the school principal, Emerito O. Labajo, and approved by the
President of the school's Board of Directors (Exh. B-1).
On June 1, 1982, Emerito Labajo addressed a letter to the petitioner through her husband,
Sotero Garciano (for she was still abroad), informing her of the decision of Fr. Joseph
Wiertz, the school's founder, concurred in by the president of the Parent-Teachers
Association and the school faculty, to terminate her services as a member of the teaching
staff because of: (1) the absence of any written contract of employment between her and
the school due to her refusal to sign one; and (2) the difficulty of getting a substitute for her
on a temporary basis as no one would accept the position without a written contract (Exhs.
C and 1). Upon her return from Austria in the later part of June, 1982, she received the letter
informing her that her services at the Immaculate Concepcion Institute had been terminated.
She made inquiries from the school about the matter and, on July 7, 1982, the members of
the Board of Directors of the school, with the exception of Fr. Joseph Wiertz, signed a letter
notifying her that she was "reinstated to report and do your usual duties as Classroom
Teacher . . . effective July 5, 1982," and that "any letter or notice of termination received by
you before this date has no sanction or authority by the Board of Directors of this Institution,
therefore it is declared null and void . . ." (Exhs. D and 2).
On July 9, 1982, the president, vice president, secretary, and three members of the Board
of Directors, out of a membership of nine (9), resigned their positions from the Board "for the
reason that the ICI Faculty, has reacted acidly to the Board's deliberations for the
reinstatement of Mrs. Esteria F. Garciano, thereby questioning the integrity of the Board's
decision" (Exh. E).
On September 3, 1982, petitioner filed a complaint for damages in the Regional Trial Court,
Cebu, Branch XI, against Fr. Wiertz, Emerito Labajo, and some members of the faculty of
the school for discrimination and unjust and illegal dismissal.
After trial, the lower court rendered a decision on August 30, 1985, ordering the defendants
jointly and severally to pay her P200,000 as moral damages, P50,000 exemplary damages,
P32,400 as lost earnings for nine years, and P10,000 as litigation expenses and attorney's
fees.
The defendants (now private respondents) appealed to the Court of Appeals (CA-G.R. CV
No. 10692), which on August 30, 1990 reversed the trial court's decision thus:
WHEREFORE, the decision appealed from is reversed, the complaint is
dismissed, and defendants-appellants are absolved from any liability to
plaintiff-appellee. With costs against plaintiff-appellee. (p. 13, Rollo.)
The plaintiff-appellee (now petitioner) filed a motion for reconsideration which the Court of
Appeals denied on October 26, 1990. Hence, this petition for review wherein the lone error
assigned by petitioner reads:
Respondent Court of Appeals gravely erred in absolving the private
respondents from liability by faulting the petitioner for her failure to report
back to her work. (p. 6, Rollo.)
After a careful perusal of the petition and the respondents' comments, the Court resolved to
deny the petition for lack of merit.
The board of directors of the Immaculate Concepcion Institute, which alone possesses the
authority to hire and fire teachers and other employees of the school, did not dismiss the
petitioner. It in fact directed her to report for work. While the private respondents sent her a
letter of termination through her husband, they admittedly had no authority to do so. As the
Court of Appeals aptly observed:
We agree with defendants-appellants, however, that they should not have
been held liable to plaintiff-appellee for damages. Defendants-appellants
had no authority to dismiss plaintiff-appellee and the latter was aware of
15

this. Hence, the letter of termination sent to her through her husband
(Exhs. C and 1) by defendants-appellants had no legal effect whatsoever.
It did not effectively prevent her from reporting for work. What is more, it
was subsequently repudiated by the Board of Directors which directed her
to report for work. (Exhs. D and 2) There was, therefore, no reason why
she did not continue with her teaching in the school. No evidence had
been presented to show that defendants-appellants prevented her from
reporting for work. The fact that defendants-appellants had "acidly"
received the action of the Board of Directors repudiating their decision to
terminate plaintiff-appellee is not proof that defendants-appellants had
effectively and physically prevented plaintiff-appellee from resuming her
post. It was nothing more than a reaction to what defendants-appellants
perceived as an affront to their collective prestige. It would appear,
therefore, that plaintiff-appellee voluntarily desisted from her teaching job
in the school and has no right to recover damages from defendants-
appellants. (p. 13, Rollo.)
Liability for damages under Articles 19, 20 and 21 of the Civil Code arises only from
unlawful, willful or negligent acts that are contrary to law, or morals, good customs or public
policy.
Art. 19. Every person must, in the exercise of his rights and in the
performance of his duties, act with justice, give everyone his due, and
observe honesty and good faith.
Art. 20. Every person who, contrary to law, willfully or negligently causes
damage to another, shall indemnify the latter for the same.
Art. 21. Any person who willfully causes loss or injury to another in a
manner that is contrary to morals, good customs or public policy shall
compensate the latter for the damage.
The Court of Appeals was correct in finding that petitioner's discontinuance from teaching
was her own choice. While the respondents admittedly wanted her service terminated, they
actually did nothing to physically prevent her from reassuming her post, as ordered by the
school's Board of Directors. That the school principal and Fr. Wiertz disagreed with the
Board's decision to retain her, and some teachers allegedly threatened to resign en masse,
even if true, did not make them liable to her for damages. They were simply exercising their
right of free speech or their right to dissent from the Board's decision. Their acts were not
contrary to law, morals, good customs or public policy. They did not "illegally dismiss" her
for the Board's decision to retain her prevailed. She was ordered to report for work on July
5, 1982, but she did not comply with that order. Consequently, whatever loss she may have
incurred in the form of lost earnings was self-inflicted. Volenti non fit injuria.
With respect to petitioner's claim for moral damages, the right to recover them under Article
21 is based on equity, and he who comes to court to demand equity, must come with clean
hands. Article 21 should be construed as granting the right to recover damages to injured
persons who are not themselves at fault (Mabutas vs. Calapan Electric Co. [CA] 50 OG
5828, cited in Padilla, Civil Code Annotated, Vol. 1, 1975 Ed., p. 87). Moral damages are
recoverable only if the case falls under Article 2219 in relation to Article 21 (Flordelis vs.
Mar, 114 SCRA 41). In the case at bar, petitioners is not without fault. Firstly, she went on
an indefinite leave of absence and failed to report back in time for the regular opening of
classes. Secondly, for reasons known to herself alone, she refused to sign a written contract
of employment. Lastly, she ignored the Board of Directors' order for her to report for duty on
July 5, 1982.
The trial court's award of exemplary damages to her was not justified for she is not entitled
to moral, temperate or compensatory damages. (Art. 2234, Civil Code).
In sum, the Court of Appeals correctly set aside the damages awarded by the trial court to
the petitioner for they did not have any legal or factual basis.
WHEREFORE, the petition is DISMISSED for lack of merit and the decision of the Court of
Appeals is AFFIRMED.
SO ORDERED.

16

Republic of the Philippines
SUPREME COURT
Manila
EN BANC
G.R. No. L-20089 December 26, 1964
BEATRIZ P. WASSMER, plaintiff-appellee,
vs.
FRANCISCO X. VELEZ, defendant-appellant.
Jalandoni & Jamir for defendant-appellant.
Samson S. Alcantara for plaintiff-appellee.
BENGZON, J.P., J .:
The facts that culminated in this case started with dreams and hopes, followed by
appropriate planning and serious endeavors, but terminated in frustration and, what is
worse, complete public humiliation.
Francisco X. Velez and Beatriz P. Wassmer, following their mutual promise of love, decided
to get married and set September 4, 1954 as the big day. On September 2, 1954 Velez left
this note for his bride-to-be:
Dear Bet
Will have to postpone wedding My mother opposes it. Am leaving on
the Convair today.
Please do not ask too many people about the reason why That would
only create a scandal.
Paquing
But the next day, September 3, he sent her the following telegram:
NOTHING CHANGED REST ASSURED RETURNING VERY SOON
APOLOGIZE MAMA PAPA LOVE .
PAKING
Thereafter Velez did not appear nor was he heard from again.
Sued by Beatriz for damages, Velez filed no answer and was declared in default. Plaintiff
adduced evidence before the clerk of court as commissioner, and on April 29, 1955,
judgment was rendered ordering defendant to pay plaintiff P2,000.00 as actual damages;
P25,000.00 as moral and exemplary damages; P2,500.00 as attorney's fees; and the costs.
On June 21, 1955 defendant filed a "petition for relief from orders, judgment and
proceedings and motion for new trial and reconsideration." Plaintiff moved to strike it cut.
But the court, on August 2, 1955, ordered the parties and their attorneys to appear before it
on August 23, 1955 "to explore at this stage of the proceedings the possibility of arriving at
an amicable settlement." It added that should any of them fail to appear "the petition for
relief and the opposition thereto will be deemed submitted for resolution."
On August 23, 1955 defendant failed to appear before court. Instead, on the following day
his counsel filed a motion to defer for two weeks the resolution on defendants petition for
relief. The counsel stated that he would confer with defendant in Cagayan de Oro City
the latter's residence on the possibility of an amicable element. The court granted two
weeks counted from August 25, 1955.
Plaintiff manifested on June 15, 1956 that the two weeks given by the court had expired on
September 8, 1955 but that defendant and his counsel had failed to appear.
Another chance for amicable settlement was given by the court in its order of July 6, 1956
calling the parties and their attorneys to appear on July 13, 1956. This time. however,
defendant's counsel informed the court that chances of settling the case amicably were nil.
On July 20, 1956 the court issued an order denying defendant's aforesaid petition.
Defendant has appealed to this Court. In his petition of June 21, 1955 in the court a
quo defendant alleged excusable negligence as ground to set aside the judgment by
default. Specifically, it was stated that defendant filed no answer in the belief that an
amicable settlement was being negotiated.
A petition for relief from judgment on grounds of fraud, accident, mistake or excusable
negligence, must be duly supported by an affidavit of merits stating facts constituting a valid
defense. (Sec. 3, Rule 38, Rules of Court.) Defendant's affidavit of merits attached to his
petition of June 21, 1955 stated: "That he has a good and valid defense against plaintiff's
cause of action, his failure to marry the plaintiff as scheduled having been due to fortuitous
event and/or circumstances beyond his control." An affidavit of merits like this stating mere
conclusions or opinions instead of facts is not valid. (Cortes vs. Co Bun Kim, L-3926, Oct.
10, 1951; Vaswani vs. P. Tarrachand Bros., L-15800, December 29, 1960.)
Defendant, however, would contend that the affidavit of merits was in fact unnecessary, or a
mere surplusage, because the judgment sought to be set aside was null and void, it having
been based on evidence adduced before the clerk of court. In Province of Pangasinan vs.
Palisoc, L-16519, October 30, 1962, this Court pointed out that the procedure of designating
the clerk of court as commissioner to receive evidence is sanctioned by Rule 34 (now Rule
33) of the Rules of Court. Now as to defendant's consent to said procedure, the same did
not have to be obtained for he was declared in default and thus had no standing in court
17

(Velez vs. Ramas, 40 Phil. 787; Alano vs. Court of First Instance, L-14557, October 30,
1959).
In support of his "motion for new trial and reconsideration," defendant asserts that the
judgment is contrary to law. The reason given is that "there is no provision of the Civil Code
authorizing" an action for breach of promise to marry. Indeed, our ruling in Hermosisima vs.
Court of Appeals (L-14628, Sept. 30, 1960), as reiterated in Estopa vs. Biansay (L-14733,
Sept. 30, 1960), is that "mere breach of a promise to marry" is not an actionable wrong. We
pointed out that Congress deliberately eliminated from the draft of the new Civil Code the
provisions that would have it so.
It must not be overlooked, however, that the extent to which acts not contrary to law may be
perpetrated with impunity, is not limitless for Article 21 of said Code provides that "any
person who wilfully causes loss or injury to another in a manner that is contrary to morals,
good customs or public policy shall compensate the latter for the damage."
The record reveals that on August 23, 1954 plaintiff and defendant applied for a license to
contract marriage, which was subsequently issued (Exhs. A, A-1). Their wedding was set for
September 4, 1954. Invitations were printed and distributed to relatives, friends and
acquaintances (Tsn., 5; Exh. C). The bride-to-be's trousseau, party drsrses and other
apparel for the important occasion were purchased (Tsn., 7-8). Dresses for the maid of
honor and the flower girl were prepared. A matrimonial bed, with accessories, was bought.
Bridal showers were given and gifts received (Tsn., 6; Exh. E). And then, with but two days
before the wedding, defendant, who was then 28 years old,: simply left a note for plaintiff
stating: "Will have to postpone wedding My mother opposes it ... " He enplaned to his
home city in Mindanao, and the next day, the day before the wedding, he wired plaintiff:
"Nothing changed rest assured returning soon." But he never returned and was never heard
from again.
Surely this is not a case of mere breach of promise to marry. As stated, mere breach of
promise to marry is not an actionable wrong. But to formally set a wedding and go through
all the above-described preparation and publicity, only to walk out of it when the matrimony
is about to be solemnized, is quite different. This is palpably and unjustifiably contrary to
good customs for which defendant must be held answerable in damages in accordance with
Article 21 aforesaid.
Defendant urges in his afore-stated petition that the damages awarded were excessive. No
question is raised as to the award of actual damages. What defendant would really assert
hereunder is that the award of moral and exemplary damages, in the amount of P25,000.00,
should be totally eliminated.
Per express provision of Article 2219 (10) of the New Civil Code, moral damages are
recoverable in the cases mentioned in Article 21 of said Code. As to exemplary damages,
defendant contends that the same could not be adjudged against him because under Article
2232 of the New Civil Code the condition precedent is that "the defendant acted in a
wanton, fraudulent, reckless, oppressive, or malevolent manner." The argument is devoid of
merit as under the above-narrated circumstances of this case defendant clearly acted in a
"wanton ... , reckless [and] oppressive manner." This Court's opinion, however, is that
considering the particular circumstances of this case, P15,000.00 as moral and exemplary
damages is deemed to be a reasonable award.
PREMISES CONSIDERED, with the above-indicated modification, the lower court's
judgment is hereby affirmed, with costs.

18

Republic of the Philippines
SUPREME COURT
Manila
SECOND DIVISION

G.R. No. 101749 July 10, 1992
CONRADO BUNAG, JR., petitioner,
vs.
HON. COURT OF APPEALS, First Division, and ZENAIDA B. CIRILO, respondents.

REGALADO, J .:
Petitioner appeals for the reversal of the decision
1
of respondent Court of Appeals
promulgated on May 17, 1991 in CA-G.R. CV No. 07054, entitled "Zenaida B. Cirilo vs.
Conrado Bunag, Sr. and Conrado Bunag, Jr.," which affirmed in toto the decision of the
Regional Trial Court, Branch XI at Bacoor, Cavite, and, implicitly, respondent court's
resolution of September 3, 1991
2
denying petitioner's motion for reconsideration.
Respondent court having assiduously discussed the salient antecedents of this case, vis-a-
vis the factual findings of the court below, the evidence of record and the contentions of the
parties, it is appropriate that its findings, which we approve and adopt, be extensively
reproduced hereunder:
Based on the evidence on record, the following facts are considered indisputable:
On the afternoon of September 8, 1973, defendant-appellant Bunag, Jr. brought
plaintiff-appellant to a motel or hotel where they had sexual intercourse. Later that
evening, said defendant-appellant brought plaintiff-appellant to the house of his
grandmother Juana de Leon in Pamplona, Las Pias, Metro Manila, where they
lived together as husband and wife for 21 days, or until September 29, 1973. On
September 10, 1973, defendant-appellant Bunag, Jr. and plaintiff-appellant filed
their respective applications for a marriage license with the Office of the Local Civil
Registrar of Bacoor, Cavite. On October 1, 1973, after leaving plaintiff-appellant,
defendant-appellant Bunag, Jr. filed an affidavit withdrawing his application for a
marriage license.
Plaintiff-appellant contends that on the afternoon of September 8, 1973, defendant-
appellant Bunag, Jr., together with an unidentified male companion, abducted her
in the vicinity of the San Juan de Dios Hospital in Pasay City and brought her to a
motel where she was raped. The court a quo, which adopted her evidence,
summarized the same which we paraphrased as follows:
Plaintiff was 26 years old on November 5, 1974 when she testified, single
and had finished a college course in Commerce (t.s.n., p. 4, Nov. 5,
1974). It appears that on September 8, 1973, at about 4:00 o'clock in the
afternoon, while she was walking along Figueras Street, Pasay City on
her way to the San Juan de Dios Canteen to take her snack, defendant,
Conrado Bunag, Jr., came riding in a car driven by a male companion.
Plaintiff and defendant Bunag, Jr. were sweethearts, but two weeks
before September 8, 1973, they had a quarrel, and Bunag, Jr. wanted to
talk matters over with plaintiff, so that he invited her to take their merienda
at the Aristocrat Restaurant in Manila instead of at the San Juan de Dios
Canteen, to which plaintiff obliged, as she believed in his sincerity (t.s.n.,
pp. 8-10, Nov. 5, 1974).
Plaintiff rode in the car and took the front seat beside the driver while
Bunag, Jr. seated himself by her right side. The car travelled north on its
way to the Aristocrat Restaurant but upon reaching San Juan Street in
Pasay City, it turned abruptly to the right, to which plaintiff protested, but
which the duo ignored and instead threatened her not to make any noise
as they were ready to die and would bump the car against the post if she
persisted. Frightened and silenced, the car travelled its course thru F.B.
Harrison Boulevard until they reached a motel. Plaintiff was then pulled
and dragged from the car against her will, and amidst her cries and pleas.
In spite of her struggle she was no match to the joint strength of the two
male combatants because of her natural weakness being a woman and
her small stature. Eventually, she was brought inside the hotel where the
defendant Bunag, Jr. deflowered her against her will and consent. She
could not fight back and repel the attack because after Bunag, Jr. had
forced her to lie down and embraced her, his companion held her two
feet, removed her panty, after which he left. Bunag, Jr. threatened her
that he would ask his companion to come back and hold her feet if she
did not surrender her womanhood to him, thus he succeeded in feasting
on her virginity. Plaintiff described the pains she felt and how blood came
out of her private parts after her vagina was penetrated by the penis of
the defendant Bunag, Jr. (t.s.n. pp. 17-24, Nov. 5, 1974).
After that outrage on her virginity, plaintiff asked Bunag, Jr. once more to
allow her to go home but the latter would not consent and stated that he
would only let her go after they were married as he intended to marry her,
so much so that she promised not to make any scandal and to marry him.
Thereafter, they took a taxi together after the car that they used had
already gone, and proceeded to the house of Juana de Leon, Bunag, Jr.'s
grandmother in Pamplona, Las Pias, Metro Manila where they arrived at
9:30 o'clock in the evening (t.s.n., p. 26, Nov. 5, 1974). At about ten (10)
o'clock that same evening, defendant Conrado Bunag, Sr., father of
Bunag, Jr. arrived and assured plaintiff that the following day which was a
Monday, she and Bunag, Jr. would go to Bacoor, to apply for a marriage
license, which they did. They filed their applications for marriage license
(Exhibits "A" and "C") and after that plaintiff and defendant Bunag, Jr.
19

returned to the house of Juana de Leon and lived there as husband and
wife from September 8, 1973 to September 29, 1973.
On September 29, 1973 defendant Bunag, Jr. left and never returned,
humiliating plaintiff and compelled her to go back to her parents on
October 3, 1973. Plaintiff was ashamed when she went home and could
not sleep and eat because of the deception done against her by
defendants-appellants (t.s.n., p. 35, Nov. 5, 1974).
The testimony of plaintiff was corroborated in toto by her uncle, Vivencio
Bansagan who declared that on September 8, 1973 when plaintiff failed to
arrive home at 9:00 o'clock in the evening, his sister who is the mother of
plaintiff asked him to look for her but his efforts proved futile, and he told
his sister that plaintiff might have married (baka nag-asawa, t.s.n., pp. 5-
6, March 18, 1976). However, in the afternoon of the next day (Sunday),
his sister told him that Francisco Cabrera, accompanied by barrio captain
Jacinto Manalili of Ligas, Bacoor, Cavite, informed her that plaintiff and
Bunag, Jr. were in Cabrera's house, so that her sister requested him to go
and see the plaintiff, which he did, and at the house of Mrs. Juana de
Leon in Pamplona, Las Pias, Metro Manila he met defendant Conrado
Bunag, Sr., who told him, "Pare, the children are here already. Let us
settle the matter and have them married."
He conferred with plaintiff who told him that as she had already lost her honor, she
would bear her sufferings as Boy Bunag, Jr. and his father promised they would be
married.
Defendants-appellants, on the other hand, deny that defendant-appellant Conrado
Bunag, Jr. abducted and raped plaintiff-appellant on September 8, 1973. On the
contrary, plaintiff-appellant and defendant-appellant Bunag, Jr. eloped on that date
because of the opposition of the latter's father to their relationship.
Defendant-appellants claim that defendant-appellant Bunag, Jr. and plaintiff-
appellant had earlier made plans to elope and get married, and this fact was
known to their friends, among them, Architect Chito Rodriguez. The couple made
good their plans to elope on the afternoon of September 8, 1973, when defendant-
appellant Bunag, Jr., accompanied by his friend Guillermo Ramos, Jr., met plaintiff-
appellant and her officemate named Lydia in the vicinity of the San Juan de Dios
Hospital. The foursome then proceeded to (the) aforesaid hospital's canteen where
they had some snacks. Later, Guillermo Ramos, Jr. took Lydia to Quirino Avenue
where she could get a ride home, thereby leaving the defendant-appellant Bunag,
Jr. and plaintiff-appellant alone. According to defendant-appellant Bunag, Jr., after
Guillermo Ramos, Jr. and Lydia left, he and plaintiff-appellant took a taxi to the
Golden Gate and Flamingo Hotels where they tried to get a room, but these were
full. They finally got a room at the Holiday Hotel, where defendant-appellant
registered using his real name and residence certificate number. Three hours later,
the couple check out of the hotel and proceeded to the house of Juana de Leon at
Pamplona, Las Pias, where they stayed until September 19, 1873. Defendant-
appellant claims that bitter disagreements with the plaintiff-appellant over money
and the threats made to his life prompted him to break off their plan to get married.
During this period, defendant-appellant Bunag, Sr. denied having gone to the
house of Juan de Leon and telling plaintiff-appellant that she would be wed to
defendant-appellant Bunag, Jr. In fact, he phoned Atty. Conrado Adreneda,
member of the board of directors of Mandala Corporation, defendant-appellant
Bunag, Jr.'s employer, three times between the evening of September 8, 1973 and
September 9, 1973 inquiring as to the whereabouts of his son. He came to know
about his son's whereabouts when he was told of the couple's elopement late in
the afternoon of September 9, 1973 by his mother Candida Gawaran. He likewise
denied having met relatives and emissaries of plaintiff-appellant and agreeing to
her marriage to his son.
3

A complaint for damages for alleged breach of promise to marry was filed by herein private
respondent Zenaida B. Cirilo against petitioner Conrado Bunag, Jr. and his father, Conrado
Bunag, Sr., as Civil Case No. N-2028 of the Regional Trial Court, Branch XIX at Bacoor,
Cavite. On August 20, 1983, on a finding, inter alia, that petitioner had forcibly abducted and
raped private respondent, the trial court rendered a decision
4
ordering petitioner Bunag, Jr.
to pay private respondent P80,000.00 as moral damages, P20,000.00 as exemplary
damages, P20,000.00 by way of temperate damages, and P10,000.00 for and as attorney's
fees, as well as the costs of suit. Defendant Conrado Bunag, Sr. was absolved from any
and all liability.
Private respondent appealed that portion of the lower court's decision disculpating Conrado
Bunag, Sr. from civil liability in this case. On the other hand, the Bunags, as defendants-
appellants, assigned in their appeal several errors allegedly committed by trial court, which
were summarized by respondent court as follows: (1) in finding that defendant-appellant
Conrado Bunag, Jr. forcibly abducted and raped plaintiff-appellant; (2) in finding that
defendants-appellants promised plaintiff-appellant that she would be wed to defendant-
appellant Conrado Bunag, Jr.; and (3) in awarding plaintiff-appellant damages for the
breach of defendants-appellants' promise of marriage.
5

As stated at the outset, on May 17, 1991 respondent Court of Appeals rendered judgment
dismissing both appeals and affirming in toto the decision of the trial court. His motion for
reconsideration having been denied, petitioner Bunag, Jr. is before us on a petition for
review, contending that (1) respondent court failed to consider vital exhibits, testimonies and
incidents for petitioner's defense, resulting in the misapprehensions of facts and violative of
the law on preparation of judgment; and (2) it erred in the application of the proper law and
jurisprudence by holding that there was forcible abduction with rape, not just a simple
elopement and an agreement to marry, and in the award of excessive damages.
6

Petitioner Bunag, Jr. first contends that both the trial and appellate courts failed to take into
consideration the alleged fact that he and private respondent had agreed to marry, and that
there was no case of forcible abduction with rape, but one of simple elopement and
agreement to marry. It is averred that the agreement to marry has been sufficiently proven
by the testimonies of the witnesses for both parties and the exhibits presented in court.
20

This submission, therefore, clearly hinges on the credibility of the witnesses and evidence
presented by the parties and the weight accorded thereto in the factual findings of the trial
court and the Court of Appeals. In effect, what petitioner would want this Court to do is to
evaluate and analyze anew the evidence, both testimonial and documentary, presented
before and calibrated by the trial court, and as further meticulously reviewed and discussed
by respondent court.
The issue raised primarily and ineluctably involves questions of fact. We are, therefore,
once again constrained to stress the well-entrenched statutory and jurisprudential mandate
that findings of fact of the Court of Appeals are, as a rule, conclusive upon this Court. Only
questions of law, distinctly set forth, may be raised in a petition for review on certiorari under
Rule 45 of the Rules of Court, subject to clearly settled exceptions in case law.
Our jurisdiction in cases brought to us from the Court of Appeals is limited to reviewing and
revising the errors of law imputed to the latter, its findings of fact being conclusive. This
Court has emphatically declared that it is not its function to analyze or weigh such evidence
all over again, its jurisdiction being limited to reviewing errors of law that might have been
committed by the lower court. Barring, therefore, a showing that the findings complained of
are totally devoid of support in the record, or that they are so glaringly erroneous as to
constitute serious abuse of discretion, such findings must stand, for this Court is not
expected or required to examine or contrast the oral and documentary evidence submitted
by the parties.
7
Neither does the instant case reveal any feature falling within, any of the
exceptions which under our decisional rules may warrant a review of the factual findings of
the Court of Appeals. On the foregoing considerations and our review of the records, we
sustain the holding of respondent court in favor of private respondent.
Petitioner likewise asserts that since action involves a breach of promise to marry, the trial
court erred in awarding damages.
It is true that in this jurisdiction, we adhere to the time-honored rule that an action for breach
of promise to marry has no standing in the civil law, apart from the right to recover money or
property advanced by the plaintiff upon the faith of such promise. 8 Generally, therefore, a
breach of promise to marry per se is not actionable, except where the plaintiff has actually
incurred expenses for the wedding and the necessary incidents thereof.
However, the award of moral damages is allowed in cases specified in or analogous to
those provided in Article 2219 of the Civil Code. Correlatively, under Article 21 of said Code,
in relation to paragraph 10 of said Article 2219, any person who wilfully causes loss or injury
to another in a manner that is contrary to morals, good customs or public policy shall
compensate the latter for moral damages.
9
Article 21 was adopted to remedy the countless
gaps in the statutes which leave so many victims of moral wrongs helpless even though
they have actually suffered material and moral injury, and is intended to vouchsafe
adequate legal remedy for that untold number of moral wrongs which is impossible for
human foresight to specifically provide for in the statutes.
10

Under the circumstances obtaining in the case at bar, the acts of petitioner in forcibly
abducting private respondent and having carnal knowledge with her against her will, and
thereafter promising to marry her in order to escape criminal liability, only to thereafter
renege on such promise after cohabiting with her for twenty-one days, irremissibly constitute
acts contrary to morals and good customs. These are grossly insensate and reprehensible
transgressions which indisputably warrant and abundantly justify the award of moral and
exemplary damages, pursuant to Article 21 in relation to paragraphs 3 and 10, Article 2219,
and Article 2229 and 2234 of Civil Code.
Petitioner would, however, belabor the fact that said damages were awarded by the trial
court on the basis of a finding that he is guilty of forcible abduction with rape, despite the
prior dismissal of the complaint therefor filed by private respondent with the Pasay City
Fiscal's Office.
Generally, the basis of civil liability from crime is the fundamental postulate of our law that
every person criminally liable for a felony is also civilly liable. In other words, criminal liability
will give rise to civil liability ex delicto only if the same felonious act or omission results in
damage or injury to another and is the direct and proximate cause thereof.
11
Hence,
extinction of the penal action does not carry with it the extinction of civil liability unless the
extinction proceeds from a declaration in a final judgment that the fact from which the civil
might arise did not exist.
12

In the instant case, the dismissal of the complaint for forcible abduction with rape was by
mere resolution of the fiscal at the preliminary investigation stage. There is no declaration in
a final judgment that the fact from which the civil case might arise did not exist.
Consequently, the dismissal did not in any way affect the right of herein private respondent
to institute a civil action arising from the offense because such preliminary dismissal of the
penal action did not carry with it the extinction of the civil action.
The reason most often given for this holding is that the two proceedings involved are not
between the same parties. Furthermore, it has long been emphasized, with continuing
validity up to now, that there are different rules as to the competency of witnesses and the
quantum of evidence in criminal and civil proceedings. In a criminal action, the State must
prove its case by evidence which shows the guilt of the accused beyond reasonable doubt,
while in a civil action it is sufficient for the plaintiff to sustain his cause by preponderance of
evidence only.
13
Thus, in Rillon, et al. vs. Rillon,
14
we stressed that it is not now necessary
that a criminal prosecution for rape be first instituted and prosecuted to final judgment
before a civil action based on said offense in favor of the offended woman can likewise be
instituted and prosecuted to final judgment.
WHEREFORE, the petition is hereby DENIED for lack of merit, and the assailed judgment
and resolution are hereby AFFIRMED.
SO ORDERED.
Narvasa, C.J. and Padilla, J., concur.
Nocon, J., took no part.

21

G.R. No. L-47739 June 22, 1983
SINGAPORE AIRLINES LIMITED, petitioner,
vs.
HON. ERNANI CRUZ PAO as Presiding Judge of Branch XVIII, Court of First
Instance of Rizal, CARLOS E. CRUZ and B. E. VILLANUEVA, respondents.
Bengzon, Zarraga, Narciso, Cudala Pecson, Azucena & Bengzon Law Offices for petitioner.
Celso P. Mariano Law Office for private respondent Carlos Cruz.
Romeo Comia for private respondent B. E. Villanueva.

MELENCIO-HERRERA, J .:
On the basic issue of lack of jurisdiction, petitioner company has elevated to us for review
the two Orders of respondent Judge dated October 28, 1977 and January 24, 1978
dismissing petitioner's complaint for damages in the first Order, and denying its Motion for
Reconsideration in the second.
On August 21, 1974, private respondent Carlos E. Cruz was offered employment by
petitioner as Engineer Officer with the opportunity to undergo a B-707 I conversion training
course," which he accepted on August 30, 1974. An express stipulation in the letter-offer
read:
3. BONDING. As you win be provided with conversion training you are required to
enter into a bond with SIA for a period of 5 years. For this purpose, please inform
me of the names and addresses of your sureties as soon as possible.
Twenty six days thereafter, or on October 26, 1974, Cruz entered into an "Agreement for a
Course of Conversion Training at the Expense of Singapore Airlines Limited" wherein it was
stipulated among others:
4. The Engineer Officer shall agree to remain in the service of the Company for a
period of five years from the date of commencement of such aforesaid conversion
training if so required by the Company.
5. In the event of the Engineer Officer:
1. Leaving the service of the company during the period of five years
referred to in Clause 4 above, or
2. Being dismissed or having his services terminated by the company for
misconduct, the Engineer Officer and the Sureties hereby bind
themselves jointly and severally to pay to the Company as liquidated
damages such sums of money as are set out hereunder:
(a) during the first year of the period of five years referred to in
Clause 4 above
...................................................................................... $ 67,460/
(b) during the second year of the period of five years referred to in
Clause 4 above ................................................................................. $
53,968/
(c) during the third year of the period of five years referred to in
Clause 4 above
...................................................................................... $ 40,476/
(d) during the fourth year of the period of five years referred to in
Clause 4 above ..................................................................................
$ 26,984/
(e) during the fifth year of the period of five years referred to in
Clause 4 above
....................................................................................... $ 13,492/
6. The provisions of Clause 5 above shall not apply in a case where an Engineer
Officer has his training terminated by the Company for reasons other than
misconduct or where, subsequent to the completion of training, he -
1. loses his license to operate as a Flight Engineer due to medical
reasons which can in no way be attributable to any act or omission on his
part;
2. is unable to continue in employment with the Company because his
employment pass or work permit, as the case may be, has been
withdrawn or has not been renewed due to no act or omission on his part;
3. has his services terminated by the Company as a result of being
replaced by a national Flight Engineer;
4. has to leave the service of the Company on valid compassionate
grounds stated to and accepted by the Company in writing.
1

Cruz signed the Agreement with his co-respondent, B. E. Villanueva, as surety.
22

Claiming that Cruz had applied for "leave without pay" and had gone on leave without
approval of the application during the second year of the Period of five years, petitioner filed
suit for damages against Cruz and his surety, Villanueva, for violation of the terms and
conditions of the aforesaid Agreement. Petitioner sought the payment of the following sums:
liquidated damages of $53,968.00 or its equivalent of P161,904.00 (lst cause of action);
$883.91 or about P2,651.73 as overpayment in salary (2nd clause of action); $61.00 or
about P183.00 for cost of uniforms and accessories supplied by the company plus $230.00,
or roughly P690.00, for the cost of a flight manual (3rd cause of action); and $1,533.71, or
approximately P4,601.13 corresponding to the vacation leave he had availed of but to which
he was no longer entitled (4th cause Of action); exemplary damages attorney's fees; and
costs.
In his Answer, Cruz denied any breach of contract contending that at no time had he been
required by petitioner to agree to a straight service of five years under Clause 4 of the
Agreement (supra) and that he left the service on "valid compassionate grounds stated to
and accepted by the company so that no damages may be awarded against him. And
because of petitioner-plaintiff's alleged ungrounded causes of action, Cruz counterclaimed
for attorney's fees of P7,000.00.
The surety, Villanueva, in his own Answer, contended that his undertaking was merely that
of one of two guarantors not that of surety and claimed the benefit of excussion, if at an
found liable. He then filed a cross-claim against Cruz for damages and for whatever amount
he may be held liable to petitioner-plaintiff, and a counterclaim for actual, exemplary, moral
and other damages plus attorney's fees and litigation expenses against petitioner-plaintiff.
The issue of jurisdiction having been raised at the pre-trial conference, the parties were
directed to submit their respective memoranda on that question, which they complied with in
due time. On October 28, 1977, respondent Judge issued the assailed Order dismissing the
complaint, counterclaim and cross-claim for lack of jurisdiction stating.
2. The present case therefore involves a money claim arising from an employer-
employee relation or at the very least a case arising from employer-employee
relations, which under Art. 216 of the Labor Code is vested exclusively with the
Labor Arbiters of the National Labor Relations Commission.
2

Reconsideration thereof having been denied in the Order of January 24, 1978, petitioner
availed of the present recourse. We gave due course.
We are here confronted with the issue of whether or not this case is properly cognizable by
Courts of justice or by the Labor Arbiters of the National Labor Relations Commission.
Upon the facts and issues involved, jurisdiction over the present controversy must be held
to belong to the civil Courts. While seemingly petitioner's claim for damages arises from
employer-employee relations, and the latest amendment to Article 217 of the Labor Code
under PD No. 1691 and BP Blg. 130 provides that all other claims arising from employer-
employee relationship are cognizable by Labor Arbiters,
3
in essence, petitioner's claim for
damages is grounded on the "wanton failure and refusal" without just cause of private
respondent Cruz to report for duty despite repeated notices served upon him of the
disapproval of his application for leave of absence without pay. This, coupled with the
further averment that Cruz "maliciously and with bad faith" violated the terms and conditions
of the conversion training course agreement to the damage of petitioner removes the
present controversy from the coverage of the Labor Code and brings it within the purview of
Civil Law.
Clearly, the complaint was anchored not on the abandonment per se by private respondent
Cruz of his job as the latter was not required in the Complaint to report back to work but on
the manner and consequent effects of such abandonment of work translated in terms of the
damages which petitioner had to suffer.
Squarely in point is the ruling enunciated in the case of Quisaba vs. Sta. Ines Melale Veneer
& Plywood, Inc.4 the pertinent portion of which reads:
Although the acts complied of seemingly appear to constitute "matter involving
employee employer" relations as Quisaba's dismiss was the severance of a pre-
existing employee-employer relations, his complaint is grounded not on his
dismissal per se, as in fact he does not ask for reinstatement or backwages, but on
the manner of his dismiss and the consequent effects of such
Civil law consists of that 'mass of precepts that determine or regulate the relations
... that exist between members of a society for the protection of private interest (1
Sanchez Roman 3).
The "right" of the respondents to dismiss Quisaba should not be confused with the
manner in which the right was exercised and the effects flowing therefrom. If the
dismiss was done anti-socially or oppressively, as the complaint alleges, then the
respondents violated article 1701 of the Civil Code which prohibits acts of
oppression by either capital or labor against the other, and article 21, which
makers a person liable for damages if he wilfully causes loss or injury to another in
a manner that is contrary to morals, good customs or public policy, the sanction for
which, by way of moral damages, is provided in article 2219, No. 10 (Cf, Philippine
Refining Co. vs. Garcia, L-21962, Sept. 27, 1966, 18 SCRA 107).
Stated differently, petitioner seeks protection under the civil laws and claims no benefits
under the labor Code. The primary relief sought is for liquidated damages for breach of a
contractual obligation. The other items demanded are not labor benefits demanded by
workers generally taken cognizance of in labor disputes, such as payment of wages,
overtime compensation or separation pay. The items claimed are the natural consequences
flowing from breach of an obligation, intrinsically a civil dispute.
Additionally, there is a secondary issue involved that is outside the pale of competence of
Labor Arbiters. Is the liability of Villanueva one of suretyship or one of guaranty?
Unquestionably, this question is beyond the field of specialization of Labor Arbiters.
WHEREFORE, the assailed Orders of respondent Judge are hereby set aside. The records
are hereby ordered remanded to the proper Branch of the Regional Trial Court of Quezon
City, to which this case belongs, for further proceedings. No costs
23


THIRD DIVISION
[G.R. No. 47013. February 17, 2000]
ANDRES LAO, petitioner, vs. COURT OF APPEALS, THE ASSOCIATED ANGLO-
AMERICAN TOBACCO CORPORATION and ESTEBAN CO, respondents.
[G.R. No. 60647. February 17, 2000]
ESTEBAN CO, petitioner, vs. COURT OF APPEALS and ANDRES
LAO, respondents. Esmsc
[G.R. No. 60958-59. February 17, 2000]
THE ASSOCIATED ANGLO-AMERICAN TOBACCO CORPORATION, petitioner, vs.
COURT OF APPEALS, ANDRES LAO, JOSE LAO, and TOMAS LAO, respondents.
D E C I S I O N
PURISIMA, J .: PURISIMA
These consolidated petitions for review on certiorari under Rule 45 of the Rules of Court
revolve around discrepant statements of accountability between a principal and its agent in
the sale of cigarettes.
The common factual background at bar follows:
On April 6, 1965, The Associated Anglo-American Tobacco Corporation (Corporation for
brevity) entered into a "Contract of Sales Agent" with Andres Lao. Under the contract, Lao
agreed to sell cigarettes manufactured and shipped by the Corporation to his business
address in Tacloban City. Lao would in turn remit the sales proceeds to the Corporation. For
his services, Lao would receive commission depending on the kind of cigarettes sold, fixed
monthly salary, and operational allowance. As a guarantee to Laos compliance with his
contractual obligations, his brother Jose and his father Tomas executed a deed of
mortgage
[1]
in favor of the Corporation in the amount of P200,000.00
In compliance with the contract, Lao regularly remitted the proceeds of his sales to the
Corporation, generating, in the process, a great deal of business. Thus, the Corporation
awarded him trophies and plaques in recognition of his outstanding performance from 1966
to 1968. However, in February 1968 and until about seven (7) months later, Lao failed to
accomplish his monthly sales report. In a conference in Cebu, Ching Kiat Kam, the
President of the Corporation, reminded Lao of his enormous accounts and the difficulty of
obtaining a tally thereon despite Laos avowal of regular remittances of his collections.
Sometime in August and September 1969, Esteban Co, the vice-president and general
manager of the Corporation, summoned Lao to Pasay City for an accounting. It was then
and there established that Laos liability amounted to P525,053.47. And so, Lao and his
brother Lao Y Ka, enlisted the services of the Sycip Gorres and Velayo Accounting Firm
(SGV) to check and reconcile the accounts. Esmmis
Ching Kiat Kam allowed Lao to continue with the sales agency provided Lao would reduce
his accountability to P200,000.00, the amount secured by the mortgage. The Corporation
thereafter credited in favor of Lao the amount of P325,053.47 representing partial payments
he had made but without prejudice to the result of the audit of accounts. However, the SGV
personnel Lao had employed failed to conclude their services because the Corporation did
not honor its commitment to assign two of its accountants to assist them. Neither did the
Corporation allow the SGV men access to its records.
Subsequently, the Corporation discovered that Lao was engaging in the construction
business so much so that it suspected that Lao was diverting the proceeds of his sales to
finance his business. In the demand letter of April 15, 1979,
[2]
counsel for the Corporation
sought payment of the obligations of Lao, warning him of the intention of the Corporation to
foreclose the mortgage. Attached to said letter was a statement of account indicating that
Laos total obligations duly supported by receipts amounted to P248,990.82.
Since Lao appeared to encounter difficulties in complying with his obligations under the
contract of agency, the Corporation sent Ngo Kheng to supervise Laos sales operations in
Leyte and Samar. Ngo Kheng discovered that, contrary to Laos allegation that he still had
huge collectibles from his customers, nothing was due the Corporation from Laos clients.
From then on, Lao no longer received shipments from the Corporation which transferred its
vehicles to another compound controlled by Ngo Kheng. Shipments of cigarettes and the
corresponding invoices were also placed in the name of Ngo Kheng.
On May 21, 1970, Andres, Jose and Tomas Lao brought a complaint for accounting and
damages with writ of preliminary injunction
[3]
against the Corporation, docketed as Civil
Case No. 4452 before the then Court of First Instance of Leyte, Branch I in Tacloban City,
which court
[4]
came out with its decision
[5]
on March 26, 1975, disposing as follows:
"IN VIEW OF ALL THE FOREGOING PREMISES, and upon a clear
preponderance of evidence in favor of the plaintiffs, the court hereby
renders judgment as follows: Esmso
1........Ordering both the plaintiffs and defendant corporation to undergo a
Court supervised accounting of their respective account with the view of
establishing once and for all, by a reconciliation of their respective books
of accounts, the true and correct accountability of Andres Lao to the
defendant corporation. Pursuant thereto, both plaintiff Andres Lao and the
defendant The Associated Anglo-American Tobacco Corporation are
directed to make available all their records pertainting [sic] to their
business transactions with each other under the contract of sales agent,
from 1965 up to the time Andres Lao ceased being the agent of the
defendant. A Committee on Audit is hereby formed to be composed of
24

three (3) members, one member to be nominated by the plaintiffs, another
to be nominated by the defendant corporation and the third member who
shall act as the Committee Chairman to be appointed by this Court. As
Committee Chairman, the Court hereby appoints the Branch Clerk of
Court of this Court, Atty. Victorio Galapon, who shall immediately convene
the Committee upon appointment of the other two members, and
undertake to finish their assigned task under his decision within two (2)
months.
2........Ordering the defendant corporation to pay Plaintiffs the amount of
P180,000 representing actual loss of earnings.
3........Ordering the defendant to pay plaintiffs moral damages in the
amount of P130,000.00.
4........Ordering the defendant to pay to the plaintiffs, exemplary damages
in the amount of P50,000.00.
5........Ordering the defendant to pay to the plaintiffs, attorneys fees in the
amount of P40,000.00.
6........Ordering the plaintiffs and the defendant to pay the compensation
of the commissioners pro-rata.
7........Finally ordering the defendant to pay the cost of this suit.
SO ORDERED."
The Committee of Audit that was eventually constituted was composed of Atty. Victorio L.
Galapon, Jr., as chairman, Wilfredo Madarang, Jr. and Cesar F.P. Corcuera, as
representatives of the Corporation, and Lao himself. On September 16, 1976, said
committee submitted a report
[6]
with the following findings: Msesm
"Total remittances made by Mr. Andres Lao in favor of
Associated from April 10, 1965 to November 1969 which
are substantially supported by official receipt
.....................................................

P13,686,148.80
Shipments by Associated to Mr. Andres Lao duly
supported by bills of lading, factory consignment invoices
and delivery receipts..................................

9,110,777.00
Shipments by Associated to Mr. Andres Lao, covered by
bills of lading and factory consignment invoices but with
no supporting delivery receipts purported to have been
delivered to Mr. Lao on the basis of sales made by him
as reported in his monthly sales reports (except for sales
in December, 1968 and November and December 1968


4,018,927.60
where the sales reports were not available to the Audit
Committee)...............................................
Shipments covered by bills of lading and factory
consignment invoices but with no supporting delivery
receipts ......................................................

597,239.40
Shipments with covering factory consignment invoices
but not covered by bills of lading and delivery receipts
......................................................

126,950.00"
On February 28, 1977, the trial court
[7]
promulgated a supplemental decision wherein it
dismissed Laos claim that he had made an overpayment of P556,444.20. The alleged
overpayment was arrived at after deducting the total payment made by Lao in the amount of
P13,686,148.80 from the total volume of shipments made by the Corporation in the amount
of P13,129,704.60, without including the amount of P597,239.40, representing alleged
shipments covered by bills of lading and factory consignment invoices but with no
supporting delivery receipts, and the amount of P126,950.00, representing shipments with
factory consignment invoices but not covered by bills of lading and delivery receipts. The
trial court, in rejecting the claim of overpayment, held that "when he (referring to Lao) made
partial payments amounting to P325,053.47 subsequent to the demand in September, 1969,
he is deemed to have admitted his liability and his claim of overpayment is not only
preposterous but devoid of logic." Therefore, with the sums of P597,239.40 and
P126,950.00 included in the total volume of shipments made by the Corporation in the
amount of P13,129,704.60, Laos total remittances of P13,686,248.80 were short of
P167,745.20. Thus, the trial court held:
"WHEREFORE, judgment is hereby rendered declaring plaintiff Andres
Laos accountability to defendant Corporation in the amount of
P167,745.20 and ordering him to pay said amount of P167,745.20 to
defendant The Associated Anglo-American Tobacco Corporation." Exsm
The Corporation appealed the decision, dated March 26, 1975, just as Lao appealed the
supplemental decision, dated February 28, 1977, to the Court of Appeals. Docketed as CA-
G.R. No. 62532-R, the appeal was resolved in the Decision of the Court of Appeals dated
October 26, 1981,
[8]
disposing thus:
"WHEREFORE, in connection with the decision of March 26, 1975,
defendant corporation is hereby ordered to pay plaintiffs P150,000.00
actual damages for loss of earnings, P30,000.00 by way of moral
damages and P10,000.00 for exemplary damages. As modified, the
decision is AFFIRMED in all other respects.
As for the supplemental decision of February 28, 1977, the same is
hereby reversed and set aside, and defendant-appellant corporation
sentenced to reimburse Andres Laos overpayment in the amount of
P556,444.20. Costs against defendant-appellant corporation."
25

The Corporation presented a motion for reconsideration
[9]
of the said Decision but the same
was denied in a Resolution dated May 18, 1982.
[10]
A motion for leave to file a second
motion for reconsideration was likewise denied.
[11]
Kylex
Meanwhile, on June 24, 1974 and during the pendency of Civil Case No. 4452, Esteban Co,
representing the Corporation as its new vice-president, filed an affidavit of complaint
[12]
with
the Pasay City Fiscals Office under I.S. No. 90994; alleging that Lao failed to remit the
amount of P224,585.82 which he allegedly misappropriated and converted to his personal
use. Although the amount supposedly defalcated was put up as a counterclaim in Civil Case
No. 4452 for accounting, the Corporation averred that it reserved the right to institute a
criminal case against Lao.
On July 31, 1974, after finding a prima facie case against Lao, the Pasay City Fiscal filed an
information
[13]
for estafa against Lao, docketed as Criminal Case No. 2650-P before the
then Court of First Instance of Rizal, Branch XXVII. Lao sought a reinvestigation
[14]
of the
case, contending that he was never served a subpoena or notice of preliminary investigation
that was considered mandatory in cases cognizable by Court of First Instance, now
Regional Trial Court. Apparently, the preliminary investigation proceeded ex-parte because
Esteban Co made it appear that Lao could not be located. Kycalr
On December 17, 1974, without awaiting the termination of the criminal case, Lao lodged a
complaint
[15]
for malicious prosecution against the Corporation and Esteban Co, praying for
an award of damages for violation of Articles 20 and 21 of the Civil Code. The case was
docketed as Civil Case No. 5528 before Branch I of the then Court of First Instance in
Cotabato City.
In his resolution dated January 3, 1975,
[16]
then Pasay City Fiscal Jose Flaminiano found
merit in the petition for reinvestigation of the estafa case. He opined that Lao had not
committed estafa as his liability was essentially civil in nature. The Fiscal entertained doubts
about the motive of the Corporation in instituting the criminal case against Lao because of
the undue delay in its filing, aside from the fact that the estafa case involved the same
subject matter the Corporation sued upon by way of counterclaim in Civil Case No. 4452.
Eventually, on May 13, 1976, the Court of First Instance of Rizal, Branch XXVII, in Pasay
City, promulgated a decision
[17]
acquitting Lao of the crime charged and adopting in totothe
said Resolution of Fiscal Flaminiano.
On March 18, 1977, the Court of First Instance of Samar
[18]
handed down a decision in Civil
Case No. 5528, the action for damages arising from malicious prosecution, disposing thus:
"WHEREFORE, the Court declares that the defendants filed Criminal
Case No. 2650-P against the plaintiff for estafa before the Court of First
Instance of Rizal, Branch XXVII, Pasay City, without probable cause and
with malice and therefore orders the defendants Associated Anglo-
American Tobacco Corporation and Esteban Co to jointly and severally
pay the plaintiff:
a........P30,000 as actual damages; Calrky
b........P150,000.00 as moral damages;
c........P100,000.00 as exemplary damages;
d........P50,000.00 as attorneys fees and costs.
SO ORDERED."
The Corporation and Esteban Co both appealed the aforesaid decision to the Court of
Appeals under CA-G.R. No. 61925-R.
On April 18, 1977, Lao presented a motion for execution pending appeal
[19]
before the trial
court. The opposition of the Corporation notwithstanding, on June 8, 1977 the trial court
issued a special order granting the motion for execution pending appeal,
[20]
and on the
following day, the corresponding writ of execution issued.
[21]

On June 10, 1977, the Court of Appeals issued a Restraining Order enjoining the execution
of subject judgment.
[22]
The said order was issued on account of a petition for certiorari,
prohibition and mandamus with preliminary injunction
[23]
filed by the Corporation and
Esteban Co with the said appellate court. Docketed as CA-G.R. No. 06761, the petition was
received by the Court of Appeals on June 9, 1977. A supplemental to the petition and a
"compliance" were also received on the same time and date.
[24]
On June 21, 1977, Lao
moved to lift the restraining order.
On September 14, 1977, the Court of Appeals resolved in CA-G.R. No. 06761 thus:
"WHEREFORE, the petition for certiorari is hereby granted, the special
order granting execution pending appeal is annulled and the restraining
order heretofore issued is made permanent.
No pronouncement as to costs."
On October 21, 1981, the Court of Appeals likewise rendered a Decision
[25]
in CA-G.R. No.
62532-R, affirming the trial courts finding that Criminal Case No. 2650-P was filed without
probable cause and with malice; and held the Corporation and Esteban Co solidarily liable
for damages, attorneys fees and costs.
The Corporation and Esteban Co moved to reconsider
[26]
the said decision in CA-G.R. No.
61925-R but to no avail. The motion for reconsideration was denied in a Resolution
promulgated on May 18, 1992. A motion for leave of court to file a second motion for
reconsideration
[27]
met the same fate. It was likewise denied in a Resolution
[28]
dated June
23, 1982.
From the said cases sprung the present petitions which were ordered consolidated in the
Resolutions of December 15, 1982 and November 11, 1985.
[29]
Subject petitions are to be
passed upon in the order they were filed. Mesm
26

G.R. No. 47013
A petition for review on certiorari of the Decision of the Court of Appeals in CA-G.R. No.
06761 that Lao filed, contending that:
1........The Court of Appeals cannot validly give due course to an original
action for certiorari, prohibition and mandamus where the petition is fatally
defective for not being accompanied by a copy of the trial courts
questioned process/order.
2........The Court of Appeals, cannot, in a petition for certiorari, prohibition
and mandamus, disregard, disturb and substitute its own judgment for the
findings of facts of the trial court, particularly as in the present case,
where the trial court did not exceed nor abuse its discretion.
3........The Court of Appeals did not act in accordance with established
jurisprudence when it overruled the trial courts holding that the posting of
a good and solvent bond is a good or special reason for execution
pending appeal.
For clarity, the petition for review on certiorari questioning the Decision of the Court of
Appeals that nullified the special order granting execution pending appeal is anchored on
the antecedent facts as follows: Slx
After the Court of First Instance of Samar had decided in favor of Lao in the action for
damages by reason of malicious prosecution, Lao filed a motion for execution pending
appeal
[30]
even as the Corporation and Co had interposed an appeal from the said decision.
In that motion, Lao theorized that the appeal had no merit and the judgment in his favor
would be rendered ineffectual on account of losses incurred by the Corporation in the 1972
floods in Luzon and in a fire that cost the Corporation P5 million, as well as the fact that the
properties of the Corporation were heavily encumbered as it had even incurred an overdraft
with a bank; for which reasons, Lao evinced his willingness to post a bond although Section
2, Rule 39 of the Rules of Court does not require such bond. Lao thereafter sent in a
supplemental motion
[31]
asserting that the Corporations properties were mortgaged in the
total amount of Seven Million (P7,000,000.00) Pesos. The Corporation and Co opposed
both motions.
On June 8, 1977, after hearing and presentation of evidence by both parties, the Court of
First Instance of Samar issued a special order granting the motion for execution pending
appeal.
[32]
The following day, June 9, 1977, the corresponding writ of execution pending
appeal issued.
[33]
At 8:00 a.m. on the same day, the Corporation and Co filed a petition
for certiorari, prohibition and mandamus with preliminary injunction with the Court of
Appeals, the filling of which petition was followed by the filing of a supplement to the petition
and a "compliance" with each pleading bearing the docket stamp showing that the Court of
Appeals also received the same at 8:00 a.m.
[34]
Scslx
In the petition under consideration, petitioner Lao contends that the supplemental petition
and "compliance" could not have been filed with the Court of Appeals at the same time as
the original petition; pointing out that the supplemental petition contains an allegation to the
effect that the special order granting execution pending appeal was then still "being flown to
Manila" and would be attached to the petition "as soon as it arrives in Manila which is
expected tomorrow, June 10, 1977 or Saturday."
[35]
Petitioner Lao thus expressed
incredulity on the fact that both the supplemental petition and the "compliance" submitted to
the appellate court a copy of the special order bearing the same time of receipt. He
theorized that the writ of execution could have been issued by the Court of First Instance of
Samar at the earliest, at 8:30 a.m. on July 9, 1977. Petitioner Lao then noted that, the
restraining order enjoining execution pending appeal did not mention the date of issuance of
the writ subsequently issued and the names of the special sheriffs tasked to execute it
simply because when the restraining order was issued the copy of the writ of execution was
not yet filed with the Court of Appeals. Petitioner Lao also averred that because his counsel
was furnished a copy of the restraining order through the mail, he was deprived of the
opportunity to take immediate "remedial steps in connection with the improvident issuance
of the restraining order."
[36]

In their comment on the petition, respondent Corporation and Co assail petitioner Laos
insinuation of irregularity in the filing of their pleadings. They aver that in view of petitioner
Laos allegation, they, made inquiries in the Docket Section of the Court of Appeals, and
they were informed that the receiving machine of said section was out of order when the
pleadings were received "as the time of receipt appearing therein is always 8:00 a.m."
[37]

This Court cannot gloss over, as it has never glossed over allegations of irregularity in the
handling of pleadings filed in the Court. However, in the absence of concrete proof that
there was malicious intent to derail the propriety of procedure, this Court has no basis on
which to arrive at a conclusion thereon. The documentary evidence of simultaneous receipt
of pleadings that should ordinarily be received one after another is simply insufficient to
warrant any conclusion on irregularity of procedure.
All court personnel are enjoined to do their jobs properly and according to law. Should they
notice anything in the performance of their duties that may generate even a mere suspicion
of irregularity, they are duty-bound to correct the same. In this case, more diligence on the
part of the personnel handling the receiving machine could have prevented the stamping on
the pleadings with erroneous date and time of receipt and would have averted suspicion of
an anomaly in the filing of pleadings. Persons responsible for the negligence should be
taken to task. However, since this is not the proper forum for whatever administrative
measures may be taken under the premises, the Court opts to discuss the merits of the
petition for review on certiorari at bar rather than tarry more on an administrative matter that
is fundamentally extraneous to the petition. Slxsc
Petitioner Lao maintains that the Court of Appeals should not have been given due course
to the petition for certiorari, prohibition and mandamus considering that it was fatally
defective for failure of the petitioners to attach thereto a copy of the questioned writ of
execution. On their part, private respondents concede the mandatory character of the
requirement of Section 1, Rule 65 of the Rules of Court - that the petition "shall be
accompanied by a certified true copy of the judgment or order subject thereof, together with
copies of all pleadings and documents relevant and pertinent thereto." However, private
27

respondents asked that their submission of a certified true copy of the special order granting
execution pending appeal attached to their "compliance" dated June 9, 1977
[38]
be taken as
substantial compliance with the rule.
The Court gives due consideration to private respondents stance. Strict adherence to
procedural rules must at all times be observed. However, it is not the end-all and be-all of
litigation. As this Court said:
"xxx adjective law is not to be taken lightly for, without it, the enforcement
of substantive law may not remain assured. The Court must add,
nevertheless, that technical rules of procedure are not ends in themselves
but primarily devised and designed to help in the proper and expedient
dispensation of justice. In appropriate cases, therefore, the rules may
have to be so construed liberally as to meet and advance the cause of
substantial justice."
[39]

Thus, in holding that the Court of Appeals may entertain a second motion for
reconsideration of its decision although the filing of such motion violates a prohibition
thereof, the Court said:
"xxx (I)t is within the power of this Court to temper rigid rules in favor of
substantial justice. While it is desirable that the Rules of Court be faithfully
and even meticulously observed, courts should not be so strict about
procedural lapses that do not really impair the proper administration of
justice. If the rules are intended to ensure the orderly conduct of litigation,
it is because of the higher objective they seek which is the protection of
substantive rights of the parties."
[40]
Slxmis
In the case under consideration, private respondents substantially complied with the Rules
of Court when they submitted a copy of the writ of execution sought to be enjoined on the
same day they filed the petition for certiorari, prohibition and mandamus. Petitioner Cos
allegation of irregularity as to the time of receipt of the "compliance" to which copy of the
writ was attached being unsubstantiated, the presumption of regularity of its receipt on the
day the original petition was filed should prevail.
Petitioner Co argues that the Court of Appeals cannot disturb the factual findings of the trial
court and substitute its own in a petition for certiorari, prohibition and mandamus where the
basic issue is one of jurisdiction or grave abuse of discretion. It is well-settled, however, that
in a petition for certiorari and mandamus, the Court of Appeals, when inevitable, may
examine the factual merits of the case.
[41]
In the present case, it was necessary and
inevitable for the Court of Appeals to look into the diverse factual allegations of the parties.
It is worthy to note that petitioners motion for execution pending appeal was premised on
his contention that the award of damages in his favor would be meaningless on account of
respondent Corporations precarious financial status. On the other hand, respondent
Corporation countered that it was operating at a profit, an assurance that at the time, it was
a stable business entity that could answer for its obligations. In the face of these
contradictory allegations, the appellate court correctly opted to make its own finding of facts
on the issue of the propriety of the issuance of the writ of execution pending appeal. It
should be stressed that what was at issue was not the award of damages itself but the
issuance of said writ.
Petitioner Laos position that the posting of a good and solvent bond is a special reason for
the issuance of the writ of execution pending appeal is utterly barren of merit. Mere posting
of a bond to answer for damages does not suffice as a good reason for the granting of
execution pending appeal, within the context of "good reasons" under Section 2, Rule 39 of
the Rules of Court.
[42]
In Roxas v. Court of Appeals,
[43]
the Court held:Missdaa
"It is not intended obviously that execution pending appeal shall issue as
a matter of course. Good reasons, special, important, pressing reasons
must exist to justify it; otherwise, instead of an instrument of solicitude
and justice, it may well become a tool of oppression and inequity. But to
consider the mere posting of a bond a good reason would precisely
make immediate execution of a judgment pending appeal routinary, the
rule rather than the exception. Judgments would be executed
immediately, as a matter of course, once rendered, if all that the
prevailing party needed to do was to post a bond to answer for damages
that might result therefrom. This is a situation, to repeat, neither
contemplated nor intended by law."
[44]

G.R. No. 60647
From the decision of the Court of First Instance of Samar in Civil Case No. 5528, finding
that they are liable for malicious prosecution and therefore, they must pay Lao damages,
the Corporation and Co appealed to the Court of Appeals. In affirming the lower courts
decision, the Court of Appeals deduced from the facts established that the Corporation
knew all along that Laos liability was civil in nature. However, after around four (4) years
had elapsed and sensing that Civil Case No. 4452 would result in a decision against them,
they instituted the criminal case for estafa. In awarding damages in the total amount of
P330,000, the Court of Appeals took into account Laos social and business
standing.
[45]
Sdaadsc
From the Decision of the Court of Appeals in CA-G.R. No. 61925-R, Co filed the instant
petition for review on certiorari; contending that the Court of Appeals erred in affirming the
decision of the Samar Court of First Instance because when the case for malicious
prosecution was commenced there was as yet no cause of action as the criminal case was
still pending decision. Co also asserted that he should not be held jointly and severally liable
with the Corporation because in filing the affidavit-complaint against respondent Lao, he
was acting as the executive vice-president of the Corporation and his action was within the
scope of his authority as such corporate officer.
The issue of whether the Court of Appeals correctly ruled that the Corporation and petitioner
Co should be held liable for damages on account of malicious prosecution shall be
ratiocinated upon and resolved with the issues submitted for resolution in G.R. Nos. 60958-
59. What should concern the Court here is whether petitioner Co should be held solidarily
liable with the Corporation for whatever damages would be imposed upon them for filing the
complaint for malicious prosecution.
28

Petitioner Co argues that following the dictum in agency, the suit should be against his
principal unless he acted on his own or exceeded the limits of his agency.
A perusal of his affidavit-complaint reveals that at the time he filed the same on June 24,
1974, petitioner Co was the vice-president of the Corporation. As a corporate officer, his
power to bind the Corporation as its agent must be sought from statute, charter, by-laws, a
delegation of authority to a corporate officer, or from the acts of the board of directors
formally expressed or implied from a habit or custom of doing business.
[46]
In this case, no
such sources of petitioners authority from which to deduce whether or not he was acting
beyond the scope of his responsibilities as corporate vice-president are mentioned, much
less proven. It is thus logical to conclude that the board of directors or by laws- of the
corporation vested petitioner Co with certain executive duties
[47]
one of which is a case for
the Corporation.
That petitioner Co was authorized to institute the estafa case is buttressed by the fact that
the Corporation failed to make an issue out of his authority to file said case. Upon well-
established principles of pleading, lack of authority of an officer of a corporation to bind it by
contract executed by him in its name, is a defense which should have been specially
pleaded by the Corporation.
[48]
The Corporations failure to interpose such a defense could
only mean that the filing of the affidavit-complaint by petitioner Co was with the consent and
authority of the Corporation. In the same vein, petitioner Co may not be held personally
liable for acts performed in pursuance of an authority and therefore, holding him solidarily
liable with the Corporation for the damages awarded to respondent Lao does accord with
law and jurisprudence. Rtcspped
G.R. No. 606958-59
In this petition for review on certiorari of the Decisions of the Court of Appeals in CA-G.R.
No. 61925-R, regarding Laos claim for damages on account of malicious prosecution, and
in CA-G.R. No. 62532-R that arose from Laos complaint for accounting and damages,
petitioner Corporation assigns as errors, that:
1........The respondent Court of Appeals erred and/or committed a grave
abuse of discretion in affirming the erroneous decision of the lower court.
The civil case for malicious prosecution was filed during the pendency of
the criminal case upon which the civil suit was based. There is as yet no
cause of action. xxx.
2........The respondent Court of Appeals erred and/or committed a grave
abuse of discretion when it reversed or set aside the supplemental
decision of the lower court in Civil Case No. 4452, which reversal was
merely based on surmises and conjectures. xxx.
3........The respondent Court of Appeals erred and/or committed grave
abuse of discretion when it awarded moral damages in Civil Case No.
4452 which was not prayed for because Andres Lao prayed for moral
damages and was already awarded in Civil Case No. 5528. Moral
damages must be specifically prayed for. xxx.
[49]

Petitioner Corporation contends that the complaint for malicious prosecution brought by Lao
during the pendency of subject criminal case for estafa, states no cause of action as it was
prematurely filed when the criminal case that resulted in the acquittal of Lao was not yet
terminated. On the other hand, respondent Lao countered that the elements supportive of
an action for malicious prosecution are evidentiary in nature and their existence or non-
existence cannot be the subject of evaluation and conclusion upon the filing of the
complaint. For Lao, those elements must be determined at the time the plaintiff has offered
all his evidence and rested his case. Kortex
Malicious prosecution has been defined as an action for damages brought by one against
whom a criminal prosecution, civil suit or other legal proceeding has been instituted
maliciously and without probable cause, after the termination of such prosecution, suit or
other proceeding in favor of the defendant therein.
[50]
As thus defined, the fact of termination
of the criminal prosecution, civil suit or legal proceeding maliciously filed and without
probable cause, should precede the complaint for malicious prosecution. Such a complaint
states a cause of action if it alleges: (a) that the defendant was himself the prosecutor or at
least instigated the prosecution; (b) that the prosecution finally terminated in the acquittal of
the plaintiff; (c) that in bringing the action the prosecutor acted without probable cause, and
(d) that the prosecutor was actuated by malice, i.e., by improper and sinister motives.
[51]

Ocamp v. Buenaventura
[52]
demonstrates the importance of the requirement that the case
maliciously commenced should be terminated before a claim for damages arising from the
filing of such case should be presented. In that case, a complaint for damages arising from
the alleged malicious filing of an administrative case for serious misconduct, grave abuse of
authority and commission of a felony, was held to be premature during the pendency of said
administrative case before the then Police Commission (POLCOM). Observing that the
complaint for damages was based on the claim that the administrative case brought before
the POLCOM was malicious, unfounded and aimed to harass the respondents, the Court
there held:
"xxx. The veracity of this allegation is not for us to determine, for if We
rule and allow the civil case for damages to proceed on that ground, there
is the possibility that the court a quo in deciding said case might declare
the respondents victims of harassment and thereby indirectly interfere
with the proceedings before the POLCOM. The respondents case for
damages before the lower court is, therefore, premature as it was filed
during the pendency of the administrative case against the respondents
before the POLCOM. The possibility cannot be overlooked that the
POLCOM may hand down a decision adverse to the respondents, in
which case the damage suit will become unfounded and baseless for
wanting in cause of action. Of persuasive force is the ruling in William H.
Brown vs. Bank of the Philippine Islands and Santiago Freixas, 101 Phil.
309, 312, where this Court said: Sclaw
"xxx. In effect, plaintiff herein seeks to recover damages
upon the ground that the detainer case has been filed,
and is being maintained, maliciously and without
justification; but this pretense affects the merits of said
detainer case. Should final judgment be eventually
29

rendered in that case in favor of the plaintiffs therein,
such as the one rendered in the municipal court, the
validity of the cause of action of said lessors against
Brown, would thereby be conclusively established, and
necessarily, his contention in the present case would
have to be rejected. Similarly, we cannot sustain the
theory of Brown in the case at bar, without prejudging
the issue in the detainer case, which is still pending.
Until final determination of said case, plaintiff herein
cannot, and does not, have, therefore, a cause of action
- if any, on which we do not express our opinion -
against the herein defendants. In short, the lower court
has correctly held that the present action is premature,
and, that, consequently, the complain herein does not
set forth a cause of action against the defendants."
[53]

A similar ruling was laid down in Cabacungan v. Corrales
[54]
where the Court sustained the
dismissal of an action for damages on the ground of prematurity. The records disclosed that
the alleged false and malicious complaint charging plaintiffs with malicious mischief was still
pending trial when the action for damages based on the subject complaint was brought.
Premises studiedly viewed in proper perspective, the contention of Lao that the elements of
an action for malicious prosecution are evidentiary in nature and should be determined at
the time the plaintiff offers evidence and rests his case, is untenable. To rule otherwise
would, in effect, sanction the filing of actions without a cause of action. The existence of a
cause of action is determined solely by the facts alleged in the complaint. Consideration of
other facts is proscribed and any attempt to prove extraneous circumstances is not
allowed.
[55]
As this Court said inSurigao Mine Exploration Co., Inc. v. Harris,
[56]
"unless the
plaintiff has a valid and subsisting cause of action at the time his action is commenced, the
defect cannot be cured or remedied by the acquisition or accrual of one while the action is
pending, and a supplemental complaint or an amendment setting up such after-accrued
cause of action is not permissible."
[57]
Thus, the circumstance that the estafa case
concluded in respondent Laos acquittal during the pendency of the complaint for malicious
prosecution did not cure the defect of lack of cause of action at the time of filing of the
complaint. Sclex
Neither does the Court find merit in respondent Laos submission that the complaint for
malicious prosecution is viable inasmuch as it is also anchored on Articles 20 and 21 of the
Civil Code. This may appear to be a persuasive argument since there is no hard and fast
rule which can be applied in the determination of whether or not the principle of abuse of
rights has been violated, resulting in damages under the said articles of the Civil Code on
Human Relations. Indeed, a party injured by the filing of a court case against him, even if he
is later on absolved, may file a case for damages grounded either on the principle of abuse
of rights or on malicious prosecution.
[58]
However, whether based on the principle of abuse
of rights or malicious prosecution, a reading of the complaint here reveals that it is founded
on the mere filing of the estafa charge against respondent Lao. As such, it was prematurely
filed and it failed to allege a cause of action. Should the action for malicious prosecution be
entertained and the estafa charge would result in respondent Laos conviction during the
pendency of the damage suit, even if it is based on Articles 20 and 21, such suit would
nonetheless become groundless and unfounded. To repeat; that the estafa case, in fact,
resulted in respondent Laos acquittal would not infuse a cause of action on the malicious
prosecution case already commenced and pending resolution.
The complaint for damages based on malicious prosecution and/or on Articles 20 and 21
should have been dismissed for lack of cause of action and therefore, the Court of Appeals
erred in affirming the decision of the trial court of origin. It should be stressed, however, that
the dismissal of subject complaint should not be taken as an adjudication on the merits, the
same being merely grounded on the failure of the complaint to state a cause of action.
[59]

As regards the Decision in CA-G.R. No. 62532-R which was spawned by respondent Laos
complaint for accounting, petitioner contends that the appellate court erred when it reversed
and set aside the supplemental decision in Civil Case No. 4452 and directed the corporation
to reimburse the amount of P556,444.20, representing Laos overpayment to the
Corporation. The Court would normally have restricted itself to questions of law and
shunned away from questions of fact were it not for the conflicting findings of fact by the trial
court and appellate court on the matter. The Court is therefore constrained to relax the rule
on conclusiveness of factual findings of the Court of Appeals and, on the basis of the facts
on record, make its own findings.
[60]

It is significant to note that as per decision of the trial court dated March 26, 1975, a court-
supervised accounting was directed so as to ascertain the true and correct accountability of
Andres Lao to the defendant corporation. Thus, a three-man audit committee was formed
with the branch of clerk of court, Atty. Victorio Galapon, as chairman, and two other certified
public accountants respectively nominated by the parties, as members.
On September 16, 1976, the said Audit Committee submitted its report
[61]
and in the hearing
of November 25, 1976, the parties interposed no objection thereto and unanimously
accepted the Audit Committee Report. The Committee found that Andres Lao has made a
total overpayment to defendant corporation in the amount of P556,444.20. Xlaw
Trial by commissioners is allowed by the Rules of Court when a) the trial of an issue of fact
requires the examination of a long account on either side, in which case the commissioner
may be directed to hear and report upon the whole issue or any specific question involved
therein; b) when the taking of an account is necessary for the information of the court before
judgment, or for carrying a judgment or order into effect; and c) when a question of fact,
other than upon the pleadings, arises upon motion or otherwise, at any stage of a case, or
for carrying a judgment or order into effect.
[62]
Ultimately, the trial court, in the exercise of its
sound discretion, may either adopt, modify, or reject in whole or in part, the commissioners
report or it may recommit the same with instructions, or require the parties to present
additional evidence before the commissioners or before the court.
[63]

In the case under consideration, it is thus within the power of the trial court to refer the
accounting to court-appointed commissioners because a true and correct accounting is
necessary for the information of the court before it can render judgment. Moreover, the
technical nature of the audit procedure necessitates the assistance of a certified public
accountant. And since both parties offered no objection to the commissioners report, they
are deemed to have accepted and admitted the findings therein contained.
30

There is no discernible cause for veering from the findings of the Audit Committee. In
arriving at its conclusion, the Audit Committee subtracted the total remittances of Lao in the
amount of P13,686,148.80 from the entire volume of shipments made by the corporation. In
determining the total volume of shipments made by the corporation, the Audit Committee
did not include the shipments covered by bills of lading and factory consignment invoices
but without the corresponding delivery receipts. These included shipments in the amount
of P597, 239.40 covered by bills of lading and factory consignment invoices but with no
supporting delivery receipts, and shipments worth P126, 950.00 with factory consignment
invoices but not covered by bills of lading and delivery receipts. However, the Audit
Committee considered shipments made by the corporation to Lao in the amount
of P9,110,777.00 covered by bills of lading and factory invoices but without the
corresponding delivery receipts because subject shipments were duly reported in Laos
monthly sales report. Xsc
The Audit Committee correctly excluded the shipments not supported by delivery receipts,
albeit covered by bills of lading and factory consignment invoices. Under Article 1497 of the
Civil Code, a thing sold shall be understood as delivered when it is placed in the control or
possession of the vendee. Unless possession or control has been transferred to the
vendee, the thing or goods sold cannot be considered as delivered. Thus, in the present
case, the Audit Committee was correct when it adopted as guideline that accountability over
the goods shipped was transferred from the corporation to Andres Lao only upon actual
delivery of the goods to him. For it is only when the goods were actually delivered to and
received by Lao, did Lao have control and possession over subject goods, and only when
he had control and possession over said goods could he sell the same.
Delivery is generally evidenced by a written acknowledgement of a person that he or she
has actually received the thing or the goods, as in delivery receipts. A bill of lading cannot
substitute for a delivery receipt. This is because it is a written acknowledgement of the
receipt of the goods by the carrier and an agreement to transport and deliver them at a
specific place to a person named or upon his order.
[64]
It does not evidence receipt of the
goods by the consignee or the person named in the bill of lading; rather, it is evidence of
receipt by the carrier of the goods from the shipper for transportation and delivery.
Likewise, a factory consignment invoice is not evidence of actual delivery of the goods. An
invoice is nothing more than a detailed statement of the nature, quantity and cost of the
thing sold.
[65]
It is not proof that the thing or goods were actually delivered to the vendee or
the consignee. As admitted by the witness for the corporation:
A: Factory consignment invoices represents what the company billed the
plaintiff Mr. Lao and the bill of lading represents the goods which were
supposed to have been shipped.
xxx.......xxx.......xxx
A: Shipments covered by factory consignment invoices simply meant
these are billings made again by the Associated Anglo-American Tobacco
Corporation to plaintiff Andres Lao. (t.s.n., November 25, 1976, pp. 45-47
as cited in Respondent Laos Comment, Rollo, p. 259)
Thus, in the absence of proof that the goods were actually received by Lao as evidenced by
delivery receipts, the shipments allegedly made by the corporation in the amount
of P597,239.40 and P126,950.00 covered only by bills of lading and factory consignment
invoices cannot be included in Laos accountability. Sc
However, as to the shipments worth P4,018,927.60 likewise covered only by bills of lading
and factory consignment invoices, the Audit Committee correctly considered them in Laos
account because such shipments were reported in the latters sales reports. The fact that
Lao included them in his sales reports is an implied admission that subject goods were
actually delivered to him, and that he received the said goods for resale.
As regards the award of moral damages, petitioner Corporation faults the Court of Appeals
for awarding such damages not specifically prayed for in the complaint for accounting and
damages in Civil Case No. 4452. Petitioner Corporation argues that moral damages were
prayed for and duly awarded in Civil Case No. 5528 and therefore, it would be unfair and
unjust to allow once again, recovery of moral damages on similar grounds.
Contrary to the allegation of the petitioner Corporation, the award of moral damages was
specifically prayed for in the complaint albeit it left the amount of the same to the discretion
of the court.
[66]
Moreover, Civil Case Nos. 4452 and 5528 were on varied causes of action.
While the award for moral damages in Civil Case No. 4452 was based on the evident bad
faith of the petitioner Corporation in unilaterally rescinding respondent Laos sales agency
through his immediate replacement by Ngo Kheng, the claim for moral damages in Civil
Case No. 5528 was anchored on the supposed malice that attended the filing of the criminal
case for estafa.
Petitioner Corporation also opposes for being conjectural, the award of P150,000.00 in Civil
Case No. 4452, representing actual damages for loss of earnings. True, damages cannot
be presumed or premised on conjecture or even logic. A party is entitled to adequate
compensation only for duly substantiated pecuniary loss actually suffered by him or
her.
[67]
In this case, however, the trial court correctly found that an award for actual
damages was justified because several months before their contract of agency was due to
expire in 1969, the petitioner Corporation replaced Lao with Ngo Kheng as sales agent for
the areas of Leyte and Samar. This, despite the fact that they had already agreed that Lao
would continue to act as the corporations sales agent provided that he would reduce his
accountability to P200,000.00, the amount covered by his bond, and engaged the services
of an independent accounting firm to do an audit to establish Laos true liability. Due to his
ouster as sales agent, Lao failed to realize a net income from his sales agency in the
amount of P30,000.00 a year. Scmis
However, the amount of actual damages should be reduced to P30,000.00 only instead of
the P150,000.00 awarded by the appellate court. Since the contract of sales agency was on
a yearly basis, the actual damages Lao suffered should be limited to the annual net income
he failed to realize due to his unjust termination as sales agent prior to the expiration of his
contract in 1969. Unrealized income for the succeeding years cannot be awarded to Lao
because the corporation is deemed to have opted not to renew the contract with Lao for the
succeeding years.
31

As to the award of exemplary damages, suffice it to state that in contracts and quasi-
contracts, the court may award exemplary damages if the defendant acted in a wanton,
fraudulent, reckless, oppressive, or malevolent manner.
[68]
In the case under scrutiny, the
Court finds the award of exemplary damages unjustified or unwarranted in the absence of
any proof that the petitioner Corporation acted in a wanton, fraudulent, reckless, oppressive,
and malevolent manner. For the same reasons, the award for attorneys fees should be
deleted.
WHEREFORE,
In G.R. No. L-47013, the petition for review on certiorari is DENIED for lack of merit;
In G.R. No. 60647, the petition is GRANTED and the assailed decision is SET ASIDE; and
the Decision of the Court of Appeals in CA-G.R. No. 61925-R, finding Esteban Co solidarily
liable with the respondent Associated Anglo-American Tobacco Corporation for damages, is
REVERSED AND SET ASIDE. As above ratiocinated, the respondent corporation cannot be
held liable for damages.
In G.R. Nos. 60958-59, the Decision in CA-G.R. No. 61925-R is REVERSED AND SET
ASIDE; the respondent corporation is adjudged not liable for malicious prosecution due to
the prematurity of the action; while the Decision in CA-G.R. No. 62532-R is AFFIRMED,
insofar as it ordered respondent corporation to reimburse Andres Laos overpayment in the
amount of P556,444.20, but MODIFIED, in that only an award ofP30,000.00 for actual
damages is GRANTED, and all the other monetary awards are deleted. No pronouncement
as to costs.
SO ORDERED.

32

[G.R. No. 107019. March 20, 1997]
FRANKLIN M. DRILON, AURELIO C. TRAMPE, GREGORIO A. ARIZALA, CESAR M.
SOLIS and FERDINAND R. ABESAMIS, petitioners, vs. COURT OF APPEALS,
HON. GEORGE C. MACLI-ING, in his capacity as Presiding Judge of Branch
100 of the Regional Trial Court of Quezon City, and HOMOBONO
ADAZA,respondents.
D E C I S I O N
HERMOSISIMA, JR., J .:
Petitioners seek the reversal of the Resolutions of respondent Court of Appeals in CA-
G.R. SP No. 25080 dated January 31, 1992 and September 2, 1992 affirming the Orders,
dated February 8, 1991 and May 14, 1991, of respondent Judge George C. Macli-ing which
denied herein petitioners Motion to Dismiss the complaint filed in Civil Case No. Q-90-6073
by respondent Homobono Adaza.
The facts are not in dispute.
In a letter-complaint to then Secretary of Justice Franklin Drilon
[1]
dated March 20,
1990, General Renato de Villa,
[2]
who was then the Chief of Staff of the Armed Forces of the
Philippines, requested the Department of Justice to order the investigation of several
individuals named therein, including herein private respondent Homobono Adaza, for their
alleged participation in the failed December 1989 coup detat. The letter-complaint was
based on the affidavit of Brigadier General Alejandro Galido, Captain Oscarlito Mapalo,
Colonel Juan Mamorno, Colonel Hernani Figueroa and Major Eduardo Sebastian.
Gen. de Villas letter-complaint with its annexes was referred for preliminary inquiry to
the Special Composite Team of Prosecutors created pursuant to Department of Justice
Order No. 5 dated January 10, 1990. Petitioner then Assistant Chief State Prosecutor
Aurelio Trampe,
[3]
the Team Leader, finding sufficient basis to continue the inquiry, issued a
subpoena to the individuals named in the letter-complaint, Adaza included, and assigned
the case for preliminary investigation to a panel of investigators composed of prosecutors
George Arizala, as Chairman, and Ferdinand Abesamis and Cesar Solis as members. The
case was docketed as I.S. No. DOJ-SC-90-013.
On April 17, 1990, the panel released its findings, thru a Resolution, which reads:
PREMISES CONSIDERED, we find and so hold that there is probable cause to hold herein
respondents for trial for the crime of REBELLION WITH MURDER AND FRUSTRATED
MURDER. Hence we respectfully recommend the filing of the corresponding information
against them in court.
[4]

The above Resolution became the basis for the filing of an Information,
[5]
dated April
18, 1990, charging private respondent with the crime of rebellion with murder and frustrated
murder before the Regional Trial Court of Quezon City, with no recommendation as to bail.
[6]

Feeling aggrieved by the institution of these proceedings against him, private
respondent Adaza filed a complaint for damages,
[7]
dated July 11, 1990, before Branch 100
of the Regional Trial Court of Quezon City. The complaint was docketed as Civil Case No.
Q-90-6073 entitled, Homobono Adaza, plaintiff versus Franklin Drilon, et al.,
respondents. In his complaint, Adaza charged petitioners with engaging in a deliberate,
willful and malicious experimentation by filing against him a charge of rebellion complexed
with murder and frustrated murder when petitioners, according to Adaza, were fully aware of
the non-existence of such crime in the statute books.
On October 15, 1990, petitioners filed a Motion to Dismiss Adazas complaint on the
ground that said complaint states no actionable wrong constituting a valid cause of action
against petitioners.
On February 8, 1991, public respondent judge issued an Order
[8]
denying petitioners
Motion to Dismiss. In the same Order, petitioners were required to file their answer to the
complaint within fifteen (15) days from receipt of the Order.
Petitioners moved for a reconsideration of the Order of denial, but the same was
likewise denied by respondent Judge in another Order dated May 14, 1991.
[9]
The
subsequent Order reiterated that petitioners file their responsive pleading within the
prescribed reglementary period.
Instead of filing their answer as ordered, petitioners filed on June 5, 1991 a petition
for certiorari under Rule 65 before the Court of Appeals, docketed as CA-G.R. No. 25080,
alleging grave abuse of discretion on the part of the respondent Judge in ruling that
sufficient cause of action exists to warrant a full-blown hearing of the case filed by Adaza
and thus denying petitioners Motion to Dismiss.
In its Resolution promulgated on January 31, 1992, the appellate court dismissed the
petition for lack of merit and ordered respondent Judge to proceed with the trial of Civil
Case No. Q-90-6073.
[10]
A Motion for Reconsideration having been subsequently filed on
February 28, 1992, the court a quo denied the same in a Resolution dated September 2,
1992.
[11]

Hence, this petition, dated October 9, 1992, pleading this Court to exercise its power
of review under Rule 45 of the Revised Rules of Court.
On January 13, 1993, however, this Court, thru the Second Division, dismissed the
petition for failure to comply with Revised Circular No. 1-88, particularly the requirement on
the payment of the prescribed docketing fees.
[12]

On March 8, 1993,
[13]
we reinstated the petition and required the respondents to
comment on the aforesaid petition. In the same Resolution, a temporary restraining order
was issued by this Court enjoining respondent Judge from further proceeding with Civil
Case No. Q-90-6073 until further orders from this Court.
The petition has merit.
In his Comment,
[14]
dated March 23, 1993, respondent Adaza maintains that his claim
before the trial court was merely a suit for damages based on tort by reason of petitioners
various malfeasance, misfeasance and nonfeasance in office, as well as for violation by the
petitioners of Section 3 (e) of Republic Act No. 3019, otherwise known as the Anti-Graft and
Corrupt Practices Act. It was not a suit for malicious prosecution.
Private respondent is taking us for a ride. A cursory perusal of the complaint filed by
Adaza before respondent Judge George Macli-ing reveals that it is one for malicious
33

prosecution against the petitioners for the latters filing of the charge against him of rebellion
with murder and frustrated murder. An examination of the records would show that this
latest posture as to the nature of his cause of action is only being raised for the first time on
appeal. Nowhere in his complaint filed with the trial court did respondent Adaza allege that
his action is one based on tort or on Section 3 (e) of Republic Act No. 3019. Such a change
of theory cannot be allowed. When a party adopts a certain theory in the court below, he
will not be permitted to change his theory on appeal, for to permit him to do so would not
only be unfair to the other party but it would also be offensive to the basic rules of fair play,
justice and due process.
[15]
Any member of the Bar, even if not too schooled in the art of
litigation, would easily discern that Adazas complaint is no doubt a suit for damages for
malicious prosecution against the herein petitioners. Unfortunately, however, his complaint
filed with the trial court suffers from a fatal infirmity -- that of failure to state a cause of action
-- and should have been dismissed right from the start. We shall show why.
The term malicious prosecution has been defined in various ways. In American
jurisdiction, it is defined as:
One begun in malice without probable cause to believe the charges can be sustained
(Eustace v. Dechter, 28 Cal. App. 2d. 706,83 P. 2d. 525). Instituted with intention of injuring
defendant and without probable cause, and which terminates in favor of the person
prosecuted. For this injury an action on the case lies, called the action of malicious
prosecution (Hicks v. Brantley, 29 S.E. 459, 102 Ga. 264; Eggett v. Allen, 96 N.W. 803, 119
Wis. 625).
[16]

In Philippine jurisdiction, it has been defined as:
An action for damages brought by one against whom a criminal prosecution, civil suit, or
other legal proceeding has been instituted maliciously and without probable cause, after the
termination of such prosecution, suit, or other proceeding in favor of the defendant
therein. The gist of the action is the putting of legal process in force, regularly, for the mere
purpose of vexation or injury (Cabasaan v. Anota, 14169-R, November 19, 1956).
[17]

The statutory basis for a civil action for damages for malicious prosecution are found in
the provisions of the New Civil Code on Human Relations and on damages particularly
Articles 19, 20, 21, 26, 29, 32, 33, 35, 2217 and 2219 (8).
[18]
To constitute malicious
prosecution, however, there must be proof that the prosecution was prompted by a sinister
design to vex and humiliate a person, and that it was initiated deliberately by the defendant
knowing that his charges were false and groundless. Concededly, the mere act of
submitting a case to the authorities for prosecution does not make one liable for malicious
prosecution.
[19]
Thus, in order for a malicious prosecution suit to prosper, the plaintiff must
prove three (3) elements: (1) the fact of the prosecution and the further fact that the
defendant was himself the prosecutor and that the action finally terminated with an acquittal;
(2) that in bringing the action, the prosecutor acted without probable cause; and (3) that the
prosecutor was actuated or impelled by legal malice, that is by improper or sinister
motive.
[20]
All these requisites must concur.
Judging from the face of the complaint itself filed by Adaza against the herein
petitioners, none of the foregoing requisites have been alleged therein, thus rendering the
complaint dismissible on the ground of failure to state a cause of action under Section 1 (g),
Rule 16 of the Revised Rules of Court.
There is nothing in the records which shows, and the complaint does not allege, that
Criminal Case No. Q-90-11855, filed by the petitioners against respondent Adaza for
Rebellion with Murder and Frustrated Murder, has been finally terminated and therein
accused Adaza acquitted of the charge. Not even Adaza himself, thru counsel, makes any
positive asseveration on this aspect that would establish his acquittal. Insofar as Criminal
Case No. Q-90-11855 is concerned, what appears clear from the records only is that
respondent has been discharged on a writ of habeas corpus and granted bail.
[21]
This is not,
however, considered the termination of the action contemplated under Philippine jurisdiction
to warrant the institution of a malicious prosecution suit against those responsible for the
filing of the informaion against him.
The complaint likewise does not make any allegation that the prosecution acted
without probable cause in filing the criminal information dated April 18, 1990 for rebellion
with murder and frustrated murder. Elementarily defined, probable cause is the existence of
such facts and circumstances as would excite the belief, in a reasonable mind, acting on the
facts within the knowledge of the prosecutor, that the person charged was guilty of the crime
for which he was prosecuted. It is well-settled that one cannot be held liable for maliciously
instituting a prosecution where one has acted with probable cause. Elsewise stated, a suit
for malicious prosecution will lie only in cases where a legal prosecution has been carried
on without probable cause. The reason for this rule is that it would be a very great
discouragement to public justice, if prosecutors, who had tolerable ground of suspicion,
were liable to be sued at law when their indictment miscarried.
[22]

In the case under consideration, the decision of the Special Team of Prosecutors to
file the information for rebellion with murder and frustrated murder against respondent
Adaza, among others, cannot be dismissed as the mere product of whim or caprice on the
part of the prosecutors who conducted the preliminary investigation. Said decision was fully
justified in an eighteen (18)-page Resolution dated April 17, 1990.
[23]
While it is true that the
petitioners were fully aware of the prevailing jurisprudence enunciated in People v.
Hernandez,
[24]
which proscribes the complexing of murder and other common crimes with
rebellion, petitioners were of the honest conviction that the Hernandez Case can be
differentiated from the present case. The petitioners thus argued:
Of course we are aware of the ruling in People vs. Hernandez, 99 Phil. 515, which held that
common crimes like murder, arson, etc. are absorbed by rebellion. However, the Hernandez
case is different from the present case before us. In the Hernandez case, the common
crimes of murder, arson, etc. were found by the fiscal to have been committed as a
necessary means to commit rebellion, or in furtherance thereof. Thus, the fiscal filed an
information for rebellion alleging those common crimes as a necessary means of committing
the offense charged under the second part of Article 48, RPC.
We, however, find no occasion to apply the Hernandez ruling since as intimated above, the
crimes of murder and frustrated murder in this case were absolutely unnecessary to commit
rebellion although they were the natural consequences of the unlawful bombing. Hence, the
applicable provision is the first part of Article 48 of the RPC.
[25]

34

While the Supreme Court in the case of Enrile v. Salazar,
[26]
addressing the issue of
whether or not the Hernandez doctrine is still good law, in a 10-3 vote, did not sustain the
position espoused by the herein petitioners on the matter, three justices
[27]
felt the need to
re-study the Hernandez ruling in light of present-day developments, among whom was then
Chief Justice Marcelo Fernan who wrote a dissenting opinion in this wise:
I am constrained to write this separate opinion on what seems to be a rigid adherence to
the 1956 ruling of the Court. The numerous challenges to the doctrine enunciated in the
case of People vs. Hernandez, 99 Phil. 515 (1956), should at once demonstrate the need to
redefine the applicability of said doctrine so as to make it conformable with accepted and
well-settled principles of criminal law and jurisprudence.
To my mind, the Hernandez doctrine should not be interpreted as an all-embracing authority
for the rule that all common crimes committed on the occasion, or in furtherance of, or in
connection with, rebellion are absorbed by the latter. To that extent, I cannot go along with
the view of the majority in the instant case that Hernandez remains binding doctrine
operating to prohibit the complexing of rebellion with any other offense committed on the
occasion thereof, either as a means necessary to its commission or as an unintended effect
of an activity that constitutes rebellion (p. 9, Decision).
The Hernandez doctrine has served the purpose for which it was applied by the Court in
1956 during the communist-inspired rebellion of the Huks. The changes in our society in
the span of 34 years since then have far-reaching effects on the all-embracing applicability
of the doctrine considering the emergence of alternative modes of seizing the powers of the
duly-constituted Government not contemplated in Articles 134 and 135 of the Revised Penal
Code and their consequent effects on the lives of our people. The doctrine was good law
then, but I believe that there is a certain aspect of the Hernandez doctrine that needs
clarification.
]

Apparently, not even the Supreme Court then was of one mind in debunking the theory
being advanced by the petitioners in this case, some of whom were also the petitioners in
the Enrile case. Nevertheless, we held in Enrile that the Information filed therein properly
charged an offense -- that of simple rebellion --
[29]
and thereupon ordered the remand of the
case to the trial court for the prosecution of the named accused
[30]
in the Information
therein. Following this lead, the Information against Adaza in Criminmal Case No. Q-90-
11855 was not quashed, but was instead treated likewise as charging the crime of simple
rebellion.
A doubtful or difficult question of law may become the basis of good faith and, in this
regard, the law always accords to public officials the presumption of good faith and
regularity in the performance of official duties.
[31]
Any person who seeks to establish
otherwise has the burden of proving bad faith or ill-motive. Here, since the petitioners were
of the honest conviction that there was probable cause to hold respondent Adaza for trial for
the crime of rebellion with murder and frustrated murder, and since Adaza himself, through
counsel, did not allege in his complaint lack of probable cause, we find that the petitioners
cannot be held liable for malicious prosecution. Needless to say, probable cause was not
wanting in the institution of Criminal Case No. Q-90-11855 against Adaza.
As to the requirement that the prosecutor must be impelled by malice in bringing the
unfounded action, suffice it to state that the presence of probable cause signifies, as a legal
consequence, the absence of malice.
[32]
At the risk of being repetitious, it is evident in this
case that petitioners were not motivated by malicious intent or by a sinister design to unduly
harass private respondent, but only by a well-founded belief that respondent Adaza can be
held for trial for the crime alleged in the information.
All told, the complaint, dated July 11, 1990, filed by Adaza before Branch 100 of the
Regional Trial Court against the petitioners does not allege facts sufficient to constitute a
cause of action for malicious prosecution. Lack of cause of action, as a ground for a motion
to dismiss under Section 1 (g), Rule 16 of the Revised Rules of Court, must appear on the
face of the complaint itself, meaning that it must be determined from the allegations of the
complaint and from none other.
[33]
The infirmity of the complaint in this regard is only too
obvious to have escaped respondent judges attention. Paragraph 14 of the complaint
which states:
x x x x x x x x x
14. The malicious prosecution, nay persecution, of plaintiff for a non-existent crime had
severely injured and besmirched plaintiffs name and reputation and forever stigmatized his
stature as a public figure, thereby causing him extreme physical suffering, serious anxiety,
mental anguish, moral shock and social humiliation.
[34]

is a mere conclusion of law and is not an averment or allegation of ultimate facts. It does
not, therefore, aid in any wise the complaint in setting forth a valid cause of action against
the petitioners.
It is worthy to note that this case was elevated to the public respondent Court of
Appeals and now to this Court because of respondent Judge Macli-ings denial of
petitioners motion to dismiss the Adaza complaint. The ordinary procedure, as a general
rule, is that petitioners should have filed an answer, go to trial, and if the decision is
adverse, reiterate the issue on appeal.
[35]
This general rule, however, is subject to certain
exceptions, among which are, if the court denying the motion to dismiss acts without or in
excess of jurisdiction or with grave abuse of discretion, in which case certiorari under Rule
65 may be availed of. The reason is that it would be unfair to require the defendants
(petitioners in this case) to undergo the ordeal and expense of trial under such
circumstances, because the remedy of appeal then would then not be plain and
adequate.
[36]
Judge Macli-ing committed grave abuse of discretion in denying petitioners
motion to dismiss the Adaza complaint, and thus public respondent Court of Appeals
should have issued the writ of certiorari prayed for by the petitioners and annulled the
February 8, 1991 and May 14, 1991 Orders of respondent Judge. It was grievous error on
the part of the court a quo not to have done so. This has to be corrected. Respondent
Adazas baseless action cannot be sustained for this would unjustly compel the petitioners
to needlessly go through a protracted trial and thereby unduly burden the court with one
more futile and inconsequential case.
WHEREFORE, the petition is GRANTED. The Resolutions of respondent Court of
Appeals dated January 31, 1992 and September 2, 1992 affirming the February 8, 1991 and
May 14, 1991 Orders of respondent Judge George C. Macli-ing are all hereby NULLIFIED
AND SET ASIDE. Respondent Judge is DIRECTED to take no further action on Civil Case
No. Q-90-6073 except to DISMISS the same.