Torts

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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.
QUISUMBING, J.:
This petition for certiorari pursuant to Rule 45 of the Rules of
Court seeks to annul and set aside the Resolution 1dated
September 27, 1995 and the Decision 2 dated April 10, 1996
of the Court of Appeals 3 in CA-G.R. SP No. 36533, 4and 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 plaintif
as a Flight Attendant for its airlines based in Jeddah,
Saudi Arabia. . . .
On April 27, 1990, while on a lay-over in Jakarta,
Indonesia, plaintif went to a disco dance with fellow
crew members Thamer Al-Gazzawi and Allah AlGazzawi, 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 plaintif. 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 plaintif 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 plaintif
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 plaintif to return to Jeddah but barred her
from the Jakarta flights.
Plaintif 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
plaintif to Manila.
On January 14, 1992, just when plaintif 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 lune 16, 1993, in
Riyadh, Saudi Arabia, a few minutes before the

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departure of her flight to Manila, plaintif 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, plaintif signed a notice to her
to appear before the court on June 27, 1993. Plaintif
then returned to Manila.
Shortly afterwards, defendant SAUDIA summoned
plaintif to report to Jeddah once again and see
Miniewy on June 27, 1993 for further investigation.
Plaintif did so after receiving assurance from
SAUDIA's Manila manager, Aslam Saleemi, that the
investigation was routinary and that it posed no
danger to her.
In Jeddah, a SAUDIA legal officer brought plaintif to
the same Saudi court on June 27, 1993. Nothing
happened then but on June 28, 1993, a Saudi judge
interrogated plaintif 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 of, 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
plaintif 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 plaintif 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
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 ("AlBalawi"), 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.

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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 Defendant's 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 SAUDIA's 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 plaintif 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 plaintifs

Amended Complaint, which is one for the recovery of

actual, moral and exemplary damages plus
attorney's 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 SAUDIA's
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.

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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 Complaint's 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 petitioner's 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 15day 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.

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071514
WHETHER RESPONDENT APPELLATE COURT
ERRED IN RULING THAT IN THIS 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
respondent's 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
Complaint 38 dated June 23, 1994:

in

her

Amended

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., 3rd Floor, Cougar Building, 114 Valero
St., Salcedo Village, Makati, Metro Manila.
xxx xxx xxx
6. Plaintif 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 reauested 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, plaintif 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 sigh a document
written in Arabic. They told her that this was
necessary to close the case against Thamer and
Allah. As it turned out, plaintif 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
SAUDIA's Manila manger, Aslam Saleemi, that the
investigation was routinary and that it posed no
danger to her.

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10. In Jeddah, a SAUDIA legal officer brought plaintif
to the same Saudi court on June 27, 1993. Nothing
happened then but on June 28, 1993, a Saudi judge
interrogated plaintif 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 of, 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 plaintif 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 plaintif 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 Philippines
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

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

afected 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 afairs 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 respondent's 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 respondent's 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

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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
Appeals, 45 this Court held that:

(PNB)

vs.

Court

of

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 respondent's 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:
Sec. 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:
xxx xxx xxx
(8)
In
all
other
cases
in
which
demand, exclusive of interest, damages of
whatever kind, attorney's fees, litigation
expenses, and cots 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)
xxx xxx xxx
And following Section 2 (b), Rule 4 of the Revised Rules of
Court the venue, Quezon City, is appropriate:
Sec. 2 Venue in Courts of First Instance. [Now
Regional Trial Court]
(a) xxx xxx xxx
(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 plaintif or any of the plaintif resides, at the
election of the plaintif.
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. Plaintif may not, by choice of an

Torts
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 plaintifs 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
plaintif (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
plaintif (now private respondent) should be upheld.
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 Morada's 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 efectively submitted to the trial court's
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

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We observe that the motion to dismiss filed on April
14, 1962, aside from disputing the lower court's
jurisdiction over defendant's person, prayed for
dismissal of the complaint on the ground that
plaintif's 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 latter's 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.

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As to the choice of applicable law, we note that choice-oflaw 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:

071514
(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
efect, 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 fori the
law of the forum is 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

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071514
its master or owner as such. It also covers
contractual relationships particularly contracts of
afreightment. 60 (Emphasis ours.)

After a careful study of the pleadings on record, including

allegations in the Amended Complaint deemed admitted for
purposes of the motion to dismiss, we are convinced that
there is reasonable basis for private respondent's 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 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. Petitioner's purported act
contributed to and amplified or even proximately caused
additional humiliation, misery and sufering of private
respondent. Petitioner thereby allegedly facilitated the
arrest, detention and prosecution of private respondent
under the guise of petitioner's 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 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 totality of
the alleged injury to the person, reputation, social standing
and human rights of complainant, had lodged, according to
the plaintif 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 ofer 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 overall injury occurred and lodged in the Philippines. There is
likewise no question that private respondent is a resident

10

Torts
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 plaintif 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 complained 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
petitioner's 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, then the burden was on it [petitioner] to plead
and to establish what the law of Saudi Arabia is". 66

071514
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 country's 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.

Lastly, no error could be imputed to the respondent

appellate court in upholding the trial court's denial of
defendant's (herein petitioner's) motion to dismiss the case.
Not only was jurisdiction in order and venue properly laid,
but appeal after trial was obviously available, and

11

Torts

071514
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.

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.
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

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

12

Torts
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 efective 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.

071514
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 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
sufered.
One of the more notable innovations of the New Civil Code is
the codification of "some basic principles that are to be

13

Torts

071514

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
efects 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 sufered 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. L27155, 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

14

Torts
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 plaintif (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 made by the
police investigators was submitted only on December 10,

071514
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 efects 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

15

Torts
remained unemployed for a longer period of time. For this
further damage sufered 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 plaintif (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

071514
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:
xxx
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

16

Torts

071514
adverted to, two of these cases were refiled with the
Judge Advocate General's Office of the Armed Forces
of the Philippines to railroad plaintifs arrest and
detention in the military stockade, but this was
frustrated by a presidential decree transferring
criminal cases involving civilians to the civil courts.

xxx
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 plaintif of participation or involvement in
the fraudulent transactions complained of, despite
the negative results of the lie detector tests which
defendants compelled plaintif 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 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 plaintif.
xxx
[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 efect, 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. 1541551, 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

17

Torts
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
plaintif (private respondent herein) could have sufered 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 quasidelictual acts committed by petitioners.

071514
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. L28589, 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.

18

Torts

071514
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
plaintifs-appellants bruno and Bernadina 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.

G.R. No. 140420

February 15, 2001

SERGIO AMONOY, petitioner, vs. Spouses JOSE

GUTIERREZ and ANGELA FORNIDA, respondents.
PANGANIBAN, J.:
Damnum absque injuria. Under this principle, the legitimate
exercise of a person's 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 person's right, or when the exercise of this right is
suspended or extinguished pursuant to a court order.
Indeed, in the availment of one's rights, one must act with
justice, give 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
judgment2 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

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 Formida. On 12 January 1965, the Project
of Partition submitted was approved and xxx two (2)
of the said lots were adjudicated to Asuncion
Pasamba and Alfonso Formilda. The Attorney's fees
charged by Amonoy was P27,600.00 and on 20
January 1965 Asuncion Pasamba and Alfonso Formida
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 attorney's 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.

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"Asuncion Pasamba died on 24 February 1969 while
Alfonso Fornilda passsed away on 2 July 1969. Among
the heirs of the latter was his daughter, plaintifappellant Angela Gutierrez.
"Because his Attorney's fess thus secured by the two
lots were not paid, on 21 January 1970 Amonoy filed
for their foreclosure in Civil Code4 No. 12726
entitled Sergio 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 attorney's
fees charged [were] unconscionable and that the
attorney's 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 attorney's 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 Code No.
12726 was rendered, the said decedent's heirs filed
on 19 December 1973 before the CFI of Pasig, Rixal[,]
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 Amonoy's 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 plaintif-appellant
Angela Gutierrez. On a twin musiyun (Mahigpit na
Musiyon
Para
Papanagutin
Kaugnay
ng
Paglalapastangan) with full titles as fanciful and
elongated as theirPetisyung (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
Orderd, dated 25 April 1986 and 16 May 1986,
directing and authorizing respondent Sherif
to demolish the houses of petitioners Angela
and Leocadia Fornilda are hereby ordered
returned to petitioners unless some of them
have been conveyed to innocent third
persons."5

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But by the time the Supreme Court promulgated the

abovementioned Decision, respondents' house had already
been destroyed, supposedly in accordance with a Writ of
Demolition ordered by the lower court.

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.

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.

We reject this submission. Damnum absque injuria finds no

application to this case.

In its January 27, 1993 Decision, the RTC dismissed

respondents' suit. On appeal, the CA set aside the lower
court's ruling and ordered petitioner to pay respondents
P250,000 as actual damages. Petitioner then filed a Motion
for Reconsideration, which was also denied.
The Issue
In his Memorandum,7 petitioner submits this lone issue for
our consideration:
"Whether or not the Court of Appeals was correct was
correct in deciding that the petition [was] liable to
the respondents for damages."8
The Court's Ruling
The Petition has no merit.
Main Issue:
Petitioner's Liability
Well-settled is the maxim that damage resulting from the
legitimate exercise of a person's rights is a loss without
injury- damnum absque injuria - for which the law gives no
remedy.9 In other words, one who merely exercises one's
rights does no actionable injury and cannot be held liable for
damages.

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, howeverm, 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 Gutierrez's
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

xxx

xxx

"Q.

Was your house completely demolished?

"A.

No, sir.

xxx

xxx

"Q.

Until when[,] Mrs. Witness?

xxx

xxx

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"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

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 outsset, 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 sufered 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 thae 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 justcie 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 xxx. Over and

above the specific precepts of postive law are the

supreme norms of justice xxx; 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:
"Artilce 19, known to contain what is commonly
referred to as the principle of abuse of rights, sets
certain standards which may be observed not only in
the exercise of one's rights but also in the
performance of one's duties.These standards are the
following: to act with justice; to give everyone his
due; recognizes the primordial limitation on all rights:
that in their exercise, the norms of human conduct
set forth in Article 19 and results in damage to
another, a legal wrong is thereby committed for
which the wrongdoer must be held responsible xxx."
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 Court's Order
and wittingly caused the destruction of respondents;
house.1wphi1.nt
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, petitioner's liability is premised on
the obligation to repair or to make whole the damage
caused to another by reason of one's act or omission,
whether done intentionally or negligently and whether or
not punishable by law.15

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WHEREFORE, the Petition is DENIED and the appealed

Decision AFFIRMED. Costs against petitioner.
SO ORDERED.

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.
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 staf

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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 . . . efective 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.

071514
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 defendantsappellants are absolved from any liability to plaintifappellee. With costs against plaintif-appellee. (p.
13, Rollo.)
The plaintif-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 plaintifappellee for damages. Defendants-appellants had no
authority to dismiss plaintif-appellee and the latter
was aware of this. Hence, the letter of termination
sent to her through her husband (Exhs. C and 1) by

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defendants-appellants
had
no
legal
efect
whatsoever. It did not efectively 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 plaintif-appellee is not proof
that defendants-appellants had efectively and
physically prevented plaintif-appellee from resuming
her post. It was nothing more than a reaction to what
defendants-appellants perceived as an afront to
their collective prestige. It would appear, therefore,
that plaintif-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).

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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

G.R. No. L-20089

December 26, 1964

BEATRIZ P. WASSMER, plaintif-appellee, vs. FRANCISCO

X. VELEZ, defendant-appellant.
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:

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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. Plaintif adduced evidence before the
clerk of court as commissioner, and on April 29, 1955,
judgment was rendered ordering defendant to pay plaintif
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." Plaintif 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.
Plaintif 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 plaintif's cause of action, his failure to marry the
plaintif 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.)

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Torts
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, L16519, 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 (Velez
vs. Ramas, 40 Phil. 787; Alano vs. Court of First Instance, L14557, 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 (L14628, 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 plaintif 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-

071514
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
plaintif 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 plaintif: "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 diferent. 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]

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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.

G.R. No. 101749 July 10, 1992

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071514

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 plaintif-appellant to a motel or hotel where
they had sexual intercourse. Later that evening, said
defendant-appellant brought plaintif-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 plaintif-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
plaintif-appellant, defendant-appellant Bunag, Jr.
filed an affidavit withdrawing his application for a
marriage license.

Plaintif-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:
Plaintif 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. Plaintif
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 plaintif, 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
plaintif obliged, as she believed in his
sincerity (t.s.n., pp. 8-10, Nov. 5, 1974).
Plaintif 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
plaintif 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

30

Torts

071514
persisted. Frightened and silenced, the car
travelled its course thru F.B. Harrison
Boulevard until they reached a motel. Plaintif
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. Plaintif 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, plaintif
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 plaintif 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 plaintif
and defendant Bunag, Jr. 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 plaintif
and compelled her to go back to her parents
on October 3, 1973. Plaintif 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 plaintif was corroborated in
toto by her uncle, Vivencio Bansagan who
declared that on September 8, 1973 when
plaintif failed to arrive home at 9:00 o'clock
in the evening, his sister who is the mother of
plaintif asked him to look for her but his
eforts proved futile, and he told his sister that
plaintif 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
plaintif and Bunag, Jr. were in Cabrera's
house, so that her sister requested him to go
and see the plaintif, which he did, and at the
house of Mrs. Juana de Leon in Pamplona, Las

31

Torts

071514
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 plaintif who told him that as she
had already lost her honor, she would bear her
suferings 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 plaintif-appellant on September 8, 1973. On
the contrary, plaintif-appellant and defendantappellant 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 plaintif-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 plaintif-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 plaintif-appellant
alone. According to defendant-appellant Bunag, Jr.,
after Guillermo Ramos, Jr. and Lydia left, he and
plaintif-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 plaintif-appellant
over money and the threats made to his life
prompted him to break of their plan to get married.
During this period, defendant-appellant Bunag, Sr.
denied having gone to the house of Juan de Leon and
telling plaintif-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, defendantappellant 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 plaintif-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.

32

Torts
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 plaintif-appellant; (2) in finding that
defendants-appellants promised plaintif-appellant that she
would be wed to defendant-appellant Conrado Bunag, Jr.;
and (3) in awarding plaintif-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

071514
trial court and the Court of Appeals. In efect, 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.

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.

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.

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

Petitioner likewise asserts that since action involves a

breach of promise to marry, the trial court erred in awarding
damages.

33

Torts
It is true that in this jurisdiction, we adhere to the timehonored 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 plaintif upon
the faith of such promise. 8 Generally, therefore, a breach of
promise to marry per se is not actionable, except where the
plaintif 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 sufered 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

071514
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 afect the right of herein private
respondent to institute a civil action arising from the ofense
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 diferent 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 plaintif 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

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071514

said ofense in favor of the ofended 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.

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.
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
ofered 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-ofer 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

35

Torts

071514
inform me of the names and addresses of your
sureties as soon as possible.

above ...................................................
.............................. $ 53,968/

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:

(c) during the third year of the period

of five years referred to in Clause 4
above ...................................................
................................... $ 40,476/

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.

(d) during the fourth year of the period

of five years referred to in Clause 4
above ...................................................
............................... $ 26,984/

5. In the event of the Engineer Officer:

(e) during the fifth year of the period of

five years referred to in Clause 4 above
..............................................................
......................... $ 13,492/

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,

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 -

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:

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;

(a) during the first year of the period of

five years referred to in Clause 4 above
..............................................................
........................ $ 67,460/

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;

(b) during the second year of the

period of five years referred to in
Clause
4

3. has his services terminated by the

Company as a result of being replaced by a
national Flight Engineer;

36

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071514
4. has to leave the service of the Company on
valid compassionate grounds stated to and
accepted by the Company in writing. 1

petitioner-plaintif, and a counterclaim for actual, exemplary,

moral and other damages plus attorney's fees and litigation
expenses against petitioner-plaintif.

Cruz signed the Agreement with his co-respondent, B. E.

Villanueva, as surety.

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.

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-plaintif'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

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

37

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071514

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 sufer.
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 efects 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).

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 diferently, 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.
SO ORDERED.

The "right" of the respondents to dismiss Quisaba

should not be confused with the manner in which the
right was exercised and the efects 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

38

Torts
G.R. No. 47013

071514
February 17, 2000

ANDRES LAO, petitioner,

vs.
COURT OF APPEALS, THE ASSOCIATED ANGLOAMERICAN TOBACCO CORPORATION and ESTEBAN
CO, respondents.
----------------------------G.R. No. 60647

February 17, 2000

ESTEBAN CO, petitioner,

vs.
COURT OF APPEALS and ANDRES LAO, respondents.
----------------------------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.
PURISIMA, J.:
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 Lao's compliance with his contractual obligations, his
brother Jose and his father Tomas executed a deed of
mortgage1 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 Lao's
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 Lao's 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.
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

39

Torts

071514

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 Lao's 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 Lao's sales
operations in Leyte and Samar. Ngo Kheng discovered that,
contrary to Lao's allegation that he still had huge collectibles
from his customers, nothing was due the Corporation from
Lao's 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 injunction3 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 decision5 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 plaintifs, the court hereby renders judgment as
follows:

1. Ordering both the plaintifs 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 plaintif Andres Lao
and the defendant The Associated AngloAmerican 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
three (3) members, one member to be
nominated by the plaintifs, 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
Plaintifs the amount of P180,000 representing
actual loss of earnings.
3. Ordering the defendant to pay plaintifs
moral damages in the amount of P130,000.00.
4. Ordering the defendant to pay to the
plaintifs, exemplary damages in the amount
of P50,000.00.

40

Torts

071514
5. Ordering the defendant to pay to the
plaintifs, attorney's fees in the amount of
P40,000.00.
6. Ordering the plaintifs 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
report6 with the following findings:

December 1968 where the sales reports were not available to the Au

Shipments covered by bills of lading and factory consignment inv

supporting delivery receipts

Shipments with covering factory consignment invoices but not co

lading and delivery receipts

On February 28, 1977, the trial court 7 promulgated a

supplemental decision wherein it dismissed Lao's 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
Total remittances made by Mr. Andres Lao in favor of Associated
April 10,
in thefrom
amount
of 1965
P13,129,704.60, without including the
to November 1969 which are substantially supported by official
receipt
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
Shipments by Associated to Mr. Andres Lao duly supported by bills of lading, factory
delivery
receipts.
The
trial
court,
in
rejecting
the
claim
of
consignment invoices and delivery receipts
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
onlyofpreposterous
but devoid of logic." Therefore, with the
Shipments by Associated to Mr. Andres Lao, covered by bills
lading and factory
consignment invoices but with no supporting delivery receipts
sums purported
of P597,239.40
to have
and P126,950.00 included in the total
shipments
been delivered to Mr. Lao on the basis of sales made byvolume
him as of
reported
in hismade by the Corporation in the
monthly sales reports (except for sales in December, 1968
amount
and of
November
P13,129,704.60,
and
Lao's total remittances of
P13,686,248.80 were short of P167,745.20. Thus, the trial
court held:

41

Torts

071514
WHEREFORE, judgment is hereby rendered declaring
plaintif Andres Lao's 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.

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 CAG.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 plaintifs 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 Lao's overpayment in the amount
of P556,444.20. Costs against defendant-appellant
corporation.
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
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
complaint12 with the Pasay City Fiscal's 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 averted 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 information13 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 reinvestigation14 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.
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
decision17 acquitting Lao of the crime charged and
adopting in toto the said Resolution of Fiscal Flaminiano.

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071514

On March 18, 1977, the Court of First Instance of

Samar18 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 plaintif 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 plaintif:

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:

a. P30,000 as actual damages;

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.

b. P150,000.00 as moral damages;

No pronouncement as to costs.

c. P100,000.00 as exemplary damages;

d. P50,000.00 as attorney's 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 appeal19 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 injunction23 filed

On October 21, 1981, the Court of Appeals likewise rendered

a Decision25 in CA-G.R. No. 62532-R, affirming the trial
court's 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,
attorney's fees and costs.
The Corporation and Esteban Co moved to reconsider26 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 Resolution28 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.
G.R. No. 47013

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071514

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
andmandamus where the petition is fatally defective
for not being accompanied by a copy of the trial
court's 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 court's 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:
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 appeal30 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 inefectual 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 Corporation's 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
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 efect 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

44

Torts
sherifs 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 Lao's insinuation of irregularity in
the filing of their pleadings. They aver that in view of
petitioner Lao's 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

071514
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.
Petitioner Lao maintains that the Court of Appeals should
not have been given due course to the petition forcertiorari,
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 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, 197738 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:
. . . 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

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071514

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:
. . . (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
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
forcertiorari, prohibition and mandamus. Petitioner Co's
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
petitioner's 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

Corporation's 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 Lao's 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:
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

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Torts
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 court's decision, the Court of Appeals
deduced from the facts established that the Corporation
knew all along that Lao's 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 Lao's social and business
standing.45
From the Decision of the Court of Appeals in CA-G.R. No.
61925-R, Co filed the instant petition for review oncertiorari;
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.

071514
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 petitioner's
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
duties47 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 Corporation's
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.
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 Lao's

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071514

claim for damages on account of malicious prosecution, and

in CA-G.R. No. 62532-R that arose from Lao's 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. . . . .
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. . . . .
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. . . . .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 plaintif has ofered all his
evidence and rested his case.

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 plaintif; (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. Buenaventura52 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:
. . . . 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,

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071514
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:
. . . . In efect, plaintif 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 afects the
merits of said detainer case. Should final judgment
be eventually rendered in that case in favor of the
plaintifs 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, plaintif 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. Corrales54 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 plaintifs 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 plaintif ofers evidence and
rests his case, is untenable. To rule otherwise would, in
efect, 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
in Surigao Mine Exploration Co., Inc. v. Harris,56 "unless the
plaintif 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 Lao's 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.
Neither does the Court find merit in respondent Lao's
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

49

Torts
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 Lao's 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 Lao's 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 Lao's 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 Lao's 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.

071514
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 report61 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.
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
efect; 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
efect.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 ofered no objection to
the commissioners' report, they are deemed to have
accepted and admitted the findings therein contained.

50

Torts
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
Lao's monthly sales report.
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

071514
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 plaintif 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 plaintif Andres Lao. (t.s.n., November
25, 1976, pp. 45-47 as cited in Respondent Lao's
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 Lao's accountability.

51

Torts
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
Lao's account because such shipments were reported in the
latter's 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 Lao's 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 sufered
by him or her.67 In this case, however, the trial court
correctly found that an award for actual damages was

071514
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
corporation's 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 Lao's 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.
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 sufered 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.
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 attorney's fees
should be deleted.1wphi1.nt
WHEREFORE,
In G.R. No. L-47013, the petition for review on certiorari is
DENIED for lack of merit;

52

Torts

071514

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
solidarity liable with the respondent Associated AngloAmerican 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 Lao's overpayment in the
amount of P556,444.20, but MODIFIED, in that only an
award of P30,000.00 for actual damages is GRANTED, and
all the other monetary awards are deleted. No
pronouncement as to costs.
SO ORDERED.

[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

53

Torts
Court of Quezon City, and HOMOBONO
ADAZA, respondents.

071514
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.

DECISION
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 Staf 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 lettercomplaint, Adaza included, and assigned the case for
preliminary investigation to a panel of investigators

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.

54

Torts
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]

071514
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
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 ofensive 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 sufers from

55

Torts
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

071514
plaintif 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-9011855, 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

56

Torts
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 inPeople 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 diferentiated
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 diferent 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 ofense charged under the second part of
Article 48, RPC.

071514
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]
While the Supreme Court in the case of Enrile v. Salazar,
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:
[26]

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 ofense committed on the occasion
thereof, either as a means necessary to its commission or as
an unintended efect of an activity that constitutes rebellion
(p. 9, Decision).

57

Torts
The Hernandez doctrine has served the purpose for which it
was applied by the Court in 1956 during the communistinspired rebellion of the Huks. The changes in our society in
the span of 34 years since then have far-reaching efects 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 efects 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.[28]
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 ofense -- 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.

071514
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

xxx

14. The malicious prosecution, nay persecution, of plaintif

for a non-existent crime had severely injured and
besmirched plaintifs name and reputation and forever
stigmatized his stature as a public figure, thereby causing
him extreme physical sufering, 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

58

Torts
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

071514
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.
SO ORDERED.

59